A booming construction sector is leading to high demand for cement in Kazakhstan. In order to help local producers expand their capacities, the EBRD is providing a loan facility of up to US$42mn to Karcement to finance the introduction of dry-line cement production at the Karaganda plant.

Karcement is a subsidiary of Steppe Cement, which was listed on AIM in 2006, and a sister company of Central Asia Cement.

The six-year loan facility consists of an increase to an existing EBRD loan signed in 2005 and an additional standby loan.

The finance will be used for the refurbishment and re-commissioning of two large production lines to manufacture cement using the energy efficient dry-process method. It is the first of the Kazakh cement companies to use this technology. Upon completion, the capacity of the plant will approach 2.5mn tonnes per year. The implementation of a comprehensive environmental action plan is an important component of the project.

With rapid expansion since 1999 and current demand of over 6mn tonnes, the Kazakh cement industry has still not been able to keep pace with the strong growth of the general economy.

Thanks to considerable construction activity in the new capital Astana, Almaty and the Caspian Sea area, domestic demand currently significantly outstrips supply. The Karaganda cement factory is the closest cement plant to Astana and oil-rich West Kazakhstan, which is a key competitive advantage.

Olivier Descamps, EBRD business group director, says the loan facility reflects the bank’s strategy to strengthen its investments in medium and large local companies outside the oil and gas sector to support the country’s economic diversification. The EBRD can offer such companies long maturities and extensive experience in preparation for accessing international capital markets.

To date, the EBRD has invested more than €1.5bn in more than 50 projects in Kazakhstan. Support for the enterprise sector to promote the diversification of the economy is one of the pillars of the bank’s strategy for the country.