While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards: PS 1: Social and Environmental Assessment and Management Systems PS 2: Labor and Working Conditions PS 3: Pollution Prevention and Abatement PS 4: Community Health, Safety and Security PS 5: Land Acquisition and Involuntary Resettlement Depending upon project circumstances, issues covered by PS6 Biodiversity Conservation and Sustainable Natural Resource Management, and PS8 Cultural Heritage may also be encountered from time to time. Performance Standard 7 Indigenous People was screened out during the due diligence process, since none are within the project affected area. While the nomadic pastoralists who pass through the area in which the project is being developed are different from local settled agro-pastoralists in that they have distinct livelihood systems, they nonetheless share Arab-Berber descent and practice commercial activities with established links to the mainstream Algerian society.

The Project is located in a relatively isolated area characterized by its low population density and limited agro-pastoral land use. The plant site is relatively far (5km) from the nearest residential areas and affected only by the presence of nomadic pastoralists. The project affected area is part of relatively homogenous bio-physical region. There do not appear to be any significant conversion or degradation of high biodiversity value areas although portions of the limestone quarry concession are largely undeveloped. The key environmental and social issues associated with the construction and operation of the plant are: (i) the existence of a social and environmental management system and the development of key operational phase E&S policies and plans (including a Stakeholder Engagement Plan); (ii) contractor management, including performance on PS 2, PS 3 and PS 4; (iii) traffic impacts, associated with the use of the existing access road and connections to the N1 highway and management thereof; (iv) potential economic displacement of farmers cultivating wheat on lands contained within the clay quarry concessions and in the immediate vicinity of the project; (v) groundwater protection, (vi) development of a strategy for progressive rehabilitation of the quarries, and; (vii) completion of the environmental and social assessments for all the related facilities. As a result of its due diligence, IFC has determined that the Project has limited adverse environmental and social impacts that are few in number, site-specific and can be readily addressed through the mitigation measures described in the sections that follow. It is therefore concluded that this is a Social and Environmental Category B project.

PS1 Social and Environmental Assessment and Management System

Social and Environmental Assessment: An EIA for the construction and operation of the proposed cement plant was completed in October 2008, consistent with the national legislation (Décret executif n. 07-145), which requires the development of a full EIA for this type of industrial installations. The document has been submitted to the relevant authorities for approval but has not yet been formally approved. The document addresses key issues, including, but not limited to, baseline characterization, project description and alternative analysis, impact assessment on air quality, noise and vibrations, water resources, and environmental management plan during construction and operations, but further analysis is deemed necessary in a number of areas, as discussed below and under the relevant Performance Standard sections.

The Project completed a geological and raw material investigation of the quarries in January 2009 and will use this study to develop a quarry mining plan. On this basis an Environmental and Social Impact Assessment (ESIA) for all the limestone and clay quarries will be developed and submitted to the relevant authorities. The ESIA will comply with the relevant national requirements of the Loi Minière n. 01-10, dated 3 July 2001, and consider in an integrated manner the potential social and environmental (including labor, health and safety) risks and impacts of the quarrying operations, including the issues identified in PS 2 through PS 8, consistent with PS 1 requirements. The ESIA will also assess the alternative scenario relevant to the limestone concession expansion, as needed, and identify its potential risks and impacts.

Ground water is the preferred source for water in the area and the ground water well field of Oued Sdar, an important water source for the commune of Ain El Ebel and for Djelfa, is located within a five km radius southwest of the plant site. Water resource conservation is particularly important in a region where precipitation is limited (annual average of 320 mm). An assessment of the hydrogeological parameters for the two 185-meter deep water wells was conducted in 1995, and indicated water resources sufficient to support the plant water usage requirements. The Company will update this assessment, developing a water sustainability study, which will include baseline water chemical analyses and ensure that no well-to-well conflicts and unsustainable streamflow depletion result from the cement plant operational needs.

Full EIAs are to be developed for the gas pipeline and the electrical transmission line, as required by the national legislation (Décret executif n. 07-145). Sonelgaz will be the contractor in charge of designing and installing the infrastructure. The two lines are related facilities developed for the Project, and, therefore, the Company will ensure that the two studies and relevant management plans are developed, in compliance with the national law and consistent with the requirements of PS 1, and approved by the local authorities.

