Celhart Pulp and Paper Mill

completed

- 4 - International Finance CorporationA Member of the World Bank GroupEnvironmental Review Summary (ERS)Project Name BULGARIA: CelhartRegion EuropeSector Timber, Pulp and PaperProject No. 0089691. This project involves the rehabilitation and modernization of an integrated pulp and paper manufacturer located in Stamboliyski, 100 km southeast of Sofia, Bulgaria. The mill produces semi-chemical and unbleached kraft pulp which is further processed into fluting and sack paper, and made into paper sacks. No bleaching of pulp is carried out. The project will include the modernization of existing machinery and improvements in paper production and wood handling. Total project cost is estimated at US$38 million, of which US$4 million will be direct investment in environmental protection. This is a category B project according to IFC''s environmental review procedure because a limited number of specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.2. Key environmental and occupational health and safety issues that were of potential concern during IFC’s environmental review of this project included: · air, water and solid waste emissions and management;· water and land contamination from prior activities;· forest management and harvesting practices and sustainability of forests and forest communities;· handling of hazardous materials;· fire protection and emergency response; and· general worker health and safety.3. The following is a summary of IFC’s findings during its environmental review of the project. Primary sources of information included information provided by the project sponsor, including a consultant’s environmental audit report, and observations during a site visit by IFC’s Technical and Environment Department.4. Air emissions from this plant are variable, and while generally acceptable do show occasional exceedances of World Bank Group guidelines for some parameters (SO2 and particulates). Plant upgrading will address these issues and ensure that the operation is in full compliance. The current major source of air emissions is the Kraft mill recovery boiler, from which SO2 emissions in particular exceed World Bank Group guidelines. The sponsor is modernizing this facility as part of this project, and has committed to rebuilding the evaporator, which will significantly reduce SO2 emissions and will also save 15% in energy costs. Minor odors from the pulping process are present around the plant, but the levels are not currently of concern. Future upgrading at the plant will include improvement of collection of non-condensable odiferous gases and other condensates, to further reduce odor generation.5. The power boilers are fueled with natural gas and will meet the World Bank Group guidelines without any additional pollution control technology.6. Process wastewater receives full secondary treatment in a large, well-operated wastewater treatment plant. Sanitary sewage from worker housing is also treated in this facility. The effluent meets World Bank Group guidelines, but exceeds Bulgarian discharge regulations for one parameter, Chemical Oxygen Demand (COD), which is set at a level considerably more stringent than the World Bank Group limit. Celhart has a small semi-chemical pulp plant, and the major emission from this plant is the cooking liquor, which is not recovered but is discharged to the wastewater treatment plant. Celhart will either upgrade or decommission this plant, which will result in a significant decrease in load on the treatment plant, and in particular a decrease in COD which is then expected to meet the Bulgarian standard. This and other improvements in the plant are expected to conserve water and reduce loading which will further improve effluent quality.7. The treated effluent is discharged to the Maritsa River, which is monitored by the state regulatory agency. At present, overflow from the lime sludge settling ponds, which is high in pH, is discharged directly to the river through a separate outfall. As part of this project, this effluent will be redirected to the wastewater treatment plant.8. Water supply for Celhart is from groundwater which is abundant in this area. Hydrogeological studies of past black liquor spills have indicated minor contamination of surface soil in some areas, but no significant impact on groundwater quality. Water quality monitoring is currently carried out regularly, but the existing lab needs to be upgraded and equipment improved. The sponsor will incorporate substantial improvement in environmental monitoring equipment, for both air and water, as part of the upgrade of this plant.9. Solid wastes include bark, recycled paper contaminants, lime sludge and water treatment plant sludges, as well as general garbage. Bark is currently deposited in a landfill, but will be used in the future as fuel in a new bark boiler which will be installed. Recycled paper residues are landfilled. Lime sludge is currently deposited in a settling lagoon to the south of the plant, but it is anticipated that, with the planned upgrade under this project, the lime will be recovered and the existing lime sludge deposits will be recycled into the process. Activated sludge from the wastewater treatment plant is currently deposited in lagoons south of the plant, where this material is available for use by local farmers as a soil amendment. Fiber sludge from the primary clarifier in the wastewater treatment plant is dried and used as fertilizer, with the excess being discharged to the landfill. The sponsor is looking for additional uses for this material, and also expects to use some as fuel for the new bark boiler. General garbage is deposited in a separate municipal landfill.10. Asbestos has been used extensively throughout this facility for insulation of boilers, tanks and piping. Before plant upgrading or demolition of unused buildings, the sponsor will be required to carry out a study of the distribution of asbestos and obtain direction on its safe removal and disposal. Other wastes include spent batteries, which are recycled by a state-owned company.11. Overall, the existing plant is in fair condition for its age. With some exceptions, general housekeeping is adequate to good. The project will include improvements in the spill collection system. Some scrap metal has accumulated on the plant site which the sponsor will ensure is recycled.12. Health and safety measures throughout the facility have been neglected in the past and the sponsor has committed to substantial upgrading to improve safety equipment, install protection on machinery, improve electrical installations and similar work. A new health and safety manager has been appointed, and the sponsor will prepare a plan to address health and safety issues prior to first disbursement. A comprehensive training program in health and safety will be implemented. Fire protection and safety has similarly received little attention. Fire protection throughout the facilities is poor, with appropriate equipment being inoperable or totally lacking in most buildings. The sponsor is aware of these needs and will as a high priority develop and implement plans to install appropriate sensors, alarms, extinguishers, hydrants, hose reels and other protective equipment throughout the facility. The plant does have an existing fire truck and a fire brigade, and specialized training is provided for these staff. The planned improvements will significantly improve the environmental and health and safety conditions of this plant and will contribute to its transformation into a modern operation.13. The modernization of the plant will take place in the existing facility and there will not be any need for additional land acquisition. Therefore, there is no physical relocation nor resettlement involved in the project. Celhart expects to undergo moderate downsizing in future years in order to improve productivity. Any downsizing is negotiated with the worker’s unions. Downsizing in 1998 occurred largely through retirement. Celhart is also developing plans to assist workers who may be laid off in the future through development of alternate skills.14. Celhart provides a variety of social services to its employees, including health care, a sports facility and educational programs to encourage progress towards university degrees as well as occupational training. Celhart also provides financial and other support for the town’s cultural center and library.15. Wood supply for the mill is produced from forests in the region which are intensively managed for sustainability and multiple use by the national Forest Service. Maintenance of biodiversity is an important principle, and replanting is oriented toward species mixtures characteristic of natural forests. Regulations for replanting, harvesting and forest management are in place. Pest control focuses on biological measures, with synthetic chemicals used only as a last resort. Recently some forest areas are being returned to private ownership, but these will continue to be managed under the regulations specified by the Forest Service.16. IFC will monitor ongoing compliance with World Bank Group environmental, health and safety policies and guidelines during the lifetime of the project by evaluating reports submitted annually to IFC by the sponsor and by conducting periodic supervision.17. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that this proposed project will meet the World Bank Group’s environmental, health and safety policies and guidelines and host country requirements.L:\wpeu\PNEAME\Bulgaria\celhart.ers.docJune 18, 1998 11:01 AM