EBRD Grants USD 150 mln Loan to Industrial Union of Donbass

The European Bank of Reconstruction and Development (EBRD) announced that it granted a USD 150 mln loan to the Industrial Union of Donbass (IUD) to build a combined power & heat plant (CHP) at Alchevsk Iron & Steel (ALMK: BUY). This announcement confirms the terms that the EBRD’s board of directors approved December 2006. The project cost is estimated at USD 383 mln. Apart fro the EBRD, it will be financed by the Japanese Bank of International Cooperation (JBIC) who will give a USD 120 mln credit to IUD, and IUD’s own funds in the amount of USD 113 mln. Andriy Gostik: The unit is expected to be launched in 2009. By that time, Alchevsk Iron & Steel hopes to raise its steel making capacity by 88% to 7.5 mln mt p.a. We estimate that the CHP will slash production costs by ~5% and make ALMK and its coke supplier, Alchevsk Coke (ALKZ: SELL) fully self-sufficient in electricity.