Aricom is preparing a comprehensive set of HSEC assessment reports including management plans that address key impacts assessed at every stage of project development. The first one being the Kuranakh mine currently under construction for which Aricom has committed to demonstrate that during both the construction and operation of the project, it will be in compliance with the environmental, labor, health and safety regulations of the Russian Federation, as well as international good practice per the requirements of IFC Performance Standards on Social and Environmental Sustainability. Aricom aims to address corporate issues as well as potential impacts for each project as outlined in the following sections.
Health, Safety & Environmental (HSE) Management:
Aricom has sought to integrate sound principles governing safety, business conduct, social, environmental and economic activities into our business practice which is both good for society and good for our business.
Aricom has recently formed a Health, Safety and Environmental Committee at Board level. The Terms of Reference of the Health, Safety and Environmental Committee is to monitor, review and make appropriate recommendations to the Board on all health, safety, environment and community relations risks. It is the responsibility of this committee to establish strong HSE principles and to ensure that these principles are both followed and understood by all. Aricom firmly believes that accidents do not just happen – they are caused and the company can help to prevent them by being alert, careful, and considerate and informed about the tasks being undertaken. The committee will monitor and improve the Group’s operating discipline by ensuring that it will learn from experiences and share these across the organization. It will lead the way for implementing a corporate Health, Safety and Environmental (HSE) Management System which will be used for the Kuranakh project as well as for additional exploration properties.
Aricom has sought IFC assistance and guidance in establishing this HSE Committee to meet international best practice in line with our PS. In this regard Aricom has committed to establishing compliance with the IFC sponsored Equator Principles for all its projects. Much to the credit of their local management team, SRK, in their March 2007 review for the recent project financing, has stated that they believe that the Kuranakh project is broadly compliant with the Equator Principles.
Some of Aricom’s projects are situated in picturesque and relatively untouched locations. The focus of Aricom environmental activities per the Action Plan and statement made at the HSE Committee is to retain this landscape and rehabilitate the impacted footprint to eventually return the license areas to a state that will blend in with the surroundings as much as is possible. If successful, Aricom will be in compliance with industry best practice for environmental compliance as outlined by regional authorities and the IFC guidelines. Qualified specialists within Aricom environmental department are responsible for the rational management and protection of natural resources, ensuring that there is no negative impact upon the surrounding areas. The conditions of land use and level of its effect on soil and vegetation comply with all Russian regulations. Atmospheric air protection is ensured by the removal of pollutants prior to discharging gases. Aricom is considering developing a corporate policy/strategy to preserve natural habitats where it operates in Far East Russia.
Health and safety remain a core focus for operating management, particularly as the company is near the completion of the construction works and commencement of operations at Kuranakh. Aricom is establishing a special service responsible for industrial and labor safety which includes, on site, medical, fire and emergency specialists as well as an ambulance and fire engine services. Aricom will undertake intensive staff training in safety procedures with input from external consultants and state authorities. IFC will monitor progress closely.
Social Responsibility and Community Engagement:
Social issues in the local communities remain in the forefront of Aricom’s concern and therefore continual efforts are made to support and encourage local initiatives. As an example, in Olekma, the community closest to the Kuranakh project, the company has recently completed an extensive refurbishment of the local heating plant – much to the happiness of local residents.
Value to the community can be most easily demonstrated by the high proportion of local inhabitants employed at Aricom’s first project. Of the 470 personnel to be employed at Kuranakh some 110 are expected to be employed from the local community which is comprised of a peak 517 persons in summer. The potential impact on community health from the influx of people, during construction particularly, will be addressed through a policy of local hiring for both workers and subcontractors. It should be noted that the way to access the Kuranakh mine is via rail therefore a large influx is not anticipated.
On emergency preparedness Aricom has already developed a preliminary emergency plans for the Kuranakh project as part of the EIA/OVOS documentation. IFC has asked the company to broaden the focus on emergency response and contingency planning including transportation, handling and use of chemicals. Aricom is committed to establishing and maintaining procedures to identify potential emergency situations, to respond to emergencies and to mitigate any resulting safety, health and environmental impacts that could affect local communities as well as workers.
Aricom has agreed to develop a systems-based approach to social and community management as well as on relations with stakeholders. These discussions included additional staffing requirements in Aricom’s HSEC functions to provide the resource needed for proper community engagement throughout the project life as well as supporting local economic development in the medium term. This requirement has been included in the Action Plan.
With IFC assistance using the Private Entrepreneur Partnership in Russia (PEP Russia) and in close consultation with key stakeholders, Aricom will explore SME development linkages for all its operations. IFC recognizes the need to support awareness and supervision capacity initiatives for local authorities. The same capacity issues apply to community engagement and local/community development planning. The IFC PEP Russia Technical Assistance team is involved, currently in the process of completing a scoping exercise on linkage opportunities in the Amur Oblast, consulting with local authorities and other key stakeholders.
S&E Assessment and HSE Permitting
- Kuranakh: the Environmental Impact Assessment (EIA) is available in English and was prepared in August 2006 by an independent consultant has been revised to reflect final project design and IFC requirements per the Performance Standards. A specific Action Plan for the Kuranakh operation is under preparation, and shall be completed and disclosed prior to the commencement of any significant mine operation activities.
