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.
IFC is considering a loan of up to $40 million to Cimko Cement (hereafter referred as "Cimko" or "the Company"), an existing IFC client and member of the Sanko Group (the "Group" or the "Sponsor"). IFC's previous investment involved construction and operation of the Narli cement plant and related infrastructure at Kahramanmaras, and a modernization program at the Adiyaman plant in the city of Adiyaman, both of which are located in Turkey.The current investment under consideration is expected to cost $96 million and will comprise: (i) efficiency improvement projects at the Narli plant, the Adiyaman plant including a waste heat recovery system at this plant, and the existing ready mix concrete (RMC) plants; (ii) three new RMC plants to be established in the Mediterranean region of Turkey; (iii) construction of a railway system for the transportation of clinker at the Narli plant; and. (iv) provision of working capital. These activities constitute "the Project" as referenced in this document.There are five key investment projects envisaged for the Narli plant which include: i) modification of the pre-calciner to allow firing with petroleum coke and domestic lignite; ii) replacement of fans in the coal milling system, iii) installation of the grate cooler waste heat recovery system for electricity production; iv) conversion of cement transport from the mills to the silos to mechanical rather than pneumatic means; and v) the railway connection to the factory. The investment program for the Adiyaman plant comprises installation of a roll press ahead of the Cement Mill 1, replacement of existing electric motors with high efficiency motors and the waste heat recovery system.The Narli plant was commissioned in 2008 and has a clinker capacity of some 2.9 million tons per annum and the Adiyaman plant a clinker capacity of some 673,000 ton per annum.Cimko currently operates 14 RMC batching plants on 11 different sites four of which are in the city of Gaziantep with six batching plants. There are further batching plants in Adana, Antakya, Osmaniye, Kahramanmaras and the neighboring Adiyaman and Kilis provinces with the Adiyaman RMC plant being co-located with the Adiyaman cement plant.
OVERVIEW OF IFC'S SCOPE OF REVIEW
The scope of the appraisal by IFC's environmental and social (E&S) specialist included the following:Site visits to the Narli plant as well as the Central RMC plant located in GaziantepMeeting with the Cimko Cement Project and Planning Manager, the Narli and Adiyaman Plant Managers, Human Resources (HR) Manager of Cimko as well as the HR manager responsible for each plant, Environmental Engineers and Occupational Health and Safety (OHS) coordinators at Narli and Adiyaman, contractor company representative and the union representative at the Narli PlantReview of key documents provided by Cimko including the feasibility reports for the energy efficiency improvements at the Narli and Adiyaman plants, as well as the three new RMC plants, available operational licenses, emission permits, sewage connection permits, risk assessment studies and incident statistics and related reports.
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 SecurityPS 5 - Land Acquisition and Involuntary ResettlementIf IFC's investment proceeds, IFC will periodically review the the project's ongoing compliance with the Performance Standards
ENVIRONMENTAL AND SOCIAL CATEGORIZATION AND RATIONALE
The proposed investment mainly focuses on improving energy efficiency and equipment/machinery and it is expected to have limited environmental and social impacts which are site-specific, temporary and none are regarded to be significant. Further, the identified impacts can be avoided or mitigated by adhering to recognized performance standards, procedures, guidelines and design criteria as described in the following sections. Thus this is a Category B project in accordance with IFC's Environmental and Social Sustainability Policy.IFC's appraisal considered environmental and social management plans for the proposed Project and gaps, if any, between these plans and IFC requirements. Where necessary, corrective measures intended to close these gaps within a reasonable period of time are summarized in the paragraphs that follow and in the agreed Environmental and Social Action Plan (ESAP) disclosed in this review summary. Through implementation of these management plans and the ESAP, the Project is expected to be designed and operated in accordance with the Performance Standards objectivesKey environmental, health and safety and social (EHS) issues related to this project include: appropriate management by Cimko to ensure EHS and Occupational Health and Safety (OHS) standards during construction and improvement works are implemented in a manner consistent with the applicable Performance Standards and labor and working conditions and management of subcontractors. Other issues include air monitoring, in particular dust, and noise and land acquisition in relation to the 3 new ready mixed cement plants and the railway line. As a result of the latter, PS5 Land Acquisition and Involuntary Resettlement is applicable to the Project.IFC's appraisal of the existing investment undertaken in 2006 and ongoing monitoring of the associated activities including the last site supervision visit undertaken in 2012 indicates that the Company has sound E&S policies (plants have been certified against ISO 9000, OHSAS 18001 and ISO 14001, quality, OHS and environmental management systems respectively), and is in general compliance with IFC's requirements and the Turkish regulatory requirements, and has significantly improved its OHS performance and complied with the Environmental and Social Action Plan (ESAP) compiled for the existing investment.