Management program: Several companies of ASEC Holding have in place Quality Management Systems compliant with international standards. The Sponsor and the Company are committed to adopting a specific Environmental Policy, an Occupational Health and Safety Policy and a Human Resources Policy, that are consistent with good international practice.

The Company will establish an environmental and social management system (ESMS) for the Project and will certify the management system compliant with ISO 14001. The ESMS will ensure ongoing compliance with (i) requisite environmental, health and safety and social measures (i.e., adopted environmental, social, health and safety (ESHS) standards, Company commitments as outlined in the EIA), (ii) Algerian legal requirements, and (iii) IFC Performance Standards and EHS Guidelines, as the Project develops and becomes operational. In addition to EHS, the management system will include policies and procedures relevant to code of ethics, local hiring and procurement, training, transportation, security, and corporate social responsibility. The Company will prepare an implementation timeline to ensure that all relevant management plans and tools are applied in a timely manner. During the transition from the construction phase to the operation phase, the Company will adapt its management plans to address the potential impacts of the new phase.

As required by the national legislation and IFC Guidelines, ASEC Algeria will develop, in the framework of the quarry ESIA, and periodically update a full Quarry Management and Rehabilitation Plan, which will be kept current during the lifetime of the Project. Limestone mining will be carried out with bench height of 15 m. The plan will include the contouring of the quarry landscape, to be developed as part of the quarry operation, and the need for collection, management and reapplication of the original overburden to ensure the appropriate media for re-vegetation. Rehabilitation will include the appropriate contouring to minimize the visual impacts. The reclamation will be carried out progressively, allowing for the gradual re-vegetation of mined out areas. The principle for the selection of species for re-vegetation will include due consideration given to the inclusion of native species or naturalized species favorably adapted to the local environment without being invasive or intrusive. Analogous specific plans will be developed for other quarries (e.g., clay quarries) opened by the Company. The first issue of the Plan will be disclosed in the IFC website.

Organizational capacity: Key roles and responsibilities will be identified and described in detail in the Project ESMS. As part of its commitment to ensure sustainability of their operations, the Company will appoint a full-time Project ESHS manager who will be responsible for the implementation of the management program [including a Stakeholder Engagement Plan (SEP)] for the Project during the construction phase and operations phase.

Training: As part of its ESMS, the Company will develop specific EHS training programs for its own personnel and will provide oversight for contractor training to assure that the workers have the skills to perform their activities in a safe, healthy and environmentally responsible manner. All new contractors will receive an orientation on EHS management prior to starting work, and new or transferred workers will receive a work-site orientation and on-the-job or formal training prior to being assigned a job. Contractors and subcontractors will provide proof of certification to the Company that their workers are competent to do their jobs safely.

Community Engagement: ASEC Cement has actively engaged with government authorities in Ail El Ebel and Djelfa. A number of public events associated with key milestones in the project have been conducted and are documented. Awareness of the project appears to be high and there appears to be widespread support for the project, this primarily being associated with the potential for the project to stimulate further investment, to promote growth and provide employment. The Company will develop and implement a Stakeholder Engagement Plan (SEP) for communities in the vicinity of the plant site (i.e., Oued Sdar and Ain El Ebel) and proximate to the limestone and clay quarry locations. The plan will include a statement of principles for the management of grievances according to IFC standards.

Monitoring: The cement plant’s EIA, the additional environmental assessments to be developed for the quarries and related facilities and additional assessment required by IFC will establish the environmental baseline for the Project area of influence. This baseline will be used as a reference to assess the results of the environmental monitoring program. The plant’s EIA provides a basic framework to describe how to measure and monitor Project implementation and effectiveness of impact mitigation. This framework will be complemented with the monitoring program to be developed for the quarry operations and other Project’s related facilities and activities (including traffic). The Company, together with local authorities and representatives of local communities, will design and implement a Project Environmental Monitoring Plan including air emissions, ambient air quality, noise and vibrations, effluent quality, groundwater quality and level in community wells and dedicated monitoring wells, solid wastes, and traffic.

