PS1: Social and Environmental Assessment and Management System and Management Program
The Xiwang Group has an overarching environmental policy, with champions from the each of the Xiwang businesses responsible for implementation at the operational level. At Group level, a Quality, Environment and Safety Committee chaired by the General Manager meets on a monthly basis. The heads of each team (for quality, environment and safety) report to the Deputy General Manager.
The Xiwang Sugar facility was certified to ISO 14001 in 2006, with four surveillance visits taken since that time. No major non-conformities were reported by Xiwang Sugar management. Xiwang Group was recognized as a national level ‘environmentally friendly enterprise’ by the Government of China in 2005.
Energy efficiency and wastewater quality are seen by management as the major E&S challenges currently facing Xiwang Sugar (and the wider Group). The cost of energy (primarily for steam) is currently the most expensive component of the company’s processing cycle. PRC and provincial government requirements for pollution control – both in terms of pollutant loading and overall volume of discharge - have tightened considerably in the last three years. As a result, Xiwang Sugar has made these cleaner production issues the focal point of their current environmental management program (see PS3).
Environmental Assessment
For the land associated with the crystalline fructose plant, an environmental impact assessment was carried out by the University of Shandong in 2006, which was subsequently approved by the Provincial Environmental Protection Bureau.
For the broader Xiwang campus (including assets owned by Xiwang Sugar), environmental assessments have been undertaken (primarily by the University of Shandong), submitted and approved by the Provincial Environmental Protection Bureau.
Supply Chain
Corn purchase is the key supply chain commodity. Xiwang Sugar currently sources from a 200km radius of facility, with a current storage capacity of 300,000mt across nine silos. 70% of the corn supply is purchased from traders, with 30% delivered directly by farmers. This is subject to seasonal trends – farmers tend to sell direct during harvest and immediately post harvest (September – January), then traders (who have storage capacity) provide the bulk of supply for rest of year. The Company advertizes corn prices in newspapers, TV and at the factory gate, with a price premium give to bulk delivery. Quality testing focuses on moisture content (<14%), debris and rotten content. Pesticide residues are tested by batch sample (every 5,000mt): if elevated, corn steeping time would be increased (but has not occurred to date). Management stated that no supplier to date has failed quality tests.
Xiwang Sugar does not provide any technical outreach services to corn suppliers. Management stated that this is satisfactorily provided by government agricultural assistance bureaus.
Organizational Capacity
The Xiwang Group provides an quality, health and environment (QSE) technical support service to the various operating companies, including Xiwang Sugar. This is staffed by full time professionals (6 for quality, 3 for safety and 3 for environment – including waste water treatment personnel). Responsibilities include a monthly evaluation of the performance of each operating company, which is subsequently reviewed at the monthly Quality, Environment and Safety Committee meeting. As many of the discharge limits at set by the Environmental Protection Bureau are at Group campus level, the evaluations are also designed to provide assurance that overall limits are being met and whether any change is required to the discharge quotas assigned to each operating company by the Committee.
PS2: Labor and Working Conditions
Human resources are managed at Group level, led by a full time Human Resource Manager and supported by a comprehensive HR management system, including documented policies, procedures and training programs. All Xiwang Group employees have written contracts specifying terms of employment and other provisions (e.g. worker insurance) in order to ensure compliance with China Labor Contract Law. A number of sample labor contracts were requested and reviewed by IFC staff while on site and found to be in order.
Current headcount for Xiwang Sugar is approximately 2,700 employees. Company management estimate the headcount will rise to 3,000 employees once all the planned expansions become operational.
Working Conditions
The minimum age for employees is eighteen. New hires have a three month probationary period, after which they are confirmed if performance is satisfactory. All employees are provided with an annual medical (respiratory, hearing and eye function plus communicable disease check). The workforce is local: two-thirds originate from the local area and all from with the Province. Salary scales are posted in common areas on site, with basic salaries above minimum wage. Overtime is on an exceptional basis only and rarely exceeds 1-2 hours. The Company operates on a 3x8 hour continuous shift basis (300 operational days/year), with each employee working six shifts a week. The legal requirement for a guaranteed rest day each week is upheld, plus recognition of all statutory holidays.
There are no collective bargaining agreements in place within the Xiwang Group, although a workers organization was established in 2001 (via ACFTU). Group management reported that approximately 80% of employees are members. Four options are provided for grievances: via intranet; via SMS texting to management representatives; via written submission (employee suggestion boxes present on site) and via group discussions (typically work team level). Xiwang Sugar management cited heat stress in a number of specific locations as the most recent grievance. This was resolved satisfactorily through provision of more fans.
A three tier disciplinary system operates within the Xiwang Group: (1) verbal warning, (2) written warning and 20RMB deduction from monthly salary and (3) cancellation of contract/dismissal.
