FV has presented plans to address the impacts of the project and to ensure that the existing and proposed operations 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 Environmental, Health and Safety Guidelines. The information about how these potential impacts will be addressed by the company is described in the paragraphs that follow and summarized in the attached Environmental and Social Action Plan (ESAP).
- PS1: Social and Environmental Assessment and Management Systems
Environmental and Social Assessment:
The development of an Environmental and Social Impact Assessment (ESIA) for the proposed project is not required by the local authorities. The company holds the required permits for both plants of Villa Rosa and Florida from the local governments (Provincia de Buenos Aires, Municipalidad del Pilar, Municipalidad de Vicente Lopez), including environmental permits (Certificado de Aptitud Ambiental), obtained in September 2006 and June 2007 respectively, gaseous emission discharge permits and liquid effluent discharge permits.
Management Systems and Organization:
FV has developed an Environmental Management System (EMS) consistent with ISO 14001 standard and has applied for formal certification for both plants. The company aims at obtaining the certification by April 2009. The management system documents are available and easily accessible to all staff through company’s intranet. Data recording and retrieval are effective. The company has developed its Environmental Objectives, linked to the key components of the company’s EMS, where the planned actions are described, responsibilities assigned, target dates, and progress documented. Adequate control of environmental, health and safety aspects is also in place for the other companies of the group, including Ferrum.
The environmental department is well staffed and reports directly to the top management of FV. The company has formed an environmental committee (Comité Ambiental) which consists of the two FV Directors, the two Plant Managers, the Environmental Manager and the Maintenance Manager. The environmental department includes the following sub-units: ISO 14001, legal compliance, research and development, technical specifications and documentation. Labor and labor relations are managed by the Human Resource (HR) Department, under which the occupational health and safety function is situated.
FV will review its organization to create a corporate environmental, health and safety (EHS) management function to ensure consistent EHS approach throughout different companies and different plants of the group (e.g., FV Argentina, FV Area Andina, Ferrum and CIBA). The company will develop and implement a system to systematically conduct environmental and social due diligence on all companies targeted for acquisition.
Training: FV has an established program to provide necessary induction and periodic training for all its direct and contractor employees on occupational health and safety aspects related to its operations, environmental management, and labor issues. Emergency preparedness and response training, and first aid training are also consistently provided. The company records all training sessions performed and trainees.
- PS2: Labor and Working Conditions
Human Resources Policy and Management:
The company underwent a steady increase in its workforce in the past five years, growing from approximately 1,100 staff to the current 1,600 staff, out of which approximately 1,250 at Villa Rosa plant and 300 at Florida plant. The staff turnover fluctuated from 6% to 15% in the past five years, but the workforce is generally stable, particularly after the first year of employment in the company and for the skilled positions. FV’s proposed upgrade project is expected to create about 200 to 300 new job positions within the company and about 500 indirect jobs in the supply chain. The HR department is adequately structured and staffed. The occupational health and safety coordinator, medical staff, and security manager report to the HR manager. The company has HR policy and procedures that cover all key aspects, including recruitment, induction and training, performance evaluation, promotion, disciplinary actions and dismissal. FV HR policy and labor relations policy are provided to the new staff and all procedures are readily available to staff. A three-day induction program is provided to new hires. Continuous training programs are well documented and comprehensive. Approximately 19,000 hours of training were provided in 2007.
HR management department provides the staff with clear terms of employment [position, wage, annual bonus, annual review, retirement fund and other benefits (including social security, personal accident insurance), medical examination, annual leave, sick leave and hours of work, emergency tasks, termination of service, change in conditions of service, flexibility, security and confidentiality, labor relations]. Copies of the induction manual, providing additional information relevant to industrial relations, disciplinary code and procedure, roles and responsibilities within the organization, are also provided to the staff.
For all workers FV guarantees minimum wages (as agreed with the representative worker’s organizations); the average monthly salary for 50% of its production workers doubles the minimum wage.
FV will evaluate the applicability and implementability of a social accountability standard, such as SA8000.
Worker’s Organizations:
The company supports the freedom of association. FV is a party to a collective bargaining agreement with workers’ organizations (UOM and ASIMRA). The company reports a stable industrial relations climate, with no significant impacts in terms of strikes or work stoppage. All unions are bound by the company''s policies and procedures as well as specific substantive and procedural agreements. Union’s representatives are also part of the internal labor committees. The company supports an open door policy and the organization of participatory groups, managed by the workers, to promote interchange and relations among workers and management, and recreational and cultural activities involving the workers and their families. Surveys of work climate are periodically conducted among all staff.
