24101 - Vicentin S.A.I.C.

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Environmental Review Summary

Project Number

24101

Company Name

VICENTIN S.A.I.C.

Date ERS Disclosed

May 17, 2005

Country

Argentina

Region

Latin America and the Caribbean

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 20, 2005
Signed : Jun 24, 2005
Invested : Jul 25, 2006

Sector

Vegetable Fats and Oils

Industry

other

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Vicentin is one of Argentina’s leading oilseed processors and exporters. IFC will provide financing for Vicentin to expand port storage capacity at San Lorenzo (Santa Fe province); upgrade management information systems; establish new origination and commercial offices; and extend the maturities of some debt. The Company’s core business is oilseed crushing and exporting of its byproducts, oil and meals. Vicentin’s operations also include cotton ginning and spinning; formulation of pesticides and herbicides; and meat processing through its subsidiary Friar S.A.

Environmental and Social

The review of this project consisted of appraising technical and environmental and social conditions at the following facilities: oil crushing and port in San Lorenzo; edible oils refinery plant in Avellaneda; cotton ginning facilities in General Pinedo and Villa Angela in Chaco Province; and the cotton spinning facility, the pesticide formulation plant and two Friar facilities (slaughterhouse and sausages plant) in Reconquista, in Santa Fe province.

The following potential environment, health and safety and social impacts of the projects were analyzed:

- Ambient and point source air emissions, including workplace air quality;
- Liquid effluent management, including storm water drainage and treatment;
- Solid waste management;
- Occupational health and safety and food safety;
- Biological and chemical control of pests;
- Complaint mechanism for stakeholders;
- Training of workers and contract workers;
- Labor regulations in Argentina;
- Existing and planned management systems for quality, environmental and social affairs and;
- Acquisition of land (potential issues with resettlement or squatters) for the planned port facility expansion or other infrastructure development.

The findings at each set of facilities are summarized below:

- Oil Processing Plants

San Lorenzo- Rosario
There are three oilseed crushing plants located in the San Lorenzo industrial zone, close to the city of Rosario: Ricardone, Planta Puerto, and Planta Nueva (still under construction); and a port terminal (San Lorenzo port) for the export of oil and meal (sub product of oilseed crushing).

The Ricardone crushing plant is located on the outskirts of Rosario City in Santa Fe province, 3 km from the San Lorenzo Port. The plant, which is able to process a number of different oilseeds, has a maximum capacity of 4,000 tpd.

The San Lorenzo crushing plant is situated next to the San Lorenzo port on the banks of the Parana River in San Lorenzo, Santa Fe province. The facility has a capacity to crush 6,500 tpd of soybeans.

Planta Nueva will have a capacity to crush 9,500 tpd of soybeans and is located near to the Planta Puerto facility.

The San Lorenzo Port is one of many in the neighboring areas of Rosario, San Martin and San Lorenzo on the Parana River.

All the processing plants use GMO soybeans as raw material.
The Ricardone and the San Lorenzo Plant are GMP13 (food safety) certified since December 2001. Monitoring of environmental impact and compliance with Health and Safety regulations is carried-out as described below.

Liquid Effluents:
- Treatment and Discharge

Ricardone plant: effluents are treated with a primary treatment which consists of a solid separation decanting low organic matter concentration. The second treatment consists of a first lagoon with forced aeration and a second lagoon with passive aeration. Both lagoons consist of facultative treatment, and discharge into the Parana River. Discharge is of 50 m3/h while the river flow is of 3600 m3/s.

A recent EIA carried out by Green Lab, a Rosario-based consultancy, concluded that dilution was completed 100m downstream from the discharge point.

Planta Puerto/Planta Nueva: effluents are treated through an oil/grease separator and also discharged to the River Parana. In both cases, run off water is collected and passed through a screen and an oil/grease separator prior to discharge into the river, sanitary waste is sent to municipal waste water treatment plant.

- Monitoring
Measurements are taken monthly on the raw influent, after the first lagoon and before discharge. The parameters measured include: COD/ BOD5.

Air Emissions:
The table 1 (see attachment) presents the main characteristics of the boilers as well as the type of emission monitoring carried out for each of the plants mentioned.

Guarantees provided by the constructor for the new plant indicated that it will be within IFC’s limits (no guarantees are provided for SOx).

Hazardous Material:
Caustic soda- 60t-, sulfuric acid- 60t- and NaCL- 5000kg- are stored on site, in retention and adequately protected.

Solid Waste Management:
No waste is generated by the process as meal is produced as a by product and exported.
Office waste is collected and disposed of into the municipal landfill by a local contractor.

