25934 - Merec Expansion

Who We Are
Who We Are

IFC is the largest global development institution focused on the private sector in developing countries. By encouraging growth, IFC advances economic development, creates jobs and improves the lives of people.
More About Us
About IFC

Our Leadership

Development Partners
Accountability

Learn more about accountability
Annual Report

Download the Report
What We Do
What We Do

IFC advances economic development and improves the lives of people by encouraging the growth of the private sector in developing countries. We achieve this by investing in impactful projects, mobilizing other investors, and sharing expertise.
What We Do Overview
SOLUTIONS

Our products and services
OUR PRIORITIES

Climate Business

Fragile & Conflict Afflicted Situations

Gender

Mobilizing Private Capital

Sustainability
SECTORS & EXPERTISE

Agribusiness & Forestry

Creative Industries

Education

Financial Institutions

Funds

Health

Infrastructure

Manufacturing

Public-Private Partnerships

Tourism, Retail & Property

Trade & Supply Chain Finance

Venture Capital

Working Upstream
Where We Work
Where We Work

As the largest global development institution focused on the private sector, IFC operates in more than 100 countries around the globe. We apply lessons learned in one region to solve problems in another.
Overview
By Region

Africa

East Asia and Pacific

Europe

Latin America and the Caribbean

Middle East and Central Asia

South Asia
Our Impact
Our Impact

Our impact improves lives. IFC brings a clear set of advantages to the world’s most challenging markets. Including a history of innovation, a global mandate, and a determination to achieve measurable development impact.
Our Impact Overview
PRINCIPLES & MEASUREMENT

Impact Investing at IFC

Measuring and Monitoring (AIMM)

Evaluation

Sustainable Development Goals (SDGs)

Owned by 186 member countries and consistently rated AAA/Aaa. IFC aims to achieve our mission of promoting development by providing debt and equity to the private sector, through a range of benchmark and bespoke products.

For Partners

For Investors

Get in Touch

Environmental & Social Review Summary

Project Number

25934

Company Name

MEREC INDUSTRIES SA

Date ESRS Disclosed

Apr 26, 2007

Country

Mozambique

Region

Africa

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Oct 29, 2007
Signed : Jul 8, 2008
Invested : Oct 16, 2008

Sector

Grain Processing (Milling, Starch, Flour, Malt)

Industry

Agribusiness and Forestry

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Merec Industries Lda. (Merec), an existing IFC client and a leading Mozambican wheat miller, is requesting a corporate facility to finance its current expansion and optimization program in Maputo, including: acquisition and installation of additional intake equipment for to increase existing wheat milling operations of 140 tons/day and 250 tons/day in Maputo; acquisition of a currently rented 1,500 m2 warehouse and distribution center in Machava; and construction of a new 3,300 m2 warehouse in also in the Machava District of Maputo; purchase of eighteen 30-ton trailers to expedite ship unloading, transport increased production volumes and provide increased logistic capacity for distribution of group products (wheat flour, maize flour, rice, and sugar); and, refinance short term working capital.

Overview of IFC's Scope of Review

IFC conducted a physical inspection of all Merec operations in late 2006 including flour milling operations in Beria and Maputo. In addition IFC reviewed data provided by the company for the proposed expansion project. IFC also conducted interviews with Merec employees to clarify specific points about operations and the expansion project.

E & S Project Categorization and Applicable Standard

Merec imports wheat at the ports of Beira and Maputo and processes it in three low impact, well established flour mills situated in Beira and Maputo. The company also owns and operates distribution warehouses for food products and a fleet of trucks for transporting wheat from Beira and Maputo ports to four mills and for distribution of milled products and foodstuffs. Flour milling operations are low impact operations with few if any environmental issues; similarly distribution of bulk goods is a low impact operation provided that vehicle operations and maintenance are conducted in compliance with good international industry practice. Solid waste from operations consists predominantly of office and packaging paper waste and vehicle maintenance both of which are recycled.

Environmental and Social Mitigation Measures

The sponsor has presented plans to address elucidated impacts to ensure that the proposed project will upon implementation of agreed measures, comply with the environmental and social requirements, host country laws and regulations, IFC’s performance standards and environmental, health and safety guidelines. 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 environmental action plan (EAP).