Grievance Mechanism:
HR is responsible for managing grievances, but workers can present their concerns and complaints using several internal mechanisms, including the participatory groups. A formal employees’ grievance mechanism exists, and IFC’s review verified that the procedure is given to the staff during induction and that staff is aware of this mechanism. External worker protection mechanisms are ensured by the national labor laws and 21 court cases are currently reported by the legal department, generally associated with unresolved claims for dismissal and/or for injuries/health problems.
Non-Discrimination and Equal Opportunity:
FV is an equal opportunity employer, promoting fair and equitable treatment of employees. The company complies with relevant legislative requirements. The HR department has developed training programs to support skills development, and opportunities for promotion exist and are adequately disclosed to the workforce, through intranet and announcement posting.
Occupational health and safety (OHS):
FV has a small OHS department which reports to the HR manager. The department is staffed with an OHS coordinator, a technician and two apprentices. The department is supported by a plant fire brigade with specifically trained staff and by safety leaders, who are plant workers with advanced safety and first aid training, selected in the different production areas. The medical staff at Villa Rosa plant consists of two medical doctors and three nurses; at the plant in Florida there is a medical doctor. FV also maintains agreements with external emergency and medical centers. Employee’s OHS training is conducted during induction and periodic refresher sessions.
Safety performance shows an improving trend since the past four years, although the company aims at further reducing the accident rates. The accident frequency rate (defined as number of accidents per 1,000,000 hours worked) decreased from 101 in 2002 to 34 in 2007; the severity rate (defined as number of lost days per 1,000 hours worked) decreased from 0.85 in 2002 to 0.24 in 2007. The accident/incident reporting system is made available to the workforce at several locations. Since 2005 FV incidence rate (defined as number of accidents per total workforce per 1,000) has been consistently below the average value (139.5) reported by the Superintendencia de Riesgos del Trabajo (SRT) for this industry sector in Argentina and in 2007 FV rate was reported at the lowest point (50.71). The most frequent types of accidents are injuries to hands and arms (e.g., cuts, traumas, fractures), but also eye injuries. Accident investigations are regularly performed, root-causes analyzed and preventive/corrective actions documented.
An emergency plan to respond to major accidents in both plants is in place. The plants are equipped with fire and emergency alarms at different locations. Fire extinguishers and hydrants are positioned in the various production units. Automatic fire suppression systems are present in the painting boots (electroplating section) and in the storage areas. Fire safety inspections are annually conducted by the Fire Brigade, which provides annual certificates of conformity. Control and maintenance of fire extinguishers and hydrants are conducted monthly by specialized firms. Fire emergency training is conducted, but general emergency drills have not been conducted until now. The company will start conducting periodic drills.
Some inconsistencies in terms of enforcement of adequate personal protective equipment (PPE) were observed. Hearing protection is generally sufficient, although with some inconsistency; the use of hard hats and respiratory protection will be improved. Physical protections are generally adequate, although some areas of improvement were identified, particularly in the furnace unit and electroplating unit. Emergency and area signage and guard rails are present, but can be improved. Housekeeping is generally adequate.
A workplace monitoring program has been developed by the company and is regularly implemented. It includes testing of water points (physico-chemical and microbiological testing) with respect to potable water limits for human consumptions, light intensity, air quality, noise and thermal load. Workplace air quality is conducted at Villa Rosa plant only and includes total particulate and respirable fraction at five locations in the foundry hall, and acid mist at one location of the electroplating section. The most recent set of measurements conducted in December 2007 were below the relevant national limits. However, workplace air quality in the foundry is impacted by fugitive emissions (mainly dust) from the furnaces and it needs to be improved. The installation of new furnaces, included in the proposed Project, will allow improving air quality in the melting shop, but the company will also study and implement improved exhaust ventilation and extraction of fumes. FV has identified the need of increasing the number of sampling points (18 locations proposed). FV will conduct an extensive monitoring campaign at several locations of the plants (including Florida) to assess workplace air quality in terms of total particulate, respirable fraction, and acid mists (sulfuric acid, hydrochloric acid, chromic acid and chromium). The company will also monitor the workplace concentration of nickel sulfate to ensure they meet international guidelines (e.g., ACGIH). Testing will allow identifying the chemical composition of the particulate (silica dust and metallurgical fumes). The company will ensure that the OSHA PEL (permissible exposure limit) for hexavalent chromium of 5 µg/m3, measured as 8-hour time-weighted average, is consistently met.
Available noise monitoring results show a number of locations exceeding the limit of 85 dB, with peaks at 110 dB. The company will conduct a detailed study of the workplace noise to assess measures to reduce the noise emissions and to limit worker’s exposure.
