Sichuan Leshan Zhen Jing Leather Products Co., Ltd

completed

- 3 - International Finance CorporationA Member of the World Bank GroupInternational Finance CorporationA Member of the World Bank GroupEnvironmental Review Summary (ERS)Project Name CHINA: Zhen Jing Leather Products Company, LimitedRegion AsiaSector ManufacturingProject No. 008375 November 26, 19971. This project involves the upgrading and expansion of an existing tannery and associated garment making facility located on two separate sites in Sichuan Province. The existing tannery processes 1.5 million pigskin hides annually on a 11,000 sq m site in an industrial area within the Xinhua Village, Wutongqiao District, 30 km south of Leshan City. Zhen Jing intends to construct a tannery expansion directly adjacent to and south of the existing site (currently farmland with three rural residential properties) to process an additional 300,000 cow hides annually and produce garment-quality leather. The existing garment factory is located on a 3,600 sq m site in an industrial area with the Leshan Hi-tech Development Zone in Leshan City, and currently processes about one-third of the tanned leather into leather garments. The Company intends to acquire approximately 3.4 hectares of farmland just to the east of the existing garment factory for the garment expansion project.2. This is a Category B project according to IFC’s environmental review procedure because a limited number of specific environmental impacts may result from this project. The review of this project consisted of appraising technical and environmental information submitted by the project sponsor by IFC’s Technical and Environmental Department staff. The following potential environmental, safety and health impacts of the project were analyzed:· pollution prevention and reduction;· air emissions/odor controls;· effluent treatment and discharge;· solid waste and sludge management and disposal;· hazardous materials storage and handling;· workplace health and safety and emergency planning; and· environmental, health and safety management.The sponsor has presented plans or has made commitments to address these issues and demonstrate that the proposed project will comply with the Government of China laws and regulations and applicable World Bank requirements. The information about how these potential impacts are addressed by Zhen Jing is summarized in the paragraphs that follow.3. The Company recognizes that there are significant opportunities for pollution prevention and control associated with the existing tannery facilities, as well as improvements that can be reflected in the expansion project. These include the implementation of chrome recovery to reduce the amount of chrome needed for tanning, the recovery of hair to reduce wastewater pollution loads, and the recovery and recycle of lime wash waters. In addition, by the end of the second year of operation of the expansion, Zhen Jing will have investigated and reduced its current unit water consumption rate from 100 m3/tonne of hide processed to less than 50 m3/tonne. By the end of the third year of operations, the Company will also have investigated the feasibility of replacing organic dyes and paints with non-organic materials.4. The main atmospheric emissions are those arising from the tanneries’ coal-fired boilers. Boiler particulate emissions are controlled by precipitators , and equivalent control technology will be used for the expansion boiler units. Owing to the relatively small size of these units, there are no major concerns regarding the impacts of particulate, sulfur dioxide, or nitrogen oxides emissions, as long as the sponsor operates and maintains the precipitators at their specified operating removal capacities.5. Tannery wastewaters are currently discharged untreated into the Minjiang River, which is reportedly used for drinking, agricultural and industrial purposes. As part of expansion project, Zhen Jing will install a wastewater treatment plant with adequate capacity to treat all liquid wastes from existing and expanded operations. The plant will include both physical/chemical and biological treatment processes to ensure removal of BOD5, COD, suspended solids, oil and grease, sulfides, and chromium to meet World Bank effluent guidelines. Prior to the first loan disbursement, Zhen Jing will have completed the engineering design and specifications for this plant. Prior to the second disbursement, Zhen Jing will have begun construction of the plant. Within one year of receiving the last disbursement, the Company will have completed construction and will be operating the new effluent treatment system in compliance with World Bank guidelines. Employee sanitary wastewaters will also be treated in this system. Garment factory sanitary wastewaters are appropriately discharged to the local municipal sewerage system.6. Coal ash, expired chemicals and empty containers, paper, and scrap leather and hide trimming wastes from the tannery are currently temporarily stored in open areas on the site, and, in some cases, have been indiscriminately dumped in an area along the western site boundary. In addition, chromium-contaminated sludge from a wastewater sump has been regularly removed and buried on farmland to the south of the existing site boundary (and in the area where the expansion plant is to be built). Prior to the first loan disbursement, Zhen Jing will have prepared an acceptable waste management plan containing waste storage and disposal practices that ensure compliance with World Bank guidelines. At a minimum, this should include the engineering design and specifications for an on-site secure storage and/or disposal area (including details on drainage, liners, covers, and operating procedures) for these wastes, as well as the wastewater treatment sludges that will be generated by the new effluent treatment plant. Prior to the second disbursement, Zhen Jing will have begun construction of this new waste storage/disposal facility. Within one year of receiving the last disbursement, the Company will have constructed the waste storage/disposal facility and transferred the buried sludge from the existing farmland disposal area to it.7. The tannery uses large quantities of a wide range of chemicals -- sulfuric acid, sodium dichromate (for chrome tanning solutions), sodium bicarbonate, lime, sodium sulfide, ammonium chloride, and a range of other chemicals, dyes, paints, and detergents. Oils extracted from raw pigskins are also produced and stored. In general, there is no containment for the chemicals stored on site and no /or limited labeling (in Chinese). Prior to the first disbursement, Zhen Jing will prepare a plan for the improvement of chemical storage and handling practices at the facility. Prior to the last disbursement, Zhen Jing will have designed and constructed the necessary improvements, including upgraded secondary containment and labeling.8. Current operations present potential concerns regarding occupational exposures and safety risks. These include employee exposure to chromium compounds during various chromium solution preparation and handling operations; solvent exposure within the leather spraying workshops; occupational noise levels within various hide washing and dyeing workshops; lack of emergency response plans and procedures; inadequate fire fighting facilities; and the general lack of worker training in chemical handling and hazards, emergency response, and fire emergencies. Prior to the first disbursement, Zhen Jing will develop a plan for upgrading the indoor air ventilation systems in the chromium mixing and paint spray areas, as well as the fire protection equipment and facilities. Prior to the last disbursement, Zhen Jing will have implemented those improvements called for in the plan, as well as prepared adequate emergency response plans and procedures and begun conducting regular occupational exposure monitoring.9. Because there is no form of environmental management system in place, Zhen Jing will immediately initiate recruiting for a full-time environmental engineer to supervise and be responsible for the environmental, health, and safety program at the sites. Six months after the first disbursement, this environmental manager/engineer will have been hired and will have developed the written environmental policies and procedures and the overall environmental monitoring program to be applied at the tannery and garment making facilities going forward.10. Zhen Jing has agreed to implement an Environmental Action Plan (EAP) which identifies a series of specific capital and operating improvements which must be included in the project, the most significant of which are discussed in this ERS. The Investment Agreement will require compliance with the action item and schedule elements of this EAP as a condition of IFC loan disbursements.11. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that Zhen Jing’s proposed project will meet World Bank environmental, health and safety policies and guidelines and the Government of China’s requirements once they have met the conditions of the EAP.12. 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 Zhen Jing and by conducting periodic site reviews during project supervision. In addition and during the period following IFC’s investments, Zhen Jing has committed to provide IFC with periodic evidence of complying with above described schedule for environmental, health, and safety improvements.L:\WPEU\STEPHEN\ERS\ZHEN.ERSDecember 2, 1997 1:04 PM