Sberbank has agreed a 12-year 33.8bn roubles (US$1.4bn) loan with steel manufacturer United Metallurgical Company (OMK).

The loan will be used to build an integrated pipe producing and steel making complex in Chusovoy in the Southwest region of Russia.

The overall value of the project is expected to total 50bn roubles. OMK has mandated Sberbank to issue ruble and forex bonds, assist with syndicated lending and render its investment and banking services to raise the additional funds needed.

OKM will receive a state guarantee of 21 rubles for what will be the largest project in the Russian metallurgy industry, Sberbank says in a statement.

“The project of constructing a modern pipe producing and steel making complex will be of great importance for the economy of the Perm territory. I believe that this project will ‘breathe a new life’ into the social and production infrastructure of one of the important metallurgical centres in the Urals”, says German Gref, president, chairman of the board of Sberbank.