25626 - Sonae Novobord

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Environmental & Social Review Summary

Project Number

25626

Company Name

SONAE NOVOBORD (PTY) LTD

Date ESRS Disclosed

May 8, 2007

Country

South Africa

Region

Africa

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 19, 2007
Signed : Jun 27, 2007
Invested : Jul 18, 2007

Sector

Wood Panels and Engineered Wood Products

Industry

Agribusiness and Forestry

Department

Regional Industry - MAS Africa

Project Description

Sonae Industria is one of the largest producers of wood based panel products globally. The acquisition of Novobord has established Sonae Novobord as one of the leading manufacturers of particle board and MDF products in South Africa. Sonae Novobord produces and upgrades particle board and MDF at its White River factory, serving both domestic (95 %) and export (5 %) markets. The White River plant currently has two preparation lines and one press line, allowing the plant to produce either medium density fiberboard (MDF) or particleboard (PB) on the same press line. The existing factory produces approximately 510 m3 of particle board or 220m3 of MDF daily. The plant operates on a 24/7 basis for approximately 350 days per annum, with one scheduled downtime period over Christmas and a shorter one mid-year. The expansion Project will add a new drier, some dry screening equipment, new forming, press and sanding lines dedicated to increasing particle and fiberboard production volumes. Revised capacity upon completion of upgrades will be ~1000 m³/day of PB while the current line would be dedicated to produce MDF at ~220 m³/day.

Overview of IFC's Scope of Review

This review is based upon a site visit to the White River (Rocky Drift) factory site and desktop review of various environmental and social documents, as follows:

- Plant Expansion and Upgrade, EIA Scoping Report (WSP Environmental, Aug 2006)
- Project Overview Presentation (PowerPoint, Sonae Novobord, March 2006)
- General Plant Overview (PowerPoint, Sonae Novobord, 2006)
- Injury Rate Spreadsheet (12 months ending November 2006)
- Corporate Social Investment slide for Sonae Novobord (PowerPoint, 2006)
- Sonae Industria Annual Report 2005
- Sonae Novobord Group Policy Manual – Retrenchment Policy (Aug 2004)

E & S Project Categorization and Applicable Standard

Environmental and Social Mitigation Measures

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 performance standards and 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. Further information is provided in the attached documentation.

Environmental and Social Assessment & Management:

An environmental impact assessment (EIA) was previously conducted for the new press line and a Record of Decision (approval) was obtained in 2005. As a result, construction is currently underway on the new line. An EIA was initiated in 2006 for the installation of the new drier. A scoping report (phase 1 of EIA under South Africa regulations) has been prepared by WSP Environmental, an independent consultancy. The scoping phase included notification of Interested & Affected Parties (I&APs) and the holding of a public meeting to discuss potential environmental and social impacts of the expansion. The second phase of the EIA, which entails conduct of detailed technical studies of noise, air emissions, traffic and cultural heritage impacts, is currently underway. Sonae Novobord will implement in full all mitigation actions listed in the Environmental Management Plan delineated in the approved EIA. The White River factory has been ISO 9002 certified since 1994, and ISO 14001 certified since 1999. Audits are conducted by the South African Bureau of Standards (SABS) annually for re-certification purposes. The factory has also recently received OHSAS 18000 accreditation.

Labor and working conditions:

The White River factory currently has 130 employees. Additional 37 jobs will be added as a result of the expansion project. The company has a Human Resources function and associated policies. There are three workers’ organizations on site, namely:

- Chemical, Energy, Paper, Printing, Wood & Allied Workers’ Union (CEPPWAWU)
- Solidarity
- Employee Representative Council (catering for non-unionized employees)

There have been no strikes at the factory since the late 1990s and no significant industrial action for at least three years. The local Department of Labour, based in Nelspruit, undertakes regular audits of the factory to check compliance with a range of labour laws and regulations. Sonae does not employ any migrant workers, nor does it make use of child or forced labour. The last retrenchment was undertaken in 2003, and involved six employees. Alternative employment was identified for all, as part of the mandatory negotiation process with labour unions around this issue. The Sonae Industria Group has a retrenchment policy which is also utilized by Sonae Novobord White River. Due to the expansion process, no retrenchment is anticipated for some time.