Aricom is in the process of finalizing the permitting procedure for Kuranakh. To date Aricom have all the necessary and appropriate permits to enable development of the Porject. The Russian permitting procedure consists of two distinct phases - project initiation, which includes project development and construction, and, secondly, project operation. The first stage is provided for by the OVOS (the equivalent of an Environment Impact Assessment report) which is the main document for obtaining environmental permission for the operation. Before operations have begun, several permits are required to be obtained from different authorities and the OVOS must be approved by state environmental experts. Between July 2006 and February 2007 Aricom has secured a number of permits required as development works continues and additional ones will be obtained as and when required. The Kuranakh OVOS has been submitted to the Department of Natural Resources, Amur Region for their approval. It is estimated that the approval will take 3 months.
During operations, Aricom has to have regular inspections for environmental pollution, and must comply with maximum acceptable concentrations, determined by state authorities, for air quality, water quality, soils and sediments.
IFC has asked Aricom to conduct early on comprehensive baseline study at exploration properties, and use the baseline data in the detailed design to minimize deforestation, control erosion and preserve habitats.
Aricom’s senior management is supportive of the need to build local capacity in the areas of HSEC. The company is looking to increase its management capacity in Kuranakh in the areas of community relations, social development and environmental management during this later consultation phase prior to commencement of operational activities. The company has appreciated the necessity for these key positions to be urgently filled over the course of the next six months and this is reflected in the Action Plan. These personnel are expected to steer and coordinate management plans to be formulated for environmental and social management.
In order to enhance community engagement for each operation, Aricom will incorporate communication and consultation plans into its management systems. Additionally, any proposed new activity must be discussed with local communities and interested public. The company will develop a simple monitoring and reporting system for tracking implementation events. Aricom is incorporating contractors'' environmental and social specifications in tender documents for construction contracts and will insist on compliance with its policies and standards.
Labor and Working Conditions:
The company provides all construction, exploration and operational teams with good accommodations while they are on duty, with: high quality meals from the project canteen; special leisure areas, equipped with televisions and a library; a bath house; a laundry house; and substantial sports facilities. Aricom strictly adheres to the Russian legal requirements regarding salaries, working hours, safety and various social schemes, including, in some cases, medical care and pensions. The project staff undergoes annual health screens as well as regular check-ups during their duty period.
Each project company will initiate recruitment as soon as the final investment decision for each project has been made. Aricom’s senior management has agreed to implement a labor policy and put hiring plans in place as reflected in the Action Plan. Current workforce is mainly drawn from surrounding settlements (such as Olekma for Kuranakh) and each project company seeks to implement a non-discriminatory and equal opportunity policy. Through Peter Hambro Mining 10-year presence in Far East Russia, Aricom’s executives have regional experience in handling labor management and in growing local workforces into active contributors to mining operations.
The Labor Policy and a Social and Labor Plan will outline commitments relating to the workforce, including training,, reporting and monitoring. Aricom will make these documents available to their workforce. These plans will recognize freedom of association, occupational health and safety and provide a fair grievance resolution mechanism. Such plans will guide recruitment and retrenchment, as well as supporting hiring a local workforce. At all community consultation meetings throughout the region, employment by the company was a common request by local community members.
Aricom subscribes to the UN Voluntary Principles on Security and Human Rights and will ensure that its contracted security forces will abide by them.
Aricom will update the Action Plan annually after consultations with local communities and other stakeholders. The Action Plan will be independently audited throughout IFC involvement in the project.
Project Level Environmental and Social Issues:
- Kuranakh project:
The project will face the following issues related to mining and environment: this operation will have many pits and dumps, a large footprint (there is a major haul road running 40km between the 2 pits and the process plant) which require a careful assessment and management of associated facilities (access road, rail spur and water/power supply), as well as dust generation, Acid Mine Drainage (AMD) and mine reclamation and closure.
Baseline Conditions – In August 2006 Aricom completed the Environmental Impact Assessment report and established the baseline conditions against which the effect on the environment will be measured. Baseline conditions were established for:
Climate - North of the Amur oblast is a district with a strongly continental climate with large temperature differences on a seasonal basis. The absolute minimum temperature for the whole monitoring period was -54°C; the absolute maximum temperature was +37°C.
Seismic and hydrogeology - the Kuranakh deposit site is located within the Olekma seismic zone. Regionally, the deposit site is connected with Baikal seismic zone, reaching in a latitudinal direction for more than 1500 km. As is typical for earthquakes with an epicentre in the Amur region, the depth of the earthquake sources within the Olekma seismic zone is generally 5-10 km below ground level. The design of all facilities incorporates proper mitigation measures.
Hydrogeological conditions of the deposit site are defined by the presence of permafrost due to a strongly continental climate. Exploration drilling showed the permafrost thickness to be more than 300 m. Taking this fact into account, over permafrost, inter-permafrost and under permafrost ground waters were identified, associated with different hydrogeological formations.
