If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.
DCM Shriram Limited ("Company") is an existing IFC client in India with two main business lines: (i) agribusiness (fertilizer, seeds, sugar and trading of agricultural inputs) and (ii) chemicals (chlor-alkali, chlorine and polyvinyl chloride/ PVC). DCM Shriram is embarking on an expansion of its chlor-alkali facility located in Bharuch, Gujarat (the "Project"). This expansion would include: i) Expansion of the chlor-alkali plant in Bharuch to a capacity of 915 tons per day (TPD) from the current capacity of 450 TPD; ii) Coal based captive power plant of 55MW, as approved by the Board in October 2014. IFC will provide corporate loan to the Company, and the funding is solely for chlor-alkali expansion.The company's Bharuch site includes two plants, a 450 TPD chlor-alkali plant and a 55 MW coal based captive power plant to provide steam as well as electricity for the chlor-alkali plant. The new zero-gap technology will be adopted for the chlor-alkali expansion. Bharuch site is 47 ha and located in a 1,700 ha chemical industry park, Jhagadia Industry Estate, developed by Gujarat State in 1994. Both chlor-alkali and power expansions will be built inside existing plant site, which is surrounded by other chemical industries. The nearest community is more than 1 km away. The construction started in mid-2015 and plans for completion in late 2016. No EPC constructor is used and DCM Shriram manages the construction by its own team.IFC's ongoing supervision of the existing investment in the company indicates general compliance with IFC's environmental and social requirements and the associated overall performance is considered satisfactory. The Environmental and Social Review Summary for the previous IFC investment in Bharuch site can be read at:ifcextapps.ifc.org/ifcext/spiwebsite1.nsf/78e3b305216fcdba85257a8b0075079d/3a982387c57e6c73852576ba000e2c1b?opendocument
OVERVIEW OF IFC'S SCOPE OF REVIEW
The scope of the E&S review includes the whole Bharuch sites for both existing operations and expansions. The E&S review consisted of appraising technical, environmental, health, safety, and social information submitted by the project sponsor, and undertaking a field visit in December 2015. The environmental and social (E&S) appraisal team met the corporate EHS and CSR teams in corporate headquarter in Delhi, and visited project sites in Bharuch, Gujarat State, India. The E&S team held meetings with the company's management teams and also interviewed some employees. Documents related to environmental impact assessment (EIA) for expansion project, quantitative risk assessment (QRA) modeling, production process introductions, hazard operability study (HAZOP), resources consumption analysis, environmental and safety permits, environmental monitoring data, etc. were reviewed and discussed during the appraisal.
IDENTIFIED APPLICABLE PERFORMANCE STANDARDS**
While all Performance Standards are applicable to this investment, IFC's environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards.PS 1 - Assessment and Management of Environmental and Social Risks and ImpactsPS 2 - Labor and working conditionsPS 3 - Resource Efficiency and Pollution PreventionPS 4 - Community Health, Safety and SecurityIf IFC's investment proceeds, IFC will periodically review the the project's ongoing compliance with the Performance Standards
Non-applicable Performance Standards (PS): PS5 through PS8DCM Shriram's Bharuch site currently consists of a chlor-alkali plant and a captive power plant; therefore, PS1 through PS4 are applicable for this project. All the expansions are within existing properties. No land will be acquired. No natural protected area or protected species are identified at, or near, the project sites. Indigenous Peoples were not identified in the project area. Cultural Heritage was not identified in the project area.
ENVIRONMENTAL AND SOCIAL CATEGORIZATION AND RATIONALE
All the manufacturing facilities are located in industrial areas and there are no communities near the facilities. Moreover, all the expansions are located within the existing properties, and all the wastewater generated from these expansions will be treated. Airborne pollutants will go through various scrubbings before emissions. Water and energy efficiencies will be increased through this project.The key E&S risks and issues include the following:- Occupational health and safety- Air emissions and abatement- Energy efficiency- Operational hazards, fire prevention, and emergency response- Community safety, engagement, and developmentMitigation measures for the potential E&S impacts have been identified and are incorporated into an Environmental and Social Action Plan (ESAP). The potential adverse E&S impacts of this project are therefore few in number and limited to project sites, and may be readily mitigated. This is therefore an E&S Category B project according to IFC's Policy on Environmental and Social Sustainability.
**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability
ENVIRONMENTAL AND SOCIAL MITIGATION MEASURES
IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFC's requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.
