Ingenio Montelimar (IFC-32253)

Countries
  • Nicaragua
Where the impacts of the investment may be experienced.
Specific Location
San Rafael del Sur
Whenever identified, the area within countries where the impacts of the investment may be experienced. Exact locations of projects may not be identified fully or at all in project documents. Please review updated project documents and community-led assessments.
Financial Institutions
  • International Finance Corporation (IFC)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Active
Bank Risk Rating
A
Risk rating varies among banks and may refer only to the particular investment and not to the risk for the project as a whole. Projects marked 'U' have an 'Unknown' risk rating at the time of disclosure.
Voting Date
Jun 27, 2013
The estimate day the bank will vote on a proposed investment. The decision dates may change, so review updated project documents or contact the EWS team.
Borrower
Consorcio Naviero de Nicaragua S.A.
The holder of the loan, grant, or other investment.
Potential Rights Impacts
  • Cultural Rights
  • Housing & Property
  • Labor & Livelihood
  • Right to Health
Only for projects receiving a detailed analysis, a broad category of human and environmental rights and frequently at-risk populations.
Investment Type(s)
Loan
The categories of the bank investment: loan, grant, etc.
Investment Amount (USD)
$ 15.00 million
Value listed on project documents at time of disclosure. If necessary, converted to USD$. Please review updated project documents for more information.
Project Cost (USD)
$ 38.00 million
Value listed on project documents at time of disclosure. If necessary, converted to USD$. Please see updated project documentation for more information.
Primary Source

Original disclosure @ IFC website

Updated in EWS Feb 5, 2018

Disclosed by Bank Mar 6, 2013


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Project Description

This Project involves an increase in CONSORCIO NAVIERO NICARAGUENSE SA (Navinic)'s annual sugar production at Ingenio Montelimar - owned by NAVINIC since 2000 and the smallest of the four active sugar mills in Nicaragua, from 33kton to 67kton. The Project includes:
i) the acquisition of 1,628 ha of land to increase own planted area to 5,262 ha,
ii) investment in irrigation and other infrastructure in the field,
iii) increasing milling capacity to 4,100 tcd,
iv) acquiring additional harvesting and transportation equipment and
iv) funding incremental working capital needs.

The increased scale of operations will allow for the installation of a high pressure boiler and supplemental cogeneration plant in 2-3 years with resulting increases in the sale of biomass-generated electric energy to the national grid.

LOCATION OF PROJECT AND DESCRIPTION OF SITE

Navinic and this Project are located in San Rafael del Sur, 62 Km away from Managua, Nicaragua.

Early Warning System Project Analysis

RISK CATEGORIZATION

The IFC reports that this proposed investment will be Category A according to IFC's Environmental and Social (E&S) Sustainability Policy, because of risks associated with complex issues relating to legacy land tenure issues in the region.

The Montelimar Project's farms are located adjacent and surrounded by Government of Nicaragua lands, which have complex legacy land tenure issues, that raise the risk of social impacts and spillover effects on the project, and over which the project sponsor has little or no control in managing. Recent IFC experience on other large scale agribusiness projects have included issues with complex agrarian land reforms, potential conflicting land claims, challenging governance framework of natural resources (e.g. conflicts over land and water resource use), and conflicts between security forces and communities.

APPLICABLE IFC PERFORMANCE STANDARDS

PS 1 - Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 - Community Health, Safety and Security
PS 5 - Land Acquisition and Involuntary Resettlement

People Affected By This Project

ENVIRONMENTAL AND HUMAN RIGHTS RISK ASSESSMENT

RIGHT TO HEALTH

There is an epidemic of chronic kidney disease along the Pacific Coast of Central America, estimated to have caused the death of over 24,000 people in El Salvador and Nicaragua since 2000. Many of those who have died worked as manual laborers in the sugarcane fields. As a result of a complaint to the Compliance Advisor Ombudsman on IFC's investment in another Nicaragua sugar company, there is now an extensive investigation into the causes of the epidemic. Two theories of the cause are the agricultural chemicals workers are exposed to and chronic dehydration.

The following survey questions should be raised by communities and individuals affected by NAVINIC's activities:

  • Has your health been affected since the beginning of the investment project?
  • Has the health of some community groups been more affected than others?
  • If there have been public health problems related to the investment project, were you informed of these problems?

LABOR RIGHTS

Montelimar is a non-discriminatory and equal opportunity employer that has a total permanent labor force of 1,828 employees, of which 12% are women. The workforce grows to 2,750 people in peak harvest season.

Cane harvest is currently 100 percent manual and a total of 535 cane cutters are employed at peak of the season. Some of the labor required during the zafra (harvest) travels from a number of distant municipalities in the western area of the country. As agreed in the ESAP, Montelimar will construct a labor camp to accommodate 150 individuals at the Waterloo farm to reduce the cost and fatigue associated with distant travel and the harvest schedule that commences very early each morning. Accommodations in the camp will include dormitories, bathing facilities, kitchen and dining areas, transport to work sites, and provision of electrolyte/hydrating solutions for field workers potentially at risk of chronic renal insufficiency (CRI). The Company will consider IFC's Guidance on Worker Accommodations.

The following survey questions should be raised by communities and individuals affected by NAVINIC's activities:

  • Are working conditions in your community and/or in this industry safe and healthy?

RIGHT TO HOUSING AND PROPERTY

In the 1940s, the Montelimar mill and plantation was started on an area of approximately 10,000 hectares. In the 1980s, the Company was nationalized, and some Company workers were allowed to settle around the sugar cane farms in cooperatives. In the early 1990s the GoN gave away large quantities of the Montelimar mill land. In 1993, the GoN privatized Montelimar and sold the assets to AMSA. Between 1994 until 2000, AMSA conducted forceful resettlement of 220 families from La Colonia, El Rio and Tanque Rojo farms. These families were relocated to La Gallina and San Juan 54 areas. As AMSA proceeded with the forced relocation, families nearest to the plant site resisted, appealed to government entities and were allowed to remain on the land. In the early 2000s the mill was acquired by NAVINIC, which stopped the forced resettlements.