Reporting: In addition to the legal requirement for control and monitoring of the Project by the Algerian authorities, the Company will establish internal and external communication and reporting systems. Project’s specific key performance indicators (KPIs) will be developed. ASEC will prepare and disclose locally on an annual basis a Project Environmental and Social Report. The report will include an update on the implementation of the Environmental and Social Action Plan (ESAP), agreed with IFC, on issues that involve ongoing risk to or impacts on affected communities, and on issues that the consultation process or grievance mechanism has identified as of concern to those communities. The description and results of the environmental and social management and monitoring programs, including material changes in mitigation measures or actions described in the ESAP on issues of concern for the affected communities, will be included.

PS2 Labor and Working Conditions

Construction of the project will occur over a 36 month period starting in December 2008 and ending in mid-2011. The Company has contracted all construction phase activities to several contractors, including project management (engineering and consultancy), civil works, equipment, automation, etc. The construction phase workforce is estimated to peak at 1500 for civil works and other 1500 for mechanical and erection works (from multiple contractors), comprising both an international (primarily Egyptian) and a national workforce. Upon completion ASEC Algeria (a wholly owned subsidiary of ASEC Cement) will assume responsibility for the Project, although both plant operation and maintenance and quarry management and raw material supply will be outsourced. The operations phase direct workforce for the two production lines is estimated to be 600, again comprising an international (Egyptian) and national workforce. Indirect jobs related to the plant’s operations are estimated to be in the range of 800. The Company will ensure the development of an ASEC Algeria human resource policy, incorporating the requirements of PS 2, applicable to its own as well as contractor operations and non-employee workers.

ASEC Cement staff assigned to the Project fall under the ASEC Cement human resource policy developed in support of Egyptian operations. As described above project construction has been assigned to multiple contractors. A review of the Project’s contracts demonstrates inclusion of generic clauses pertaining to compliance with Algerian laws and some aspects of occupational health and safety. Meetings with civil works contractors currently on-site and document review demonstrated: (i) utilization of an international (Egyptian) and national workforce; (ii) compliance with Algerian requirements requiring application of a local-first employment policy prioritizing hiring from Ain El Ebel, Djelfa and the rest of Algeria - as such a national migrant labor force will be accommodated by the Contractors; (iii) coordination with local labour authorities to manage local recruitment; (iv) the existence of human resource and safety inductions; (v) established procedures for the management of recruitment, contracts, payment, discipline and dismissal.

Algerian labor laws allow for the establishment of workers organizations. Although no workers organizations were established and operational on site, there was no evidence suggesting restrictions on freedom of association. Similarly there was no evidence of the use of child labor. In line with cultural norms, the entire workforce was male. Contractors noted that the local population generally lacked adequate skills for employment in skilled positions and the majority of the local workforce was thus employed as general labor. Both civil works contractors reported higher than anticipated levels of local employment to accommodate the low skill base and the use of on-the-job training. Finally both civil works contractors indicated that paid wages are above the minimum wages required by law, this being confirmed by review of contracts. Currently the workforce works an 8 hr shift with 1-2 hours over-time, 6 days per week, although this will evolve into a 3-shift 24 hour operation.

The migrant national and the Egyptian workforce are to be housed in rented accommodations in Djelfa or worker accommodation camps developed on a plot adjacent to the plant site. While construction of worker accommodation was not complete, an inspection of existing facilities involved the sleeping quarters, bathrooms and toilets, water supply, septic tanks, and cafeterias. Appropriate insulation and heating to account for the extreme weather conditions was noted. The provided accommodation is largely in compliance with usually acceptable standards; however, no camp management system was in place. The Company will develop a Worker Accommodation Policy defining standards and management requirements. The Company will ensure that all Contractors develop and implement a camp management plan meeting relevant standards and ensuring the well-being of the workforce.

