Sber signs general agreement with Ecolant and opens import letter of credit for construction of major steelworks
Sberbank and Ecolant (owned by Anatoly Sedykh, Chairman of the UMC Board of Directors) signed a general agreement on letters of credit with a limit of over EUR 282 mn and opened a letter of credit for EUR 116.5 mn in the framework of the construction of the first major full-cycle steelworks using green technology in Europe, to be built in Vyksa, Nizhny Novgorod Region. The technology will help reduce carbon dioxide emissions threefold compared to traditional solutions.
The import letters of credit issued by Sberbank in the framework of a concluded agreement are to be used for transactions with foreign high-tech equipment suppliers and contractors handling the commissioning. They will be confirmed by foreign banks. Sberbank’s obligations under the letters of credit are syndicated by the other partner banks in the project – VEB.RF and Otkritie Bank – providing guarantees in the form of domestic letters of credit on Sberbank’s behalf. This structural solution, innovative for the Russian market, enables the client to finance the project and achieve the best possible transaction conditions with foreign suppliers.
Ecolant is a landmark project for the steel industry, setting the bar high for environmental performance in steel production. Sber’s participation in the project financing emphasizes the bank’s readiness to facilitate our clients’ ESG transformation. To increase business efficiency, it is important to seize every opportunity to reduce expenses and minimize risks. Letters of credit are one of the most secure transaction instruments, in particular when dealing with foreign counterparties. The partner banks in the project syndicating unsecured letters of credit ensures the best possible commercial terms and maximum credit support for our client.
First Deputy Chairman of the Executive Board, Sberbank
Ecolant Steelworks is the first in Europe to combine green technology, the best engineering solutions, and an effective production chain. This cutting-edge, technologically and environmentally advanced project is being financed entirely in Russia. We would not have been able to begin work without our creditor banks. We are grateful to Sberbank and our other partners for their professional approach and reliable financial agreements corresponding to the highest possible standards. Ecolant Steelworks, which is set to be commissioned in 2025, will catalyze the development of the national steel industry and boost the growth of the Russian economy on the whole.
Andrey KukhnoDirector, Ecolant