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 Environmental and Social Review Procedure. The review of this project consisted of appraising technical, environmental, and social information submitted by the project sponsor and site visits by Environment and Social Development Department staff. Environmental, social, and health and safety issues associated with this project include: Air emissions; Water use and waste water management; Quarry exploitation and reclamation programs; Solid waste management and disposal; Fire protection and emergency response; Occupational health and safety; Logistics and transport; and Community relations and development initiatives.

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 of the host country laws and regulations and the World Bank (WB) and 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 and in the Corrective Action Plan as illustrated in Table 1. - Calidra de Oriente – Puebla This plant, located in an industrial area in Acajete, Puebla and with a quarry located next to the industrial site will increase its current installed calcining and hydrating capacity. All new equipment to be installed at the plant (i.e., kilns, silo, hydrators, etc.) will have the appropriate air pollution control systems to ensure emissions below the applicable 50 mg/Nm3 WB requirement. SOx as well as NOx emissions will be also in compliance with the applicable WB requirements. Water for the project, which will be obtained from Calidra’s own well, will double its current consumption. Calidra obtained the needed local permits which confirmed that there will not be negative groundwater impacts as a result of additional water extraction. Domestic liquid effluents, which are the only generated at the plant, will be further controlled to ensure compliance with the applicable WB guidelines. Liquid effluent emissions will be compliant by project completion. Since there will be an increase in production the amount of trucks used for transport of raw materials and products will significantly increase. Thus, Calidra has began looking for alternatives routes to access the plant from the highway and has committed to build an alternative access road to avoid the crossing of raw materials and final products delivery trucks through the main road of the Acajate nearby community by mid 2005. The preliminary alternatives study and the basic plan to build this alternative road will be presented to IFC by December 2003 and no later than the first disbursement. Calidra de Oriente has began its quarry reforestation program in the quarry, in response to the agreements reached with the local authorities. As part of the project, Calidra will paved the plant premises to further reduce fugitive emissions and enhance the housekeeping of the plant. The plant health and safety programs aiming to minimize workplace accidents/incidents will continue to be implemented in the industrial site as well as in the quarry, and personal protection equipment will continue to be provided and required to be used by all employees. The plant will maintain and improve, as needed, the fire prevention measures in place. The environmental and safety personnel will continue responding for the sound operations of the plant. Cal Química I, and Cal Química II - San Luis Potosí As part of the Project, Cal Química I and Cal Química II will closed down its hydration operations. Cal Química I site will be converted into a distribution center and Cal Química II premises will be closed down. These closing will significantly upgrade the environmental conditions of the nearby communities. Calidra bought, through a willing buyer-willing seller transaction, a 3.5 ha to built a new 1 ha hydration plant which comprised of a hydrator, a packing unit, silos for raw material and final product, and a palletizer. No relocation of economical displacement took place on the acquired site and unlikely the existing plants, the new site is located distant from communities. The nearest community is approximately I km from the site premises. The site has approximately 1.5 ha of native forest which will be fully preserved. The construction will take place in the already intervened portion of the lot. Lime, which will continue to be produced in the two kilns placed in the quarry, will be transported by truck to a new hydration plant. All equipment to be installed at the new plant will have the appropriate air pollution control systems to ensure emissions below the applicable 50 mg/Nm3 WB requirement. Water for the project will be obtained from Calidra’s own well which will be located on premises. Calidra will obtain the needed local permits confirming that there will not be negative groundwater impacts as a result of water extraction. Copies of these permits will be furnished to IFC as soon as received but prior to beginning construction of the new plant. Domestic liquid effluents from existing as well as new operations will be treated to ensure compliance with the applicable WB guidelines. Liquid effluent emissions will be compliant by project completion. As a result of the project, there will be retrenchment of personnel at this plant. And in this, as in any other Calidra plant where personnel reduction will take place, Calidra will offer, as first option, voluntary retirement. For those for which such option does not apply or not consider such alternative, Calidra will offer a compensation package as per Mexican requirements. The environmental impact statement for this project is being developed and it is anticipated to be completed by July 2004. As soon as the study is complete