Occupational Health and Safety issues:
The company has implemented a quality and health & safety management system, which will be audited for certification in September 2005. The company has developed its own manuals for: H&S for contractors/ H&S on the plants/ personnel security/ electrical maintenance/supervisors/ ergonomic/fire prevention/ first aid/training program/ management of dust and noise/general safety standards/ industrial safety/monitoring of Health impact of dust and noise.

A detailed survey of dust and noise at different working points was carried out in August 2004 and workers in sensitive areas are provided with adequate PPE. Measures of the dust level at different working stations in none-sensitive areas were well below IFC’s limits. Regular monitoring is carried out via periodic photographic checks. A manual was developed in 2003 to provide guidance on monitoring and mitigations. A similar procedure will be followed for the new plant.

Training:
Training is provided on a continuous basis to all workers and the company keeps a very detailed record of the training.

Fire Fighting:
All the facilities are adequately equipped and fire drills are carried out regularly.

Other issues:
1200 trucks per day are coming to the plants and there are long queues at the downloading area, according to the plant management, there are no complaints from local resident because the trucks drive very slowly and people know this is an industrial zone.

The main issues of non compliance with IFC’s policies and technical guidelines are lack of systematic and adequate monitoring of air emissions, liquid effluents and reporting. The Corrective Action Plan, attached to this document, addresses the compliance gap with IFC’s requirements through the implementation of an integrated environmental, social, health & safety, quality and food safety management system that will include monitoring and reporting.

Avellaneda

Vicentin’s head office is located in Avellaneda. The company also has a 120 tpd crude oil refining and bottling facility. This plant was first build in the 1970s. The plant is operated with at 11t/h fuel boiler (15kg/cm2) and no monitoring of air emissions takes place. Effluents are treated with an oil decantor and a lagoon (90 days) and discharged into a near by stream.

The quality of the discharge is monitored via both internal and external audits, however, no data has been provided during the due diligence to enable the assessment of compliance with IFC’s policies and guidelines. It seems very likely however that this plant does not meet IFC’s guidelines limits on air emissions and effluents quality or on occupational health and safety issues.

The Corrective Action Plan, attached to this document, addresses the compliance gap with IFC’s requirement through an independent audit of plant environmental, health and safety and social performance and a company commitment to implement the recommendations resulting from the audit.

- Cotton processing plants
Vicentin has facilities in Avellaneda and Reconquista in Santa Fe province, Bandera in Santiago del Estero, El Colorado in Formosa and Gral Pinedo, Villa Angela and Buyatti Las Brenas in Chaco. Vicentin operates only three of its plants, Gral Pinedo, Villa Angela and El Colorado.

The cotton is bought from both small farmers and large operations and is hand-picked.

None of the plants currently have an integrated management system including quality, food safety and environmental and social issues. Monitoring of environmental impact and compliance with Health and Safety regulations is nevertheless carried out for each facility as described below:

Liquid effluents: Dry processes are used in both ginning and spinning plants so the plants only have sanitary effluents that are treated in municipal sewers or in septic tanks and run off water is collected and discharged in local near by streams.

Air Emissions: Electricity is provided by the grid and there is no power generator or boilers on sites.

Hazardous Material: Small quantities of fuel are stored on site and in retention, as well as 15 m3 of gas (5X 3m 3 tanks). Oil containers are returned to the distributor when empty.

Solid Waste Management: The plants produce no solid waste as residues from the ginning plant are recycled (mixed with soil to produce construction bricks) and residues from the spinning are resold as cotton fiber (clean and soiled types). Office waste is collected by the municipality and cardboard is recycled.

Occupational Health and Safety issues: The company has implemented a quality and health & safety management system, which will be audited for certification in September 2005. Health and Safety issues as well as working conditions are regularly monitored by the health department and all plants have Health and Safety committees and the company has an industrial safety department. Work places are regularly monitored for dust and noise and workers provided with PPE as needed. All employees are submitted to at least 1 annual medical check up, sometime more during the dry season. The spinning plant has a doctor on site.

Training: Regular training is provided to all employees on H&S and fire fighting issues.

Fire fighting: All plants are equipped with fire extinguishers that are regularly inspected as well as with an automatic sprinkler system. In the case of the spinning plant, automatic sensors can stop the entire system in case of incidents.

Other issues: The spinning plant is equipped with a modern fully automatised air conditioning system ensuring that all cotton dust is permanently removed by aspiration (the air is filtered, cooled and humidified 26x/h).

The main issue of non compliance with IFC’s policies and technical guidelines is lack of systematic and adequate reporting.

The Corrective Action Plan, attached to this document, addresses the compliance gap with IFC’s requirements through the implementation of an integrated environmental, social, health & safety, quality and food safety management system that will include monitoring and reporting.

