Shanxi International Casting Company

completed

- 4 –International Finance CorporationA Member of the World Bank GroupInternational Finance CorporationA Member of the World Bank GroupEnvironmental Review Summary (ERS)Project Name: CHINA: Shanxi CastingsRegion: AsiaSector: ManufacturingProject No. 009340 1. This project involves an investment in a joint venture company (Shanxi International Casting Co., or SICC), located in the interior province Shanxi, which will be modernized to reach installed capacity of approximately 68,000 tons/year and to produce up to 40,500 tons/year of iron castings for automotive, engine and heavy equipment industries for domestic sales in China and for export to Japan, the U.S. and Europe. The company will occupy and upgrade the foundry and office premises on a portion of a large (62 ha) industrial site established in the 1970s. The project will include the installation of new furnaces and other infrastructure and improvement of molding and casting operations to meet international standards. 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 Technical and Environment Department staff. The following potential environmental, health and safety impacts of the project were analyzed:· Site contamination from previous activities· Air emissions· Wastewater handling and treatment· Solid and hazardous waste handling· Fire safety and emergency response· Social and community issues· General worker health and safetyThe information provided about how these potential impacts are addressed in the development of the project is summarized in the paragraphs that follow.3. Site features and contamination from previous activities. The industrial site is surrounded by largely agricultural areas. A village, which provides housing for most of the work force, is located within two kilometers of the site. The site is bordered on the west by a dry riverbed; flow in the river has been diverted by an upstream dam for irrigation purposes. A Phase II site assessment indicated minor instances of soil contamination throughout the entire industrial site by petroleum products or metals, but none significant enough according to international standards to require remediation. Contamination is generally confined to surface soils and testing indicated no evidence of contamination of groundwater. The company will take measures to prevent any further spillage of petroleum products and implement suitable waste management measures.4. Air emissions. Air emissions from the operations include smoke and fumes from the casting process and dust from sand handling. The foundry is fitted with new electric furnaces and the electrical supply is from the regional grid. Smoke from the casting process is filtered through dust collectors to ensure that emissions will meet World Bank Group guidelines. Ventilation is provided for other sources of fumes in the molding and casting process. Dust collectors are also included in the sand processing area. The industrial site includes a steam plant with four coal-fired, 20-ton boilers, to produce steam for both the industrial site and the nearby village. This plant is equipped with wet scrubbers for particulate removal. Prior to disbursement, SICC will monitor the stack emissions to determine compliance with World Bank Group guidelines, and will implement any corrective measures necessary to achieve compliance, if required. SICC is planning to install diesel generators to provide a backup electrical supply, and these units will meet World Bank Group air emission guidelines.5. Wastewater handling and treatment. There is essentially no process or industrial water generated in the rehabilitated foundry, as water is not used for quenching or washing. Runoff water from the site is channeled through storm sewers to six outfalls to the dry riverbed bordering the plant. Water quality monitoring has indicated that these outfalls are contaminated with sanitary waste, indicating cross-connections with the sanitary waste collection system, which serves the entire site. This latter collection system discharges to the dry riverbed in the northwest corner of the industrial site, adjacent to a largely completed but unused wastewater treatment plant (constructed for a coal gasification facility, now abandoned, on the site). SICC has committed to locate and repair any cross-connections between the sanitary and storm sewers, as well as bring the wastewater treatment plant into operation to ensure adequate treatment of this waste stream. With these changes, all wastewater discharges will meet World Bank Group guidelines. SICC will review the wastewater treatment needs and prepare a plan for implementation of the required measures prior to disbursement, and will implement these measures as part of this project. The steam plant uses water to wash out ash and slag from the bottom of the boilers. Water is also used in the wet scrubbers in this plant. Both of these waste streams are directed to settling ponds, and the clarified water is recycled. Overflow is discharged through surface drainage channels to the river, and monitoring of this effluent stream will be carried out to ensure compliance with World Bank Group guidelines.6. Solid and hazardous waste handling. There is solid waste (construction waste, molding and casting waste) stockpiled in various locations in and around the site, but SICC’s joint venture portion of the site has been largely cleaned up. There is a suitable municipal landfill off-site which accepts these materials and which has sufficient capacity and appears to be well managed. SICC will ensure that all solid wastes from its operations are appropriately handled and disposed of. All chemicals, fuels and lubricants will be properly stored, with secondary containment provided as needed to protect against accidental spills. Workers will be required to use Personal Protective Equipment as appropriate to their tasks and location of work.7. Fire safety and emergency response. The site has a fire station with one fire truck and a fire brigade of 10 persons. Training is provided by the local government. SICC is purchasing a new fire truck for this facility. Standard fire protection measures including hydrants and extinguishers are provided throughout the facilities as required. There is no formal emergency response plan for the site but there are guidelines for accident prevention and response. 8. General worker health and safety. SICC has a comprehensive training program which includes 3 courses for new employees including job safety, and annual training for employees in specific positions. There is a clinic on site with a full time doctor. All workers are required to have an annual medical checkup. Records of accidents are kept and submitted to the appropriate governmental authority. SICC is subject to Caterpillar’s international environmental and occupational health and safety auditing practices and will be managed to Caterpillar’s international standards in this regard.9. Social and community issues. SICC works closely with the local community to provide support for education, public health and cultural affairs. This has included providing educational scholarships and training, and construction of a new church and clinic. SICC is working with the USA-based China Foundation to promote community development in this area. 10. 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 SICC and by conducting periodic supervision. SICC will carry out regular environmental monitoring of all air and water emissions and ambient air quality and noise in the workplace and will provide annual summary reports on environmental quality, accidents and significant environmental incidents in a format specified by IFC.11. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that this proposed project will be implemented and managed to meet World Bank Group environmental, health and safety policies and guidelines and host country requirements.