PS 1: ASSESSMENT AND MANAGEMENT OF ENVIRONMENTAL AND SOCIAL RISKS AND IMPACTS
Environmental and Social Assessment and Management SystemDCM Shriram hires external experts to conduct E&S assessments for various existing projects according to India's regulatory requirements. It also has an established corporate E&S management system to manage the E&S risks in its operations. The E&S management system at Bharuch site is certified by ISO 14000, OHSAS 18000, and SA 8000, respectively.PolicyThe company has a corporate E&S policy that focuses on integration of EHS management in all its business activities, avoidance or minimization of E&S risks, compliances with all relevant regulations, and resources conservations. The policy also mandates the Environmental Health and Safety (EHS) unit in each subsidiary to enforce EHS operational procedures at all levels. DCM Shriram also requires its subsidiaries to maintain strong relationships with the nearby communities, identify the vulnerable groups among the communities, and contribute to the continual development of communities through various corporate social responsibility (CSR) programs. Bharuch site follows the corporate E&S policy, which is included in the new employee orientation and induction program.Identification of Risks and ImpactsDCM Shriram contracted external experts to conduct an Environmental Impact Assessment (EIA) for the proposed chlor-alkali/captive power project, which was approved by the local authority in February 2015. A gap analysis was conducted for compliance with IFC E&S assessment requirements. As indicated in the ESAP, the company will contract external experts to prepare an EIA Addendum to meet IFC requirements. The addendum will focus on cumulative impact assessment, resource efficiency analysis, community safety, and community engagement. Based on the EIA, preliminary information for the EIA addendums, and IFC's E&S appraisal, it can be concluded that the Bharuch site operations will comply with both the local regulatory requirements and IFC's Performance Standards upon successful implementation of the agreed mitigation methods.Management ProgramsThere is an EHS briefing at each operational unit during shift changes. Each plant holds daily management meeting starting with EHS issues. Bharuch site also holds monthly EHS meetings, which include EHS committee members from both employees and contractors. EHS issues are included in the Board meetings, held every the other month. DCM Shriram contracts third party experts to conduct annual environmental audit and biennial safety audit for all manufacturing plants. All the non-compliances identified are recorded for corrections with defined timelines. The corporate EHS department prepares annual EHS improvement plans based on monthly reports and environment/safety audits.Organizational Capacity and CompetencyThe corporate EHS manager leads the overall EHS management, and report to the DCM Shriram Board. Corporate EHS manager is also the Board member. There is an EHS unit at Bharuch site, which reports to both corporate EHS manager and site general manager. Part-time EHS coordinators are assigned to each operation unit. The HR and administration head at Bharuch leads the community engagement works. For the expansion constructions, additional third party EHS consultants are contracted to manage the EHS performance at construction site. The company ensures one EHS professional is at the construction site around the clock to monitor various construction teams.Emergency Preparedness and ResponseChlorine leak and fire hazard are the main operational risks at Bharuch site. Chlorine sensors and smoke detectors are installed at each appropriate location across the site. All the sensors/detectors are connected to the central control rooms. Bharuch site has its own firefighting team and adequate firefighting equipment are onsite with proper maintenance. Bharuch site conducts quarterly emergency response (ER) mock drills with different themes. Special ER plan for chlorine leaks is also prepared. Jhagadia Industry Estate (JIE) also holds annual joint ER mock drills, which involves district office of crisis management and local hospitals. Each industry in JIE takes turns to host the joint ER drills. The last joint drill held at Bharuch site was in 2013.Monitoring and ReviewBharuch site has comprehensive E&S monitoring programs, including air emissions, wastewater discharges, workplace air quality/noise levels, solid waste disposals, employee opinion surveys, etc. Some of the monitoring programs are conducted by third parties. Based on the monitoring data, Bharuch site prepares its monthly EHS report to corporate EHS manager. Corporate EHS department conducts biannual EHS inspections, and contracts third party to conduct EHS audits. Based on these monitoring data and reports, the corporate EHS department also prepare an annual EHS plan for Bharuch site with corrective actions and implementation timelines.