- Social and Environmental Assessment and Management Systems.

Mozambique Decree no. 76/98 of 29 December 1998 established the requirements for environmental licensing of industrial facilities. All public or private activities that may have a direct or indirect impact on the environment must prepare an environmental impact assessment (EIA) or obtain approval from the Ministério Para A Coordenação Da Acção Ambiental (MICOA) to proceed with construction and operations in the absence of an EIA. The warehouse facility to be constructed in Machava, Merec is exempt from the MICOA requirements for an EIA. Merec will provide documentation demonstrating that environmental assessment requirements have been waived in accordance with the attached environmental action plan (EAP).

Merec has no formal management system at present. However internal systems used for raw materials and finished goods acquisition, transport and storage and to ensure quality production are well established. Merec purchases wheat internationally using a written specification. Wheat is imported to the Port of Maputo from USA, Europe (Germany), Argentina, Canada and Australia. Bulk wheat is transported to the mill by trucks. At the Socimol mill there is rail spur is available with a connection to the Maputo Port rail system. Merec’s future plans include utilization of the spur to transport bulk wheat to the mill. On-site QA laboratories are used to ensure compliance with purchase specifications. The laboratory is utilized for continuously analyzing collected samples and to determine compliance with defined operations parameters. The QA laboratory at the Socimol mill also operates a small bread bakery to ensure that the produced flours yield good quality breads. The Production and Quality teams work together to ensure that mills are operated in accordance with the quality parameters.

Merec’s Human Resources manager is also responsible for operations compliance with diverse Mozambican laws and regulations including training, occupational health and safety and government guidelines for production and management of foodstuffs. This function is well established to ensure compliance.

Mr. Veeresh Hiremath has developed a good working relationship with the Matola District municipality manager in Maputo. This channel will be utilized for the purposes of community engagement and disclosure of Merec’s expansion plans to the local authorities and community. At the time of purchase of the Socimol mill there were newspaper articles written in the local press announcing the acquisition of the Socimol operation by Africom/Merec.

- Labor and Working Conditions: Merec has a Human Resources Department and an HR policy.

The HR policy incorporates a grievance mechanism for expressing concerns about employment and working conditions. There is a collective labor agreement with a local work organization and both employees and Merec are guided by this agreement. The HR manager is responsible for all compliance with Mozambican laws and regulations affecting food production labor and occupational health and safety.

Merec provides fire prevention and response training to all employees at induction, as well as refresher courses annually. Fire drills are carried out twice a year. These courses are conducted for Merec employees by a local fire-fighting supply company. Merec mills are designated non smoking facilities and are clearly posted with no smoking signs. Fire and emergency response drills are carried out twice a year. Merec will formalize corporate occupational health and safety training activities for milling, transport, warehousing and other activities to include expanded training programs; job hazard analyses; orientation to chemical compounds and employee training using material safety data sheets (MSDS) or International Chemical Safety Cards (ICSCs); for chemicals employed in pest control; and collection of accident and near miss statistics and analysis of these statistics to modify work places and working conditions to reduce the number of lost time accidents observed.

The central stairwell for the Socimol mill serves six floors with an open central well and very low railings. The space in the well is used for a freight elevator to transport equipment and tools to upper floors for maintenance and operations. Additionally, aging milling technology and a central drive unit providing belt-driven power for the flour mills pose diverse occupational health and safety risks to employees. Merec will erect a fall-proof structure around the stairwell and reduce the hazards of unenclosed drive belts for the flour mills in accordance with the EAP.

- Pollution Prevention and Abatement.

There is no process effluent as all water used in operations is consumed in the flour mills mill for wheat conditioning. Potable water for operations and sanitary purposes is provided by the municipality. Wastewater from employee changing rooms, bathrooms, laboratories and other operations is piped to a septic tank and connected to a subsurface disposal system. No hazardous materials are utilized in milling or food storage and distribution operations with the possible exception of compounds that the subcontractor uses for pest management. Small scale fueling operations for company transport vehicles, which will be expanded, are segregated from milling and storage operations. Pest control materials are consistent with those allowed for food preparation operations.