In the July 2012 agreement with the GoN specifically CORNAP and the (PGR), NAVINIC gave back approximately 2,900 ha of land to the GoN in order to assist the process of land titling in the area near their sugar mill in Montelimar. The land in question includes parts of, or the entirety of the following parcels: Los Jicaros A and B; El Zapote, San Diego, Tablas A and B, Tablas/Cuenca C, Samaria Apante, and the Annex of El Zapote. The donated land does not include areas that are currently planted with sugar cane, forested areas that are certified by INAFOR or MARENA, rights of ways, transportation routes, or bodies of water including aqueducts. The GoN will respect NAVINIC's use rights over these bodies of water. The Company maintains that local communities can have access to the water with no restrictions of use. IFC understands the groups with informal possession located on some of the GoN lands that are interspersed among NAVINIC lands consist of ex-sugarcane plantation workers of Montelimar that formed agricultural cooperatives, cooperatives of ex-military personnel, as well as other individuals. The GoN has agreed to continue the process of formalizing the titles to land parcels that are primarily held by collectives and cooperatives. A summary of the agreement is available on CORNAP's website: http://www.cornap.gob.ni/index.php?menu=nver&id=127

The following survey questions should be raised by communities and individuals affected by NAVINIC'S activities:

  • Are there laws, policies or programmes protecting property rights?
  • Has the planned investment project afforded people affected by the loss of property an opportunity to meaningfully participate in the planning and compensation evaluations?
  • Are there mechanisms through which people can file a complaint and/or obtain a remedy when their right property has been affected? If so, are communities of aware of this grievance mechanism?
  • What opportunities (legal or other) are available if you feel that your right to adequate housing has been affected?
  • Have people in your community ever been forcibly evicted from their homes?

RIGHT TO CULTURE

In Nicaragua, there are more than 500 known archaeological sites with petro glyphs. Montelimar Cave La Gallina, named after a painting of a bird found in the cave), is one of six that retain cave paintings and prints. At this site there are twenty different figures. All retain their original carvings into the rock ceiling of the vault. The rock art symbols include the following elements: an anthropomorphic figure (human) form, four zoomorphic (animal) shapes including snake, monkey, bird, and eight geometric shapes, three of which are abstract and one that is one unspecified and incomplete.

Montelimar Cave is particularly important to the history of Nicaragua due to the presence of three symbols that have been identified as part of an ancient dialect of the Nahuatl language. These symbols are recognized in the Nahuatl language today, which was a dialect used by the land inhabitants between the thirteenth and fifteenth century. In Nicaragua the people of this language disappeared but the language is still in use in some villages in Central America and Mexico.

NAVINIC has provided active protection of the archeological site La Gallina Cave since 2004. Infrastructure includes a covered walkway and improved pathways to protect the resource from rain, wind and erosion.

The following survey questions should be raised by communities and individuals affected by NAVINIC'S activities:

  • Do you have access to cultural facilities?
  • What opportunities (legal or other) are available if you feel that your right to take part in cultural life has been restricted or denied?
Investment Description
  • International Finance Corporation (IFC)

Total Project cost is estimated at US$38 million. The proposed financing is a US$15 million loan from IFC's own account.

Private Actors

CONSORCIO NAVIERO NICARAGUENSE SA (NAVINIC)'s majority shareholders and Project sponsors are the Fernandez Holmann and Morales families.

CONSORCIO NAVIERO NICARAGUENSE SA (NAVINIC): owns the smallest of four sugar mills in Nicaragua (Montelimar mill), with a milling capacity of 2,300 tons of sugar cane per day ("tcd").

PAST HUMAN RIGHTS ABUSES:

The IFC's Compliance Advisor Ombudsman has received a complaint from sugarcane workers at another Nicaraguan sugar company regarding the epidemic of chronic kidney disease that affects many agricultural workers along the Pacific coast of Central America.

Contact Information

San Rafael del Sur City Hall
Located on the West side
of the San Rafael del Sur Central Park
Tel: +505 2293 3284; +505 2293-3542

San Rafael del Sur Public Library
Located on the Southern side
of the San Rafael del Sur Central Park
Tel: +505 2293 3284

Ingenio Montelimar
Km 62 Carretera a Montelimar
San Rafael del Sur, Nicaragua
Tel: (505) 2269-6136
Fax: (505) 2269-6546

Ingenio Montelimar Managua Offices
Optica Nicaraguense, 3c al Este
Bolonia, Managua
Tel: + 505 2266-9776

Oscar Gutierrez: mailto:ogg@navinic.com.ni
Gerente Administrativo

Jose Luis Lopez: mailto:jlopez@navinic.com.ni
Coordinador Gestion de la Calidad y Relaciones Publicas
NAVINIC-Ingenio Montelimar
Telefonos: (505)2269-6516 | (505)2269-6136
Fax : (505)2269-6546

CONSULTATION PROCESS

The company's previous community engagement activities have been somewhat informal and ad hoc. Going forward they will formalize the process and take the actions outlined above and in the ESAP to develop and implement a Stakeholder Engagement Plan as well as engagement with households that are affected by land acquisition, and those households on their farms they have been helping obtain title. As per the Environmental and Social Action Plan, the company will develop a community grievance mechanism that may be used by the community to express concerns about the company's operations and impacts and also serve as a communications channel for consumers to advise the company of concerns about company products.

ACCOUNTABILITY MECHANISM OF IFC

The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org. You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org/