but not later than the beginning of the construction, Calidra will send a satisfactory copy to IFC. For the new plant as in the existing operations (quarry and calcination), Calidra will continue to maintain the areas clean, and well signaled. The health and safety programs aiming to minimize workplace accidents/incidents will continue to be implemented, and personal protection equipment will continue to be provided and required to be used by the employees. Calidra will maintain and improve, as needed, the fire prevention measures in place. The environmental and safety personnel will continue responding for the sound operations of the plant. For the quarry, Calidra will maintain and improve, as needed, the quarry reforestation programs, in response to the agreements reached with the local authorities. Cal de Apasco (Unit 1) This plant, which produces lime for the construction industry and for other of Calidra’s plants, is located in Apaxco, State of Mexico in an industrial area. As part of the project, this plant will increase its storage capacity, within its existing premises, by installing two 1,000 tons silos each for storage of lime and hydrated lime respectively. With these new silos, the plant will: - eliminate unnecessary kiln stops and thus reduce fuel consumption - eliminate the manual handling of materials thus eliminating the generation of fugitive emissions - significantly reduce product losses, and - improve the overall air quality conditions of the nearby areas. Not only the silos but also all areas where there is transfer of materials and in packing area will have the appropriate air pollution control devices to ensure compliance with the applicable 50 mg/Nm3 WB stack particulate emissions requirement. All kilns at this plant will be able to operate either with fuel oil or natural gas, the existing fuel, and its installations will have all needed safety measures to prevent possibility of accidental spills or leaks. In addition, the domestic liquid effluents will be treated to ensure compliance with the applicable WB guidelines by project completion. As part of the project, Calidra will continue - maintaining the plant clean and well signaled, - implementing the needed health and safety programs aiming to minimize workplace accidents/incidents, - providing personal protection equipment and requesting its use to the employees, - having environmental and safety personnel responding for the sound operations of the plant. The plant will also maintain and enhance the fire prevention measures in place. Specifically, as part of this project, it will install a fire prevention system. Cal de Apasco ( Unit 3) As part of the Project, Cal de Apasco Unit 3 will close down its calcining operations (6 single shaft kilns) and the area potentially recovered/reforested. These closing will significantly upgrade the environmental conditions of the nearby communities. Fábrica de Cal y Materiales de Construcción Purísima, SA de CV The plant is located in Yautepec, 28 km distant from Cuernavaca in the State of Morelos. The current site; which is surrounded by sugar cane fields, town houses and a new industrial area to be soon officially be converted in an industrial park, is comprised of: - a lime production plant with a 50 Ton per day kiln and the 100 hp boiler, - a quarry from which lime as well as construction aggregates are exploited, and a - hydration plant. With the proposed project, Calidra will: - definitely shut down the existing kiln and boiler, - extract only aggregate material (i.e., material not suitable for lime production), - build a state of the art hydration plant, all in an adjacent area, bought for that purpose, at approximately 200m from the actual plant, and - improve the access road which currently is in a very poor condition. The existing site will be restored to build a green area which eventually could be also used by the community nearby. The quarry safety and operational conditions will be upgraded as needed as per the corporate quarry reclamation plan to be prepared as part of this project. The land acquired for the new project was bought through a willing “buy-sell” agreement. The area which was initially used for agricultural purposes (sugar cane) has been redefined by the local authorities for industrial use. Calidra has already obtained a preliminary permit for industrial land use. As soon as, Calidra obtains its final permit but prior to initiating construction, Calidra will present copy of this permit to IFC. Approximately 70% of the new area will be used for the plant construction and the remaining 30% will be used for green areas. The environmental impact statement for this project is being developed and it is anticipated to be completed by November 30, 2003. As soon as the study is complete but not later than the beginning of the construction , Calidra will send a copy to IFC. As part of the project, the new systems and material handling equipment will have all needed air pollution control devices to ensure that particulate matter either fugitive or from the stacks is not released to the atmosphere beyond the applicable 50 mg/Nm3 WB guidelines. The proposed project will: - improve the conditions of the nearby communities since it will eliminate the dust emissions generated at the existing kiln and boiler as well as the fugitive emissions from the existing operations, - reduce product losses and - reduce waste paper from ripped paper bags during the packing operation. The water for the project will be obtained from a well located within the premises of the new plant. The appropriate permit will be obtained