**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
Identification of Risks and Impacts: Construction of the three new RMC plants has been evaluated against the requirements of the Turkish Environmental Impact Assessment (EIA) regulation. These were declared exempt from the full EIA process as the capacity of the new plants were designed as 90 m3/h wet mix which is below 100 m3/h on which basis a full EIA would have been required. All the Cimko plants have obtained the necessary and required provincial and regulatory certificates, permits and/or licenses from the Ministry of Environment and Urbanization, including emission permits, sewage connection permits, waste oil incineration permits for rotary kilns and temporary hazardous waste storage permits.Cimko will apply and obtain all the necessary operational permits and environmental permits and licenses for the three new RMC plants from the Ministry of Industry and Commerce and Ministry of Environment respectively.Environmental and Social Policies: Cimko has an EHS Policy established in line with its Integrated Management System that encompasses overarching standards and rules including that related to environmental protection, workplace health and safety and corporate social responsibility. The Company is committed to comply with IFC Performance Standards and relevant World Bank Group (WBG) EHS Guidelines at existing and planned operations.Management Program. As part of its commitment under the existing IFC investment, Cimko has implemented procedures for the regular identification of impacts and risks developed in the context of the Integrated Quality, Environment, Health and Safety (QEHS) Management System which is aligned with ISO 9001-2000, ISO 14001, and OHSAS 18001 standards and in accordance with this Performance Standard and applicable WBG General and Sector-Specific EHS Guidelines for both of the Narli and Adiyaman plants.During operations regular risk assessments are performed at the Cimko plants to identify OHS risks and implement necessary mitigation measures to minimize those risksAll the RMC plants are certified against the ISO 9001 quality management system. In addition to ISO 9001, Cimko is committed to developing an environmental and social management system in line with PS1 and ISO 14001 and OHSAS 18001 for the new RMC plants within a two year timeframe following the start of operations.Organization. Environmental and social management at the Narli and Adiyaman plants is under the responsibility of the Quality Assurance Department of each plant and carried out in accordance with local regulations. Cimko is committed to ensuring consistency on EHS management across Company operations, including the corporate training program, the identification of Key Performance Indicators (KPIs), monitoring and reporting. An environmental engineer and an OHS engineer are employed at each facility and the OHS engineers have received an Occupational Safety Specialist B class certificate from the Ministry of Laborand Social Security. The OHS engineer at the Narli facility has also received NEBOSH (National Examination Board in Occupational Safety and Health) International Certificate.An OHS Coordinator is available for the RMC plants and regularly visits all the RMC sites to undertake ongoing monitoring. As per the ESAP, Cimko will also assign an EHS coordinator for purposes of construction at the new RMC plants, and construction/ installation work at the cement plants.Training. Cimko has established and implemented a training program that is well planned and structured at the Narli and Adiyaman facilities. Corporate procedures developed in the framework of the QHSE management system determine training as a continuous process to ensure skills needed for specific work responsibilities, as well as covering environmental and social topics and contribute to increasing staff knowledge on OHS risks associated with their work. Specific OHS training required by local regulations is also systematically provided.Emergency preparedness and response plan. The Company has an emergency response plan and regular fire drills are performed in accordance with the fire safety procedures for each facility. The Emergency Response Plan addresses the responsibilities of the emergency response team, and specific emergency response actions for each emergency situation (accident, earthquake, fire, storm, road accident and spill).Monitoring and Reporting. Reporting on EHS key performance indicators is done internally as per the requirements of the corporate EHS management system and externally to the national regulatory agencies requiring EHS monitoring. Both the Adiyaman and Narli plants undergo regular audits in accordance with the Environmental License and fulfill reporting requirements to the relevant authorities under the Ministry of Environment and Urban Planning, and Ministry of Forestry and Water Works on the hazardous and non-hazardous waste, wastewater quality, air emissions, hazardous chemicals and labor working conditions. The Company also regularly submits an Annual Monitoring Report to IFC on E&S performance for both the Narli and Adiyaman plants prepared in accordance with the IFC's Performance Standards and the WBG EHS guidelines. The monitoring data indicates satisfactory performance based on compliance to the relevant performance standards and WBG EHS guideline requirements.To oversee EHS performance during construction of the new RMC plants as well as all future construction activities, Cimko will develop an EHS management system inclusive of a monitoring program of air emissions, solid wastes, effluent, occupational accidents, trainings as well as taking into account compliance with any relevant legal and/or contractual obligations and regulatory. This requirement is defined in the ESAP.
