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 and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental/social information submitted by the project sponsor as well as site visits to all the production facilities by IFC environmental and social specialists. The following potential environment, health and safety and social impacts of the projects were analyzed: - Suitability of production plant locations with respect to sustainable raw material supply and infrastructure; - The land acquisition procedures and compensation criteria used for all recent land take and the outcome of that land take; - Process technologies used and their application with respect to raw material and energy consumption, as well as air emission, waster water and solid waste management; - Areas of potential environmental or social noncompliance with IFC/World Bank guidelines and policies, and remediation actions needed to correct any such noncompliance; and - Occupational health and safety practices, and analysis of accident statistics.

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. For practical reasons the paragraphs are separated for the two main locations of the company’s operations, namely Shaoxing County, Zhejiang Province and Delingha City, Haixi Prefecture, Qinghai Province. - Shaoxing County, Zhejiang Province: Zhejiang Glass has a series of float glass production lines in an industrial complex in Yangxunqiao Township, Shaoxing County, Zhejiang Province. The float glass operations are supported by a series of downstream operations, partly located in the same complex area and partly in a new industrial development. The location of the operations seems appropriate, close to its main market, with limited impact on residential areas, and relatively good access to the road infrastructure, although not located directly on the highway system. Raw materials are now coming partly from Zhejiang’s own soda ash production plant, with the sand and other raw materials bought on the open market. The Zhejiang Glass plant was established over a period starting in 1994 and the area has since developed into a major industrial center. The company has expanded its operations from its original site a number of times through successive acquisition of adjacent land and expansion of facilities, until reaching its current land size of approximately 57 hectare, which has resulted in the displacement of agricultural households. Land use rights to greenfield sites are typically obtained from local authorities who assume all responsibility for managing the land acquisition process including payments of compensation and resettlement of people who are affected. IFC interviewed local authorities and confirmed that cash compensation provided by the company was paid to households that were displaced by land acquisition for the original plant and its expansion. In addition, annuities and grants are being provided to vulnerable households as a supplement to land compensation. Nonetheless, IFC will require the company to provide details on the social impacts of the land acquisition made on its behalf to ensure that the payment of land compensation, physical resettlement and rehabilitation of affected people was carried out in accordance with the objectives of IFC’s policy on Involuntary Resettlement. This requirement is included in the projects Environmental and Social Action Plan (ESAP) which is attached below. The float glass plants are all equipped with a combination of Chinese designed furnaces and internationally sourced downstream equipment. The furnaces all have post combustion chambers, but no secondary firing option to reduce NOx formation. The fuel is low sulfur heavy fuel, and despite the lack of secondary firing the NOx emissions are kept in the order of 1920-2060 mg NOx/Ncm, based on official tests on the two oldest lines. IFC will require all hot operations to be measured for relevant air emissions (only some operations have official reliable measures today and only for some components), and based on the outcomes Zhejiang Glass will need to establish a plan (included in ESAP) for optimizing its combustion processes where appropriate to optimize energy efficiency, minimize emissions, and obtain compliance with acceptable levels for NOx and dust emissions from existing glass operations. Yangxunqiao, the location of the company’s operations is a major industrial center and water is received from municipal utility systems, which also receive the waste water generated. Power is also derived from the public grid. Zhejiang Glass has obtained a Chinese equivalent (GB/T 24001-2004 idt ISO 14001:2004) of the ISO 14001 certification for its environmental management system. This system will help Zhejiang Glass in the process of optimizing its furnace operation. The down stream handling of the produced glass is to a large extent manual operations. These types of manual operation typically result in an increased risk of accident involving cuts from breaking glass. To limit the risk involved in the glass handling all glass handling workers are consistently using appropriate Personal Protective Equipment (PPE) including full covering work clothes, safety shoes, head gear and non-slip gloves. The accident statistics for the glass operations shows 15.7 - 19.3 Lost-Day-Accidents per Million-Man-Hours worked at the plants in the period 2004/5. These are normal frequencies for this type of operation, while above what is seen broadly in other light manufacturing operations. For some new downstream operations Zhejiang Glass has included automated glass handling, and the company will according to the ESAP prepare a plan for how automated glass handling can be applied to relevant existing operations within a reasonable timeframe. - Delingha City, Haixi Prefecture, Qinghai Province: Haixi Prefecture is located at a plateau averaging 3,000 meters above