The company will review the organization to ensure that the current OHS staff is sufficient to cover for the increased workforce, and will develop an OHS management system consistent with OHSAS 18001 standards. Existing procedures will be reviewed and, as needed, specific procedures will be developed for hazard identification, risk assessment and risk control, resources, roles and responsibilities, training and awareness, emergency preparedness and response for internal events and coordination with local authorities to manage emergencies that may escalate or impact on areas outside plant boundaries, accidents/incidents register, corrective and preventive actions, and audits. The company will hire an external qualified consultant, acceptable to IFC, to conduct an occupational safety and fire safety assessment and develop an action plan, as needed. An Occupational Hygiene Risk Exposure Profile (OHREP) covering all the shops (melting, molding, casting, electroplating, finishing, and assembling) in both plants will also be prepared and included in the new OHS management system.
- PS3: Pollution Prevention and Abatement
Pollution prevention:
Air emissions include particulate matter, generated in each of the process steps from thermal (melting furnaces) and chemical / physical processes (molding and core production, pickling, electroplating), and mechanical actions (e.g. handling of raw materials and finishing processes). In the melting process, particulate matter emissions in the form of dust, metallic materials, and metal oxide fumes, are of concern. Graphite is used as foundry facing and lubricant and contributes to emissions of particulate and carbon monoxide. Impact of dust on indoor air quality at the furnace hall is visible. Off-gas collection hoods allow capturing fugitive emissions from furnaces. Dust emissions to atmosphere are mitigated through the use of cyclones.
Sulfuric acid and chromic acid are of specific concern from pickling and electroplating processes. Fume suppressants are used as additives to electroplating baths to reduce air emissions of chromium and/or in-line aspirators with scrubbers are operational to eliminate acid compounds. Other air pollutants, which are monitored by FV and comply with the national standards, include carbon monoxide, sulfur dioxide, lead, hydrochloric acid, formaldehyde, ethanol, nitrogen oxides. FV is also required to monitor copper, zinc, oil mist and nickel.
The company has developed a program to improve the control of air emissions, with specific reference to particulate matter and zinc oxide from furnaces, molding and pressing units, and to chromic acid and sulfuric acid from electroplating and pickling units, in order to bring the emissions into compliance with national standards. The program is conducted in coordination with the local authorities and especially focuses on reduction of emissions from the following stacks: No. 48 (particulate matter), and Nos. 23, 33 and 70 (chromic acid). For stack 48 FV will monitor the presence of toxic metals and oil mist in the emissions of particulate matter and install an abatement system (typically a bag filter system) capable to meet the relevant national and IFC standards. To control and abate the emissions of chromic acid generated by the electroplating process, FV installed a mesh-pad demister, which is considered the maximum achievable control technology (MACT) by US Environmental Protection Agency, to replace the pre-existing scrubber with Raschig ring packing. In addition, the organic additives in the chrome baths were changed to improve the efficiency of the surfactants with antifoaming agents and reduce emissions from the baths. However, due to inadequate locations of the sampling ports in the stacks 23 and 70, it has not been practical to measure the concentrations of chromic acid emitted and therefore confirm the effectiveness of the measures implemented. The company will modify the sampling ports at the stacks and ensure that measurements of chromic acid emissions are consistently performed. The company will demonstrate that emissions of hexavalent chromium are minimized, with reference to the recommended limits indicated by international standards (e.g., US EPA limit of 0.01 mg/m3 of dry standard exhaust air). The abatement systems will be visually inspected quarterly to ensure there is proper drainage and there is no chromic acid buildup or chromic acid breakthrough, and no evidence of chemical attack on the structural integrity of the equipment. The company will periodically perform washdowns of the mesh-pad demister.
The emission points at Villa Rosa are 87 and in 2007 the company has developed a monitoring plan, which will be reviewed to ensure compliance verification against IFC guidelines and will need to be consistently implemented. According to local regulations, the company is required to assess air quality impacts due to emissions to atmosphere according to a three-tiered verification. In 2007 potential exceedances for ambient air quality were calculated for PM10, nitrogen oxides, zinc and copper. The company will develop an air emission dispersion model in order to define maximum ground concentrations of pollutants of concern, locations of maximum impact and pollutant concentrations at the closest external receptors.
