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 and environmental and social information submitted by the project sponsor. The following potential environment, health and safety and social impacts of the projects were analyzed. - emissions to air; - emissions to water; - noise; - energy efficiency; - handling of solid wastes; - hazardous materials management; - workplace conditions; - general environmental and health and safety management. - fire safety and emergency response;

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. - Emissions to air The main air emissions are associated with the operation of the oil-fired steam boilers. Low sulfur oil is used as fuel and consequently SO2 emissions are well within IFC and Chinese requirements. NOx emissions slightly exceed requirements, though burner adjustment is expected to correct this figure. Particulate emissions will be measured and burners adjusted to reduce emissions if required. Carbon black is handled in bags, and the conveyor and mixing systems are enclosed. The company will investigate the possibility to buy carbon black in sealed containers, to limit dust arisings. Dust emissions from the mixing process are collected in a bag filter system and returned to subsequent mixer batches. In the expanded project, a wet scrubber will be added after the filtration stage to ensure additional particulates removal. Fumes from hot rubber and curing processes are collected in hoods and ducted from the building. Levels of VOCs in these exhausts have been measured and are well within Chinese and IFC requirements. - Emissions to water The existing factory has a waste water treatment plant. Effluent is monitored weekly; the parameters monitored are within IFC and local minimum requirements. Limited additional monitoring (of coliforms and metals) will be added. Effluent includes treated sanitary waste water; if coliform monitoring shows this to be necessary then existing disinfection equipment will be brought into service to ensure that coliform count of waste water meets IFC requirements. The effluent treatment system will be expanded in recognition of the increased effluent load which will result from expansion. Treated effluent from the expanded plant will meet IFC and local requirements. Process water use is limited to blowdown from closed cooling circuits and the steam boiler. Some water saving initiatives have been adopted by the company, and this work will be extended where cost-effective. - Noise Factory expansion has been designed with noise mitigation in mind: in some instances low-noise machinery has been specified, and in others, silencers and sound-deadening will be adopted. Noise has been measured at the boundary of the existing property, and meets Chinese and IFC requirements. There are residential areas around the factory, but calculation shows that noise levels at these will be well within acceptable limits. - Energy efficiency The company operates with high plant loadings and achieves excellent levels of energy efficiency, with lower specific energy consumption than in many tire plants in the world. Energy efficiency should improve further as capacity and output increase. Good energy consumption ratios are supported by metering of electricity used by production area, and several heat-saving projects have been implemented. - Handling of solid wastes NKT generates a variety of wastes including tire waste, packaging materials, waste oils, waste water treatment plant sludge and domestic solid wastes. Wastes are appropriately segregated and managed in as described in the following section. Tire and rubber waste are minimized by good manufacturing practices which result in high yields. Waste tires represent around 0.5% of output by weight; they are sold for reprocessing and subsequent use in road construction. Dust and uncured rubber are reused in the manufacturing process. Steel scrap is sold for recycling. Wooden packaging materials are returned to the raw material manufacturer, while plastic and card containers are sold for recycling. Waste oils are collected by a specialist treatment company for reprocessing and re-use. Water treatment plant sludge and general garbage are accepted by the Nanjing Environmental Sanitation Office for material recovery and subsequent disposal at a sanitary landfill. - Hazardous materials management; The company stores large volumes of gasoline, heavy oil (boiler fuel), sodium hydroxide and hydrochloric acid on site. NKT will prepare a Hazardous Materials Management Program for these materials, which will include a Risk Management Plan, in accordance with IFC’s Hazardous Materials guidelines and Good Practice Manual and local requirements. Gasoline is stored in an underground tank, smoking and inflammable materials are prohibited in the vicinity of the tank and a fire protection system is provided. The tank meets Chinese corrosion resistance standards, but in addition an inventory is kept of stock levels and fuel added and dispensed, to monitor the store for leakage. The boiler fuel oil tanks are above ground, and are constructed on a seep-proof base and have a secondary containment wall. Other tanks are above ground. Secondary containment walls will be built around these tanks. - Workplace conditions; Regular monitoring is carried out of workplace conditions. Dust, other air contaminants and noise levels are at acceptably low levels. The factory is well ventilated, preventing development of excessively high temperatures. There is a program of continuous improvement of the workplace, with the objective to make one improvement monthly. - General environmental and health and safety management. The Manager of the Safety and Environmental Team, who reports to the company’s deputy General Manager has day to day responsibility for environmental and safety management, and there are a number of operating procedures which make reference to environmental management. The team has established quantitative targets for emissions to air and water, and for workplace air quality, and is working to develop its environmental management procedures with the objective to achieve ISO 14001 certification by September 2005. The management practices required for this are already familiar to the company, since it has achieved certification to both ISO 9002 the automotive sector’s QS 9000 quality standards. Accident statistics are kept which show that the company has a very low rate of accidents. This results from extensive, systematic and well established health and safety management procedures, which include quantitative accident targets, and a variety of safety training programs varying from safety induction training for new employees to regular briefings on safety and hazard identification and avoidance provided by line management staff and members of the Safety and Environmental Team. This is supplemented by special training for those engaged in potentially hazardous activities (such as maintenance staff) and annual external training for safety staff. NKT will seek certification of the safety management system to OHSAS 18001 or equivalent. New employees undergo health checks and thereafter annual check-ups are provided. - Fire safety and emergency response Factory building design incorporates compartmentation gates to resist the spread of fire through the building, and buildings are constructed from fire resistant materials. Use of inflammable materials is actively managed by qualified personnel; and dedicated training is given to those involved in “special operations” which includes hot working. All employees have fire prevention awareness training and receive quarterly training in the use of fire extinguishers. Management staff have monthly training in the use of fire control tools, how to combat fire, fire awareness and emergency response, and make daily housekeeping checks. Additionally a number of fire fighters participate in training organized by the city’s fire control department. An upgraded automatic fire/smoke/high temperature detection system is currently being installed. A fire pump and hydrant system serves the main factory building. Foam extinguishing and steam smothering systems are also installed. The operation of all fire fighting systems is checked regularly, and regular fire drills take place. Protocols have been established for communication with local authorities in the event of a fire, chemical spill or other emergencies.

The following supporting documents provide further details of environmental and/or social issues. Environmental Corrective Action Plan (CAP) dated September 11, 2003.

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: - the status of implementation of any measures contained in the Environmental Action Plan and - ongoing performance of project-specific environmental, health and safety and social activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.