IFC requires that this document is made available through the World Bank InfoShop and to the locally affected community no less than 30 days prior to project consideration by the IFC Board of Directors. The Summary of Project Information (SPI) also provides details of where the ERS has been made available to the locally affected community. The SPI must be sent to the World Bank InfoShop no less than 30 days prior to project consideration by the IFC Board of Directors.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental information submitted by the project sponsor. The following potential environment, health and safety impacts of the projects were analyzed. - Existing operations and operating standards; - Air emissions; - Solid waste management; - Liquid effluents; - Occupational health and safety; - Energy efficiency; - Consequences of new projects; - Employment; and - Management capability and corporate coordination.

The sponsor has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. - Lecico has three existing operations - the initial operation located in Lebanon and two new plants located in Egypt. All three operations were visited, appraised and found in full compliance with existing good practice for sanitary ware and tile production. Due to its association with Sanitec and its reliance on the European market the production facilities are designed to meet European production standards both with respect to quality and environmental performance. All plants are located within dedicated light industrial areas. The raw materials for the productions are sourced as international commodities, while the kiln operations in all cases are based on gas, and auxiliary operations in Lebanon are operated on diesel/kerosene. - Air emissions from the productions can be divided into two types; dry handling of raw material resulting in fugitive dust, and emissions from kiln operations. The fugitive dust emissions from the dry handling of raw materials are controlled to the immediate handling area in which employees are required to wear dust masks. The kiln operations are natural gas or LPG-gas based in Egypt and kerosene/diesel oil based in Lebanon, and this result in the lowest possible sulfur dioxide and particulate emissions. Further NOx emissions are limited by the use of low-NOx burners, which due to the flame characteristics limit the formation of NOx during the combustion. Diesel fuel is used for auxiliary operations in Lebanon. - Solid waste from the production is minimal and limited to clay residues, plaster, and inert ceramic material, which can either be recycled as filling in products or be deposited at an authorized landfill site. - Liquid effluents are either recycled (Khorshid site in Egypt) or discharged to municipal wastewater treatment plants for treatment before discharge. - Lecico runs periodic training courses for all employees covering OH&S and fire safety. The accident frequencies for the three operations have over the years 2000 to 2002 been reduced by more than 40% based on LTA/MMH (Lost-Time-Accident/Million-Man-Hours). While the average frequency at the end of 2002 is acceptable at 9.4 LTA/MMH it leaves room for improvements and Lecico will, in corporation with IFC, continue to work on initiatives to improve the safety performance. - Energy consumption is an essential operational cost in sanitary ware and ceramic tile production. Lecico has, therefore, over the years carried out several initiatives for lowering the energy consumption in the kilns. In this way the Lebanese plant, which has operated for the longest period in time, has reduced its fuel consumption by 30% over a 15-year-period. - IFC loan is partly to finance an expansion and partly to refinance the existing debt of the Lebanese subsidiary. The expansion project will be located in Egypt in connection with the existing operations and can all be hosted within the current sites. Thus, no land take or resettlement will be needed, and the facilities will directly benefit from the existing infrastructure. - Lecico currently has around 500 employees in Lebanon and 2900 employees in Egypt. The majority of these are factory workers, and the new projects at Borg el Arab are expected to require an additional 500 new factory workers. - Lecico has a significant management capacity. ISO 9001, quality management, certification has been achieved for all operations, and implementation of ISO 14001, environmental management, is in the planning stage. An Environmental and Community Affairs office located at the Borg El Arab facility, headed by Mr. Mohamed Sorour, will carry out the corporate coordination of EMS issues.

This ERS contains the full environmental and social documentation prepared for the project.

Accordingly, IFC concludes that the proposed project will meet the applicable World Bank/IFC environment and social policies and the environmental, health and safety guidelines upon successful implementation of the agreed mitigation measures.

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 ongoing performance of project-specific environmental, health and safety activities. Periodic site supervision visits will also be conducted.