23915 - Nghi Son Cement Corporation (NSCC) Expansion Project

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Environmental & Social Review Summary

Project Number

23915

Company Name

NGHI SON CEMENT CORPORATION - HANOI BRANCH

Date ESRS Disclosed

Apr 21, 2008

Country

Viet Nam

Region

East Asia and the Pacific

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Nov 28, 2008
Signed : Dec 23, 2008
Invested : Jul 27, 2009

Sector

Cement

Industry

Manufacturing

Department

Regional Industry - MAS Asia & Pac

Project Description

The project involves an expansion program for an existing IFC client, Nghi Son Cement Company (NSCC) in good standing on environmental, health & safety, and social performance. The expansion includes:

- second cement production line with a clinker production capacity of 5,800 tpd (2.15 million tpy cement) in Thanh Hoa province within the existing cement plant facility at Nghi Son, on the North Central coast, approximately 150 km south of Hanoi;
- a new distribution terminal with a storage capacity of 15,000 tons and a distribution capacity of 0.5 million tpy in Khanh Hoa province (South Central coast, 450 km from Ho Chi Minh City); and
- a cement tanker with capacity up to 15,000 deadweight tons to expand Nghi Son’s current transport capacity between the production plant in Thanh Hoa province and its existing and new distribution terminals in the southern parts of Vietnam.

Overview of IFC's Scope of Review

An IFC team visited all NSCC’s existing facilities and quarries, as well as the proposed site for the new distribution terminal. The IFC team concluded its assessment with detailed technical discussions with the NSCC project management team at Nghi Son. During the visit NSCC’s compliance with environmental and social commitments made for the initial IFC loan, which was used for the establishment of the company in 1998 was also confirmed.

E & S Project Categorization and Applicable Standard

This project is being reviewed as a Direct Investment according to IFC’s Social and Environmental Sustainability Policy. Based on a review of project information, the following Performance Standards (PS) are found relevant for the project:

- PS1: Social and Environmental Assessment and Management Systems
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS 4: Community Health, Safety and Security
- PS 5: Land Acquisition and Involuntary Resettlement
- PS 6: Biodiversity Conservation and Sustainable Natural Resource Management

The findings of the project review confirm the application of these performance standards and indicate that there are no impacts related to Indigenous Peoples (PS7) or Cultural Heritage (PS8).

NSCC is an existing IFC client in good standing with respect to implementation of previous environmental commitments. The proposed expansion of existing facilities does not involve any new land take at the production site. The new distribution center in Khanh Hoa province is located within a designated industrial development zone, and only required the acquisition of land occupied by three families and one small company. The land acquisition process has been carried out in accordance with the principles of PS5 and has not caused any loss of livelihood or need for income restoration. With no indication of impacts related to Performance Standards 7 and 8, and only common manageable environmental issues under Performance Standards 1 through 4 and 6, the project is being processed as a Category B project.

Environmental and Social Mitigation Measures

The sponsor has presented plans to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with host country environmental and social requirements as well as IFC’s Environmental and Social Performance Standards and industry guidelines. The information about how these potential impacts are being/will be addressed by the NSCC is summarized in the paragraphs that follow.

- PS1: Social and Environmental Assessment and Management Systems:

IFC’s assessment considered the company’s management of its environmental, health and safety performance in the establishment and operation of its facilities; compliance with national and local permitting requirements; and the company’s engagement with local communities regarding environmental, health and safety performance and corporate social responsibility. NSCC maintains an Environmental Management System (EMS) that is applied across the corporation through the technology competence based at the main facility in Nghi Son.

NSCC has continuous oxygen, carbon monoxide, particulate of the existing kiln emissions, and similar systems will be introduced at the proposed new kiln line. Continuous sulfur dioxide and nitrogen oxides monitoring will also be introduced at both kilns as part of the proposed project. Oxygen and carbon monoxide measurements are linked to the process controls to optimize the energy utilization, while the particulate, sulfur dioxide and nitrogen oxides monitoring are used to ensure compliance with the local environmental regulations and the IFC industry guidelines on a continuous basis.

While there is no formal requirement for the submission of a quarry reclamation plan to obtain extraction rights from the government, NSCC has agreed to prepare and progressively maintain such reclamation plans.

Environmental assessment requirements are limited in Vietnam. Nghi Son has nevertheless prepared a simplified Environmental Impact Assessment (EIA) as part of their feasibility study (a copy is attached to this disclosure) and Action Plan to ensure compliance with local regulations. NSCC has also agreed to design and operate the facility in compliance with IFC’s new environmental, health & safety and social guidelines for the cement sector. The project’s full compliance with the Performance Standards is expected.

- PS2: Labor and Working Conditions:

IFC’s assessment considered the company’s operations with regard to fair, safe and healthy working conditions in the operation of facilities. The Group employed more than 470 full time staff in all of its current facilities as of the end of 2006. An additional 125 people will be employed as a consequence of the proposed expansion project.

NSCC applies a corporate HR policy across all operating units that is generally consistent with IFC’s Performance Standard on Labor and Working Conditions. The HR policy includes components related to: guidelines for recruitment, selection and continuity in service; standardized skill competencies; performance appraisal; career progression; professional development; and professional ethics.