The civil works contractors have established safety and emergency plans. Each contractor has dedicated safety officers responsible for the provision of induction and PPE to workers and a system of incident reporting is in place. The Company will appoint a site health and safety officer, responsible to oversight the construction works and ensure adoption and implementation of occupational health and safety procedures in line with good international industry practice. The two Contractors share an on-site clinic (with doctor and nurse) and ambulance.

PS3 Pollution Prevention and Abatement

Pollution Prevention, Resource Conservation, Energy Efficiency: The proposed plant design has good emission controls, includes noise abatement measures, and has provision to treat all wastewater to comply with the Algerian regulations and IFC guidelines.

Air emissions from the new kilns will be below the Algerian standards (Décret executif n. 06-138) and relevant IFC guidelines for cement plants. Particulate emissions will be controlled at the quarrying sites and in the material handling systems by designs requiring minimal material drops during handling, fully enclosed conveying systems for the raw material / mix and the cement, with bag filters installed at all transfer points. Water based dust suppression will be used where evacuation and filtration systems are not practical, such as the road transport within the quarry operations. Other abatement and control measures will include covering trucks with canvas or other covers, and covering storage piles. At the primary crusher area and at the cement plant, all operations will be fully equipped with particulate emission control systems. These systems will be based on bag filters, with an electrostatic precipitator (ESP) to dedust excess air at the clinker cooler, and recycling of all the captured materials to the relevant stage of the process. Three main sources of dust emissions are the kiln exhausts/raw material grinding, the clinker grate cooler and the cement mills. For the filter removing the dust from the kiln exhausts/raw material grinding, the guaranteed value for dust emission is ≤ 25 mg/Nm3, dry gas, 10% O2. For the clinker cooler filter and the cement mills, the dust emission will be ≤ 25 mg/Nm3, dry gas. This complies with national requirements, and it is in accordance with the IFC guidelines.

Sulfur dioxide emissions are expected to be negligible, as the presence of sulfur compounds in the raw materials was reported to be very low and the plant’s fuel will be natural gas with no sulfur content. In addition, the alkaline conditions in the kiln will result in the absorption of the majority of the (limited) sulfur entering the systems either through the raw materials. The sulfur dioxide emissions will be therefore well below the local requirements of 500 mg/Nm3, and the IFC guidelines value of 400 mg/Nm3.

Formation of nitrogen oxides (NOx) is caused by fuel burning at high temperatures in the kiln. To minimize the formation of nitrogen oxides the kiln will use advanced burning principles, including the usage of low-NOx burners, which by controlling the flame shape is able to ensure a relative low core flame temperature. Based on the volumetric load, the burner zone load, the kiln stoichiometry and the raw meal burnability, NOx emissions from the rotary kiln are expected to be in the lower end of the normal range, and a “state-of-the-art” pre-calciner / back end firing system [High Temperature Low-NOx In-Line Calciner (ILC) pre-heater concept] will allow a significant reduction of the kiln NOx. By applying these techniques, the NOx emissions will be kept below IFC’s guideline value of 600 mg/Nm3 (10% oxygen, dry gas).

Continuous monitoring of air pollutant emissions from the kiln stacks will be conducted for particulate matter, sulfur dioxide, nitrogen oxides and carbon monoxide. Dust emissions will be continuously monitored at the kiln and by-pass stacks, cooler stacks, and cement mill stacks. Periodic monitoring of total organic carbon and heavy metals will also be performed.

Maximum ambient air quality concentrations for NOx and fine particulate matter (PM10) measured at five stations selected within 4 km radius from the site during the EIA were found well within the World Health Organization (WHO) limits. Based on the controlled air emissions from the plant, the clean ambient air quality in the Project affected area and a simplified pollutant dispersion model, the EIA concluded that Project emissions will not result in concentrations of NOx and PM10 that significantly impact relevant ambient quality guidelines and standards at the closest sensitive receptors, with points of maximum impact between 800 and 1,500 meters from the sources. However, the Company will conduct a detailed study of the potential impacts of the airborne pollutants on the ambient air quality, using an internationally recognized air dispersion model and the detailed design data currently available, to supplement the analysis done in the EIA, carried out with preliminary engineering information. The outcome of the modeling in the study will be compared to national air quality criteria and WHO guidelines for acceptable pollution levels. The assessment will focus on the location of local residential areas (including the nearest dwellings) and will quantify pollutant dispersion from the kiln stacks and the other main stacks of the plant. To monitor potential effects on air quality from the multiple sources associated with plant and quarry operations, including point, fugitive and mobile (traffic) sources, ASEC will install ambient air monitoring stations or will conduct periodic monitoring at selected distances and locations, including nearest residential receptors, to measure particulate matter (PM10 and PM2.5) and NOx levels.