PS 2: LABOR AND WORKING CONDITIONS
Human Resources Policies and ProceduresDCM Shriram has a corporate human resources (HR) policy that specifies the terms of employment and working conditions. These include procedures related to recruitment, probation, training, performance review, promotion, insurance, salary and compensation, resignation, lay-off and firing, vacation, other leave, and retirement. The company has HR policy training that is part of the new employee induction, and all employees have access to this policy. The daily HR works at Bharuch plant are managed by plant HR unit. As part of this project, Bharuch plant of DCM Shriram will also ensure its labor performances to comply with IFC Performance Standard 2.Working Conditions and Terms of EmploymentEmployees at Bharuch site consists of the company's permanent employees and contractor employees. All key technical position and manufacturing positions are held by permanent employees, who work for the company unless the positions are redundant. The other positions are contracted out to different contractors, such as security, loading/unloading, etc. There are no seasonable employees. The expansion construction labors are mainly from nearby villages and there is no construction labor camp.Workers' OrganizationDCM Shriram allows labor unions. However, no union is formed at Bharuch plant site. For all important HR decisions, such as annual salary increase, HR unit conducts internal employee survey, and the decision is made based on employee opinions and market researches. The salary levels at Bharuch site are among the highest in chemical industries in southern Gujarat State.Non-discrimination and Equal OpportunityThe HR policy specifies non-discrimination and equal opportunity. No procedures and/or practices have been identified as discriminatory. All the hiring and promotion are merit-based. When candidates have equal qualifications, preferences of hiring are given to local residents. Currently, there is only one female employee at Bharuch site. DCM Shriram will set female employees/contractors as HR priority for the recruitment of expansion project through female friendly working environment/OHS procedures.RetrenchmentCurrently there are approximately 200 employees and 180 contractors at Bharuch site, respectively. Retrenchment is not expected for this project. After expansion, there will be approximately 300 employees and 250 contractors, respectively. Besides, approximately 800 temporary labors are hired by various contractors for the expansion constructions.Grievance MechanismGrievance mechanism is in place at the Bharuch Unit. There is a dedicated HR resource at Bharuch who conducts routine plant tours to talk to the employees and identify & address (as far as possible) grievances, if any. The employees can also report their grievances to HR Head or respective head of departments. All the grievances and the mitigations are noted. In case the grievance cannot be addressed byHR or HOD and needs attention of Senior Management, the same is brought to their notice by the HR Head and a suitable course of action is then taken. Email Address of HR Team and suggestion boxes are available at various points in the factory for conveying any grievance.Protecting the Work ForceBharuch site complies with national law and does not hire workers below the age of 18 years. HR checks birth and school certificates during the hiring process. No forced labor practices are used by DCM Shriram.Occupational Health and SafetyBharuch site has routine OHS trainings, including new employee training and annual refreshers. There have been no fatal or serious accidents in the past five years. Bharuch site records all accidents and improves the OHS performance through statistical incidences management. The EHS unit conducts job hazard analysis (JHA) for any new positions with operational hazards and uses JHA results to improve its OHS procedures for these critical positions. There is sufficient personal protective equipment (PPE) at each position and employees all wear proper PPE. Workplace air quality and noise levels meet both local regulatory requirements and good international industry practices (GIIP). The company has comprehensive OHS procedures and provides induction training including PPE rules, toxic chemical handlings, heat protection, confined spaces, height, electricity, heavy equipment, etc. As part of this project, all employees handling hazardous materials will have to pass exams at inductions and annual refreshers to be able to work at the plants.Workers Engaged by Third PartiesAll the contractors, including expansion construction contractors, are required to follow the all applicable labor requirements. DCM Shriram also require constrictors follow its HR policy and procedures if suitable. Bharuch plant HR unit reviews contractors' performance routinely, especially for the contractor labor payments. Contractor labors can also report to HR welfare officer for his grievances.Supply ChainThe main raw material, sea salts, are sourced from nearby saltworks. Bharuch site does not source salts from saltworks with child labors and its HR periodically reviews HR performances of its salt suppliers.
