Dongyue Group 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 IFC Environment and Social Performance Standards and the World Bank Group (WBG) environmental, health and safety guidelines. The information about how these potential impacts will be addressed by Dongyue Group is summarized in the paragraphs that follow. Further information is provided in the attached CAP, which is agreed upon by IFC and Dongyue Group and will address the compliance gaps with IFC’s requirements.
- Social and Environmental Assessment and Management Systems:
Land and natural environment:
Dongyue Group owns approximately 57.5 ha land inside a designated chemical industrial area, which is located approximately eight km north of Zibo, Shandong Province, China. Dongyue Group planted fast-growing poplar trees in the remaining lands and the lands surrounding the companies, which are rented from the farmers. The poplar belts provide a visual screen between the Dongyue Group and the nearby communities. There are two villages to the east of Dongyue Group, and one town to the southeast of Dongyue Group at approximately half to one km away. The main crop in the project area is corn. Dongyue-Jinfeng is expected to take ownership of a fluorite processing plant and also plans to set up an AHF manufacturing plant in Chifeng, Inner Mongolia Autonomous Region, China. Dongyue-Jinfeng has also started purchasing fluorite mining rights in Chifeng area. According to Dongyue, there are no protected areas or protected species at or near the sites in both Zibo and Chifeng.
E&S assessment:
Dongyue Group hired external experts to conduct environmental and social (E&S) assessments for various existing projects according to Chinese regulatory requirements. Dongyue Group is committed to meet both Chinese regulatory requirements and IFC Performance Standards for the E&S assessments for future projects. In accordance with the CAP, Dongyue Group will send the ESIA for proposed projects to IFC for review and approval prior to project implementation.
Environmental and social management and organization:
Dongyue Chemical has ISO 14001 certification and the other two companies also plan to apply for the certification. Dongyue Group has a corporate level EHS management structure. There are environmental and safety departments, under the vice president of production, to oversee the EHS issues for all subsidiary companies. There are fulltime or part-time EHS coordinators in each subsidiary company. The preliminary EHS management system in Dongyue Group comprises management programs, training, monitoring, reporting, etc. In accordance with the CAP, Dongyue Group will set up a formalized EHS management system, improving the management roles of both environmental and safety departments and extending the management power to the operations of Dongyue-Jinfeng.
Training, monitoring, and reporting: Dongyue Group has an established program to provide necessary training for all its employees in the field of environmental and social performance related to its operations. Dongyue Group conducts routine environmental, health and safety monitoring for its operations.
- Labor and Working Conditions:
Human Resources Policy and Management:
Dongyue Group has a Human Resources policy which specifies the terms of employment and working conditions at Dongyue Group. These include procedures for hiring and recruiting, probation, training, performance review, promotion, insurance, salary and compensation, resignation, lay-off and firing, leave and vacation, and retiring. The human resources function is a corporate function and each of the 4 plants has a human resources manager appointed. All policies, procedures and guidelines are the same for the Dongyue Group and follow Chinese labor law. Labor inspections are done every year by the social security authority. Since 1997, when the companies begin operations, there has not been any strike or fine. As part of IFC investment and in accordance with the CAP, Dongyue Group will make the human resources policy and procedures accessible to all workers. Dongyue will apply the same human resources policy and procedures to Dongyue-Jinfeng.
Wages and Benefits:
Wages are composed of 3 components: basic salary + monthly bonus + yearly bonus. Benefits and the percentage that company and workers need to contribute are determined by the government. There are no differences between amount and type of benefits between local and migrant workers. Migrant workers can collect the amount paid to the regional government when they move to another area.
Working hours:
Administrative staff works one shift and workers in the production process work three shifts. Shifts are changed weekly. The working time per week is 40 hours with 2 days off.
Disciplinary practices:
Disciplinary procedures are specified in their human resources policy. As part of IFC investment, Dongyue Group will implement best practice examples.
Grievance Mechanism:
HR is responsible for supervising the grievance process and ensuring proper follow-up. There are three ways a worker can convey a concern or complaint to Dongyue Group management. Through a suggestion box (boxes are near each production area and at the front gate), through a call, or directly written to the responsible manager. All complaints are forwarded to HR who divides them into categories. HR makes a decision on who needs to be part of the grievance team which will address the issue. The team decides if the complaint proceeds or not, but either way a response is provided to the person or posted into the common board at the cafeteria. Most complaints are related to the quality of food at the cafeteria and requesting more holidays.