Occupational Health & Safety:

Employees are provided with relevant personal protective equipment (PPE), and were observed to be wearing appropriate PPE during the site inspection. Medical checks are undertaken on an annual basis for employees. Occupational hearing loss tests are routinely undertaken for all staff. Workplace monitoring for low levels of formaldehyde is conducted on a weekly basis at a number of locations throughout the plant, as per the Occupational Health & Safety Act. Monitoring results are available to the Department of Labour, and reviewed during external ISO 14000 or OHSAS 18000 audits. Employee exposure surveys are undertaken by qualified external parties including general work areas and employee-specific 8-hour exposure studies where a workplace potentially represents low level formaldehyde exposure (e.g. the glue deck and press areas). Accidents and lost time rates are monitored and analyzed. Data provided indicate a downward trend over the past year for both disabling injury frequency rates and total injury frequency rates for the factory. Before any construction occurs on site a Health & Safety Plan has to be submitted to the regulator and an OHS overseer identified. The project itself has a dedicated safety and risk controller, who conducts independent inspections of contractors. This person also conducts induction programs and toolbox talks related to OHS aspects.

As formaldehyde emissions and exposures from Sonae Novobord’s operations are restricted to specific workplaces and potentially to selected employees, workplace formaldehyde monitoring is conducted weekly. The data are recorded and analyzed by the laboratory, reviewed by the central safety committee and indicated corrective actions are implemented consistent with the requirements of OHSAS 18000. Over and above weekly testing, external Occupational Stressor Surveys are conducted by an accredited external company. One objective of these exposure surveys is to determine the exposure level by occupation and work area and thus delineate actual exposures during the working shift. The legal Time Weighted Average (TWA) limit in South Africa is 2 ppm, and the Short Term Exposure Limit (STEL) is 2 ppm. The factory’s internal STEL control limit is currently set at 1 ppm. IFC Environmental, Health & Safety Guidelines stipulate a Short-Term Exposure Limit (STEL) of 0.3 ppm, as recommended by the American Conference of Governmental Industrial Hygienists (ACGIH). Sonae Novobord is revising facility action levels for formaldehyde downward over the next few years to reflect international norms. Additionally, the company will continue to confirm through routine monitoring that the new emission control measures described above are having the desired impact on emission levels.

- Pollution Prevention & Resource Conservation

Air Emissions:

The current project for which the ESIA scoping study was prepared is for a replacement of the wood drier. Air emissions from the drier as well as a number of other processes will be reduced significantly with the installation of the new drier, board press and associated elements of the planned investment program. The drier is fueled predominantly with sander dust from both PB and MDF board manufacture and limited furnace oil; light furnace oil is used for drier startup. Based upon comments received from interested and affected parties during the EIA public hearing, the drier appears to be a central focus of concern to interested and affected parties due to its visible stack emissions. The existing drier was specified to reduce emissions to ~400 mg/Nm3, which was the regulatory limit at the time that the drier was supplied and installed. The new unit will reduce particulate emissions to ≤100 mg/Nm3.

Fugitive emissions are being addressed as part of facility expansion including the new drier, installation of a supplemental press and a scrubber system for both presses, and other facility modifications and improvements. Air emissions from the existing press are currently vented to the atmosphere. The new press, which will be installed in the first half of 2007, will be equipped with a scrubber for fumes and particulate emitted from particle board and MDF manufacturing. Emissions from the existing press will be collected and conveyed to the scrubber supplied with the new press. Low level formaldehyde emissions from manufacturing were addressed in the occupational health and safety discussion above. In addition, the pneumatic conveyor for dried, screened material, which has been identified as a source of fugitive dust emissions, will be replaced with mechanical transport equipment thereby helping to reduce fugitive particulate.