Reduction of water needs has been a critical aspect considered in the plant engineering design, in consideration of the arid climate of the region. The cement manufacturing process used is based on dry technology. No gas conditioning tower will be present for conditioning of the gases after the preheater, and only air cooling will be employed for this purpose. Bypass gas will also be quenched only with air. The process water needs will therefore be limited, and mainly associated with water injection in the cement mills, for an estimated 240 m3/day. A total maximum 500 m3/day water usage is currently estimated, accounting for all other uses (including human consumption), lower than conventional industry benchmark, and much lower than the water usage of 4,000 m3/day presented in the plant’s EIA, based on preliminary design figures. Because of the proximity of the water well field of Oued Sdar, the Company will install a monitoring well network specifically designed to monitor groundwater conditions in terms of water quality and water levels, starting to monitor before operations to develop an appropriate baseline and continuing throughout operations.

The drainage system for the project areas will follow storm water management guidance of IFC guidelines and applicable discharge criteria, if discharge outside project boundaries is needed. A permanent sewage treatment plant will be constructed to treat for the wastewater produced by the plant during operations. This sewage treatment plant will treat the wastewater to comply with IFC guidelines. Treated wastewater will be suitable for use as greenbelt irrigation. The construction camp will be provided with adequate sewage collection and disposal. A technical review of the design of existing septic tanks will be conducted and corrective actions will be implemented to ensure that adequate treatment is provided.

Noise sources in the operation phase will include: (i) open-cut mining of limestone and marl reserves; (ii) mine truck haulage; (iii) crushing; (iv) cement plant with associated mills; (v) traffic associated with the transport of raw material and cement products. Baseline noise measurements were conducted during the EIA development and baseline noise levels were below 40 dB(A) at the site, which is consistent with typical noise levels in rural areas. The Company conducted a noise assessment in the framework of the plant’s EIA. The study assessed that the contribution to the noise levels due to the plant operations does not impact on the ambient noise at the closest residential receptors of Oued Sdar. However, truck traffic generated by the Project will result in an impact that will need to be mitigated. The Company will develop a traffic assessment and management study, discussed under PS 4, which will assess all relevant impacts, including noise, and define adequate mitigation measures. ASEC will repeat baseline daytime and nighttime ambient noise measurements before operations and will conduct periodic ambient noise monitoring at selected distances and locations, including nearest residential receptors. If exceedances with national and IFC criteria are measured, proper design and mitigation measures (including best practice housing, acoustic insulation and installation of silencers) will be applied to selected sources to achieve compliance.

Prior to operations, taking into consideration the significance of trucking during operations, the Company will conduct a baseline survey of the closest buildings and infrastructure conditions along the access road from highway N1 to the site, to mitigate against potential claims of vibration induced damage. Blasting is expected to be necessary for limestone quarry exploitation. The Company will ensure that specific attention is used during the design of blast patterns and maximum instantaneous charge (MIC) to be used. The Company will also perform overpressure and vibration monitoring at selected sites adjacent to the quarry site for each blast.

Energy Efficiency and Greenhouse Gas Emissions: The proposed plant design has energy consumption levels within good practice industry benchmarks. The energy efficiency of the kiln operation will result in a guaranteed heat consumption of 745 kcal/kg clinker at 0% bypass. The plant will be connected to the public electrical network, through a high tension line. The plant electrical power consumption has been calculated at 0.097 MWh/ton cement, which is near the lowest end of the industry benchmark range. The CO2 emissions will be contained by the use of natural gas as fuel, and furthermore, the Company agrees to identify potential sources of fly ash, pozzolana and other cement additives to lower the requirement of clinker in the cement products and, consequently, further reduce CO2 emissions. The estimated total CO2 emissions will be 2.07 million tonnes CO2 for a production of up to 3.02 million tonnes of 85% OPC and 15% blended cement per year. This is equivalent to 684.5 kg CO2 per tonne of cement on average.

