EBRD supports steel production in Georgia

The European Bank for Reconstruction and Development (EBRD) has provided a US$28mn loan to Geosteel for the construction and operation of a mini-steel mill in Georgia. The loan is being financed under an A/B structure, with a US$14mn loan from the EBRD and a B portion of US$14mn syndicated to the State Bank of India.

The plant will have a production capacity of 180,000 tonnes of a year, and will be built in the town of Rustavi, about 35km from Tbilisi.
The firm will be focusing on the production of rebar, an essential for the construction industry, to meet growing domestic demand and demand in Armenia and Azerbaijan.

Geosteel is a joint venture between Georgian Steel Holding Group and the Indian steel producer JSW Steel. The Indian firm is planning to employ more than 350 people in an area which has been severely affected by the economic downturn over the last 2 decades. Geosteel’s plant will also benefit from the strong supply of scrap metal available on the Georgian and Armenian market. Presently, both countries are exporting scrap metal.

Michael Davey, EBRD director for the Caucasus, commented that the investment will send a strong signal to other investors about the benefits of investing in Georgia and the wider region, remarking: “The Caucasus countries have seen strong growth in recent years, and now the priority must be to maintain this momentum. Attracting international investors such as Geosteel is one of the major elements for this.”