Other point source air emissions from wood waste combustion include the thermal oil heater for the particle board press and the boiler that is operated during MDF manufacturing. Both wood waste and timber chips are used as fuel in the thermal oil heater combustion unit, which was supplied with air emissions controls to maintain particulate emissions at ~150 mg/Nm3. Similarly, the MDF boiler is fired with board trim pieces, and wood chips and has the same level of emissions controls. Sonae Novobord’s five-year investment plan includes purchase and installation of emissions scrubbers to reduce particulate emissions from both of these combustors to <100 mg/Nm3.

In summary, Sonae Novobord will implement the following measures to reduce point source emissions:

- Install a new drier and reduce stack emissions from ~400 mg/Nm3 to ~100 mg/Nm3;
- Install a fume collection system for the existing press and treat collected fumes and particulate in the scrubber system that will be supplied and installed as part of the new press;
- Complete installation of the new wood waste drier and convert pneumatic conveyance of screened materials to a mechanical device to reduce fugitive emissions from operations;
- Upgrade emissions controls for thermal oil heater for the MDF/particle board presses to reduce particulate emissions to <100 mg/Nm3;and
- Implement all measures in relation to air emissions specified as conditions of approval in the EIA record of decision.

Wastewater Emissions:

On-site industrial processes generate limited wastewater. The MDF process generates wastewater mainly from the plug feeder squeeze-out and boiler blowdown. This water is collected in the storm water collection pits at the lower boundary of the premises. At this point it is treated for pH and COD, before being pumped to the artificial wetland dams, from whence the water goes to a surface stream. The effluent is tested on a regular basis to ensure compliance with the Department of Water Affairs’ requirements. The collection pits have a combined volume of 900 m3. When the new line runs particle board, the current line will produce MDF. Sonae Novobord anticipates more regular treatment and pumping of water to the wetlands in future. Effluent from sanitary facilities and similar operations is collected and discharged to the municipal treatment system. However, storm water may become contaminated with particulates as it traverses the site. Thus collected storm water from the property is channeled to the same collection sumps situated in the northwest portion of the site and is then pumped to a series of four ponds of an artificial wetland flow through system constructed by the company in 2001. Effluent from the final pond is discharged into local surface water. Effluent from the final pond is monitored to ensure compliance with discharge requirements.

Resource Conservation/Energy Efficiency:

Timber converted to chips for particle board and cellulose fiber for fiber board emanate from discards from other industries with high wood requirements. The bulk of biomass fuel for the three main energy sources – the board press thermal oil heater, wood chip drier and the MDF boiler - all use wood waste either generated internally or sourced from area sawmills that previously incinerated this wood waste. Sonae Novobord’s purchases of wood waste therefore contribute to elimination of open burning of wood waste. Sander dust is captured and used to fire the drier. Bark, spilled wood chips, reject material and other wood-based waste are used as boiler fuel. Reject product and trim cut-offs are recycled back to the process to limit wastage and ensure optimal use of raw material.

Solid Waste:

A small volume of wood waste combustion ash is generated by the thermal oil heater and the MDF boiler. Collected ash is transported to the local municipal landfill for disposal.

Hazardous Materials:

Sonae Novobord utilizes urea-formaldehyde resin based adhesives for MDF and particle board. The resin is manufactured by third parties and transported to site in bulk. Formaldehyde emissions from wood products bonded with urea-formaldehyde resin-based adhesives is strictly regulated. European urea-formaldehyde resins are classified according to free formaldehyde content of the resin before the curing process. E-1 rated resins contain less free formaldehyde than E2 rated resins and have become the new EU standard since formaldehyde was classified as a selected carcinogen with limited evidence in 2006 by the World Health Organization. Sonae Novobord’s current resin is rated E-2. After installation of the new press and expiration of the performance guarantee (July-August 2007) the company will convert to E-1 resin. Trials were completed for E1 resin in the first quarter of 2006. Workplace exposures to low levels of formaldehyde from forming resins, which is the principal issue of concern in this industry, are discussed under Occupational Health & Safety above.