Worker’s Organization:
Separate from the HR process, Dongyue Group has one union which has the responsibility of getting feedback from employees and organizing activities for employees.
Non-Discrimination and Equal Opportunity:
Dongyue Group does not have discriminatory practices. Migrant workers are treated in equal terms as local workers. Housing is provided for free and dormitories are new and in compliance with best practice seen in other countries. As part of this investment and in accordance with the CAP, Dongyue Group will update their human resources policy to include a reference to non-discrimination and equal opportunity.
Protecting the Work Force:
Dongyue Group complies with national law and the minimum age of hiring is 18 years old. As part of IFC investment, Dongyue Group will ensure that contractors:
- implement terms of employment that comply with national law and IFC Performance Standards;
- prevent unacceptable forms of labor (e.g. child labor and forced labor); and
- promote a safe and healthy work environment.
Occupational Health and Safety (OHS):
The Safety Department manages the OHS issues in the Dongyue Group. Safety awareness is among the top concerns for both management and operators. There are effective OHS procedures and adequate personal protection equipment for each position in Dongyue Group. There are routine OHS trainings including annual refreshers for its employees. There have been no fatal or serious accidents in the operation history of the Dongyue Group. The monitored parameters for the workplace conditions meet both local regulatory requirements and good international industry practice. According to the CAP, Dongyue Group will start compiling the statistical data of OHS accidents, monitor the workplace particulate matter (PM) levels, and monitor the quality of the potable water, which is from onsite deep wells.
Dongyue-Jinfeng started acquiring fluorite mining rights in Chifeng area. According to the local industrial safety agency, there have been no fatal accidents related to fluorite mines in recent years in Chifeng area. As stated in the CAP, Dongyue will review the fluorite mine operations, develop a detailed fluorite mining OHS and emergency response (ER) procedures for fluorite mining, and conduct periodic ER drills at the mines owned by Dongyue-Jinfeng.
- Pollution Prevention and Abatement:
Raw materials and resource consumption:
The major raw materials consumed in the Dongyue Group are sulfuric acid (120,000 t/y), fluorite (120,000 t/y), methanol (36,000 t/y), industrial salts (240,000 t/y), water (1.4 million t/y), and coal (170,000 t/y). The water is from the deep wells onsite. Dongyue Group has a 50 MW thermal power plant to supply electricity and steam, and purchases an additional 166,000 MWhr/y electricity from the grid, which comes from local coal-based power plants. Dongyue Group has corporate-wide energy/water saving programs, which consists of reduction targets for each year and is monitored closely by the management.
Environmental Compliance:
Dongyue Group generates 3,100 m3/d wastewater, which is discharged to a surface water channel after onsite treatment. The monitored parameters in the wastewater effluents meet all the local regulatory requirements and the WBG guideline limits, with the exception of total suspended solid (TSS), which slightly exceeds WBG guideline limits. Air emissions from the power plant and various processes meet all the local regulatory requirements and the WBG guideline limits, with the exception of sulfur dioxide (SO2) from fluorite rotary oven, which slightly exceeds the WBG guideline limit. The ambient noise and ambient air quality meet all the local regulatory requirements and the WBG guideline limits, with the exception of SO2 and PM, which exceed WBG guideline limits. The PM mainly comes from fugitive emissions from fluorite storage and onsite transport, while the SO2 is from elevated process emissions. In accordance with the CAP, Dongyue Group will monitor adsorbable organic halogens (AOX), biological organic demand (BOD), and coliform bacteria in the wastewater effluents and increase wastewater treatment efficiency to lower TSS and ensure effluents meet all the WBG guideline limits. Dongyue Group will also reduce SO2 emissions through technological improvement and control fugitive dust sources by improving practices to ensure all emissions and ambient air qualities meet WBG guideline limits.
There is an onsite incinerator for organic fluoride wastes, which may contain organic chloride wastes. The monitored parameters of emissions meet the local regulatory requirements. There is also a proposed organic waste incinerator in the organic silicon capacity expansion project. According to the CAP, Dongyue Group will ensure that no persistent organic pollutants are generated thorough incineration. Dongyue Group is also committed to meet the local regulatory requirements, the WBG guideline limits, and good international industry practice for the organic silicon capacity expansion project, the mining operations in Inner Mongolia, and any other potential new projects.