- Meat Processing facilities

Vicentin is operating the following meat processing plants presented n Table 2 (see attachment).

Each plant is run independently but to similar quality standards.
An environmental impact assessment of the facilities is being carried out and final results are expected to be available before the end of the year. An ISO 9001 certification procedure was started in December 2003.

The data summarized below was collected on site and from information provided by the sponsor, for the Reconquista facilities.

Liquid effluents:
The same Waste Water Treatment Plant (WWTP) is used for both plants and consists of an open air succession of forced aeration and decanting basins with grease/oil separator and 6 successive lagoons, 2 anaerobic and 4 aerobic. Total retention time in the lagoons is 1 month.

Run off water and water from the cattle pen is also treated in the same way.
The WWTP is old and has recently been repaired. During the reparation period, permission was provided by the local environmental authorities to discharge raw effluent for 3 months. Treatment of the effluents resumed in mid march 2005.

As the WWTP is located close to residential areas, there are regular complains about the nuisances (flies, odor and visibility) and the company meets regularly with the community to discuss its mitigation plans.

Plant management has developed a 2 prong project to significantly reduce the nuisances created by the effluent treatment: i) improve the quality of the effluent during the process and recirculate some of the effluents to reduce intake (it is expecting to be able to recover 100m3/h); and ii) build a new enclosed aerobic WWTP.

This project is linked to extension plans to increase total production to 1200 head of cattle/day and consultation have started for the design of the WWTP and Friar expects to be able to start the extension in 2005.

All of the initial water intake (3000m3/day) is discharged as treated effluent (3000m3/day) in the nearby El Rey Stream.

Monitoring:
Measurement of COD, BOD5 and oil and grease is carried out monthly and last data available indicated levels were well above both IFC and Argentina limits as raw effluents were discharged over the last 3 months with permission from the local environmental authorities. Data from 2004 indicates that of the 3 parameters measured, only oil and grease failed to meet either Argentine or IFC’s standards.

Air Emissions:
Electricity is provided by the grid and the plant has 2 fuel boilers of 23 M and 14 M Btu/h.

No monitoring of air emission is carried out.

Hazardous Material:
All cooling units are run on ammonia. Ammonia is stored in a closed circuit and in retention with a security detection system for leaks.

Solid Waste Management:
Meat parts that are not allowed for rendering are collected separately and incinerated. Office waste is collected by the municipality; cardboard is recycled and intestine and manure from the cattle pen are composted in a fenced area belonging to the facility.

Occupational Health and Safety issues:
Both plant have excellent house keeping and are very modern, automated operations.
An ISO 9001 certification process was started and the company quality policy is based an ISO 9001 standards. The last third party revision was in August 2004.

Training:
Regular training is provided to all workers on Good Manufacturing Practices, Security Measures against Fire, Evacuation Practices, Weight Lifting, Cutting Tools Handling, and Safety Practices.

Food safety issues:
All cattle producers are registered at SENASA (Servicio Nacional de Sanidad y Calidad Agro-alimentaria) and each animal is identified through a detailed ID sheet recording origin, vaccination, transport, etc.
Foot and mouth disease, as well as BSE, are monitored successively at the producing ranch, and upon arrival at the plant.
Vaccination certificates are checked upon arrival by veterinary inspectors.
Upon arrival, cattle are herded into pen that respect the standards issued by the Animal Welfare Organization (large pens, water sprinkling, classical music).

Friar’s products are exported to the EU, US and other countries.

Compliance with EU export requirements is achieved through the following procedures: Inspectors from the EU visit Argentina periodically, typically annually, inspecting each of the exporting facilities (last visit in April 2005). The visit is coordinated through SENASA, which is part of the Department of Agriculture. After the visit, the EU inspectors communicate the results of their audits to SENASA, and SENASA proceeds to confirm/revoke the license to export for each facility. In Belgium, the inspectors prepare a report with recommendations for improvement at a country level and send it to SENASA. A consolidated list with the establishments authorized to export is prepared by the EU. The list can be seen at http://forum.europa.eu.int/irc/sanco/vets/info/data/listes/01ar.pdf. The last list was published in April 22, 2005 and included Friar (establishment #1970). SENASA also publishes the list of facilities authorized to export at http://www.senasa.gov.ar/documentos/frigHabilitados.pdf.

In addition, SENASA has several employees permanently on site who certify the quality and traceability of each carcass. By-products from the meat packing are treated in a rendering plant that produces animal feed. Argentine legislation allows cattle rendered products to be used for the production of poultry and swine feed only.