Emergency Preparedness and Response:

The factory has a facility-wide emergency response plan. Fire safety equipment includes fire hydrants, fire extinguishers, fire alarms and a relatively sophisticated automated system of fire detection/suppression around sensitive areas such as the drier. Due to the nature of the process and raw materials, occasional small fires, which occur in the process and away from staff, are typically detected and suppressed each month. To date, no significant fire-related incidents have occurred at the factory. Occupational health and safety programs include periodic drills to ensure readiness for unplanned events. Sonae Novobord has five trained fire teams; at least one of these teams is working during each shift.

Road Traffic:

Current and future transport requirements related to the factory are as follows:

- Raw materials: currently ~ 50 trucks/day; in future ~100 – 150 trucks/day
- Resin: currently 3 trucks every 2 days; in future 3 trucks per day
- Product: currently 18 trucks per day; in future ~30 - 40 trucks per day

These numbers provided apply to the proposed expansion and reflect day and night time traffic (i.e. spread over 24 hour cycles); whilst those relating to the existing situation involve day time only traffic (i.e. spread over 8 - 12 hour cycles). Public concerns have been raised concerning the number of trucks on the road which links Nelspruit and White River, mostly in relation to possible accidents, raw material spillages (on a gravel back road leading to the factory) and road congestion. In response, Sonae Novobord has included a traffic study in the detailed studies component of the EIA which is currently underway. Preliminary results indicate that the existing road system can deal with both the existing and expanded transport requirements of the factory. However, in order to reduce congestion around the factory and improve road safety, Sonae Novobord has agreed to the following ameliorative measures.

- Constructing a second entrance to the plant to separate logistics related from timber related traffic;
- Adding an additional weigh bridge to eliminate congestion within the factory, which otherwise leads to congestion outside of the factory gate;
- Developing significant parking space within the factory walls to allow trucks to wait inside rather than back-up along the main road (as happens currently);
- Widening the main road past the plant in order to ensure safe entrance and exit;
- Requiring the compulsory use of log nets for certain sizes of timber product;
- Informing raw material suppliers of liabilities associated with spillages on national roads and that further spillages will lead to a ban on delivery to Sonae Novobord; and
- Regular weekly inspection of the gravel back road to the factory and active cleaning if any spillages have occurred.

Noise:

A few individual members of the public complained about factory noise levels. Sonae Novobord responded to these complaints by commissioning an independent noise survey at the affected properties. The noise study showed that noise levels were found to be well within acceptable limits at the receptors.

Stakeholder Engagement

Novobord (now Sonae Novobord) began organizing quarterly public engagement meetings several years ago. As the level of interest in the company’s activities gradually declined, meeting frequency was reduced to bi-annual and thereafter annual events. However, it is likely that public meeting frequency will now increase due to interest generated by the EIA for factory expansion. A stakeholder database has been developed during the various EIAs and this forms the basis for contacting interested & affected parties before meetings. EIA specific public engagement is mandatory in South Africa and formed part of the Scoping phase of the current EIA. Notification is provided both on site and by means of local newspaper advertisements. Adjacent landowners are contacted by telephone or in writing. A public meeting was held and another is likely to be held early in 2007 once the EIA detailed studies have been completed and the draft EIA report is available for public comment. Public concerns raised to date have been and are being scrutinized carefully in external detailed studies in the second phase of the EIA process; these studies include air emissions, road traffic, noise and possible impacts of air emissions on ancient rock art (paintings) in the area.

Environmental documents can be accessed at the following locations:- Sonae in Woodmead, Sonae House, 148 Western Service Road, Woodmead, Johannesburg, South Africa;- White River, Sonae Novobord, Heidelburg Road, Rocky Drift, White River, South Africa.

For further information please contact:

William B Morkel, Company Secretary
Sonae Novobord (Pty) Ltd
148 Western Service Road, Woodmead
2157 Johannesburg South Africa

Telephone: +27 11 236 1408
Fax: +27 11 656 2204
E-mail: wmorkel@sonae.co.za
Website: http://www.sonae-novobord.co.za

Client Documentation

File Name	Actions
EAP.pdf
EIA Scoping Report.pdf

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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.

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