Merec milling operations are closed to reduce the release of dust and the potential for a catastrophic explosion. However at the Socimol mill the machinery age and configuration prevent collected dust from being returned to product or to bran. To date the company has been unsuccessful in selling the waste for animal feed. As collected dust is not blended back into product as it is in other mills, Socimol operators burn waste flour collected by the dust suppression system and floor spills; ash is used as a soil amendment on the property. In compliance with the EAP Merec will implement an alternative milling waste disposal procedure and eliminate burning of collected dust.

Merec’s transport vehicle maintenance facility produces waste hydrocarbons and scrap that are collected and sold for recycling. Diesel fuel for vehicles is stored in above ground containers with no secondary containment. Waste hydrocarbons in storm water from the property are collected in an oil water separator and prior to discharge to the public sewerage.

Merec’s greenhouse gas emissions resulting from consumption of electric power do not exceed IFC’s threshold of 100,000 tons/year of CO2 equivalents. Nevertheless, IFC is in discussions with Merec to fund an energy consumption audit for Socimol milling operations to investigate feasible reductions of national grid and locally-generated energy consumption and to define capital expenditures that could reduce energy demand. The local cost of energy is high at a reported ~US$0.38/kWh. Potentially significant savings may be realized through installation of individual electric motors on flour mills because at present even if only one mill is operating the central drive must be in operation.

Pest management is provided by third party service company licensed by local government. In general the service is not utilized unless an infestation is noticed. Merec will obtain technical information on the chemicals in use and include information about these compounds and associated hazards in employee occupational health and safety training programs. Bird intrusion is a common problem and control measures include trapping and releasing.

- Community health Safety and Security.

Merec contracts external security services and will prepare a contract specification for these services to include guidance for the contractor firmly based upon the principles of proportionality and by good international industry practice in hiring, rules of conduct, training, equipping and monitoring these services. Merec will also make appropriate enquiries into past performance of the security contractor and make an effort to unearth any evidence of past abuses.

The company will develop an emergency response plan and include community representation and awareness building as part of local community engagement.

Through the local director’s established working relationship with the chief administrative official of the Matola district, where Merec operations are an active member of the business community, Merec will ensure that supplemental community engagement takes place in addition to the activities described above under PS1.

- Land Acquisition and Involuntary Resettlement.

The land area required for the new warehousing operation to be constructed in the Machava area of Maputo is part of an existing parcel and complex that Merec purchased in 2000 for its operations base. The warehouse is strictly a storage facility. The land was acquired at that time on a willing buyer-willing seller basis and no economic or physical displacement occurred due to the purchase. The warehouse to be purchased is existing facility that is currently rented in the Salenta Benefica area of Maputo. Negotiations are underway for purchase; there will be no physical or economic displacement resulting from this transaction.

Stakeholder Engagement

Translation of the ESRS and EAP into Portuguese and publication in local news organs and placement in town council offices in the Districts where Merec operates. Merec will utilize its existing working relationship with the Matola District chief administrative officer where Merec is an active member of the business community to promote community understanding of Merec’s operations. Through this channel Merec will explain its expansion program to local community representatives and describe potential impacts and how these will be mitigated through project design.

Merec’s expansion documentation as well as environmental review documents prepared for the project may be viewed at the following location or by contacting the following individual.