Employee relations with management, wages rates and benefits are governed by the national Labor Law. All NSCC employees are provided with medical insurance and workman’s compensation (accident insurance), unemployment insurance, maternity leave, housing allowance and pension.

Labor standards for industrial workers are covered by national regulations. There is a labor union at NSCC. This union is a “company union” meaning that it is a union specific for employees of NSCC. NSCC discusses health and safety, remuneration and benefits with this union. The terms of employment maintained by NSCC provides for mechanisms by which workers can raise and resolve grievances in the workplace with plant management.

There is no retrenchment associated with IFC’s investment in the company, and the proposed project will result in a net increase in workforce in each facility.

NSCC follows all national and local statutes governing the protection of the workforce. Satisfactory standards of workplace health and safety are maintained by each operating unit based on instructions from the technical management team located at the Nghi Son facility. NSCC maintains workplace accident statistics for its existing operations. These statistics indicate very low accident frequencies (<1 Lost-Day-Accident/Million-Man-Hours (LDA/MMH) for 2006). NSCC in general maintains good housekeeping standards at its facilities. The appraisal inspections did however reveal a generic problem in the road tanker cement loading areas where a second filling of road tankers result in overflow. NSCC has agreed to improve either the operational practice (avoid the second filling attempt for road tanker trucks) or the equipment used.

- PS3: Pollution Prevention and Abatement:

IFC’s assessment considered the company’s compliance with environmental requirements, optimization of resource inputs, including energy efficiency and waste minimization practices as well as the storage and handling of hazardous materials used in the construction and operations of facilities.

Monitored air emissions concentrations at NSCC’s cement manufacturing plant indicate full compliance with IFC guidelines with respect to sulfur dioxide, nitrogen oxides, and particulate emissions (400 mg SO2/Ncm, 600 mg NOx/Ncm and 50 mg particulate/Ncm). IFC will require that the main stacks be equipped with continuous monitoring for particulate, NOx, and SOx to assure continuous compliance with the above guidelines for both kiln lines in accordance with the IFC Performance Standards and guidelines. The ambient air quality, with the first kiln in operation, is well within the acceptable (19 microgram particulate/m3 (24 hr avg.), with Vietnamese limit: 2 mg/m3, and no WHO limit; 46 microgram NOx/m3 (24 hr avg.), with Vietnamese limit 5 mg/m3 and WHO 40-50 mg/m3 (annual avg.); and 61 microgram SO2/m3 (24 hr avg.) with Vietnamese limit 5 mg/m3 and WHO 125 mg/m3) and the ambient air quality is expected to continue to comply with the recommended limits when the second line is commissioned.

NSCC has concessions for the extraction of limestone, clay and sand. The limestone is sourced from a deposit located approximately 14 kilometers to the south of the main plant. From there the limestone is transported to the plant by means of an enclosed conveyor belt. As limestone is the main raw material this gives a significant reduction of the potential impact on the local road infrastructure. The clay deposit (located 14.5 kilometers away) and the sand deposits (located 10 kilometers away) are served by truck transport. Quarry management and reclamation measures are described under PS6.

The current as well as the future kilns at the NSCC cement plant will use local Vietnamese sourced anthracite coal provided by the state-owned Vietnam Coal Corporation. The coal is of good quality with a heating value of 7,000 kcal/kg. The coal is supplied by ships not belonging to NSCC.

Iron ore, bauxite and basalt, all minor additives for the clinker production are sourced on the free market and are typically delivered from sources located 80-100 kilometers from the plant.

Electrical power is provided from the national grid through a 110 kV transmission lime. The current line has sufficient capacity to carry the power for both the existing and the future kiln lines and auxiliary facilities, and no new additional line is therefore foreseen.

Water at the main plant is sourced from local wells, and since the production is a dry process the water consumption is low. Waste water, including domestic waste water from canteen and housing colony is treated onsite before discharge to the sea. The quality of the waste water discharged from the main NSCC is well within both local regulations and the IFC guidelines for all parameters, except for E.coli bacteria, where the plant complies with the local requirements but exceed the IFC guideline limit of 400 MPN/100ml. NSCC has taken a number of initiatives to improve this situation, and will, if need be start chlorination or other treatment to reduce the E.coli bacteria level to within the IFC guideline limit.

IFC has proposed to include a waste-heat-to-power generating facility, which would be able to produce approximately 10 MW of electricity from captured waste heat at the new kiln. A similar facility could also be included at the existing kiln. The effect of installing such units will be a public grid electricity saving equivalent to (0.375 kg CO2/MWh * 10 MW * 7,500 hrs/yr) 28,000 tons CO2 per year per unit. Due to the current low electricity prices (approximately 0.05 US$/kWh) in Vietnam such investments are however not financially viable at this time. IFC and NSCC have therefore agreed that the loan agreement for this project will include specific financial conditions according to which the review and potential implementation of such generating facilities will be mandated. The implementation criteria, including the need for local authority approval will be linked to grid electricity pricing (trigger value in the order of 0.06-0.07 US$/kWh) and equipment and installation costs.

