The European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) are each lending US$25mn to the Bor Glassworks, Russia’s leading supplier of float glass for the building and auto industries.
The eight-year loan will be used to finance the company’s capital expenditure programme, including the repair and upgrade of one of Bor’s two lines for float glass a higher quality type of glass than sheet glass as well as the completion of a line that will produce laminated auto-glass.
The laminated glass line will allow Bor to produce green glass for the automotive industry, which will help raise Russian auto-glass products to European standards and thus increase the industry’s export appeal. Other auto-glass plans include the installation of a new cutting and printing line by the end of this year, and a new furnace for making tempered flat glass in 2004.
The investment will, among other benefits, enable Bor to satisfy Russian auto manufacturers’ demand for higher quality glass, as well as match the requirements of international carmakers now starting production in Russia, says Dragica Pilipovic-Chaffey, director of the EBRD’s Russia team.
The scarcity of high-quality component suppliers in Russia has to date been a deterrent for international car manufacturers considering entry into the Russian market.
The restructuring of this former state-owned glassworks has been a success despite the effects of the 1998 Russian financial crisis. The new investment programme involving Bor’s foreign owner Glaverbel and its parent, Asahi Glass, should send an important signal to other multinational companies now considering the Russian market, Pilipovic-Chaffey adds.
The modernisation being financed by these EBRD and IFC loans will help reduce noxious gas emissions, eliminate the use of asbestos rollers in the manufacturing process and meet other environmental concerns.
The EBRD and the IFC, the private sector arm of the World Bank, have been minority shareholders in Bor since the end of 1997, when the two international financial institutions invested US$15mn each.
Bor is controlled by Europe’s second biggest flat glass manufacturer, Belgium’s Glaverbel SA, which is in turn owned by Asahi Glass Co Ltd, the world’s largest producer. The Bor glassworks are situated in the town of Bor opposite Nizhny Novgorod on Russia’s Volga River, 500km east of Moscow.