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: PS1: Social and Environmental Assessment and Management Systems PS2: Labor and Working Conditions PS3: Pollution Prevention and Abatement PS4: Community Health, Safety and Security PS8: Culture Heritage Galaxy leases the land from Suez Public Free Zone, an industrial park set up by local government in the desert area near Red Sea. No natural reserve area or endangered species are identified at or near the project site. Indigenous peoples were not identified in the project area.

This is a Category B project according to IFC’s Environmental and Social Review procedures because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The project is located in a desert area inside the Suez Public Free Zone (SPFZ), which was established a few years ago by the local government. There is no agricultural land at or near the SPFZ. The nearby community is approximately 1.5 km from the project site. The Environmental and Social Impact Assessment (ESIA) states that the proposed project will meet both local regulatory requirements and IFC Performance Standards/EHS guidelines. Mitigation measures for the potential environmental and social impacts have been identified and are incorporated into an attached Environmental and Social Action Plan (ESAP).

The key environmental and social issues for this project include the following: - Water saving, wastewater treatment, and water reuse - Operational safety and emergency response - Energy saving and energy efficiency Galaxy has presented plans to address these impacts to ensure that the proposed project 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 the World Bank Group (WBG) environmental, health and safety guidelines. The information about how these potential impacts will be addressed by Galaxy is summarized in the paragraphs that follow. Further information is provided in the attached ESAP, which is agreed upon by IFC and Galaxy and will address the compliance gaps with IFC’s requirements. 1. Social and Environmental Assessment and Management Systems Land and natural environment: Galaxy leases 5 ha land, located in Suez Public Free Zone, Egypt, from local government for the proposed project. The project site is a desert area without agricultural land. The nearby community is approximately 1.5 km to the southeast of the site along the Red Sea. Environmental and Social Impact Assessment (ESIA) confirmed that there is no natural reserved area or endangered species, at or near the project site. The site preparation started from January 2010. Environmental and Social Assessment: Galaxy contracted external experts to conduct environmental and social (E&S) assessment according to Egyptian regulatory requirements and IFC’s Performance Standards (PS)/EHS guidelines. The ESIA predicts the project could meet both local regulatory requirements and IFC PS/EHS guidelines upon successful implementation of the proposed mitigation methods. As indicated in the ESAP, the ESIA will be further revised to evaluate the effectiveness of a membrane bio-reactor (MBR) for further treatment of the wastewater and the possibility of wastewater reuse. Environmental, health, and safety (EHS) management and organization: Galaxy has an EHS corporate management system in India. Galaxy is committed to establish an effective EHS management system in its Egyptian operation with responsible officers and appropriate EHS management programs/procedures, and will ensure that the E&S management meets all the requirements of IFC Performance Standard 1. In accordance with the ESAP, Galaxy will hire its EHS manager / executive by the end of 2010, draft all EHS programs and procedures prior to the trial production, and set up an effective EHS management system one year after the trial production starts. Training, monitoring, and reporting: In its Indian operation, Galaxy has an established program to provide necessary training for all its employees in EHS fields related to its operations. Galaxy also conducts routine environmental, health and safety monitoring for its Indian operations. For the proposed new project in Egypt, Galaxy will set up the EHS training, monitoring, and reporting programs as part of its preparation of overall EHS programs and procedures prior to the trial production. 2. Labor and Working Conditions Human Resources Policy and Management: Galaxy has a corporate level Human Resources (HR) policy that specifies the terms of employment and working conditions. These include procedures for hiring and recruiting, probation, training, performance review, promotion, insurance, salary and compensation, resignation, lay-off and firing, leave and vacation, and retiring. For the Egyptian operation, Galaxy is committed to implement a similar HR policy to meet requirements of Egyptian regulations and IFC Performance Standard 2. In accordance with the ESAP, Galaxy will prepare a qualified human resources policy and procedures for its Egyptian operation and the employees should have access to the HR policy and procedures. The HR office will also work as a grievance mechanism for the employees. Working Conditions and Worker’s Organization: Galaxy hires a local law firm to provide legal assistance on labor issues. Galaxy has no objection to collective bargaining and will follow all the Egyptian labor laws and related IFC requirements for working conditions and worker’s organization. Non-Discrimination and Equal Opportunity: Hiring and promotion at the Galaxy Egyptian operation will be solely merit-based. The majority of the new employees and contract labors will be hired locally from Suez area, with preference to female applicants for non-shift positions. Retrenchment and Protecting the Work Force: Retrenchment is not expected for this project. Galaxy will hire approximate 1,000 construction labors during the construction time, and hire 60 employees and 60 contract labors during normal operations. Galaxy is committed to comply with Egyptian labor law and will not hire workers below the age of 18. Occupational health and safety (OHS): Operational safety is highly emphasized in the operation at Galaxy. There is routine OHS training including new employee training and annual refreshers at its Indian operations. For the Galaxy plant in Egypt, OHS operational procedures for each position will be prepared three months prior to trial production, and all employees will be trained in OHS procedures based on their positions before the trial production. Galaxy will also develop workplace air quality/noise monitoring programs, and track the statistical trends of near-miss and accidents, as part of its EHS management system programs/procedures. 