Solid and Hazardous Wastes:
Dongyue Group generates a significant amount of solid wastes from production processes, including calcium sulfate (160,000 t/y), coal slag (18,000 t/y), salt sludge (32,100 t/y), etc. Calcium sulfate and coal slag are sold to construction material manufacturing plants, and salt sludge is shipped back to the industrial salt plant for disposal. Dongyue Group has a contract with a nearby village to dispose of its household solid waste. In accordance with the CAP, Dongyue Group will dispose of the household solid waste at a sanitary landfill approved by the municipal government and draft an action plan to dispose of calcium sulfate and coal slag in the case of a slowdown in the construction market.
The major hazardous wastes generated onsite include waste catalysts, used desiccants for organic solvents, organic fluoride waste, and carbon tetrachloride. Waste catalysts and desiccants are recycled by manufacturers. Organic fluoride waste is incinerated onsite. Carbon tetrachloride is converted onsite to ammonium chloride, which is sold as fertilizer.
- Hazardous Materials and Operation Hazard:
Dongyue Group’s raw materials, intermediate products, and products comprise significant amounts of hazardous materials. The manufacturing, storage, handling, and transportation of these materials pose serious dangers to the employees and nearby communities. Hazard operability (HAZOP) studies were completed during the detailed design for each process. Dongyue needs additional in-depth information of the hazard characteristics to improve its safety management. In accordance with the CAP, Dongyue Group will conduct a comprehensive operation safety audit to collect in-depth information on hazard characteristics. The safety auditing will also identify the processes that require an updated HAZOP. Dongyue Group will conduct this comprehensive safety auditing periodically in the future.
The major operation hazards are from manufacturing and storage of chlorine and AHF at Dongyue F-S and Dongyue Chemical, respectively. There is an automatic monitoring/alarm system for chlorine manufacturing and storage. However, there is no automatic monitoring/alarm system for AHF manufacturing and storage. There are no underground storage tanks for hazardous materials. Some of the above-ground storage tanks for the hazardous materials do not have secondary containment. In accordance with the CAP, Dongyue Group will install an automatic monitoring system for AHF manufacturing and storage, and install chlorine automatic monitoring system along the plant perimeter. Dongyue Group will also build proper secondary containment for the hazardous material storage area.
Fire Prevention and Emergency Response:
There is adequate fire fighting equipment onsite and it is properly maintained. The external fire trucks and ambulance can reach site in five to ten minutes. Fire prevention and emergency response (ER) are included in new employee trainings and annual refreshers. Dongyue Group conducts routine drills for fire fighting and potential chemical explosion/releases. There is a 24-hr onsite clinic for both routine first aid and emergency care.
Ozone-Depleting Substances (ODS):
The major ODS generated in Dongyue Group are Freon 22 and carbon tetrachloride (CTC). Freon 22 is Dongyue chemical’s major refrigerant product and raw material for PTFE manufacturing at Dongyue Polymer. CTC is a byproduct of CMS manufacturing. According to the Montreal Protocol, China will phase out CTC on January 1, 2010, and freeze consumption and phase out the Freon 22 on January 1, 2016 and January 1, 2040, respectively. However, the production and consumption of Freon 22 as a chemical feed for further processing (e.g. into PTFE) is not subject to the phase out under the Montreal Protocol. Dongyue Group set up a process to convert all CTC to monochloromethane, which received the certification from the provincial environmental protection agency on July 1, 2006.
Green House Gases (GHG):
Dongyue Group generates approximately 10.92 million tons carbon dioxide (CO2) equivalent GHG per year. Approximately 10 million tons CO2 equivalence GHG comes from 1,000 tons Freon 23 venting. Dongyue Group has set up a CDM project to reduce 10 million tons GHG emission from Freon 23 venting. The CDM project was approved by the United Nations Framework Convention on Climate Change (UNFCCC) on March 13, 2006. The project will use incineration technology to decompose Freon 23. In accordance with the CAP, Dongyue Group will monitor dioxins and furans from the emissions and ensure that the emissions meet good international industrial practice.
- Community Health, Safety and Security:
The nearby communities are separated from the Dongyue Group by a poplar green belt, planted by Dongyue Group. The slightly elevated SO2 and PM concentrations along the Dongyue Group’s perimeters pose limited impacts to the communities due to the buffering effects of the green belt. There have been not any complaints from the communities about Dongyue Group’s routine operations. However, at the extreme scenario, such as a large scale chlorine leak, there are potentially significant impacts to the communities. Majority of the products and raw materials are transported by trucks to and from the Zibo Train station, which is eight km away from Dongyue Group. The road conditions are very good, and the road does not go through communities.