and submitted to IFC as soon as ready but not later than the beginning of the construction of the plant. The project will also include a wastewater system so that the new facilities meets WB and local regulations. The proposed project is being designed to ensure that: - the site will be maintained clean, and well signaled, - the health and safety programs to be implemented will minimize workplace accidents/incidents, - personal protection equipment will be provided and required to be used by the employees - all needed fire prevention measures are in place, and - the environmental and safety personnel will respond for the sound operations of the plant. As a result of the project there will be retrenchment of personnel at this plant. And in this, as in any other Calidra plants where personnel reduction will take place, Calidra will offer, as first option, voluntary retirement. For those for which such option does not apply or do not consider such alternative, Calidra will offer a compensation package as per Mexican requirements. Caleras de la Laguna - Torreón A 20 tph ready mix mortar plant will be built in the same site as the actual lime plant in Torreón. All new equipment to be installed at the plant will have the appropriate air pollution control systems to ensure emissions below the applicable 50 mg/Nm3 WB requirement. SOx as well as NOx emissions will be also in compliance with the applicable WB requirements. Current water requirements at this plant will not be altered since the new ready mix mortar plant does not require water to operate. The plant will continue generating only domestic liquid effluents which will be handled appropriately to ensure compliance with the applicable WB guidelines. For this project also, the quarry will continue to be exploited and the needed reclamation actions, as per local requirements, will be implemented. The environmental impact statement for this project is being developed and it is anticipated to be completed by September 2004. As soon as the study is complete but not later than the beginning of the construction , Calidra will send a copy to IFC. As part of the project, additional jobs will be generated. Calidra will continue to be maintained clean, and well signaled. The plant health and safety programs aiming to minimize workplace accidents/incidents will continue to be implemented, and personal protection equipment will continue to be provided and required to be used by the employees. The plant will maintain and improve, as needed, the fire prevention measures in place. Specifically, Calidra will identify locations and install additional fire extinguishers as a result of the project. The environmental and safety personnel will continue responding for the sound operations of the plant. Calidra de Occidente The plant is located in the Colima-Manzanillo KM 15 Road in Los Asmoles, Colima, Colima. It currently has two 60 tpd vertical kilns, a 10 tpd hydrator, and a 15 tpd packing unit. With the proposed project, Calidra will: - shut down the existing kilns, - install a new kiln - install a grinding unit, and - upgrade the air pollution control systems of the existing plant. Benefits drawn for the project include: - improved products quality, - fuel consumption reduction up to 37% , and - improved air quality conditions in the neighbouring areas No land acquisition was required since the new operations will be installed in the quarry located in front of the current installations. Current water requirements at this plant will not be altered since the new kiln does not require water to operate. The plant will continue generating only domestic liquid effluents which will be handled appropriately to ensure compliance with the applicable WB guidelines. For the existing operations, as well as for all new equipment to be installed at the plant (i.e., kilns, silo, hydrators, petcoke mills, etc.) Calidra will installed the appropriate air pollution control systems to ensure emissions below the applicable 50 mg/Nm3 WB requirement. SOx as well as NOx emissions will be also in compliance with the applicable WB requirements. Domestic liquid effluents, which are and will be the only generated at the plant, will be controlled to ensure compliance with the applicable WB guidelines. The environmental impact statement (EIA) for this project is being developed and it is anticipated to be completed by September 2004. As soon as the study is complete but not later than the beginning of the construction, Calidra will send a copy to IFC. The hazardous wastes to be generated (i.e. waste oils, materials contaminated with the oils, etc.) will be properly collected, stored and send for final disposal by an authorized contractor. As part of the project, no additional jobs will be generated neither redundancies are expected. For the existing and new installations, Calidra ensures that will: - maintain the plants clean, and well signaled, - implement all needed health and safety programs aiming to minimize workplace accidents/incidents, and - will provide personal protection equipment and require to be used by the employees. The plant will maintain and install the needed fire prevention measures. Contingency and emergency response plans which as being developed as a result of the project will be furnished to IFC as soon as ready but before the beginning of the plant operation. The plant will have designed environmental and safety personnel to respond for the sound operations of the plant. Copies of the environmental permits to be provided by the local authorities for the new project, will be furnished to IFC as soon as they