Severstal Goes Green For $436M

Severstal borrowed 300 million euros ($436 million) from the European Bank for Reconstruction and Development on Monday to fund a program to cut greenhouse gas emissions.

The loan is the largest for a Russian company to reduce emissions, Severstal and the EBRD said in a statement. The two-part deal for the Cherepovets-based steelmaker matures in seven years and 10 years, it said.

Russia, the world's third-largest polluter, expects its greenhouse gas emissions to increase by about 15 percent through 2015, according to the Economic Development and Trade Ministry.

Severstal, the country's biggest steelmaker, plans to spend 700 million euros to reduce energy consumption by 5 percent to 10 percent. "This is one of the largest energy efficiency investment programs ever undertaken by an industrial company anywhere," EBRD president Jean Lemierre said in the statement.

The loan, under an agreement signed Monday, will be granted in two equal tranches. The EBRD will provide the first one of 150 million euros for 10 years. The other 150 million euros will be syndicated and granted for seven years. Severstal deputy general director Mikhail Noskov told reporters that the first tranche would be granted at a rate of Euribor plus 160 basis points. The other tranche will be provided at Euribor plus 140 basis points for the first five years and Euribor plus 160 basis points for the remaining two years.

Bloomberg, Reuters