The EBRD is lending Natron Hayat, a pulp and paper factory in Maglaj, Bosnia and Herzegovina, €11mn to help modernise the plant and increase production of its main products, including cardboard and paper for making large sacks.

The loan will help revive the plant by upgrading existing equipment and rebuilding and restarting the pulp plant and a machine for making sack paper, bringing production up to full capacity. The investment will help to raise company sales substantially. It will also help improve efficiency at the plant by upgrading energy, water and wastewater treatment facilities, improving environmental standards to European Union levels.

Claudio Viezzoli, EBRD director for the Western Balkans, says the bank is helping to transform an aging plant into one that will be modern, competitive and more environmentally friendly.

The loan should demonstrate to other investors of the benefits of restructuring older, inefficient companies and turning them into profit-making success stories, says Viezzoli. The loan is also helping support the local forestry industry by sourcing raw materials such as wood chipping from local suppliers, he adds.

Previously Natron had been one of the leading pulp and paper manufacturers in Yugoslavia. But its production declined following the Bosnian conflict in 1992. Damage to equipment and a lack of investment in the then state-owned company saw exports to neighbouring countries fall to just 20% of pre-conflict levels. Following the privatisation in 2005, the plant, renamed as Natron Hayat, is now majority-owned by KEAS, the leading wood processing company in Turkey. The government retains a 30% stake in the company.

Yrk, president of Natron-Hayat, said the EBRD’s loan, together with other creditors such as Finland’s Nordea, and Austria’s BACA, will complement KEAS own funding bringing a total of €65mn in investments to increase exports and sales.

It will help us to become competitive and a leading player in the sack paper market in the Balkans and Turkey, says Aktrk. This project, being the largest Turkish investment in BiH, could also pave the way for other investments from Turkey, he adds.

The EBRD is one of the largest investors in Bosnia and Herzegovina, having committed more than €560mn in 48 projects.