Workers are also provided with accommodation options on site. This is prioritized for workers who live >5km from the campus and comprises single room and double (family) room options and subject to a monthly rental charge. The workers’ dormitories visited were of a high construction standard. Xiwang Sugar management reported that dormitories are assessed for fire risk and appropriate corrective actions taken, including provision of fire prevention and fire-fighting equipment.
Retrenchment
No retrenchment has occurred to date.
Occupational Health and Safety
A full time Occupational Health and Safety Manager leads a team of three who provide OHS support to all operations on the Xiwang Group campus. Safety champions are nominated to work at operating company level. No lost time accidents (defined by PRC regulation as greater than 105 days absence) nor any other accidents on site were reported for 2008-09, although a number of traffic related accidents recorded (<30 days total absent from work). The safety manager considered physical labor (moving of product and raw material sacks) and the addition of SO2 to the corn steeping process as the most significant safety risks associated Xiwang Sugar’s operations. No formal risk assessment has been undertaken, however and other risks such as exposure to high noise, heat stress, fire risk and lack of machine guarding (e.g. on grinder belts) was observed on site. This is addressed by the Environmental and Social Action Plan.
Personal Protective Equipment (PPE): dust masks are provided for employees in high dust areas (e.g. packing). There are currently no areas on the Xiwang Sugar site where ear defenders are mandatory and no safety shoes were observed. Assessment of the adequacy of PPE and recommendations for improvement will be part of the risk assessment (see Environmental and Social Action Plan).
Fire and Life Safety
The Xiwang Group campus is served by a fire ring main and a fire response team comprising 100 trained Group staff. Fire signage and local fire response equipment was also observed in Xiwang Sugar buildings, but a more formal review will be part of the risk assessment (see Environmental and Social Action Plan).
PS3: Pollution Prevention and Abatement
Xiwang Sugar’s production processes require significant daily amounts of energy: 5,000 tons steam, 31,000kW(h) electricity and water: 6,500m3.
Water Use and Wastewater Treatment
Water is sourced from the municipal supply, which is in turn drawn from the Yellow River. While no limitations have been placed on the Group’s water demands to date, the Provincial Water Supply Bureau has started to enforce water efficiency measures and metrics and in 2000 closed all industrial boreholes accessing groundwater. Water stress is therefore an issue which the Xiwang Group environmental team is aware of and addressing through more efficient water use, including recycling (50% of treated water from new waste water treatment plant (WWTP).
The Company has also set itself water usage rations within production processes (e.g. corn steeping: 3 m3 per 1 kg of corn kernels; liquefaction: 1 m3 per 1 kg of crystalline glucose; enzymatic conversation of fructose: 2 m3 per 1 kg of fructose). These are regularly reviewed as part of the monthly evaluations by the QSE team, with the objective of continuously improving water efficiency ratios. The Company has also been collaborating with various university departments (including Tsinghua) on cleaner production opportunities, with a focus on heat recovery and water efficiency. The Company’s business strategy of moving to higher value products could also improve efficiency ratios. IFC will also review cleaner production opportunities as part of its supervision of the project.
The Shandong Environmental Protection Bureau (EPB) requested that Xiwang Group expand its wastewater treatment capacity in 2007 due to the expansion in Group operations. The new WWTP came on line in July 2009 and is operated by Xiwang Bio-Chem, one of the one-shore operating companies of Xiwang Sugar Holdings, and IFC''s borrower. The WWTP serves the entire Xiwang Group operations on site, with Xiwang Sugar providing approximately 90% of the loading (including the new fructose plant). The local government contributed to the capital budget of the WWTP in exchange for the option of Xiwang treating the sewage generated from the villages adjacent to the campus.
The new WWTP has a capacity of 10,000m3/day capacity and use of multi-stage anaerobic and aerobic treatment over a two day retention time. Chemical Oxygen Demand (COD) is the lead indicator tracked by the EPB, with the limit for Xiwang Group set at 100 mg/l. The Group anticipates the COD limit may drop further (to 60 mg/l) and therefore the new WWTP has been designed to operate to that level of efficiency. The applicable IFC guideline limit is 250mg/l. The WWTP is designed to meet the other effluent level criteria specified in the guideline for pH, BOD, total nitrogen, total phosphorus, oil and grease, total suspended solids, temperature increase and total coliform bacteria. Validation of performance (including methane capture – see below) is addressed in the Action Plan. The 50% of treated water not recycled for cooling water will be discharged to the Yellow River. A CCTV camera continuously monitors the discharge point: this was installed by Xiwang Sugar at the request of the Shandong EPB, with the monitoring screen situated in the EPB offices.
