11378 - Belisce Expansion

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Environmental Review Summary

Project Number

11378

Company Name

Belisce d.d.

Date ERS Disclosed

Mar 5, 2002

Country

Croatia

Region

Europe

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 28, 2002
Signed : Sep 2, 2002
Invested : Nov 4, 2002

Sector

Pulp Mills

Industry

other

Department

Regional Industry MAS LAC & EUR

Project Description

The project is to support an existing IFC client, Belisce d.d., in its corporate expansion and modernization program aimed at becoming a leading producer of packaging paper and materials in the Balkan region. Belisce is already a major player in its home market - Croatia and in the countries of former Yugoslavia. Most of the modernization of Belisce''s own facilities has already been completed with IFC financing during 1997-98. The proposed project of up to EUR46.5 million (US$40.8 million equivalent) will consist of the following components: (i) further modernizing Belisce''s internal facilities; (ii) acquiring and modernizing Valkarton, a Slovenian corrugated box producer with a subsidiary in FYR Macedonia; and (iii) restructuring of existing debt. IFC''s investment will help Belisce to: (i) show better results in both production and sales; (ii) decrease its sensitivity to downturns of the industry cycles due to diversification of its operations and markets; (iii) enhance its market, improve its distribution systems and increase sales of packaging papers and corrugated board packaging; (iv) improve its regional market position; and (v) balance its corporate debt in terms of maturity and match long-term investments with long-term financing.

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 IFC requirements. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow.

Belisce and Valkarton both have ISO9000 (Quality Management) certification and in addition Valkarton has ISO14001 (Environmental Management) certification. Belisce plans to obtain ISO14001 certification during 2002. With the purchase of Valkarton, Belisce has committed to develop and implement a corporate wide Environmental Management System (EMS) by the end of CY2002 and to achieve complete ISO14001 for all operations by the end of CY2003.

Belisce has recently submitted an Annual Monitoring Report for CY2001 to IFC. Air emissions from the mill are associated with natural gas fired boilers to generate steam and electricity as well as from the chemical preparation (white liquor) plant and from the black liquor boiler. Air pollution control devices have been installed and are operated to international standards. Liquid effluents from the mill are treated by primary sedimentation and two stage biological treatment prior to discharge to the Drava River. Waste sludge from the treatment plant is thickened and dewatered prior to disposal in a sanitary landfill. While the treatment generally works effectively, the concentration of biological and chemical oxygen demand (BOD and COD) in the final liquid effluent exceeds IFC requirements. As a result the company has committed to upgrade the performance of their liquid effluent treatment plant by the end of CY2002 to comply with not only Croatian standards but those of IFC. Where possible wood wastes are briquetted and sold as fuel by a separate company in the Belisce Group. Other solid wastes are sent to a local sanitary landfill. Belisce has a complete management system for the storage and handling of chemicals and other hazardous materials as well as for the disposal of any associated waste materials.

The major raw material of Belisce are wood and wastepaper. Wood is available from domestic sources with much of it coming from the thinning operations in existing managed forests. Since the last (1998) IFC investment Belisce has significantly increased the use of waste paper with about 40% of the total needs of recycled paper supplied from domestic sources. In this regard Belisce operates a wastepaper collection company in Croatia which contributes additional employment and environmental benefit. The earlier IFC investment also resulted in significant reductions in raw material, energy and water use. The installation of the high-efficiency press as part of this project will result in further reductions in the use of raw materials, energy and water.

Belisce has established detailed worker health and safety procedures. The procedures include staff training, testing of equipment, use of personal protective equipment, details of work practices under hazardous conditions, first aid, evacuation and emergency response. Fire detection and fire fighting equipment has been installed and the Belisce Group has it''s own professional fire department, which also provides fire fighting services to the local town. The company has a complete out-patient health clinic. Employees receive annual medical checkups and the occupational health and safety department carries out regular monitoring of the workplace environment (particularly for noise and air quality). Detailed records of the health and safety performance of the company are maintained.

While Valkarton''s operations are ISO14001 certified, there is very limited information on the EHS performance of these plants and their compliance with local and IFC requirements. As such Belisce has committed to complete a full independent EHS audit of the Valkarton operations. If necessary to bring Valkarton''s operations into compliance with local and IFC requirements, a detailed corrective action plan (CAP) will be prepared, together with budgets and schedules. The audit and CAP will be submitted to IFC for review and approval before the end of CY2002.

Conclusion & Monitoring

IFC will evaluate the project''s compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering the ongoing performance of project-specific environmental, health and safety activities. Progress on the development and implementation of the ISO14001 certification will be assessed annually as will progress in the implementation of any IFC approved CAP. Periodic site supervision visits will also be conducted.

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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