Horizon Pulp & Paper

completed

- 3 - May 12, 1997International Finance CorporationA Member of the World Bank GroupInternational Finance CorporationA Member of the World Bank GroupEnvironmental Review Summary (ERS)Project Name Estonia-Horizon Pulp and PaperRegion Eastern EuropeSector Paper ProductsProject No. 008128 1. This project is the rehabilitation and modernization of Horizon Pulp and Paper Company (Horizon), the only large pulp and paper company in Estonia. The project cost is estimated to be up to US$20.31 million. Horizon is currently producing approximately 2,100 tons per month of sack paper. The project will aim to improve the competitiveness and profitability of the existing integrated sack paper mill (production will increase to 3,000 tons per month) while at the same time laying the foundation for the long term development of Horizon by introducing the production of tissue products. The project includes a number environmental upgrades. IFC has been requested to provide debt financing for up to US$6 million, which accounts for 29.5 per cent of the total project cost.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. The environmental review of this project consisted of information submitted by the project sponsor and the technical review completed by IFC’s Technical and Environment Division staff. The following potential environmental, health and safety impacts of this project were analyzed:· forest management and sustainability of wood supply· effluent discharges· air emissions and· solid waste disposalThe information provided about how these potential impacts would be addressed in the project is summarized in the paragraphs that follow.3. Forest management policy in Estonia is well defined. The National Forest Board is responsible for forest management. Its Commercial Center focuses on marketing of wood resources from the predominantly state owned forests and its Forest Management Planning Center in responsible for inventory and planning. The country has been divided into 100 forest districts and a detailed individual harvesting and management plan is prepared for each district. According to the Forest Management Planning Center harvesting plans, at least 1.2 million m3 of soft wood is available for fiber wood annually from Estonian forests. Horizon the country’s only pulp and paper mill will be satisfied with 15 percent of this annual volume.4. Horizon’s wastewater treatment process consist of mechanical and biological plants. Effluent from the biological treatment plant is summarized here:ParameterHPPEstonian RequirementsWB GuidelineTSS (mg/l)8.31550BOD (mg/l)9.41550COD (mg/l)100--250Phenols (mg/l)0.0010.1pH7.36-96-9These figures indicate that Horizon’s wastewater treatment plant is in good working order.5. The major issue regarding existing air emission is the marginally higher level of hydrogen sulphide, methyl merceptane and odor caused by reduced sulfur compounds from pulp when the plant is running at its full capacity of 45,000 MT/annum. This emission will be substantially lower as the plant would be working at 30,000 MT/annum. However, to address these issues the existing cascade evaporator will be refurbished to improve its performance. By keeping better control on cooling water temperature of barometric condensers objectionable emissions will be controlled. In the long run when full capacity of the mill would be utilized cascade evaporators will be replaced by a new concentrator. In addition Horizon has recently converted its power boiler from oil to gas thereby reducing SO2 and particulate emission.6. Historically, lime sludge ash has been disposed of at a landfill in the vicinity of the mill. Water from this landfill has routinely overflowed to a nearby river and Horizon has been paying about US$5,000/month in penalties to the Ministry of Environment. The project will channel this overflow from the landfill to the plants wastewater treatment plant. This, together with modifications to the aeration system and in the Vaco filter will significantly improve effluent quality of the landfill overflow as shown here: ParameterCurrentAfter InvestmentWB GuidelineTSS (mg/l)150below 1550BOD (mg/l)75below 15l50PH (mg/l)9.8below 86--9COD (mg/l)about 100250Phenols (volatile) (mg/l)0.8below 0.1--7. IFC will monitor ongoing compliance with World Bank environmental, health and safety policies and guidelines during the lifetime of the project by evaluating reports submitted annually to IFC by Horizon Pulp and Paper Company and by conducting regular supervision and periodic site visits.8. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that Horizon Pulp and Paper’s proposed project will meet World Bank environmental, health and safety policies and guidelines and host country requirements.P:\CTEEU\HORIZON.ERSMay 12, 1997 2:06 PM