are ready. Corporate Aspects Several of Calidra plants already have considerable advancement towards the implementation of plans and actions to qualify for the voluntary “Clean Plant” and “Safe Plant” certifications that the Mexican environmental authorities award to qualified industries. In addition, the Caleras de la Laguna, Cal Química I, and Calidra de Oriente plants are gearing up towards obtaining the ISO 14001 certification. Calidra has conformed a corporate environmental, health, and safety (EHS) committee to develop the company’s EHS policy, strategic goals, and objectives; and to ensure that Calidra operations comply with its local as well as international environmental commitments. To facilitate the management of its operations, Calidra also has EHS personal in charge of the day to day aspects at each one of its plants. In addition, Calidra has began developing performance targets and indicators (i.e., m3 water/ton hydrated lime produced, energy used/ unit lime produced, unit lime produced/unit raw material extracted, etc.) All plants continue to develop programs aimed to reach those levels and to reach zero-discharge operations. The overall handling, reclamation, and safety aspects of the quarries are being handled also at corporate level, with local presence at each of the quarries. To further improve the quality operations of the quarries and develop consistency between Calidra’s own-operated and contracted-serviced quarries, Calidra will prepare an Integrated Quarries Management Plan which will include agreed EHS commitments with local authorities, current status, corrective actions, implementation of good practices, and parameters to be monitored to follow up the sound operation from the EHS viewpoints. Copy of this plan will be submitted to IFC on July 2004. Internal and external communication are important for Calidra. This includes both consultation with communities located near Calidra operations as well as internal training programs designed to fill the gap between job needs and the actual worker capabilities and education. If yet informal, Calidra has a grievance system to handled complaints or comments from the community. Complaints and observations from external groups or members of the local community are received by the General Manager who directs the efforts for satisfying the demands. Calidra is yet to developed a more formal and consistent grievance system at corporate level. Internal training programs include academic advancement, preventive medicine, hygiene, AIDS, sexual diseases, environmental, health and safety good practices, etc. Since Calidra’s transportation of raw materials and products is subcontracted and in its effort to ensure that the inherent potential risk due to traffic accidents does not cause indirect negative impacts, Calidra has committed to prepare a Transportation Management Plan which will submit to IFC on July 2004. This plan will include minimum safety requirement needed, training if needed to be provided, key clauses for contractual agreements with contractors, etc. Calidra’s track record of community projects reflects a corporate philosophy that contributing to community development is both good business and good ethics. Calidra gives preference to hiring locally and employs over 950 direct employees and over 300 indirect employees. Calidra sponsors education programs within the communities it operates, facilitates construction materials to local municipalities and education centers at discount price, promotes micro enterprises, etc. As part of the project, the Calidra is committed to: - abstaining from implementing expansions or improvements that will result in the resettlement of individuals or business until Calidra has submitted to the IFC, and the IFC has approved, a specific Resettlement Action Plan to deal with such situation in compliance with IFC policies on involuntary resettlement, - operating with all safety precautions, and replacing as soon as possible the few operating polychlorinatedbyphenyls (PCB) containing transformers, - operate all existing operations beyond the realms of this proposed project in compliance with the applicable WB/IFC requirements.

The Corrective Action Plan is attached below.

Accordingly, IFC concludes that the proposed project is being designed to meet the applicable World Bank/IFC environmental and social policies and the environmental and 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 Corrective Action Plan and - ongoing performance of project-specific environmental, health and safety activities. Periodic site supervision visits will also be conducted. IFC will evaluate the project's compliance with the applicable environmental and social requirements twofold: At project completion, Calidra will submit a report (environmental audit or equivalent) demonstrating how all its operations comply with the applicable World Bank guidelines and policies. This report will include copies of monitoring results as well as evidence of all corrective actions agreed to be implemented. - During the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering: - status of implementation of the measures presented above, - ongoing performance of project-specific environmental, social, health and safety activities, as reflected in the results of periodic and quantitative sampling and measuring programs; - significant accidents/incidents and corrective measures; - interaction with the communities (i.e., awards, recognitions, complaints, interaction with NGOs, etc.); and - sustainability initiatives. Periodic site supervision visits will be also conducted.