sea level in the Northern part of the Qinghai Province. The prefecture has a very dry climate, with an average rainfall around the Delingha city of approximately 100 millimeters per year. This dry climate has resulted in the formation of salt lakes, and a landscape dominated by Gobi (desert) land. The presence of abundant amounts of sodium chloride in the salt lakes, significant limestone reserves, and energy in the form of coal has made this a natural area for the development of soda ash production based on the Solvay process. Soda ash has been produced by a government build and owned operation for years, but to promote further development a private investor (Zhejiang Glass) was given a concession to extract salt from a salt lake located along the road from Xining to Delingha. A Limestone concession was also given for a peak in the Cyprus mountain area, where a number of other operators also extract limestone. Water would be extracted from the river feeding the Delingha city reservoir, while coal and coke will be bought at the free market in the province or neighboring provinces. The Qinghai Soda Ash plant and its ancillary works are located primarily in Delingha City, within the Haixi Mongolian Tibetan Autonomous Prefecture. The population of Haixi Prefecture is approximately 400,000, of which 25% is composed of ethnic minorities belonging to 29 different groups. Delingha City’s population is about 100,000, of which less than 20% belong to ethnic minorities. Mongolians represent 14% of the city’s population and constitute the largest minority group; Tibetans make up less than 5% of or the city’s population. Minority ethnic groups make up a majority of the rural population. Traditionally semi-nomadic herding peoples, the Mongolian and smaller Tibetan minority populations have been provided incentives by the central government to settle permanently in rural population centers. As of the time of the IFC’s visit, Qinghai Soda Ash employed 1,531 workers, of which 206 (13.5%) belonged to eight ethnic groups including Mongolian, Tibetan, Hui, and Tu. More than 1,100 hectares of land was acquired for the development of the existing plant and its support facilities. The majority of this amount was land zoned by the local government for industrial purposes. Approximately 300 hectares of land required for the wastewater pipeline alignment and access road as well as the limestone quarry was acquired by local government from rural communities. Some of this land was grassland allotted to herding families for grazing their cattle. IFC confirmed that cash compensation was provided by the company to local government for distribution to households affected by land acquisition through their village councils. However, IFC was unable to confirm the number of households affected by land acquisition, the actual impact of that land acquisition on the livelihood of each household, or the adequacy of the compensation received by each household to offset the loss of grazing land. IFC will therefore, in accordance with the ESAP require the company, in collaboration with local government, to identify those households affected by the acquisition of grasslands for the project and confirm that the living standards of these households have not declined as a result of loss of grassland. In addition, IFC will encourage the company to support local government efforts to promote the welfare of minority populations in Haixi Prefecture through: - employment training; and - improving productivity of grazing areas and animal husbandry practices, and ensuring that households affected by land acquisition receive assistance from such programs. The soda ash plant was designed by a local design bureau and is following the principles of the Solvay Process, without downstream production of Sodium Bicarbonate. The plant also has its own captive power plant with a firing capacity of 2,100 tons coal per day (equivalent to 635 MW fired). The steam produced in the power plant is mainly used for heating and drying processes in the soda ash production, with only 24 MW electricity produced for internal use. Air emission controls are included in the design, but the automatic emission measuring equipment has not yet been installed. At the power plant Electro Static Precipitators (ESP) are installed. These ESPs have been designed for 200 mg dust/Ncm. This is according to the latest, more stringent, Chinese regulation but is yet above the World Bank guideline limit of 50 mg dust/Ncm for new plants. The agreed ESAP will require that the power plant be equipped with continuous monitoring of dust (and NOx) emissions and that the ESPs will initially be optimized to optimal performance. Once the optimal performance has been established Zhejiang Glass will present to IFC a satisfactory plan for bringing the emissions in compliance with IFC/World Bank guidelines within a reasonable time frame determined by the ESAP and dependent on the deviation from this limit. Any new expansion will be designed for 50 mg dust/Ncm as maximum emissions. The NOx emissions from the plant are expected to be within the guideline limits due to the combustion techniques used, but if the actual measurements should show otherwise Zhejiang Glass will set up a timeframe for reducing these emissions too. The coal used is low sulfur coal (<0.38% sulfur and desulphurization is therefore not necessary). The soda ash production is a closed production loop with minimal emissions, except for steam releases. There is no major dust containing emissions as the drying is carried out in rotary drier kilns with the heating provided from a steam heated cap and filters on the vapor emission points. Only production releases are related to ammonia losses, whish are partly in the product separation stage and partly in with the warm waste water. The total ammonia loss is around 8 kilogram per tons of soda