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 impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising updated technical and environmental information submitted by MIT, review of recent annual environmental monitoring reports submitted to IFC covering ongoing environmental performance, as well as site visits by IFC staff. IFC’s last appraisal in 1999 analyzed the following potential environment, health and safety impacts of the project: - contamination from past uses; - vegetation protection and reforestation; - stormwater management; - dredging; - oil/hazardous materials storage and handling; - hazardous cargo management; - solid and liquid waste management; - sewage treatment; - fire prevention and emergency response; - employee health and safety and training programs; and - EHS organization and management. The appraisal for the current project confirmed the effectiveness of MIT’s environmental management, as evidenced by its ongoing performance and planned improvements. The appraisal also reviewed the potential environmental impacts of the currently planned terminal expansion and the mitigation proposed.

MIT continues to demonstrate that its activities comply with applicable Panamanian laws and requirements, and World Bank Group Policies and Guidelines. The company also has presented plans to address the impacts of its expansion to ensure that the proposed project will, upon implementation of the specific measures, continue to comply with applicable environmental requirements. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. - Existing Operations. MIT’s most recent Annual Monitoring Report documenting its environmental performance for calendar year 2004 (dated February 2005) indicates that the terminal operates in substantial compliance with applicable and relevant requirements, and that no major corrective actions are necessary to improve performance. The Company reported 7 minor chemical spill incidents, most of which involved relatively small quantities of hazardous materials that had been improperly packed in a container by an owner or handled by a shipper prior to arrival at the Terminal. In all cases, the MIT Hazmat response team prevented the material from being released to the environment and appropriately cleaned up and disposed spilled material. MIT also continues to perform a large variety of community services and donates significant resources to help improve peoples’ lives throughout the Colon area. - Expansion Impact Mitigation. MIT’s expansion area involves a track of land, an old wharf, and a cluster of buildings previously used by the Colon Port Terminal operated by the government. The company will prepare an Environmental Assessment for the development of this area. Appropriate measures to mitigate the impacts of some minor dredging, filling, and demolition of old structures will be identified during this process. These may include: the implementation of vegetation protection and reforestation activities to compensate for disturbing or clearing any small areas of vegetation; disposal of small amounts of dredged material at the designated offshore disposal site after chemical analysis confirms the absence of any toxic constituents; the reclamation and restoration of any borrow pits used as a source for fill material; and the proper removal and disposal of any asbestos-containing material discovered during building demolition. - Sewage Treatment. MIT plans to install a secondary-level treatment plant to treat sewage generated from buildings recently constructed at the terminal that support logistics-related services. This improvement will reduce pollutant loadings to the Bay, and meet the effluent requirements of ANAM and World Bank Group Guidelines.

This ERS contains IFC's environmental and social review 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 continue to 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 Assessments; and - ongoing performance of project-specific environmental, health and safety and community activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.