PS 2: LABOR AND WORKING CONDITIONS
Human Resource Policy and Management. A Human Resources (HR) Policy is available at the Group level and additionally Cimko has its own HR policy and procedures. The Narli and Adiyaman plants have their own Human Resources Managers respectively, whereas personnel management at the RMC plants is overseen by the corporate Cimko HR Director. The Company operates in accordance with the Turkish Labor Code that covers worker conditions, worker and employer rights, retrenchment, leave, minimum wages, discipline, the relationships between workers, companies and unions, and other labor issues.The Narli plant currently employs 323 workers as well as 255 contract workers, including packaging contractors. The Adiyaman plant employs 197 employees as well as 83 contractor workers. The number of workers employed in Cimko's RMC operations currently average 390, allied to 19 contract workers.Employees work on a 12 hour shift basis and overtime work is paid in accordance with the national Working Conditions regulation. For all workers Cimko guarantees minimum wages, however supports all employees with a comprehensive benefits package including family and child allowances, annual leave, and religious holiday packages. On the other hand, contractor workers in the packaging plant, involved in cleaning and the kitchen are employed according to minimum requirements defined in Turkish Legislation. In addition, food, social benefits and transportation are similar to those provided to Cimko employees.Cimko complies with local labor law requirements, supporting equal opportunity and non-discrimination in employment and requiring all prospective employees to demonstrate proof of age of 18 years or older. It also contractually requires construction contractors to do the same. Cimko Cement will nevertheless develop and implement a procedure for monitoring compliance of contractors in accordance with PS 2 requirements.Retrenchment: Cimko Cement does not anticipate a reduction in the current workforce and rather the three new RMC plants are anticipated to create 14 new employment positions. However, should collective dismissals become necessary, Cimko will prepare a retrenchment plan based on consultations with the affected workers, the labor unions and in accordance with local Labor Codes and IFC's PS2 requirements.Workers Organization and Grievance Mechanism: Cimko management has stated that each employee is free to join a worker organization and confirmed the existence of the Cement Industry Employers Union of Turkey at the Narli and Adiyaman plants. 173 employees at the Narli plant and approximately 134 employees at the Adiyaman plant are unionized. Cimko has a documented grievance mechanism and adopts an open door policy and, as reported, employees can directly communicate their concerns to management. The Company has placed a number of suggestion boxes at locations throughout the facilities to allow employees to submit anonymous suggestions orcomplaints. As well as these internal grievance mechanisms, external worker protection mechanisms are ensured by the national labor laws and union activities where relevant. The HR Director reported that Cimko ensures that all contractors receive their salaries and are afforded their rights in line with local labor legislation. Going forward Cimko will improve the grievance mechanism to actively include contractors working at all facilities for both construction and other activities.Employees at the RMC plants are under Cimko's payroll and have similar rights as other employees.Occupational Health and Safety (OHS). Cimko's plants operate in accordance with an accredited occupational health and safety management system i.e., OHSAS 18001, and this includes risk assessment studies, accident root cause analysis and reporting. Ongoing supervision of the existing investment with Cimko indicates the Company has achieved significant progress on OHS and made considerable investments in improving workplace health and safety practices.The Company is also obliged to comply with national OHS legislation which establishes the general principles relating to the prevention of occupational risks, protection of workers at the workplace, elimination of risk factors and occupational accidents, training of workers and their representatives, and general guidelines for the enforcement of these principles. All Cimko employees, including at the RMCs, are provided with general health and safety training prior to commencement of work activities and OHS training is conducted annually. In 2012 there were 3 lost time accidents with 139 lost workdays at the Adiyaman plant and 10 lost time accidents with 249 lost workdays at Narli plant. The lost time injury frequency rate (LTIFR) for the Adiyaman and Narli plants are calculated as 11 and 16.5 respectively which are above the US sectoral reference value of 10,5. The number of lost time