ash produced. This is in line with other Chinese plants but four times the recommended value for new European plants (according to the appropriate BREF note). It is expected that the losses can be reduced to around 5 kilogram per tons once the operation is optimized. The ESAP includes that once the plant is in optimal operation the sources of the ammonia releases shall be established and it shall be evaluated if there are further technical possibilities for reducing the losses. The soda ash plant was commissioned in the late part of 2005 and the surrounding construction site has therefore, due to the winter conditions not yet been leveled and cleaned for construction debris. This will be done during the summer of 2006, together with a campaign to improve house keeping as the house keeping standard currently is not up to an acceptable standard. A check of the upgraded housekeeping standard is scheduled for the later summer of 2006. The soda ash production does not create separate solid waste. The wastewater stream from the plant does however contain significant amounts of gypsum, and some ammonia. This waste water, which has a pH of approximately 10, is pumped 28 kilometers through a dedicated waste water pipeline system to an evaporation lagoon in the desert. The lagoon is located at a depression in the landscape with one end closed by a dam, which at the final operation will reach 22 meters. The dam has been designed by a local design institute and IFC require that a second independent check of the design be made to ensure its stability when the lagoon is filled. The lagoon with a dedicated area of 18 square kilometers is expected to reach evaporation equilibrium when it reaches 7 square kilometers. At that time the pond will start stabilizing due to the continuous influx of gypsum and the evaporation. To ensure that the scattered wildlife of the region is not harmed by the operation of the lagoon it has been agreed that the lagoon will be surrounded by an animal fence able to keep out animals from small sizes up to wolves and wild camels which roam in the desert area. The requirements for the evaporation ponds are included in the ESAP. The salt for the soda ash production is taken from a salt lake covering an area of more than 100 square kilometers. The salt lake is divided into concessions, of which the government owned soda ash plant in Delingha holds one and an existing consumable salt factory another. The Zhejiang Glass concession is for 18 square kilometers. Currently the soda ash facility has a contractor digging out salt in this concession, washing it and then trucking it to Delingha. This creates a black surface to the lake, as the salt holds black anaerobic digestion products from encapsulated organic materials. This is a natural co-deposit, but it does have a negative visual impact when released during the washing process. During the summer of 2006 it is planned to install a series of evaporation ponds and pump saturated brine from the channels currently being created by the removal of salt. As the organic deposits are not dissolved in the brine this will eliminate the need for washing the salt crystals and hereby prevent the release of the organic deposits. The deposits created by the current practice will, according to the ESAP thereafter be leveled to remove the negative visual effect. The lime stone deposit allocated to the plant is located to the north of Delingha city in the Cyprus mountain complex. This is a major limestone deposit area and a number of operations have been allocated raw material concessions there. The concession used is a minor barren peak in the end of the main valley. The peak will be removed completely as a result of the operation, but no significant habitat will be affected. At the end of the operation the area will form a part of the slope for the next mountain. A formal quarry management plan will, in accordance with the ESAP be prepared to ensure the best extraction possible while ensuring the remaining landscape qualities are maintained. Water for the operations are pumped from a series of river bed wells located upstream of the Delingha water reservoir. According to the local authorities, a full modeling of the extraction potentials has been carried out and it was proven that the extraction for the soda ash production would not have any negative effect on the city’s water supply. Domestic sewage from the city is channeled to an evaporation pond. The plant’s domestic sewage is also sent there. As no recipient water is affected by this practice, IFC has not required any further action be taken. The soda ash plant has only been operating for less than half a year and it is therefore not possible to draw firm conclusion based on the safety performance within this relatively short time frame. An accident frequency close to 20 Lost-Day-Accidents/Million-Man-Hour during this period, together with a need for better house keeping and improved use of Personal Protective Equipment (PPE) like helmets and safety shoes indicate that the plants occupational health and safety system needs a boost. The plant management has acknowledged the need for these improvements and it has been agreed and included in the ESAP that a clean up and safety campaign will be carried out over the summer of 2006 to achieve a consistent standard similar to the glass operations in Shaoxing County.

An Environmental and Social Action Plan (ESAP) has been prepared to cover agreed upgrades to the current operations to achieve compliance with the IFC/World Bank policies and guidelines. The ESAP is attached below.

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 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 agreed and described above and ongoing performance of project-specific environmental, health and safety and social activities. Periodic site supervision visits will also be conducted.