EBRD credit committee has decided to open Sevestal a credit line for the construction of Severgal - hot dip galvanized steel for the automotive industry at a capacity of 400,000 tonnes a year.

Severgal joint venture is registered in the Russian Federation. Severstal owns 55% of the company, Arcelor - 25%. The project's budget for construction, staffing and product marketing is estimated at US $ 180 million. Severgal joint venture will produce steel sheet with Extragal coating Extragal TM for interior and exterior parts of vehicles. The line will be built at Severstal's industrial site in Cherepovets, Vologda region by the beginning of 2004.

According to Ivan Nefedov, general director of Severgal, prior to providing a line of credit, EBRD looked at the results of an independent expertise of a project for construction of the new line. Hatch consulting company, which specializes is expertise in the steel-making industry.

Upon a detailed study of the project Hatch gave its conclusion of risks involved in all project aspects, its compliance to environmental safety, technical and technological norms.

Severstal has signed a letter of intent with the bank in February of 2002 and an agreement on main principles of financing.

?BRD put together a group of experts which worked on the credit agreement. The group has visited Severgal in June of this year and had prepared its conclusions to the forthcoming credit committee meeting. At the meeting the bank representatives had presented to EBRD with the project of a new line and Hatch offered its official report on the final results of the Expertise.

A credit for the Sevegal joint venture will be opened in October-November 2002, after parties agree on terms, conditions, amounts and deadlines for traunches.