3. Pollution Prevention and Abatement Raw materials and resource consumption: The major raw material consumption in the Galaxy Egyptian project consists of ethoxylated fatty alcohol (16,000 t/y), linear alkyl benzene (16,000 t/y), caustic lye (6,500 t/y), sulfur (3,000 t/y), water (870 t/d), and natural gas (1.5×106 m3/y). The water is supplied by the industrial zone. The industrial zone also supplies Galaxy with approximately 9,600 Mhr electricity from the national grid. Environmental Compliances: The current ESIA predicts the air emission, workplace air quality and noise levels. Ambient air quality and noise levels will meet both local regulatory requirements and World Bank Group (WBG) EHS guideline limits upon successful implementation of the proposed mitigation measures. Galaxy will generate approximately 220 m3/d wastewater. Galaxy proposes to use membrane bio-reactor (MBR) technology to further treat the wastewater in order to meet the WBG EHS guideline limits for effluents. Galaxy plans to recycle the effluent after MBR treatment. As indicated in the ESAP, Galaxy will start auditing environmental and social performances of its main raw material suppliers. Solid and Hazardous Wastes, Hazardous Materials and Operation Hazard: The used catalyst will be sent back to manufacturers for re-generation. Other solid and hazardous wastes will be sent to different registered contractors for recycle or disposal. Galaxy’s raw materials, intermediate products, and byproducts comprise significant amount of hazardous materials. The manufacturing, storage, handling, and transportation of these materials pose dangers to the employees and nearby communities. Galaxy has internal procedures to conduct hazard operability (HAZOP) study, and will contract external experts to conduct HAZOP study before project commissions. Fire prevention and emergency response (ER): Galaxy will install adequate firefighting equipment at the proposed site. Galaxy will have its own fire fighting staff and first aid clinic onsite. Galaxy plans to conduct mock emergency response (ER) drills once a month, and plant-wide ER evacuation drills twice a year. The nearest fire station is approximately 10 minutes from the site. A new fire station is also proposed for the Suez Public Free Zone. Greenhouse Gases (GHG): Galaxy has developed various energy efficiency improvements at its Indian operations in the past few years. All the applicable energy efficiency improvements will be adopted at its Egyptian operations. Besides, all the heat from sulfur combustion unit will be used for steam generation. As a result, the annual GHG generation will be 8,000 ton/year, mainly from natural gas boilers and electricity purchase. 4. Community Health, Safety, and Security Community health, safety and security: There are communities approximately 1.5 km southeast of the Galaxy site. The ESIA predicts limited impacts to the surrounding environment during normal operations. Raw materials and products will be transported between the site and the special chemical jetty, located approximately 200 km south of the site, along the coastal highway. The road conditions are satisfactory. Emergency preparedness and response: Galaxy will have ER plans available and conduct routine drills for fire fighting and potential chemical explosion/releases. As indicated in the ESAP, Galaxy will coordinate with neighboring companies and involve the local hospital, fire brigade, and representatives from the nearby community in the ER drills. In accordance with the ESAP, Galaxy will only contract with transportation companies that have defensive driving programs, acceptable safe driving records, and sufficient emergency response methods. Galaxy will also monitor the hazardous material transportation and require the transportation company to report the accident rates quarterly. Security personnel: Galaxy will hire an external agency for plant site security, which conducts routine ID checks at the gate and security monitoring. The security personnel will not have any weapons. For serious security issues, Galaxy will report directly to the local police station. 5. Cultural Heritage ESIA confirms that there is no cultural heritage site at or near the project location. However, Galaxy proposes a chance finding procedure for the project construction or operation in accordance with the ESAP.

Galaxy has an established community engagement program and grievance mechanism in its Indian operations. Galaxy will implement similar community engagement program at its Egyptian operation. In 2010, Galaxy will identify the vulnerable communities in the project area and develop a community development plan with a focus on education, vocational training, and healthcare. Besides disclosure of the ESRS and ESAP, Galaxy will also disclose its EHS performance on a bulletin board outside its plant gate. Galaxy has had a public hearing during ESIA preparation. As indicated in ESAP, Galaxy will hold a public consultation with local community prior to the project commission.

Galaxy will disclose the Arabic version of this document and attached ESAP at Galaxy Chemicals (Egypt) S.A.E, Plot No. 9, Block M, the Public Free Zone, Attaka – Suez, Egypt. Please contact the following for inquiries or concerns about the environmental and social impacts of this project. Mr. Yasser Sherif /. Ms. Ola Kamal Environics (Environment Consultant to Galaxy) 6 Dokki Street, Giza 12311, Egypt Phone: +202 37495686,37495696, 37601595 yasser.sherif@environics.org / ola.kamal@environics.org