Arcelik LG Klima

completed

- 2 - April 26, 1999International Finance CorporationA Member of the World Bank GroupInternational Finance CorporationA Member of the World Bank GroupEnvironmental and Social Review Summary (ERS)Project Name Turkey - Arçelik LG KlimaRegion Central and Southern EuropeSector Consumer Goods ManufacturingProject No. 0096111. The project consists in the establishment of a facility near Istanbul, Turkey for manufacture of split and window unit air conditioners for the Turkish and West European markets. Arçelik-LG Klima Sanayi ve Ticaret A.ª. ("Arçelik LG Klima" or "the Company"), a Turkish joint venture, was established in late 1998 by Arçelik A. ª., a member of the Koç Group, (Turkey) and LG Electronics (Korea) to construct and operate the facility. The joint venture will be located in a refurbished building at the Gebze Industrial Zone, and will have an initial annual production capacity of 200,000 air-conditioning units. The air conditioners will be marketed under the LG brand name in Europe and Arçelik, LG-Beko, and Demirdokum brands in Turkey.The machinery and equipment for the Arçelik LG Klima project will be similar to technology currently used to produce household split and window-unit products in Korea by LG Electronics. The Company will produce models for window, single split-unit and multi-split unit use. The new production line is expected to yield substantial savings in consumable materials and promote greater energy efficiency compared to Arçelik’s current air conditioner manufacturing facilities.2. 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. Key project environmental, health and safety issues are the following:· liquid effluent; · air emissions;· handling and storage of hazardous materials;· use of ozone depletion substances (eg CFCs);· solid waste disposal;· fire prevention and emergency response;· workplace health and safety, particularly air quality.The information provided by Arçelik LG Klima about how each of these potential impacts will be addressed in the development of the proposed project is summarized in the paragraphs that follow.3. Mitigation measures to address the key issues above are as follows:Liquid effluents. The Company will construct a wastewater treatment facility and dispose of domestic and industrial effluents to the municipal sewer in compliance with the requirements of local authorities (Kocaeli Governorship Local Environmental Committee). This is consistent with IFC/World Bank guidelines.Air emissions. The Company will use boilers for the production of hot water and steam. The emission values for boiler exhaust will be compliant with local regulations and World Bank guidelines. There will not be external emissions of solvents or refrigerants under normal operations. Handling and storage of hazardous materials. The company will use hazardous materials for use in the process by trained personnel with appropriate personal protection. Hazardous wastes will be sent to hazardous waste disposal and incineration plants in the municipality of Izmit. Prior to final disposal hazardous materials will be stored in special non-leakage bags. Use of ozone depletion substances. The Company will abide by the requirements of the Montreal Protocol. Arçelik LG Klima will initially use a refrigerant of low ozone depletion potential, R-22 (HCFC – 22), and will switch to non-CFC refrigerants by 2003 for equipment to be exported to European Union and by 2005 for its entire production. The Company already has the technology to use non-CFC refrigerants and is capable of making modifications to its production lines as scheduled.Solid waste disposal. Domestic wastes and other non-hazardous wastes will be disposed of at the municipal landfill. Metal, nylon, paper, plastics and Styrofoam wastes will be sold to a subcontractor for recycling.Fire prevention and emergency response. The company has appropriate fire safeguards, emergency fire response and release plans for LPG, solvents and R-22, such as those in use at other Arçelik plants.Occupational health and safety. The Company will adhere to strict local regulations and IFC’s guidelines on this matter, particularly in relation to workplace air quality, safe use of machinery and handling of hazardous materials.4. On the basis of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that the proposed project will be in compliance with Turkish and IFC/World Bank environmental and social requirements.5. IFC will monitor ongoing compliance with IFC/World Bank environmental, health and safety, and social policies and guidelines during the lifetime of the project by evaluating reports submitted annually to IFC by Arçelik LG Klima and by conducting periodic supervision.cc: Messrs./Mmes. Raczynski, Riddle, Armstrong, Middleton, Joyce, Pherwani (CTE), Rosen, Lamba, Koskelo (CSEG), Berckholtz (CLED2) IFC Info Center