Project summary document

Project description
and objectives:

The proposed project consists of the restart of pulp production line and overall renovation of facilities of an integrated pulp and paper mill located in Maglaj, owned by Kastamonu Entegre Agac Sanayi ve Ticaret (the “Sponsor”), a Turkish producer of particleboard, MDF, laminated flooring, veneer, timber, plywood and door skin/panels. The investment programme will focus on the rehabilitation of existing equipment, rebuilding and restarting of the pulp plant and sack paper machine, substantial improvements to the corrugated cardboard facilities and substantial improvements and upgrading of the energy, water and waste water treatment facilities. Approximately EUR 19 million of these investments (53% of total amount excluding the contingency) are planned either for outright environmental improvements or for environmentally beneficial process improvements.

Transition impact:

The main transition impact of the project will derive from the demonstration effect of a successful turnaround and the setting of standards of corporate governance and business conduct. In addition, the project will increase regional competition and will facilitate the development of the forestry sector in Bosnia and Herzegovina, including Implementation of principles of sustainable wood procurement.

The client:

Natron Hayat d.o.o., a subsidiary of the Sponsor.

EBRD finance:

EUR 11 million senior debt.

Total project cost:

EUR 54 million.

Environmental impact:

An Initial Environmental Examination conducted by the Bank’s environmental specialist showed that the project will improve the Company’s environmental performance and that any adverse environmental impacts can be readily identified, assessed and mitigated. The introduction of modern technology will improve the mill’s environmental standards and energy and resource efficiency as well as reduce the air emissions and wastewater discharges compared with the historic levels despite an increase in production. The operation involves existing facilities and operations, which may be associated with significant environmental, health and safety issues. For the above mentioned reasons, the EBRD has classified the project B/1, requiring an Environmental Analysis and an Environmental Audit.

The environmental investigations are being undertaken by international environmental consultant in accordance with EBRD's requirements. The investigations include an environmental site assessment, a survey of the project area and its surroundings, a Best Available Technology assessment and an assessment of the environmental impacts of the project.

An Environmental Action Plan will be prepared for the Company to address corrective measures needed at the existing facilities ensuring these are brought into compliance with national and EU environmental and health and safety standards. To mitigate the adverse impact of the wood procurement and to ensure the wood supplied to the mill is of legal and sustainable origin, the Company will adopt and implement wood procurement procedures that are based on principles of sustainable forest management, ensuring that:

• the wood does not originate from statutory protected forests, forest areas included in nature conservation programmes or sites which have been notified by the authorities to be excluded from felling;

• the origin of the wood is monitored;

• suppliers operate according to the principles of sustainable development, in compliance with the legislation currently in force and under the supervision of state authorities; and

• the biodiversity and the functions of the forest ecosystem are maintained in accordance with internationally and nationally approved principles.

In accordance with Bank requirements, a summary of the relevant environmental issues associated with the project will be disclosed in the local language at or near the project site.

This section will be updated and amended as soon as further environmental due diligence has been completed.

Technical
cooperation:

EUR 25,800  for performing an energy efficiency audit. The amount was financed under an existing framework contract, financed by the CEI, Central European Initiative (Italy). 

For consultant opportunities for projects financed by technical cooperation funds, visit procurement of consultants.

Company contact:

Mr. Ali Aykac, General Manager
Natron Hayat d.o.o
Lijesnica b.b.,
Maglaj 74250,
Bosnia and Herzegovina

Tel:+387 32603142
Fax: +387 32603405

Email: ali.aykac@natron-maglaj.ba

EBRD contact:

Rijad Hasic, Operation Leader: hasicr@ebrd.com

Business opportunities:

For business opportunities or procurement, contact the client company.

General enquiries:

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com