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 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 and social 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, environmental and social information submitted by FKCF as well as visits to existing limestone and clay quarries, the proposed cement plant site, and existing bagging operations. The following potential environment, health and safety and social impacts of the projects were analyzed: - Site location and suitability for the project; - Project documentation and local Environmental Impact Assessment (EIA) process; - Sustainability of raw material supply; - Quarry rehabilitation plans; - Air emissions and water management; - Occupational health and safety; and - Local social impacts.

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. The original FKCF production plant (based on wet technology) and the limestone and clay quarries were established in 1965 near the small town of Fushe Kruje, about 35 kilometers north of Tirana in an area that is rural in nature. The FKCF facilities are surrounded by small farming operations including grazing of cattle, sheep, and goats and, with the exception of the plant site, limestone and clay quarries, the land still appears to be relatively undisturbed from its natural state. The FKCF plant was privatized in 2000, after years of technical, as well as health and safety deterioration, and the production of clinker in the wet kiln had ceased. The production of cement by grinding of imported clinker has continued and is today the only activity at the plant. The project is to revitalize the cement production at Fushe Kruje by removing the old wet kiln and installing a new modern dry technology cement kiln and upgrading the milling and bagging facilities. The project will at the same time improve the quality of the products from FKCF. IFC has carried out its own review, but the new project is also subject to preparation of an Environmental Impact Assessment (EIA) in accordance with Albanian standards. Any recommendations or corrective actions as an outcome of this EIA work will be implemented in the project, as appropriate, and agreed with the local authorities. FKCF will provide a translation of the Albanian EIA document to IFC for review once it becomes available. The limestone quarry has reserves estimated at 83 years of use and the current clay quarry has an estimated 18 year reserve. No new quarries are therefore needed in the near future. The current quarries will have quarry usage and reclamation plans prepared, including plans for removal and holding of overburden until reclamation can be carried out. The usage and reclamation plan will also include actions to be taken to ensure appropriate land profiles at the end of the reclamation process. Further, ceasing of any potential casual grazing currently taking place on the quarry land, as well as the greenfield portion of the production plant, will be managed to avoid tension with local villagers. The new dry kiln clinker production plant will use technology known to IFC from a previous project, which fully complies with all World Bank guidelines, including dust, SO2, and NOx emissions, hence this project will also fully comply and no adverse impacts are expected. The kiln operation will, as was the case with the former clinker production, be based on coal and pet coke, which are both fuel sources with relatively high CO2 emissions. The change from wet to dry process will bring the energy consumption for each unit of clinker down by roughly 50% and the CO2 emission per ton cement will therefore be significantly lower than in the previous operation. The cement milling and bagging facilities will also be upgraded and renewed to achieve these standards, thereby eliminating current fugitive emission problems. While the plant is based on dry technology there will be a need for both domestic (canteen/toilets/etc.) water supply and cooling water for some units. To meet these demands the plant will have its own water supply and treatment systems ensuring full compliance with the local regulations and World Bank guidelines for effluents. Any solid waste generated will be disposed of using licensed handlers. Occupational Health and Safety (OH&S) standards have not been satisfactory in the past and FKCF will embark on an aggressive action plan to reverse the historic lack of attention to OH&S. A training program for workplace safety and fire response will be implemented by the end of 2004, and OH&S performance standards for workers, supervisors, and managers will be developed and enforced. To further this culture change at the FKCF plant the Company also intends to obtain ISO 9000 (Quality Assurance) and ISO 14001 (Environmental Management System) certifications for its operations. Existing operations employ 320 workers and represent the principal means of employment in Fushe Kruje. All workers are paid wages well above the minimum required under Albanian law. During the construction phase, additional jobs will be available for the local community.

This ERS contains the full environmental and social documentation prepared for public disclosure 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 and social activities. Periodic site supervision visits will also be conducted.