accidents has been significantly reduced since IFC initially invested in the Company and the LTIFR for both of the plants for the past 2 years were 6.5 at the Adiyaman plant and 8.5 at the Narli plant.The Company maintains detailed records of incidents and near-misses in the accident log system including relevant corrective actions implemented. Risk analysis studies are performed and an extensive Work Permit System is in place including that related to working at height, electrical works, confined space, etc.Cimko facilities have detailed maintenance programs for equipment such as forklifts, boilers and the like, and maintenance activities are regularly tracked. Documentation of the preventive maintenance programs is available and annual technical inspections are carried out by authorized institutions. All chemicals are labeled and stored appropriately with relevant MSDSs (material safety data sheet), lock out/tag out procedures have been compiled and implemented and PPE (personal protective equipment) is provided to all workers including contractor workers.A workplace doctor works 5 days a week and a full-time nurse is available on site at both the Narli and Adiyaman plants. Some 20% of the staff has been trained as first aiders and a first aider is available at each shift. Staff also undergoes medical examinations twice a year, including lung screenings and audiometric tests. Cimko makes arrangements such as workplace change for staff with audiometric problems in addition to providing earplugs.Cimko undertakes workplace monitoring program including the measurements of coal dust, calcium sulfate, nitrogen dioxide (NO2), particulate matter, sulfur dioxide (SO2), cement dust and silica, workplace noise and heat stress. Available data presented in the latest AMR (Annual Monitoring Report) indicates compliance with both the WBG EHS Guideline and Turkish regulatory limits.The Company has a comprehensive emergency response plan and fire drills are performed at the necessary frequencies at all plants. Adequate fire detection and alarm systems and fire extinguishing equipment are in place as required by local building codes and fire department regulations. Standby generators and pumps are installed and fire extinguishing equipment is inspected periodically by fire safety contractors.
PS 3: RESOURCE EFFICIENCY AND POLLUTION PREVENTION
Energy use and greenhouse gas emissions. The average electricity consumption per ton of product for the first seven months of 2013 at the Adiyaman and Narli facilities was 122.16 kWh/ton and 101,16 kWh/ton respectively. With the implementation of the energy efficiency improvement studies outlined in the project description, the Company anticipates a reduction in these consumption figures by approximately 14% at the Adiyaman plant and 13% at the Narli plant. The average cement industry energy consumption benchmark is between 90-140 kWh as defined in the WBG EHS Guidelines Cement and Lime Manufacturing. With the new investments energy consumption will be in accordance with best practice.Details of estimated energy efficiency elements for sub-projects are as follows. At the Narli plant this includes; i) replacement of fixed speed fans in the coal milling system which will reduce electricity consumption at the coal mill 1 from 49 kWh/ton of coal to 38 kWh/ton of coal and at coal mill 2 from 64 kWh/ton of coal to 47 kWh/ton of coal; ii) installation of a grate cooled waste heat recovery (WHR) system on the excess air exhaust from the cooler thereby generating between 3.5-5,5 MW depending on operating conditions; and iii) conversion of cement transport from mills to silos to mechanical means thus reducing the electrical requirements for this activity some 5 fold. The Adiyaman plant activities include; i) installation of a roll press on cement mill 1and; ii) replacement of existing electric motors with high efficiency motorsAs a result of reducing electricity consumption with the planned investments, the Company calculated that Narli and Adiyaman plants will reduce CO2 emissions by some 20,000 tons and 9,000 tons respectively per year.The Company reported that connection of the Narli factory to the railway system will allow for a CO2 reduction of about 1,700 tons per year annually.Air emissions monitoring. As a part of its reporting requirements in the Annual Monitoring Report (AMR) submitted to IFC under the existing investment both the Narli and Adiyaman plants obtained A-class emission permission from the relevant government authorities and emission measurements are performed by accredited laboratories. Review of the available data indicates compliance with the local regulations and the applicable WBG EHS Guideline values.At the time of appraisal an issue related to ambient dust emissions was observed at the Central RMC plant in Gaziantep. Thus Cimko will perform ambient air dust monitoring and undertake necessary measures to mitigate the