PS 3: RESOURCE EFFICIENCY AND POLLUTION PREVENTION
Raw Materials and Resource EfficiencyThe major raw materials used at Bharuch site are water, sea salts, and coal. Water is supplied by industry park, sea salts are supplied from local saltworks; and coal is imported. The existing captive power plant meets the WBG EHS Guideline benchmarks for both efficiency and CO2 emission. Based on the design data, the proposed captive power plant will have the same efficiency, but the CO2 emission will be reduced by 11% using better turbine technology. The company has continuing programs for resource efficiency. In the past five years, water consumption for unit product was reduced by 13% through recycling, and electricity consumption for unit product was also reduced by 3%. Currently, its energy efficiency could meet WBG EHS Guideline benchmark (3,000 kWh/ton Cl2).Energy and Material Efficiency ProjectsAs part of this project, Bharuch site will update all the existing electrolytic cells to zero-gap technology, which can further increase energy efficiency by 10%. The expansion project will also adopt the new zero-gap technology for energy efficiency.GHG EmissionsAfter the expansion, Bharuch site will generate approximately 867,000 tons of CO2-equivalent annually, mainly from co-generation based on coal. Per IFC E&S policy, DCM Shriram will report CO2 emissions annually.Pollution PreventionDCM Bharuch site has all the necessary EHS performance procedures for its different processes and operation positions. The part-time EHS coordinators at each unit manage the daily EHS performance and identify outstanding EHS issues that need improvements. The engineers of EHS unit conducts inspections and provide technical supports. The EHS unit proposes corrective actions for outstanding EHS issues, including an implementation timetable and responsible parties. The progress on the implementation of corrective actions are reviewed during monthly EHS meetings.Coal is stored at an open storage area with 1.5 m high protection walls and compacted impermeable bottom. The storage area is covered by canvas during monsoon season. In line with the ESAP, Bharuch site will improve the protection walls and unloading area to prevent coal dust spreads.Air Emissions and Ambient Air QualityAll the air pollutants go through various scrubbing processes before emissions at Bharuch site. There are six electrostatic precipitators (ESP) fields for the captive power plant flue. All air emissions from both captive power plant and chlor-alkali plant meet both local regulatory requirements and WBG EHS Guideline limits. The expansion projects are based on similar or better pollution prevention technologies, and the air emissions will also meet both local regulatory requirements and WBG EHS Guideline limits.Wastewater TreatmentThe main wastewater is from boiler blowdown. Bharuch site will generate approximately 860 ton/d after expansion project. The wastewater is treated onsite before being discharged to the industry park sewer system. Based on the EIA, the effluents will meet both local regulatory requirements and WBG EHS Guideline limits. The sanitary wastewater will be treated through onsite septic tanks.Solid and Hazardous WasteThe sanitary wastes are collected by municipal contractors for disposal. The minor hazardous wastes, mainly waste oils, are collected by licensed hazardous waste disposal contractors. The main solid waste onsite is brine sludge from the electrolytic cells, which is disposed at the onsite industry waste landfill. The landfill has double composite liner systems, which meet both local regulatory requirements and GIIP. Fly ash from captive power plant is temporarily stored at closed silo and transported out to nearby cement plant as raw materials.Hazardous Materials and Operation HazardBharuch site's products comprise significant amount of hazardous materials. The manufacturing, storage, handling, and transportation of these materials may pose serious dangers to the employees and nearby communities. Bharuch site has detailed procedures to handle these hazardous materials. There is no hydrogen storage onsite. Chlorine storage tanks are routinely checked for integrity. Bharuch site conducts HAZOP for all existing and planned processes. HAZOP is updated whenever the process is modified. QRA is also conducted for the existing and planned chlorine storage tanks. Various leak scenarios are modelled and incorporated into the emergency response plan.
PS 4: COMMUNITY HEALTH, SAFETY AND SECURITY
Community Health and SafetyBharuch site is surrounded by other chemical industries, and the nearest community is more than 1 km away. The normal operations at Bharuch site have limited impacts to the communities nearby. Most of the chlorine will be piped to nearby companies in the same industry park. Some chlorine is bottled in 1-ton cylinder and transported to other industries in south Gujarat. All the main offsite customers have access to national highway. There are no residential communities along the national highway. There has been no major transportation accident in Bharuch site operation history.Hazardous Materials Management and SafetyIn case of the major chlorine lead, the nearby industries and communities may be impacted. Bharuch site minimizes the onsite storage at its tanks and improves the bottling process to minimize chlorine leak amount in case of the worst scenario. Bharuch site has sufficient operational procedures to prevent chlorine leaks, including JHA, HAZOP, QRA, censor system, etc.Emergency Preparedness and ResponseBharuch site community liaison and EHS staffs meet with nearby communities twice a year for grievances as well as training/education for self-protection in case of chlorine leak. The Company also provides similar trainings for the community schools. The company also has off-site ER plan available and joins the annual ER mock drills organized by the district office of crisis management, which involves the local communities. As indicated in the ESAP, Bharuch site will install chlorine monitors along its fences and connect the monitors to the central control room. With the fence line monitoring, the company can generate better chlorine dispersion models in case of emergency.Security PersonnelBharuch site contracts an external agency for plant site security that conducts routine ID check at the gates and security monitoring.