The WWTP includes methane capture for power generation. At full capacity, methane generation is estimated at 4.2mt/day. At 80% capture efficiency, this corresponds to 3.7mt/day or 1351mt/annum. In turn, this corresponds to an avoidance of approximately 25,000mt of greenhouse gases (as CO2e) per annum. Validation of performance is addressed in the Action Plan.
Sludge from the WWTP is sold as an animal feed ingredient and to local farmers as fertilizer.
The original waste water treatment plant (capacity7,500m3/day) has now been mothballed but will be retained as an emergency back-up.
The Xiwang campus is served by a storm water drainage system, which discharges to the municipal drain (which in turn discharges to the Yellow River). As part of the ESAP, Xiwang Sugar will map all storm water drains on its portion of the campus site, assess the risk of contamination/uncontrolled release to a storm water drain and take appropriate management actions to minimize this risk – including clear color coding of storm drains and (if necessary), the installation of oil interceptors or other pollution prevention measures.
Power and Steam
Xiwang Group has a 15% equity stake in an 80MW rated coal-fired combined heat and power plant (CHP) adjacent to the campus. This provides 100% of the power and steam requirements of Xiwang Sugar. Overall demand from Xiwang Group will stay steady or decline as the on-site biogas generation is brought on line (see preceding section).
The CHP plant, formerly operated by Peak Pacific was fitted with flue gas desulphurization as part of a World Bank air quality program. Xiwang Group management stated that the power plant was currently in compliance with all regulatory limits, although some pollution control upgrades for particulate may be required in future.
Estimated greenhouse gas emissions from the project are estimated at 227,000mtpa. This figure assumes 80% methane capture from the WWTP – resulting in Scope 1 emissions being negligible and Scope 2 (off site production of power) generating the GHG total. As this figure exceeds the annual 100,000mtpa CO2e threshold specified in PS3, the Company will be required to report annually to IFC on GHG emissions in accordance to internationally recognized methodologies and continue efforts to reduce their energy footprint.
Other Air Emissions
Particulate matter is the principal emission to air. This is uncontrolled at the corn offloading point but cyclones and baghouses serve the subsequent processing stages. Dust control appeared satisfactory but a more formal review will be part of the risk assessment (see Environmental and Social Action Plan).
Emergency Preparedness and Response Plan
Xiwang Group has a formal Emergency Preparedness and Response Plan (EPRP) and a team drawn from across the various operating companies to implement. EPRP members (typically at team leader level) receive induction training and annual refresher training. Each team leader also receives first aid/first responder training.
The sodium gluconate plant has continuous monitoring and a series of automatic warning alarms, due to the exothermic reaction involved. No uncontrolled incidents were reported by management.
PS4: Community Health, Safety and Security
A security team operates at Group level, providing day guards, night-watchmen and risk monitoring (e.g. fire). Security employees receive formal training and do not carry weapons. Company management stated that no material security issues had arisen to date, in part due to the good working conditions and employee services provided on site. The EPRP (see preceding section) addresses the risk of on-site incidents to housing units on the campus. Assessment of the adequacy of current community, health and safety risk evaluations and recommendations for improvement will be part of the risk assessment (see Environmental and Social Action Plan).
PS5: Land Acquisition and Involuntary Resettlement Xiwang Group campus: prior to 1986, the land for the campus was agricultural, with one residential village. 200 villagers were physically relocated in the initial phase of campus development. Villagers were provided with alternative housing (on the campus) and if not already employed by the Group, offered employment. The legal classification of the land was changed from agricultural to industrial when the campus was constructed. The reclassification triggered payment of compensation by the local government to the farmers who had previously used the land – an annual crop loss payment based on prevailing market rates at 1mt wheat per mu. For the subsequent expansion of the campus, villagers losing agricultural land were also compensated by local government (as above) and offered employment in the Xiwang Group. No physical resettlement took place. Xiwang Sugar - crystalline fructose plant: the land comprises approximately 200mu (13ha), the land use rights for which were purchased from the prior owner (Changde textile company), who never took physical possession of the site. Xiwang Sugar’s acquisition of the land was therefore a voluntary, willing buyer-willing seller, commercial transfer with Changde. Approximately 250 farmers were affected by Change’s original acquisition of the site. As described above, farmers losing agricultural land were compensated by local government. Once Xiwang Sugar took possession of the site, it also extended employment opportunities to all affected farmers. The undeveloped parts of the 13ha lot are currently given over to agriculture, with approximately 20 farmers paying a nominal rent to Xiwang Sugar in order to use the land to grow wheat. The Company supports this practice as part of its community relations program.
No further land acquisition is planned by Xiwang Sugar but the Company has committed to follow the requirements of PS5 should further acquisition occur (through the Group level QSE management system described under PS1).