issue including rehabilitation of the plant site as indicated in the ESAP. Dust emission measurements of other RMC plants will also be submitted to IFC in the AMR and, if required, actions taken as set forth ESAP will be implemented.Water use and efficiency. Water for the Cimko operations is sourced from ground water wells within the plant premises and continuously monitored at regular intervals via analyses performed by an accredited laboratory. As per the circular from the Ministry of Environment and Urbanization dated February 2013, the Company performed a field analysis of watershed geometry and water collected within the boundaries of the watershed is re-used following the physical treatment for the purpose of watering concrete roads. Based on current production the total quantity of water used by the RMC operations is 330,000 m3 and this will increase marginally by to some 430,000 m3 as a result of the new RMC plants. The Company will target to continually decrease the water consumption and will include water as a yearly KPI targets.Wastewater Treatment. Cimko's operations do not produce process-wastewater and domestic wastewater is discharged via biological treatment plants located at the Adiyaman and Narli plants respectively. Monitoring data from the treatment plants indicates compliance with local regulatory requirements as well as WBG EHS Guidelines. A surface runoff water treatment system is available at both the Narli and Adiyaman plants, including a sedimentation pond. The waste water effluent quality data is reported to IFC via the AMR and data indicates compliance with national law and the effluents parameters detailed in the WBG EHS Guidelines for Cement and Lime Manufacturing.Potable water is provided to all workers and contractors at all sites of Cimko including the quarries and RMCs.Management of solid and hazardous wastes. Solid non-hazardous waste and hazardous waste management at all the cement plants is adequate and involves waste segregation and reduction. Non-recyclable waste produced on site are temporarily stored by type, capacity and physical state in appropriate containers or barrels and treated in accordance with the provisions of the regulations on the disposal of waste from production processes.Hazardous waste including waste oil, electrical equipment, fluorescent bulbs, tires, contaminated barrels, etc. is stored separately from non-hazardous waste in special labeled containers and disposed to licensed companies authorized by regulatory agencies. Procedures have been established for the management of solid and hazardous wastes and the annual amounts and storage and disposal methods are reported to IFC in the AMR.
PS 4: COMMUNITY HEALTH, SAFETY AND SECURITY
There are no immediate households or neighbors in the vicinity of both Narli and Adiyaman facilities. A traffic management plan exists for the daily operations at both cement plants and RMC plants.Going forward a traffic management plan will be prepared for the construction phase for all project sites to minimize the risks for affected communities.The Company employs licensed and armed security personnel at all sites contracted from a private Sanko Group company with a clearly defined written protocol as to the use of armed force and they are regularly trained and certified as per the local regulatory requirements.
PS 5: LAND ACQUISITION AND INVOLUNTARY RESETTLEMENT
The land acquisition process for construction of the railway connection at the Narli plant was largely (90%) completed at the time of appraisal in accordance with the 6th. Regional Government Railway Directorate and included 34 fields used for agricultural use (crops such as corn, barley and wheat) and compensation was paid to landowners. The Company reported that the compensation amounts paid by Government are higher than market value decided by an official commission as required and defined by the local Expropriation Law No: 2942. However, the Company will provide additional information on this as per attached ESAP.The branch line (2 km) will only be completed by the Government one month prior to construction activities commencing. There is ongoing negotiation with willing sellers for the acquisition of the remainder of the necessary land. The Company will ensure that the Government-managed acquisition and the measures used to compensate the land owners are in line with the requirements of the Performance Standard 5 as per ESAP.Required land for the construction of new RMC plant in Adana has been acquired on a willing buyer-willing-seller basis. The Company has not yet started the land acquisition process for the other two plants which will also be completed on willing buyer-willing-seller basis.To address issues related to future land acquisition and ensure compliance with this Performance Standard, as per the ESAP, the Company will establish a Land Acquisition Policy and Framework in agreement with IFC.