NSCC currently operates three bulk cement carrying ships, which brings cement to the distribution center in Ho-Chi-Min city. With the expansion project it is necessary to add an extra bulk carrier to this fleet. This new ship will be built locally in Vietnam but will be equipped with European loading and unloading equipment to ensure its efficiency and satisfactory dust emission control during the loading and unloading operations.

- PS4: Community Health, Safety and Security:

IFC’s assessment considered the company’s operations with regard to the impacts of the construction and operations of facilities, including: movement of vehicles to and from construction sites, operation of construction equipment, containment of dust, noise and other nuisance factors.

NSCC’s current operations and expansion projects are all located with fair access to the main road infrastructure. The facilities controlled by NSCC are all operating according to sound pollution control principles, and the project will meet the same standards according to the IFC environmental, health & safety and social guidelines. No measurable degradation of the air shed is foreseen in connection with any of the NSCC facilities.

- PS5: Land Acquisition and Involuntary Resettlement:

The main investment object, the construction of a second cement manufacturing line at the Nghi Son facility will not result in the need for additional land take. Also the expansion at NSCC’s current distribution central near Ho Chi Min City, located within Hiep Phuoc industrial area along the Soai Rap River will also be able to accommodate the expansion project without additional land acquisition.

The new distribution central in the Khanh Hoa province will serve the currently undersupplied central Vietnamese market, and will be located in Ninh Thuy industrial zone north of the city of Nha Trang. This industrial zone is currently dominated by a new ship yard, and has a good access road which runs past the entrance of the area dedicated for the NSCC facility. The land for the distribution center has until now been used by three families and one small company. The company has agreed to be resettled to another site within the industrial zone, as its activities do not require the direct access to the water. The three families, with whom negotiated agreements have been reached includes: a) a politically well connected family with a small pig raising facility. Although a settlement has been agreed, it is not clear where this family will relocate their activities, b) abandoned land belonging to a non-functional fish farm. This family had earlier left the area after their fish farm experienced diseases, and the compensation has been a welcomed way to dispose off the land/pond, and c) a two person family living in a one room house on a small lot. The income for this family comes from the male family member’s employment at the ship yard. This family has been given compensation to resettle in a location served by the ship yards employee transport system and both residence and continued income has therefore been ensured. The complete site was visited by the IFC team together with a local NSCC employee, and there were no hostilities between the company representative and the previous users met. The local land compensation system ensures that the families had a grievance mechanism, should they not have reached an amicable agreement with NSCC.

- PS6: Biodiversity Conservation and Sustainable Natural Resource Management:

IFC’s assessment considered the impact of NSCC’s quarry activities around the Nghi Son facility, and concluded that the expansion project will not area-wise require the expansion of the already allocated limestone, sand and clay quarrying areas, although a currently unused clay concession area might be changed for another adjacent concession area. IFC brought the need for updated quarry management standards to the attention of the Nghi Son management in the summer of 2006, and Nghi Son has since then initiated the implemented of these rehabilitation initiatives, which gives a better utilization of the quarries and ensures progressive rehabilitation. The agreed quarry management initiatives will improve the rehabilitation and therefore the biodiversity support, compared with the previous operational standard. Nghi Son will, in its Annual Monitoring reports, provide IFC with progress information verifying the implementation of the agreed quarry management and rehabilitation plans.

The new distribution central in the Khanh Hoa province will be located with direct ocean access. The coastal stretch on which it will be established is within a dedicated industrial zone with severely degraded terrestrial and aquatic habitat caused by partly de-functional fish farming activities and other small scale industries and their untreated discharges. To avoid any negative influence outside the degraded industrial area, the jetty for the facility will be constructed as a piled structure for free passage of the coastal current.

Stakeholder Engagement

As the main employer in Nghi Son NSCC plays a key role in the communities. NSCC maintains open and ongoing communications with local and regional authorities with regard to the environmental conditions of the plants, and their impacts on local communities. As part of NSCC’s commitment to community engagement, this ESRS and its attachments (only those relevant for the specific location) will be locally disclosed to the public to ensure that stakeholders are fully informed of the planned expansion.

Contact details for the community engagement representative for NSCC, are as follows:

Mr. Itaya,
Manager,Expansion Project Division
E-mail address; itaya@nghison.com.vn

The ESRS and attachments will be made available at the following locations:

-Nghi Son (main plant area):
Contact address : Hai Thuong Commune,
Tinh Gia District, Tnanh Hoa Province,
Vietnam

-Khanh Hoa province (new distribution central area):
Contact address : Ninh Thuy Commune,
Ninh Hoa District, Khanh Hoa Province,
Vietnam

-Ho Chi Minh City (Existing distribution therminal)
Contact address : Hiep Phuoc Commune,
Nha Be District Ho Chi Minh City,
Vietnam

Client Documentation

File Name	Actions
Nghi Son II CAP Final 03172008.pdf
CO2 emissions Nghi Son II Final 03172008.pdf
EIA and control measures 03172008.pdf

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
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