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. Last Updated: 07/27/2016

Ex-Im Bank to Back Bratsk Loan

The Bratsky LPK paper mill on Lake Baikal will receive a $50 million loan guarantee from the U. S. Export Import Bank to purchase American equipment that will help it reduce its pollution, a bank vice president said Friday.


Thomas E. Moran, head of the bank's Canadian and European division, said that the Russian government had informed the Ex-Im bank on Friday that it would guarantee the loan for the equipment, which will be bought from Babcock-Wilcox, an Ohio-based subsidiary of McDermott.


The Bratsk paper mill, whose shares are being sold at a privatization auction, has been a controversial polluter of the otherwise pristine Lake Baikal. Environmentalists have pushed for it to be shut down entirely while the Russian government has promised over several years to allocate funds for its renovation.


The Ex-Im bank guarantee, which will be backed up by Bratsk's exports of pulp and other wood products, covers $48 million of the $55 million cost of the U. S. equipment, a very large boiler system that Moran said will improve the mill's environmental record. Other equipment for the boiler will be purchased outside of the United States, bringing the total project cost to about $100 million.


Citibank will provide the actual loan, said a Citibank executive who asked not to be named. He said the Bratsky paper mill had already made a down payment for the equipment.


The executive also said that his bank had had discussions with GUM, the famous department on Red Square, about possible investment. He said, however, that the discussions were very preliminary and that any agreement was a long way off. "We're still trying to determine what role we want to play and what role they want us to play", the banker said.


The value of GUM shares in the small unofficial Moscow market has increased by 10 percent in recent days, fueled by reports that Citibank was likely to make an investment.