The EBRD is providing the equivalent of US$55mn in long-term financing to Kagazy Recycling to help the Kazakh private company complete the restructuring and expansion of its paper business.

Kagazy Recycling is part of the fast-growing Kagazy Group, whose operations include a range of businesses connected with paper manufacturing based upon recycled waste paper in Kazakhstan. The group is the leading producer and trader of a wide range of paper products in central Asia, including corrugated paper, boxes, polygraphic papers, newsprint and office paper.

Kazakhstan has very limited forest resources and most paper products are imported. The group established its paper business in 2001, to produce paper based upon recycled wastepaper for the local market. A year later it acquired its first paper production machinery and in 2003 it started trading.

The proceeds of the loans will finance the installation of new equipment to expand significantly the company’s output, with the volume of paper production scheduled to rise to over 85,000 tonnes per year by 2012, from 40,000 now. The aim is to build an incorporated paper business, comprising trading, manufacturing and service facilities.

Andrsvek, EBRD director for Kazakhstan, says: “We are very pleased to have the opportunity to participate in the current growth of Kagazy Recycling and thus contribute to the development of the domestic paper industry in Kazakhstan. The loan will help Kagazy Recycling make the most efficient use of resources using established western technology and management expertise. The project also underscores the EBRD’s commitment to finance projects in the corporate sector with a strong environmental impact.”

To-date, the EBRD has invested almost €1.5bn in the country. Some 70% of the bank’s portfolio in Kazakhstan is in the private sector.