The industrial effluents of concern are from electroplating process and from metal shaping and surface preparation processes and they are treated in several steps within the facility. Chrome-containing wastewater is eventually treated in an industrial wastewater treatment plant (WWTP), where hexavalent chromium is reduced and precipitated as trivalent chromium by adding sodium bisulfite. The sludge is collected and disposed of as hazardous waste. Nickel bath, contaminated with grease, is also treated in batch using activated carbons to adsorb organic contaminants, and then recycled to the process. The treated industrial effluents are combined with sanitary wastewater and discharged to surface water (arroyo Burgueño). Effluent monitoring is conducted monthly and in year 2007 generally showed compliance with national standards, with the exception of one exceedance for nickel in March and two exceedences for hexavalent chromium in November and December. Available measurements in 2008 comply with national standards. In recognition of the limited capacity of the existing treatment plant, especially in view of the upgrade of the production facilities, the company is installing a new WWTP which should allow to consistently meet the discharge standards. The new plant will allow treatment of 160 m3/day of effluents, and will include equalization, chromium reduction and precipitation, neutralization, flocculation and hydroxide settling to treat trivalent chromium, nickel and copper, effluent clarification, sulfide settling, final filtration and chlorination. The plant will include a sludge conditioning process with ferric chloride and a filter press to dewater the sludge before off-site disposal. The plant will be operational by the end of 2008. The company will monitor the efficiency of the new plant and develop a program to ensure compliance with applicable IFC guidelines for nickel, hexavalent chromium and copper, as needed.
Other actions planned by the company include the review and evaluation of actions needed to ensure complete separation of the different wastewater streams (industrial, sanitary and stormwater), and the installation of a new biological system for sewage treatment. The company will develop and implement an action plan to ensure that potentially contaminated stormwater are segregated from clean stormwater and conveyed to treatment. The company will ensure that the new sewage treatment plant complies with both national standards and IFC guidelines.
Solid and hazardous waste management:
Solid non-hazardous waste and hazardous waste management at the plant is adequate, involving waste segregation and reduction. Waste collection, storage and disposal are conducted according to the company’s waste management plan and to specific procedures developed for non-hazardous and hazardous waste. Both non-hazardous and hazardous wastes are disposed of at off-site permitted treatment and disposal facilities. Waste generation is adequately monitored, and the main streams of industrial waste include molding and core sand waste (approx. 300 tons/year), sludge from electroplating process (approx. 200 tons/year) and waste oil. Filter dust from abatement treatment is recycled in the furnaces. Metalworking oils and fluids from metal cutting and shaping are recovered from metal chips through the use of centrifuges, and recycled. After treatment, the metal particles contain approximately 3 to 4 percent of oil and are returned to the foundry. FV is investigating methods to reduce further the percent of oil in the metal particles. The company has also started collaboration with the Universidad Tecnológica Nacional, Facultad Regional La Plata, to study the fixation of metals in foundry sands by calcic and hydrocarbonate ligands.
A new industrial waste storage area is under construction at Villa Rosa; the storage area is adequately covered, paved, bunded and of sufficient capacity. It will allow the storage of both liquid and solid residues. The waste storage area at Florida plant is adequate to handle the limited amount of industrial waste generated. FV will also increase the frequency of waste collection by the contractors from two weeks to one week in order to reduce quantities of industrial waste stored at the plants.
Hazardous Materials:
A new chemicals storage area was recently constructed at Villa Rosa and is adequately covered and contained, although some improvement is needed to extend the containment to the front area of the storage. Chemicals management procedures have been developed and enforced throughout the plants. They include supply, acceptance, unloading, handling, storage and labeling of the chemicals. Specific detailed procedures are available for granular and powder chemicals, liquid chemicals, combustible materials, and oils. Tank tightness tests are periodically performed on the existing diesel fuel tanks.
Greenhouse Gas Emissions:
Annual electricity consumption of both plants is approximately 20,000 MWh and annual gas consumption is approximately 2.5 millions cubic meters. Preliminary evaluation of total CO2 emissions has quantified them in approximately 10,000 tons CO2 emitted per year. FV will annually quantify and report direct emissions from the facilities owned or controlled (including Ferrum and CIBA) and indirect emissions associated with the off-site production of power used by its facilities, in accordance with internationally recognized methodologies.
- PS4 Community Health, Safety and Security
Community Health and Safety:
Issues include emergency preparedness and response, transport of raw materials and products, and security. As discussed under PS2, the company has an adequate emergency preparedness and response system in place, in coordination with the local authorities to cover for external emergencies.
Transport of raw materials and products is mainly contracted to transport contractors. Adequate internal controls are in place and implemented by the security team to ensure that vehicles and trucks entering and leaving FV’s facilities are in good conditions, documents are in good order, and loading/unloading procedures are safely implemented.
Security Personnel Requirements:
Security functions are covered by company staff. The current protection services structure include 32 security staff, deployed in three shifts of eight hours, and managed by a security manager and a chief supervisor. The security staff is licensed to use fire arms, which are all registered by the national authorities and maintained in firearms storage. The staff is periodically audited by the Ministry of Defense and is mandated to attend an initial training course and refresher courses, provided by an external certified body. FV has developed an internal procedure for security staff, covering their functions, documentation, obligations, prohibitions, duties and code of conduct, including appropriate management of firearms.