Surface water - The River Kuranakh and its tributaries form the drainage network of the study area, the general length of the River Kuranakh is 78 km. The flow of the rivers and streams is very irregular throughout the year and practically absent in winter. The mining and processing facilities are not expected to impact water quality.
Soils - The results of the soil investigations showed that the land at the project area can be characterized by low potential fertility and is of low productivity. The majority of the project area is covered by mountain taiga forest. The forest is sparse as the trees do not grow very close together, are short and their development is suppressed by permafrost.
Wildlife - The project area constitutes habitat for a number of large and small mammals and also five rare protected species of birds. Next to the concession is the Imangra regional botanical reserve located on the western side of the project boundary. This reserve was established in 2002 by the Amur Oblast for conservation purpose after the license for mine development was granted. The mining concession does not overlap with the reserve.
Socio-economical issues - The nearest, and only, settlement within a radius of 50 km from the deposit site is the settlement of Olekma which is located 40 km from the mine site and 5 km from process plant site. The settlement was established in 1980 as a station settlement for Olekma Station on the Baikal-Amur Railroad. Population of the settlement is on average 517 people.
Indigenous people and cultural heritage - Amur Oblast has communities of Evenks. Traditionally, the main occupation of Evenks is deer farming and hunting. The nearest settlement to the Kuranakh deposit site with an indigenous population is Ust-Nyukzha, located 70 km south-east of the deposit site. No Evenks are living at Kuranakh but they just use the pasture land. The Kuranakh deposit site forms a very small part of the total area of deer pastures and hunting grounds.
Management Plan – A preliminary Environmental, Health and Safety Plan has been developed in the August 2006 EIA. It describes the main commitments of Aricom for the Kuranakh mining and processing project in terms of mitigation measures to protect the environment, safety provisions and proposals on public consultation. The Plan has been developed based on the issues identified during the preparation of the environmental impact assessment report. The need for preparing a full set of management plans has been identified during IFC appraisal and is included in the Action Plan.
Management and responsibilities - All questions related to environmental protection will be the responsibility of the environmental services department of the project. The department is headed by a chief specialist on environmental protection and safety, who has appropriate qualifications and work experience in mining. The head of the department reports directly to the Project Director. The environmental services department also includes a specialist on health and safety, and an environmental engineer.
Waste Management - The Kuranakh mining and processing project will produce a large quantity of different kinds of wastes. The main parts of the waste will be waste rock, dry tailings from primary separation and wet tailings from the process plant. Domestic wastes will be produced at the mine site and the process plant sites and will be disposed of in a landfill on the mine site. Waste rock from the open pit will be disposed of in dumps, located in the void of the open pit (internal dump), and beside the open pit (external dump). Waste rock dumps are a source of dust generation, and the management of dust will be the responsibility of the mining engineer responsible for the dump management. Non toxic tailings from the process plant will be disposed of in the tailings dam, located close to the process plant.
Dust Control - The Kuranakh mining and processing project will be a source of dust and low precipitation in the area reinforces this problem. Dust sources were defined as: open pit; waste rock dumps; primary concentration dry tails dump; crushing and screening plant; process plant and tailings dump. Adequate measures of water spraying will be implemented to provide the dust suppression and minimize the impact of dust on the physical environment and human health.
Water supply – The impact assessment on water resources showed that use of water resources on the mine site would require three boreholes to be drilled into local aquifers. One borehole has been drilled at the Olekma process plant site and two further holes will be drilled in 2007, one at the Kuranakh mine site and a second at the Olekma site. It is not anticipated that these 3 wells will have a impact on communities supply.
Community Health, Safety and Security - The major community health and safety issue is the road and rail transport of ore, supplies and chemicals. Kuranakh enjoys an advantage of not having to use any chemical reagents in the processing of ore. The only liquid material used in the process is water which is continuously recycled.
Emergency Response - Aricom has a responsibility both to minimize the risk of emergencies and to ensure effective planning for response to emergencies. Detailed emergency response plans for potential events, will be developed prior to the operational phase of the project on the basis of detailed design. These plans will: define emergency situations; develop emergency scenarios and assess the risk of their occurrence; record the quantity and location of hazardous substances; prepare material safety data sheets detailing the properties of each hazardous substance; detail the plan of action for each type of emergency; and stipulate the reporting procedures. This requirement is part of the Action Plan.
Health and Safety management system - To provide effective occupational health and safety management, an appropriate Health and Safety Management System (HSMS) will be implemented. The Chief specialist for environmental protection and safety will develop the occupational health and safety management system, with input from international and local experts. Occupational health and safety on site will be managed by the health and safety specialist who will report to the Chief specialist for environmental protection and safety. The HSMS will include the following main parts: risks identification; risk assessment and control; First-aid; training; ambient conditions in the workplace.
As part of the Action Plan, Aricom has agreed to prepare a full set of management plans for the Kuranakh mine to properly implement all required environmental and social mitigation measures as well as a detailed monitoring plan. It will include detailed procedures and instructions for employees on every component of the project. A credible approach to HSEC management planning is needed as the project is located in a pristine area with vulnerable settlements, where community health and safety is critical.
