24757 - Sanko Cement

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Environmental Review Summary

Project Number

24757

Company Name

CIMKO CIMENTO VE BETON SANAYI TICARET ANONIM SIRKETI

Date ERS Disclosed

Apr 11, 2006

Country

Turkiye

Region

Central Asia and Turkiye

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 6, 2006
Signed : Jun 16, 2006
Invested : Jul 28, 2006

Sector

Cement

Industry

other

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Sanko Holding, a previous IFC client, is a 105-year old Turkish conglomerate operating mainly in the textile, construction, finance, packaging, energy, food, cement and automotive sectors. The Group is owned by the reputable Konokoglu family with a tradition in the textile business. As a part of its diversification strategy, the Group has decided to increase its production of cement and related products through their Cimko subsidiary. Cimko is planning to construct and operate a 3.1 million tonne per year greenfield cement plant and related infrastructure at Kahraman Maras, about 45 kms from Gaziantep. The cost of this greenfield project is about $240 million. In addition Cimko recently won a bid to acquire the Bartin cement plant for a total amount of $48 million. This cement plant was recently sold by the Government of Turkey in an open bidding process.

This project also involves a $21 million modernization program at the recently acquired Bartin cement plant as well as Cimko’s Adiyaman cement plant, which the Group acquired about 10 years ago. Sanko has an established expertise in the cement sector and the new plant and acquisition as well as the proposed modernization program fits well with the Group’s overall diversification strategy. This project provides IFC with the opportunity to support this diversification process, as well as to support the development of one of Turkey’s poorer regions, the Gaziantep region.

Environmental and Social

The sponsor, Sanko, has presented plans to address these impacts to ensure that the proposed project will comply with the Turkish environmental and social requirements and the IFC environment and social policies and the environmental, health and safety guidelines. Information about how these potential impacts will be addressed by the sponsor is summarized in the paragraphs that follow.

- Compliance of Sanko’s cement operations with Turkish and IFC Environmental, Health and Safety (EHS) Requirements:

The new cement plant is about 20 kms southeast of the town of Kahraman Maras and together with the limestone quarry will be developed on a 700 ha site. Cimko is currently applying to the Government of Turkey for the necessary permits and these are expected by June 2006. Poor quality agricultural land has been acquired at fair market value for the plant and associated facilities. The local communities are very supportive of this project as it will provide about 300 jobs in an area of high unemployment. Based on information from the equipment supplier (Polysius, a German company), the cement plant will meet both Turkish and IFC EHS requirements. Quarry operation will be handled by an independent contractor. Cimko will closely monitor EHS performance of the contractors hired to build the plant over the 12 month or so construction period as well as the contractors operating the quarry – a particularly concern being worker health and safety.
The Adiyaman cement plant and associated open-pit quarrying operations (for limestone and clay) currently comply with both Turkish and IFC EHS requirements based on monitoring reports prepared by independent sources. As part of this project Cimko has plans to further upgrade this cement plant which was acquired in a privatization process from the Government in 1995.

In addition to improvements in housekeeping and maintenance, there is ongoing construction for a new cement mill and plans to add a new air pollution control system (ESP) to the cooler and new bag filters for the cement mills and kiln. Based on the monitoring data provided, the Bartin cement plant and associated quarrying operations meet Turkish EHS requirements. However these operations do not yet comply with IFC’s EHS requirements. As part of this project Cimko has committed to significantly improve housekeeping and maintenance in this cement plant as well as to make a number of investments in equipment including air pollution control systems. These modernization programs at both the Adiyaman and Bartin will ensure that these cement plants and their associated facilities fully comply with Turkish and IFC EHS requirements.

- Commitment to Quality and Efficiency

Sanko and its cement subsidiary, Cimko, have a long history of high quality operations with excellent EHS performance. The Adiyaman and Bartin cement operations have ISO 9000 (Quality) certification from the Turkish Standards Institution (TSI). In addition these plants have OHSAS 18001 (Occupational Health and Safety) certification. The Adiyaman plant also has an EU Certification of Conformity for their Portland Cement. Cimko is committed to improve their cement operations and the Adiyman and Bartin plants are now working on ISO 14001 (Environmental Management) certification. The new cement plant at Kahrman Maras will have ISO 9000, ISO 14001 and OHSAS 18001 certifications within about 1 year of start-up (by the end of CY2008).

- Labor, Community and Social Issues

Labor at the Adiyaman and Bartin cement plants is unionized with workers salaries and benefits covered by a national collective agreement for all cement workers. Salaries and benefits are above average for the area and Cimko is viewed as an excellent and generous employer. The new plant at Kahraman Maras will have similar labor policies and practices.

Sanko Holding has a very long history of involvement in the community as the largest employer in Gaziantep. Sanko makes direct contributions to the community as well as through Sani Konukoglu Foundation. The Foundation has focused on education and health and since 1990 has contributed about $8 million including:

- about 8,000 scholarships for school and university students in need;
- at the beginning of the school year providing school materials, school uniforms, and shoes to about 8,500 students from poor families;
- supporting the implementation of the Functional Adult Literacy Program with over 4,000 persons benefiting from 1998 to 2005;
- construction of three elementary schools, one Technical Vocational High School, one Teacher’s College, one Vocational High School for the Mentally Disabled, and five regular High schools (all are now operational);
- provision of supplies to universities and high schools including computers;
- providing health services, aid and support services in Adiyaman, and Gaziantep since 1990;
- constructing a Cardio-Coronary Intensive Care Unit and a Hemodialysis Unit at Gaziantep State Hospital;
- and construction of the Abdulkadir Konukoglu Mouth and Dental Health Center and the Sani Konukoglu Health Clinic (all are now operational).

Sanko and the Foundation continue to provide ongoing food assistance to about 20,000 families in need. The Sani Konukoglu Foundation also provides aid such as food, medication, clothing and financial donations to associations and social support institutions such as the Foundation for the Blind, Association for the Disabled, Retirement Homes, Childcare Centers, and Children’s Homes.

Conclusion & Monitoring

IFC will evaluate the project’s compliance with the applicable Turkish and IFC environmental, health and safety, and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering the ongoing performance of project-specific environmental, health and safety (EHS) and social/community activities. Periodic site supervision visits will also be conducted.

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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