Agro Industrial Paramonga S.A.

completed

- 3 - International Finance CorporationA Member of the World Bank GroupInternational Finance CorporationA Member of the World Bank GroupEnvironmental Review Summary (ERS)Project Name: PERU-Agro Industrial Paramonga S.A.Region: Latin America and CaribbeanSector: Food and AgribusinessProject No.: 0082791. This project involves the renovation and expansion of an existing sugar mill near Lima, Peru, to bring its capacity to 4000 tonnes per day. The project includes the rehabilitation of 5200 ha of sugarcane and development of an additional 3500 ha. The company will also be financially and organizationally restructured. This is a category B project according to IFC''s environmental review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.2. The review of this project consisted of appraising technical and environmental information submitted by the project sponsor, and the technical appraisal and site review completed by IFC’s Agribusiness Department staff. The following potential environmental, health and safety impacts of the project were analyzed: · air emissions;· liquid effluents;· solid waste handling and management of hazardous materials (including pesticides); · fire protection and emergency response; and· general employee health and safety.The information provided about how these potential impacts are addressed in the development of the project is summarized in the paragraphs that follow.3. The factory is situated in the town of Paramonga, about 195 km north of Lima. The town has a population of approximately 36,000 and almost surrounds the plant. Cane plantings will be extended to presently unused desert land in the vicinity.4. The plant will utilize a new bagasse and oil-fired boiler, fitted with wet scrubbers to ensure that exhaust gases meet World Bank guidelines. Process water from the scrubbers will be treated to remove particulates and either recycled to the scrubbers or used as irrigation water on the company’s cane fields adjacent to the plant.5. Liquid effluents from the plant are almost entirely composed of cooling water from the evaporation process. These cooling waters are used on the plant property for irrigation of cane fields adjacent to the plant, and are not released to surface waters off site. Condensate water from the evaporation process is uncontaminated and is recycled in the process. Sanitary wastes are discharged to a septic system.6. Filter mud from juice clarification is composted and will be returned to the cane fields as a fertilizer. Boiler ash is also used as a fertilizer. Bagasse not required for the plant’s boiler will be sold to a third party for use as boiler fuel or as raw material for paper production.7. The plant should not generate excessive noise and will meet the World Bank guidelines for ambient noise levels in adjacent areas.8. Any hazardous chemicals used in the sugar production process will be subject to secure storage with secondary containment, and will be handled only by trained operators. The plant is designed for protection against fire and explosion, including the provision of fire walls, hydrants and extinguishers, and fire fighting equipment. Machinery will be appropriately safeguarded. Staff are trained in occupational health and safety, including fire protection. Training will include safe working practices in the cane fields. Personal protective equipment will be provided as appropriate for each worker’s specific tasks.9. Pesticide use in the cane fields will comply fully with both World Bank and national guidelines on types of pesticides used, handling procedures and cleaning and disposal of containers and equipment.10. During restructuring of this plant, employment is predicted to decrease from approximately 1870 to about 1070 persons. The current overstaffing of this operation will be addressed through a phased program of retirement and layoffs which has been negotiated with staff and unions. Approximately 400 workers who have reached retirement age will receive a retirement package which includes severance pay, pension, deferred salaries and bonuses and other allowances. An additional nearly 92 workers in the medical facility, formerly operated by the plant, will remain with this facility when it is transferred to local private ownership. Approximately 309 workers are expected to be laid off in a phased program, and the company has prepared detailed plans to provide these displaced workers with severance pay packages, training to acquire new job skills, and assistance in starting their own businesses. In addition, an outplacement and counseling office has been established to assist workers in finding suitable employment in the region. The company will further require its sub-contractors to give first priority to hiring workers down-sized from the company.11. The project is also establishing an outgrower extension service, which will provide independent farmers with genetically-improved plant material, technical assistance and financing. This extension service is expected to create an additional 300 new jobs.12. IFC will monitor ongoing compliance with World Bank environmental, health and safety policies and guidelines during the lifetime of the project by evaluating environmental monitoring reports submitted annually to IFC by the company and by conducting periodic supervision. The company will also provide quarterly reports to IFC on all actions taken in regard to corporate downsizing and the company’s severance/retirement program.13. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that this proposed project will meet World Bank environmental, health and safety policies and guidelines and host country requirements.L:\WPEU\PNEAME\PERU\PARAMONG.ERS09/12/97 11:11 AM