The Corrective Action Plan, attached to this document addresses compliance gaps with IFC requirements on adequate air emission and liquid effluents monitoring and reporting, through the commitment to develop a monitoring plan, build a new WWTP and carry out all necessary corrective to achieve full compliance.

Pesticide formulation Plant
Vicentin commercializes the following pesticides, Cypermetrina and Endosulfan and is operating a plant for the formulation of the herbicide Glyphosate since the end of 2003.
The current production is of 250,000 l/ month (total capacity is of 800,000l/m) and the final product is packed in cans of 20 liters. The raw materials used come in bags of 25kg and 600 kg. All final products are labeled with SENASA certificates.
The plant is located in an old cotton ginning facility and an Environmental Impact Assessment was carried out prior to the granting of the operational permit, in 2002.

Endosulfan and Cypermethrin are categorized by the WHO as moderately hazardous pesticides (Class II). The pesticide management policy states the following: "IFC requires that any pesticides it finances be manufactured, packaged, labeled, handled, stored, disposed of, and applied according to standards acceptable to IFC. IFC does not finance formulated products that fall in WHO classes IA and IB, or formulations of products in Class II, if :
- the country lacks restrictions on their distribution and use; or
- they are likely to be used by, or be accessible to, lay personnel, farmers, or others without training, equipment, and facilities to handle, apply, and store these products properly.

The sponsor has provided adequate information to indicate that the Argentina regulatory framework is adequate to meet IFC’s policy requirements. The sponsor has also provided sufficient information to demonstrate it is fully compliant with the legislation on pesticides formulation.

As part of the Corrective Action Plan, the sponsor will provide additional information to demonstrate compliance with Argentina’s requirements on pesticide products distribution and storage.

Mitigation measures in place to minimize negative impact of the plant are described below:

Liquid effluents:
There are no liquid effluents and run off waters are collected and discharged to the road. Sanitary effluents are treated in municipal sewers. Regular monitoring of the water table is carried out by independent monitors; see below.

Air Emissions:
Electricity is provided by the grid and there are no power generators or boilers on site. Air quality on site is regularly monitored by independent monitors, see below.

Hazardous Material:
All products are stored in retention and under protection in well ventilated hangars.
Formulation products are stored in a 9000m3 tank.

Empty containers of monoisopropylamin are sent to a company in Buenos Aires that specializes in the cleaning of hazardous material containers. An authorization is expected to be provided in the next few months to allow the plant to send its waste (wood pellets, polypropylene bags from bulk packages) to a third-party for use as alternative fuel. The proposed third-party already has the authorization to use waste material from local automobile factories (Renault, Fiat, and Chrysler) and from petrochemical companies. This waste is currently stored on site, under cover.

Solid Waste Management:
Office waste is collected and disposed off by the municipality.

Occupational Health and Safety issues:
Health and Safety issues are well managed and the plant is closely monitored by the local authorities.

Training:
Regular training is provided to all employees on H&S and fire fighting issues.

Fire fighting:
Regularly inspected fire extinguishers are located throughout the different areas of the plant. An automatic sprinkler system is also in place, together with a water tower.

Other issues:
The plant is regularly inspected by an independent environmental laboratory (BVQI) and the last 2 reports – May and August 2004- conclude that the plant is in compliance with its permit and legislation. The plant is also registered in the national listing of producers of both pesticides and hazardous waste.

The main issue of non compliance with IFC’s policies and technical guidelines is lack of systematic and adequate reporting. The Corrective Action Plan, attached to this document addresses the compliance gap with IFC’s policy and guidelines requirements.

Social Issues

Workforce:
Vicentin has 11 different facilities and/or offices with the following number of employees and contractors per facility.
See Table 3 in attachment.

Training:
Vicentin provides training to their employees in the area of health & safety, specifically in safety at work, emergency procedures and quality. Each plant has a record keeping procedure stating the people trained and the numbers of hours spend in training.

Contractors:
Employees working for contractors are given training on health & safety issues by Vicentin. All PPE are being provided by the contractor.

Complaint mechanism:
Vicentin has no effective complaint mechanism for handling protest from external stakeholders. As an example, Friar has not been able to solve the problems with the neighboring community due to nuisances produced by the plant.

As a corporation Vicentin could better manage social issues in a systematic and consistent manner. Improvement can be achieved through the integration of social issues into the business for the corporation to measure compliance with IFC requirements and report on social performance. For an adequate reporting in the future, Vicentin will include the social issues into its planned integrated management system.

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 status of implementation of any measures contained in the Corrective 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.

Environmental and Social Documentation

File Name	Actions
VicentinExpansion CAP 11052005.pdf
ERS_Tables.pdf

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.

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