During operation, ASEC will quantify direct greenhouse gas (GHG) emissions from their facilities within the physical project boundary and indirect emissions associated with the off-site production of power used by the project. Quantification and monitoring of GHG emissions will be conducted annually in accordance with internationally recognized methodologies.

Waste and Hazardous Materials: Insignificant quantities of solid or hazardous production waste will be generated from plant and quarries, canteen, office and laboratory, and maintenance (used refractory bricks, lubricants, etc). The industrial and hazardous waste will either be re-used (e.g., refractory bricks can be crushed and re-used as raw material feed) or handled by reputable and legitimate waste management contractors, licensed by the relevant regulatory agencies and following good international industry practice for the waste being handled. Ordinary domestic waste will be minimized, recycled, where feasible, or disposed of in approved local landfill operations based on an agreement with the local authorities. ASEC will audit the local solid waste treatment and disposal centers to ensure that they comply with local regulations and all measures are taken to avoid potential impacts to human health and the environment. All solid waste and wastewater generated in the construction camps will be managed in accordance with Algerian regulations and IFC guidelines.

Delivery and storage of explosive materials for blasting will be responsibility of the Algerian military forces. Internal procedures will be developed and require that explosive materials for blasting to be safely handled onsite, as well as specific external and internal emergency response.

Emergency Preparedness and Response: The plant is being constructed in a recognized seismic zone (Zone I) and has been designed to meet the standards for Zone II. As required by the national regulations (Décret executif n. 07-144) for classified industrial installations, the Company prepared and submitted to the local authorities a hazard study. The study identified the potential hazards and accidental scenarios and presented the measures for accident prevention and industrial safety. A scheme for the development of an internal emergency plan (plan d’intervention interne) was also prepared. ASEC will finalize an emergency preparedness and response plan for the operations phase.

PS4 Community Health, Safety and Security

Community Health and Safety: Given its relative isolation from existing settlements, the project will have limited direct interaction with the local population. Currently the project site is unfenced allowing transit of local farmers and nomadic pastoralists. ASEC will ensure that the plant site will be fenced and secured as soon as possible, to prevent risks associated to third party intrusion. The Project is also using a number of additional sites including a fenced rented land plot on which the civil contractors’ batch plants and accommodation are located, and sites for the disposal of inert excavation material. ASEC will ensure that Contractors stop the use of off-site disposal of inert excavation material and, where this has already occurred, will ensure that the sites are appropriately demarcated and leveled and rehabilitated.

Pastoralists utilize the limestone quarry on a seasonal basis as a grazing area for their sheep. Seasonal cultivation of wheat occurs on some of the clay quarry sites. ASEC will ensure that quarry operations will be demarcated and boundaries monitored during operations.

The main safety concern is associated with access to the site. Currently the Project makes use of a pre-existing paved road to secure access to the N1 highway. This access road was developed to support access to the local water treatment and storage facility of the Ain El Ebel commune, and is not suited to support heavy traffic. Furthermore ASEC Cement indicates that a truckers’ facility (with canteen, resting and sanitary facilities) will be built on the boundary, but within, the plant site. Truckers waiting to enter the loading area will be expected to park their trucks on the access road to utilize the truckers’ facility. Initial estimates of traffic (associated with both the supply of raw materials and marketing of cement) indicate an amount of heavy-duty trucks at or in excess of 400 trips/day. Given that the N1 Highway is a high speed connection route and government plans to expand the N1 highway from 2-lanes to a dual-carriageway, safe access to from the access road to the N1 and vice versa is a concern. In light of the above, ASEC will (i) conduct a thorough traffic assessment and management study demonstrating anticipated raw material supply and market traffic, estimates of in situ truck backlog in parking, interactions with local traffic, and community health and safety risks; (ii) based on (i) and, in association with relevant government authorities, develop and implement plans for (a) traffic management, (b) upgrade and maintenance of the access road, (c) adequate truck parking capacity and (d) appropriate access to the N1 Highway i.e., joiner lands, overpass or underpass.

