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Ukraine: Revamping and Modernization of the Alchevsk Steel Mill (ERUs) (co-purchase)
(Spanish Carbon Fund)

OJSC Alchevsk Iron and Steel Works (AISW) is currently the 5th largest integrated iron and steel plant in Ukraine. It is located in the city of Alchevsk in Lugansk Oblast, Eastern Ukraine. It is part of the Industrial Union of Donbass (IUD), an industrial group that is a major shareholder in a number of metallurgical enterprises in Ukraine as well as in Poland and Hungary.

While one of the more modern integrated steel works in Ukraine, AISW was fairly typical of the Ukrainian iron and steel sector up to 2004 in terms of the vintage of technologies. The current facilities are mainly built in the 1950s and 1960s with the exception of new Open Hearth Furnace (TSU 1,2) commissioned in 2005. The plant has high energy intensity. AISW has a Sinter Plant, Lime Kilns, four Blast Furnaces, four old Open Hearth Furnaces and one recent Tandem Open Hearth Furnace, Ingot Casting, Blooming Mill and several other mills. IUD is implementing a US$1.5 billion capital investment program to modernize operations in its two Ukrainian plants including AISW over the period of 2004 - 2010 with financing of currently committed components in part being supplied by IFC through a US$100 million direct loan and participation in a syndicated loan facility in the amount of US$250 million. The rest of the financing is being sourced from commercial banks.

Beginning in 2004 and now coming on stream, modernization program at AISW has the integrated objectives of applying more efficient technology, improving environmental performance, increasing capacity and therefore competitiveness (reducing costs per tonne of steel produced). This modernization program is planned to involve technology replacement or upgrade of all major components of the iron and steel making and finishing processes.

The program’s initial focus at AISW has been on steel production with the replacement of the old OHFs with two modern basic oxygen furnaces (Converters) integrated with continuous Slab Casters to replace the existing Blooming Mill utilizing Joint Implementation with the total investment costs of US$ 944 million.

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