Location: Merec Industries Lda., Mashava
Maputo Mozambique

Contact: Mr. Veeresh Hiremath
Chief Operating Officer
Telephone:+258 2 1 750 103

email: veeresh@sasseka.com

Environmental & Social Action Plan

Merec Expansion(25934) Supervision Disclosure Snapshot – Version 2
Description	Anticipated Completion Date	Status	Comments	Completion Date
Environmental and Social Impact Assessment and Management Plan. Commission a qualified Consultancy to undertake the EIA of the proposed Maputo (Matola) Grain Terminal and Flour Mill at Nacala mandated by MICOA for new industrial installations in accordance with the applicable IFC Performance Standards and WBG Environmental, Health and Safety (EHS) General and Sector-Specific Guidelines.	30-Dec-2012	In progress	Under discussion with IFC Client	9/30/2012
Upgrade Housekeeping and Occupational Health and Safety Standards of Machava and Socimol Operations. Taking the operations of the Beira Flour Mill as a benchmark, undertake an internal audit of workplace health and safety conditions in the Machava and Socimol flour mills and develop a Corrective Action Plan for bringing those operations up to the standards of Beira.	30-Sep-2012	Completed	Completed	9/30/2012
Upgrade Housekeeping and Occupational Health and Safety Standards of Machava and Socimol Operations. Taking the operations of the Beira Flour Mill as a benchmark, undertake an internal audit of workplace health and safety conditions in the Machava and Socimol flour mills and develop a Corrective Action Plan for bringing those operations up to the standards of Beira.	30-Sep-2013	In progress	Under discussion with IFC Client
Occupational Health and Safety Program. Develop a Group-wide occupational health and safety program for milling, transport, warehousing and other operations to address: health and safety training; job hazard analyses; evaluation and development of mitigation of dust explosion hazard in all operating mills; orientation to chemical compounds and employee training using material safety data sheets (MSDS) or International Chemical Safety Cards (ICSC) for chemicals used in facilities for fumigation and pest control; collection of accident and near miss statistics and analysis of these statistics to reduce the number of lost time accidents recorded.	30-Sep-2012	Completed	Completed	9/30/2012
Occupational Health and Safety Program. Develop a Group-wide occupational health and safety program for milling, transport, warehousing and other operations to address: health and safety training; job hazard analyses; evaluation and development of mitigation of dust explosion hazard in all operating mills; orientation to chemical compounds and employee training using material safety data sheets (MSDS) or International Chemical Safety Cards (ICSC) for chemicals used in facilities for fumigation and pest control; collection of accident and near miss statistics and analysis of these statistics to reduce the number of lost time accidents recorded.	30-Sep-2012	In progress	Under discussion with IFC Client
Occupational Health and Safety Program. Develop a Group-wide occupational health and safety program for milling, transport, warehousing and other operations to address: health and safety training; job hazard analyses; evaluation and development of mitigation of dust explosion hazard in all operating mills; orientation to chemical compounds and employee training using material safety data sheets (MSDS) or International Chemical Safety Cards (ICSC) for chemicals used in facilities for fumigation and pest control; collection of accident and near miss statistics and analysis of these statistics to reduce the number of lost time accidents recorded.	30-Sep-2015	In progress	Under discussion with IFC Client
Environmental and Social Impact Assessment and Management Plan. Commission a qualified Consultancy to undertake the EIA of the proposed Maputo Grain terminal and Flour Mill at Nacala mandated by MICOA for new industrial installations in accordance with the applicable IFC Performance Standards and WBG Environmental, Health and Safety (EHS) General and Sector-Specific Guidelines.	30-Sep-2012	In progress	Under discussion with IFC Client
Obtain Internationally Recognized Food Safety Certification for Pasta and Biscuit Manufacturing Operations. Pasta manufacturing may be certified Hazard Analysis and Critical Control Point (HACCP) independently in accordance with the Codex Alimentarius or included in an ISO 22000 management system that combines quality and food safety.	30-Sep-2015	In progress	Under discussion with IFC Client

Client Documentation

File Name	Actions
EAP.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.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

Projects

Environmental & Social Review Summary

Project Description

Overview of IFC's Scope of Review

E & S Project Categorization and Applicable Standard

Environmental and Social Mitigation Measures

Stakeholder Engagement

Environmental & Social Action Plan

Client Documentation

Similar Projects

Projects

Environmental & Social Review Summary

Project Description

Overview of IFC's Scope of Review

E & S Project Categorization and Applicable Standard

Identified Applicable Performance Standards

Environmental and Social Categorization and Rationale

Environmental and Social Mitigation Measures

Environmental and Social Mitigation Measures

Stakeholder Engagement

Stakeholder Engagement

Environmental & Social Action Plan

Environmental & Social Action Plan

Press-Release

Related SII

Client Documentation

Similar Projects

Information on E&S Complaints and Grievance Mechanisms

Disclaimer