Emergency Preparedness and Response: ASEC will ensure that community emergency preparedness and response plans are developed for operations. These plans will deal with accidents involving management and transportation and use of explosive materials, slope failures and other accidents related to plant and quarry operations, potentially affecting third parties.

Security: Security service providers will be utilized during construction and operations. Typically all security services are registered and approved by the Algerian government and provide armed guards for security. The government provides a list of these providers to Companies requiring security services.

PS5 Land Acquisition and Involuntary Resettlement

All project lands were initially classified as state land. The national Enterprise Regionale des Ciments du Centre (ERCC) acquired the rights to the plant site in 1995. Rights to the quarries were secured between 2004-2006 through a public-auction process. ASEC Cement successfully bid for the right to develop the Project in 2006 and in so doing acquired, from ERCC the rights to the project and its assets. These assets include: the project site (100 ha); a limestone quarry (236 ha); six clay quarries [Oued Sdar (46 ha, 4.5km), Ben Hamed I and II (65 ha, 45 km), Ben Yacoub I and II (111 ha, 78 km) and Ben Naamane (70 ha), the latter currently not included in the potential development plan], and; other assets (two water wells, a 30KV transmission line, five villas in Djelfa). These assets were officially transferred from the State to ASEC Cement Algeria in 2007. Landholdings are held under a renewable 20 year concession requiring annual payment of fees. In addition, the two civil contractors currently working on site have rented an additional site from government to house their batching plants and worker accommodation, while two other sites have been used, with the agreement of local government, for the disposal of inert excavation material from the site. The Project footprint will be completed with the acquisition of the ROWs needed to facilitate the delivery of gas and electricity to the site. These ROWs still need to be defined in detail; however, it is likely that the transmission lines will be constructed in an existing ROW, while the gas pipeline will be connected to the existing pipeline network approximately 32 km from the plant site. Finally, the Project indicates that it is seeking to double the area of the limestone concession.

Discussions with tribal elders and community members did not indicate any dissatisfaction associated with land acquisition process to date.

As described above, the main land use of the limestone quarry and elevated areas proximate to the site is seasonal occupation and grazing of sheep by nomadic pastoralists. Most of the clay quarries are used, at least in part, for opportunistic, extensive, seasonal cultivation of wheat by sedentary agro-pastoralists resident in nearby settlements. These farmers have diversified livelihoods that include herding livestock, opportunistic seasonal wheat cultivation and orchards. In the relatively high rainfall 2009 season, the entire areas of the Oued Sdar and Ben Yacoub quarries appeared to be cultivated, while only sporadic cultivation occurred on the Ben Hamed quarries, reflecting soil quality and moisture availability. While quarry exploitation and management plans are yet to be developed, it appears that the limestone quarry will be used progressively over its 80 year lifespan, while clay quarries will be developed in toto (in accordance with total quarry management principles) and used simultaneously to achieve the requisite quality of clay. Exploitation of the clay quarries will result in the economic displacement of a number of local cultivators. ASEC will implement a socio-economic land use assessment of the project site, the adjacent areas and all quarry locations. At a minimum this assessment will identify cultivators, traditional claims to land area cultivated, area cultivated, productivity over last 5 years, total area cultivated by the farmer, and potential economic displacement stemming from project development and operations. The Company will develop an appropriate compensation and mitigation plan for economic displacement caused by development and operation of the Project.

The Project will contract the State agency responsible for electricity and gas (Sonelgaz) to establish the ROW of the gas pipeline and electricity transmission line required. This agency will assume responsibility for requisite expropriation and compensation following an established procedure. ASEC will (i) monitor and provide a summary of Sonelgaz acquisition of ROW indicating number of households affected; household and aggregate statistics regarding area of land acquired, infrastructure affected, crop affected; household and aggregate data for compensation for land, building or crop; (ii) if deemed to be significant in terms of gaps with PS 5 requirements pertaining to land acquisition and involuntary resettlement, the Company will commit to necessary corrective action.