Based on the new information about hazardous raw material transportation, received by January 9, 2007, Dongyue will transport AHF from Inner Mongolia to Zibo after the AHF plant is put into operation. The conditions of the transportation route are good. In the next few years, Dongyue will also purchase chlorine from several chlor-alkali plants in Zibo area. In consistent with CAP, Dongyue Group will only contract with transportation companies that have defensive driving programs, acceptable safe driving records, and sufficient emergency response methods.
Emergency Preparedness and Response:
Dongyue Group has emergency response (ER) plans available and conducts routine drills for fire fighting and potential chemical explosion/releases. However, communities are not informed or involved in the drills. According to the CAP, Dongyue Group will update its ER plans, conduct joint fire fighting and ER drills with local fire department and hospital, provide necessary ER training for the nearby communities, and gradually involve the communities in the offsite ER drills.
Based on the new information received by January 9, 2007, Dongyue Group will also coordinate with local responsible agencies and hospitals along the transportation routes to prepare ER plans and conduct joint ER drills for potential chemical leaks.
- Land Acquisition and Involuntary Resettlement
Dongyue Group has acquired in different stages since 1987 approximately 87.5 hectares, which include 58 hectares with LUR certificates; 4.4 hectares for public land; 0.6 hectares for an external construction plant; and 25 hectares which are still under application process for a LUR certificate. In 2006 they began the process of acquiring 17.7 hectares for the expansion of the silicon plant. Currently they are waiting for the government certification documents. This portion of land is currently used for farming corn and wheat. The farmers owning the rights to the land are from the Lizhai village. During interviews with farmers they said that they agreed on giving the rights to the land to Dongyue Group. They have been given the right to harvest this year and some of them have been given jobs by Dongyue Group to plant trees in the area. Dongyue Group accepted IFC’s suggestion to ensure they hire as many workers as possible pertaining to this group of farmers.
The county government has established a scheme called “Centralized Land Acquisition Office” which manages the compensation to farmers. After December 2004, according to the new land acquisition compensation rules, the compensation can be a long-term arrangement or a lump sum arrangement. The company will deposit the total compensation money into this Office. The Centralized Land Acquisition Office designates the amount of compensation depending on the type of crop and size of land. If farmers signed the long-term agreement, they will receive every year for as long as the farmers (normally the head of the family) live, a total amount depending on the crop and on the amount of land they had. Wheat is paid before July 15 at a market value set by the government on June 30 and for 500 kg per mu. Corn is paid before October 15 at a market value set by the government on June 30 and for 400 kg per mu.
The process used by Dongyue Group followed the steps listed below.
- Selection of land area:
The selection criteria include availability, project related, process adaptability and prevalent wind patterns.
- Consultation:
Meetings with village community representatives were held in order to determine if they were willing to give land rights to Dongyue. An agreement was signed by the Village Committee and the company, which was send to the local and national government. The compensation option was to receive a lump sum or a yearly compensation through the “Centralized Land Acquisition Office”.
- Approval process:
Application was sent to the land state bureau in order to see if land was suitable for industry use. Land state bureau gave formal approval and sent the information to the provincial land authority for approval. The provincial authority sends the final report to the city authority. Dongyue Group has land rights for 40 years.
- Compensation:
Money of compensation to farmers was deposited into the “Centralized Land Acquisition Office”. Farmers who signed a long-term agreement will be compensated on a yearly basis through the “Centralized Land Acquisition Office”.
As part of this investment and in accordance with the CAP, Dongyue Group will identify a qualified professional to do a post land acquisition and compensation review to identify all individuals compensated and the type of compensation chosen; Dongyue will monitor on a yearly basis the efficiency of the long-term compensation to farmers; and will implement an effective grievance mechanism.
Dongyue-Jinfeng acquired 20 ha land in early 2006 near Jinshan Township, Chifeng, Inner Mongolia Autonomous Region, China. Approximately half of the land is secondary woods belonging to the local government and the other half is composed of farmlands belonging to approximate 30 families. No physical resettlement has been done and all the families have additional farming lands besides the land acquired by Dongyue-Chifeng. Farmers were paid the equivalent to approximately 30-year income of the land with Yuan 660 per mu per year. During the interview with the IFC specialist, the farmers confirmed that they received the cash and were satisfied with the process. Dongyue-Jinfeng also likes to hire the local villagers for the qualified jobs.
