24202 - Stora China

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Environmental Review Summary

Project Number

24202

Company Name

Stora Enso Oyj

Date ERS Disclosed

Apr 19, 2005

Country

China

Region

East Asia and the Pacific

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 9, 2005
Signed : Jun 14, 2005

Sector

Other Paper (Including Multiple Types)

Industry

other

Department

Regional Industry - MAS Asia & Pac

Project Description

Stora Enso Oyj (Stora Enso or the sponsor), the world’s largest paper and board producer by output volume and number three sawn timber producer, has approached IFC for a loan facility to support its plantation and manufacturing investments in China. Stora Enso’s current activities in China include development of eucalyptus plantations in the Guangxi Autonomous Region of Southern China, and a paper mill in Suzhou, Jiangsu Province. Stora Enso plans to further develop both operations, with an immediate financing need to help development of their plantations. These investment projects, combined with Stora Enso’s other possible investment projects in China comprise an estimated $125 million investment program over the next five years. Stora Enso has requested a flexible debt facility to help it with its investment program financing needs.

Stora Enso may also develop a pulp and board mill in Southern Guangxi. This project will only proceed if Stora Enso is able to develop its Guangxi plantations to the extent that they can provide sufficient volumes of wood for pulping on a sustainable basis. Any possible pulp mill development will be subject to separate Environmental and Social Assessment, and is not covered further in this Environmental Review Summary.

Environmental and Social

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.
Suzhou Mill

- Environmental and Occupational Health and Safety management:

Suzhou Mill has a full-time Environmental Management team and an Environmental Management System (EMS). Following audit by DNV its Suzhou Mill’s EMS was certified in November 2001 to comply with the requirements of ISO 14001. The mill also received an environmental award from the Suzhou New District Administration in early 2005.

OHSAS 18001 certification was received in 2003. The mill is notably neat and tidy with generally very high standards of machine guarding. The mill which has around 660 employees recorded 9 lost time accidents in 2002, 3 in 2003 and no lost time accidents in 2004. Despite this impressive performance, two converting machines were seen to operate with open or absent guards. Machine guards will be installed and interlocked with converting machine drives.

- Emissions to air:

Emissions to air comprise water vapor from the paper drying processes, and products of combustion from the coal-fired boiler plant.

Specific emissions of sulfur to air from the boilers exceed IFC’s guideline values, although the concentration of sulfur in flue gases meets IFC and Chinese requirements. High sulfur emissions were identified by the EMS and the mill is in the process of planning a flue gas desulfurization project which will reduce sulfur emissions by 80%. This will bring the mill fully into compliance with IFC’s pulp and paper making guideline.

An ammonia-based desulfurization technology may be adopted, in which case project planning shall require development of all necessary safety procedures which may include, if the volume of stored ammonia warrants, development of dispersion models and an emergency response plan which including guidance on how and when to contact the community around the mill in the event of an ammonia leak.

Emissions to air of NOx are fully compliant with IFC and Chinese requirements.

Particulate emissions from the boilers do slightly exceed IFC’s guideline values, but will be reduced below IFC guideline values by the desulfurization project.

- Emissions to water:

Suzhou Mill has a comprehensive waste water treatment system. Emissions to water are fully compliant with IFC and Chinese requirements.

- Energy use:
Suzhou Mill’s specific electricity use represents good practice for a non-integrated paper mill. Stora Enso has a corporate target that all its mills undergo an energy efficiency review at least once every two years. In 2004, Suzhou Mill reduced its energy use slightly while increasing production output.

- Fiber Source
Stora Enso monitors and documents all its pulp supplies. Suzhou produces paper from imported ECF or TCF pulp: softwood pulp from Scandinavia and hardwood pulp from South America.

Plantations

- Land Selection and acquisition processes
Guangxi Stora Enso (GXSE) will not create plantations in areas of natural forest or in other environmentally-sensitive areas. Nor will any plantations created by or on behalf of GXSE cause loss of human habitation.

GXSE has started a process of working with selected partners in Guangxi to lease land-use rights for eucalyptus plantation development. GXSE has acquired and will continue to acquire land use leases covering both collectively-held and state-owned land. GXSE’s plantations are typically established on previously-developed pine, eucalyptus or acacia plantations or on “recovered land” used for marginal agricultural production.

GXSE may acquire use rights for collectively-held land directly from the collective, from individuals’ previously allocated land-use rights by the collective or from individuals or companies who may have acquired land use rights from collectives or individuals. When acquiring land-use rights from a collective owner, GXSE checks that the decision to lease the land secures at least a two-thirds majority at a vote of members of the collective, and checks that land use rights are legally held and that forestry land-use certificates are available.

Acquisition of state-owned land is a willing lessor/lessee transaction.

GXSE has an informal grievance procedure which is used in the event of disputes which can arise because of rival land claims, objections of a minority of holders of collective land or objections of tenants to state-owned land. A formal grievance procedure will be established.

- Environmental and Occupational Health and Safety management:

GXSE has a Sustainability Manager who has responsibility to ensure the environmental and social sustainability of all aspects of the plantation developments. As an important aspect of planning future work in this area, GXSE commissioned in March 2005 an Environmental and Social Impact Assessment (ESIA) of its operations in Guangxi. The ESIA will define an action plan necessary for the creation of an Integrated Management Systems covering quality, environmental and occupational health and safety aspects of the operations in Guangxi. GXSE expects to undertake the first certification audits by summer 2006.

GXSE has not yet harvested any plantations. For land preparation, planting, fertilizer application and weed control GXSE uses a contract workforce, working under the direct supervision of GXSE employees. Training is provided in safe handling of pesticides and other chemicals and supervision by GXSE’s own staff ensures that established procedures for safe use of thee substances are followed.

- Sustainability of forest management:

The ESIA will consider aspects of plantation operations which have relevance to forest certification, for example selection and use of pesticides and herbicides. Hence, the ESIA will also form an essential part of planning to obtain certification of sustainable forest management. Following the ESIA, GXSE expects to start in 2006 the process leading to independent certification of sustainable forest management.

GXSE provides access to its forests to local people. For example, collection of dead wood and other biomass, and grazing of animals such as buffalos in the forests are permitted. GXSE identifies and does not develop graves on its land and allows access to the graves to the descendants of the deceased. Local people are offered opportunities to work as contractors in the plantations as such work is required.

GXSE has provided funds for social development of several collectives from which it has acquired land use leases, including providing a social fund to be used, subject to GXSE’s approval as the village collectives’ requests. Funds have been used to refurbish a collective’s offices and to provide a computer laboratory which allowed a school to retain “middle school” status.

GXSE has developed a seed orchard which will be used to promote the restoration of native species in Guangxi. In addition, GXSE is collaborating with institutions in Guangxi in restoration of mangrove forest.

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 Environmental Action Plans 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
EAP April 8 2005 .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.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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