PS6 Biodiversity Conservation and Sustainable Natural Resource Management

The Project affected area (and more largely the region of Djelfa) is part of the steppe rangelands of the High Plains of Algeria (or “steppe d’Alfa”). Alfa (Stipa tenacissima) is a prevailing perennial plant which characterizes the landscape of the region. The EIA did not identify the presence of endangered or critically endangered species in an area of radius of 10 km from the plant site, although some vulnerable species, including the bird Houbara Bustard (Chlamydotis undulata), are reported in the region.

Initial civil and earth works for the construction of platforms at the plant site were completed by ERCC. As such the plant site represents a disturbed environment. Similarly the clay quarries are disturbed environments being used as a commercial source of clay (Ben Hamed I) or used in seasonal cultivation of wheat (Oued Sdar, Ben Hamed II, Ben Yacoub I and II). Current land use in the proposed limestone quarry (Djallal El Gharbi) includes seasonal grazing by nomadic pastoralists and limited cultivation of wheat. The limestone quarry also presents a population of Pine trees and lies adjacent to a more densely forested area. Native vegetation and fauna species are present in portions of the limestone deposit.

As part of the quarry ESIA, ASEC will conduct a biodiversity assessment of the limestone concession site and its surroundings and other potential identified sources of raw materials (including gypsum deposits identified in the region), and ensure that there are not significant impacts to areas of high biodiversity value. The use of native species or naturalized species favorably adapted to the local environment without being invasive or intrusive will be implemented in rehabilitating the natural areas of the quarrying concessions.

PS8 Cultural Heritage

The EIA identifies the existence of Neolithic rock engravings and remnants of Roman Berber settlements throughout the Djelfa region, and particularly around the road between Djelfa and Laghouat and near Zaccar, east of Oued Sdar and the project sites. The EIA indicates that the project site, the limestone and clay quarries, and other sources of raw materials (gypsum, etc) are neither coincident nor proximate to the identified cultural heritage sites, a fact further confirmed by differences in geology and reference to secondary data. The closest archaeological site is reported at more than 7 km from the plant site. Nonetheless ASEC will conduct an assessment of the potential existence of cultural heritage on the quarry sites and potential sources of gypsum in the Project region. ASEC will also develop a chance find protocol which it will include in contracts with relevant contractors operating on the Project sites, including the quarries, to ensure that cultural heritage is dealt with appropriately, should it be found to exist.

ASEC (and its Contractors) have well-established, formal, consultation channels with various stakeholders including the Djelfa government and the Ain El Ebel administration (including the mayor’s office, the labour office, etc). Meetings with representatives from these offices demonstrated high levels of awareness of and support for the Project. It is understood that the labour office (with whom the contractors work to secure labour) is a ready source of information about the project. Furthermore meetings with tribal elders from Oued Sdar and Ain El Ebel as well as casual conversations with local people demonstrated high levels of awareness and broad support for the project and its activities. Nonetheless the Project will develop a Stakeholder Engagement Plan that provides regular project updates to the affected communities (both Oued Sdar and Ain El Ebel as well as communities located close to the project quarries).

Project documentation to be made available in the Project site office and in relevant government offices in Djelfa and Ain El Ebel. This Environmental and Social Review Summary, the associated Environmental and Social Action Plan and relevant Project documentation may be viewed at ASEC webpage and in Project site office and in relevant government offices in Djelfa, which are located at: Project site office: Zone 1, on National Rd 1 (20Kms South of Djelfa) Oued Sedor District – Ain EL Ebel Welaya Djelfa Algeria Direction de l’ Environnement La Welaya De Djelfa Algeria Contacts within ASEC are: Giorgio Bodo – Chairman & CEO – ASEC Cement Tel.: + 202 2755 8333 Fax: + 202 2755 8399 Email: gbodo@asecement.com Tamer Yakout – Business Development Manager – ASEC Cement Tel.: + 202 2755 8333 Fax: + 202 2755 8399 Email: tgalal@asecement.com Company webpage: www.asecement.com