10310 - PT. Sunson Textile

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Environmental Review Summary

Project Number

10310

Company Name

SUNSON TEXTILE MANUFACTURER, PT

Date ERS Disclosed

Sep 11, 2000

Country

Indonesia

Region

East Asia and the Pacific

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Apr 5, 2001
Signed : Sep 4, 2001
Invested : Oct 1, 2001

Sector

Spinning (Yarn, Including Integrated with Fiber Production)

Industry

other

Department

Regional Industry - MAS Asia & Pac

Project Description

This investment entails a financial restructuring for PT Sunson Textile Manufacturer Tbk (the Company), which is an integrated textile producer located in Bandung, West Java, Indonesia. Founded in 1972, the Company is one of the largest cotton spinners in Indonesia. Cotton yarn production constitutes 70% of revenue. Grey fabrics (18%) and finished fabrics (12%) complete the mix of products. Yarn and fabrics are manufactured in three facilities: Karawang, Cijerah, and Rancaekek. Karawang (oldest weaving, dyeing and finishing equipment) was closed in August 2000. Cijerah (older weaving, texturizing, and knitting equipment) is situated on 2.7 hectares, employs approximately 1000, operates on power from the public grid (PLN) plus backup power, and is serviced by Bandung public utilities. Rancaekek (modern spinning, weaving and fabric treatment) is situated on 40 hectares, employs roughly 4000 (including recent expansion to 175,000 spindles), operates on power from PLN plus emergency generators, and is serviced by a combination of Bandung public utilities and Company processes.

Environmental and Social

The sponsor has presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific measures agreed, comply with applicable host country laws and regulations and World Bank/IFC requirements. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. (Further information is provided in the attached documentation.)

1. Liquid effluents and water and steam conservation. Liquid effluents from the Cijerah operation are discharged to city sewerage and treated by the municipality. Rancaekek liquid effluents consisting of sanitary, process and fabric finishing and dyeing wastewater are collected for treatment at the existing wastewater treatment plant. Wastewater management system enhancements, which will ensure compliance with Indonesian regulations and World Bank Group (WBG) guidelines, will include implementation of engineering measures to reduce steam and water use and wastewater generation, installation of hot water recovery systems including pumps and storage tanks and use of hot water in downstream hot water washing systems, installation of screening systems to remove cotton and synthetic fibers from liquid waste streams to reduce to the treatment plant organic load, and elimination of non-biodegradable detergents (ABS) in fabric conditioning. If necessary, additional conservation and treatment system measures will be implemented to ensure compliance with WBG guidelines.

2. Fuels and hazardous chemicals. These include diesel fuel for boilers and standby generators, sodium hydroxide, acetic acid, and resin finish auxiliaries. Materials are stored in clearly labeled containers; storage areas for these materials will be equipped with secondary containment to hold spills and prevent discharges to the environment.

3. Solid waste. Cotton and synthetic wastes from Cijerah and Rancaekek are collected, baled and sold as a byproduct to other operators making lower quality yarn and associated products. Municipal solid waste from Cijerah and Rancaekek is collected and disposed of by the City of Bandung. The Company does not utilize heavy metals-containing dyes. The Company will submit a complete list of dyes and chemical constituents to IFC prior to first disbursement. Wastewater treatment sludge from the Rancaekek treatment plant is dried and given to adjacent farmers as a soil amendment. When dried sludge is not needed for soils it is disposed of in the land disposal facility operated by the city of Bandung.

4. General worker health and safety. A Company subcontractor provides a training program in employee health and safety including fire safety described in nine (9) below, workplace injury avoidance, and utilization of the standard issue uniform (including coveralls, caps, gloves, hearing and eye protection, and dust masks). Company management will implement appropriate measures to ensure compliance with WBG guidelines for cotton dust and noise exposure and 100% utilization of personal protective equipment issued for each employee.

5. Workplace dust concentrations are reduced through pneumatic collectors and ventilation systems. Achievement of acceptable workplace concentrations of cotton dust and noise from spinning and weaving equipment is contingent upon utilization of personal protective equipment issued by the Company for individual employees. Health and safety training classes emphasize the mandatory use of issued personal protective equipment including hearing and eye protection, and dust masks. Supplemental training classes taught by the Company and Indonesian Department of Labor staff will further emphasize the importance of 100 % use of noise and dust protective equipment.

6. The Company’s management team will oversee compliance with WBG environmental and health and safety requirements, establish corrective and proactive programs, train personnel, and monitor compliance.

7. Fire protection and emergency response. Cijerah and Rancaekek employees are trained in basic fire prevention techniques, emergency response and engage in fire drills as part of occupational safety and health training programs. The Company will complete a fire safety engineering survey by an independent engineer within the next two years. The Company will implement needed fire safety modifications described in the engineering report.

8. Employee retrenchment from closure of Karawang facility. The oldest Company plant, Karawang, was closed in August 2000. All employees from this operation were transferred to expanding operations at Rancaekek. Existing transport services for Rancaekek employees were extended to Karawang employees transferred to Rancaekek. Medical and social benefits continued without interruption.

9. The Company will complete the Corrective Action Plan (CAP); submit a complete list of dyes and chemical constituents to IFC; and, complete and submit for IFC’s review and approval an independent, third party audit report confirming compliance with applicable WBG environmental and occupational safety and health guidelines as conditions of first disbursement.

Conclusion & Monitoring

IFC will evaluate the project''s compliance with applicable environmental and social requirements during the lifetime of the project through the following activities.

Review ongoing status of all action items incorporated into the CAP.

Review annual monitoring reports (AMRs) for Cijerah and Rancaekek addressing ongoing performance including at a minimum: new initiatives impacting the environment and proposed corrective measures; significant incidents, potable water quality; stack emissions; quality of liquid effluents discharged to surface water; workplace noise and dust levels; industrial safety, and health; employee training programs; statistics for occupational accidents and illnesses; solid and hazardous waste management; and interactions with local communities.

Evaluate noncompliance with Indonesian regulations and/or applicable WBG Environmental and Occupational Health and Safety guidelines and review sponsor’s analysis of the cause, proposed corrective measure and schedule for implementation.

Conduct periodic site supervision visits.

This Environmental Review Summary (ERS) is prepared and distributed in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Any documentation that is attached to this ERS has been prepared by the project sponsor or in conjunction with the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content. The following ERS is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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