29628 - Latapack Growth

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Environmental & Social Review Summary

Project Number

29628

Company Name

Latapack-Ball Embalagens Ltda.

Date ESRS Disclosed

Nov 4, 2010

Country

Brazil

Region

Latin America and the Caribbean

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Dec 15, 2010
Signed : Apr 15, 2011
Invested : Jun 30, 2011

Sector

Metal Can and Other Metal Container (Including Aluminum Beverage Cans)

Industry

Manufacturing

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

Headquartered in the city of Sao Paulo, Latapack-Ball Embalagens Ltda (“Latapack” or the “Company”) is an established Brazilian manufacturer of aluminum beverage cans.

Founded in 1995, Latapack is Brazil’s third-largest producer of aluminum cans, mainly for Brazilian brewing companies, with a 18% domestic market share. The Company has three production facilities: (i) a can body plant in Jacareí, São Paulo State; (ii) another can body plant in Três Rios, Rio de Janeiro State, and (iii) a can end plant in Simões Filho in the State of Bahia.

Latapack is undertaking an Investment Program consisted of the installation of a new plant at the city of Alagoinhas, in the state of Bahia to produce aluminum can bodies on 3 sizes, 12oz, 16oz and sleek. The new plant will respond to the rapidly growing market demand for aluminum cans in Brazil and especially to the country’s Northeast Region. Also, Latapack will increase its can end capacity in its Simões Filho plant to meet the additional production from Alagoinhas plant.

Overview of IFC's Scope of Review

The environmental and social review of the proposed project and existing facilities comprised interviews with the E&S management team of Latapack, review of a questionnaire completed by the Company, and review of the E&S performance of an existing project with IFC (#27031). The initial Environmental and Social Review Summary of the existing project with Latapack is available on IFC’s Disclosure Portal at:
Project #27081 Latapack

Meetings were held with Latapack’s Quality Assurance Manager, the Environmental Coordinator, the Human Resources Coordinator, and the Engineering and Technology Manager. The current performance of the existing project was assessed through a field visit performed in February 2010 to all the existing production facilities of Latapack (Jacareí, Simões Filho and Três Rios) and the Annual Monitoring Report submitted by Latapack in March 2010. The company has provided additional updates regarding the current operations and the plans for the new project, including the updated air emissions monitoring plan for Três Rios.

E & S Project Categorization and Applicable Standard

While all Performance Standards (PS) are applicable to this investment, IFC’s environmental and social review of project information 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.

The expansion of the can end plant in Bahia will not require a new site or acquisition of land. The exact location of the new plant in Alogoinhas, Bahia has not been defined; however the company is planning to acquire the land through a commercial transaction, potentially in an industrial area. Therefore, there are no expected impacts related to PS 5 “Land Acquisition and Involuntary Resettlement”, PS6: “Biodiversity Conservation and Sustainable Natural Resource Management”, PS7: Indigenous Peoples”, or PS8 ‘Cultural Heritage.

This is a category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria as is described in the following sections.

Key environmental and social issues identified during the appraisal include the following:
Corporate environmental and social management capacity;
Land acquisition, site location, planning, and permitting;
Construction and management of the new production lines;
Efficient use of energy, water and resources;
Wastewater treatment and disposal;
Labor and working conditions; and
Occupational health and safety.

Environmental and Social Mitigation Measures

Social and Environmental Assessment and Management System

-Social and Environmental Assessment: Latapack has a proven record on developing new projects and acquiring the relevant permits and licenses. The construction and operation of the plant in Três Rios has incorporated best available technology and has been designed to be in compliance with local and IFC’s requirements.

Latapack will construct and operate the new plant in Alogoinhas, Bahia in accordance to local legislation and IFC’s requirements, which include, but are not limited to obtaining the local environmental permits, the preparation of an Environmental Impact Assessment (EIA) and the implementation of the recommended measures derived from the EIA. Latapack will obtain and submit copies to IFC of the locally required environmental and social studies for the new production facilities. Latapack will submit the permits and licenses for the construction and operation of the new lines previous to initiate the construction, installation and operation of the projects. Potential impacts and mitigation measures are expected to be similar to those of Três Rios. In consequence, on completion the Alogoinhas facility is expected to be fully compliant with local social and environmental requirements and IFC’s Performance Standards.

Latapack will use best available technology for the new projects and has considered local and international standards in the selection of equipment. In consequence, on completion the production lines are expected to be fully compliant with local social and environmental requirements and IFC’s Performance Standards. The new plant in Alogoinhas will incorporate manufacturer upgrades for some equipment such as ovens and air compressors compared to the existing facilities in Três Rios. The expansion at Simões Filho will include the replacement of compressors and some auxiliary equipment to provide enough capacity for the production of can ends. Latapack has an internal engineering department which identifies and selects the equipment to be used in the production lines; this selection is done in coordination with Ball Corporation, one of the world''s leading manufacturers of packaging products and partner of Latapack.

Latapack has a proven record on coordinating the construction and installation of previous production lines and will apply in this project the experience on contractor selection and verification of E&S compliance.

-Social and Environmental Management Program: Latapack has functional Environmental and Social Management Systems (ESMSs) at corporate level and for each of the manufacturing plants. The management systems are in compliance with the requirements of ISO 9001, ISO 14001 and OHSAS 18001. An ESMS is being implemented at the new Três Rios manufacturing plant and completion is expected within a year. New production lines and facilities will operate under Environmental and Social Management Systems. Environmental and Social indicators are defined, monitored and benchmarked against Latapack’s plants and best practices of the sector. Latapack undertakes periodic internal and external audits to the management systems and acts upon the findings.

-Organizational Capacity: Latapack has a corporate Environmental and Social team with well defined responsibilities and supported by operational personnel on each plant to implement the corporate policies. Environmental and Occupational Health and Safety issues are coordinated by the quality manager, environmental specialist and the OHS specialist. Human Resources aspects are under the coordination of a general HR manager. The engineering department is in charge of the development of new projects, including selection of equipment, technology and sites. The environmental and OHS specialists participate in the new developments to address potential impacts and risks.

-Training: The Company has a comprehensive training program for new and existing employees. Latapack provides periodic training on emergency response and environmental topics such as management of waste and efficient use of resources. Latapack has supported local higher education colleges to ensure the students acquire the skills required by the Company and therefore facilitate the hiring. The Company identifies training needs through annual assessment of the managers and observation on the field. The Company has a well developed Behavior-Based Safety (BBS) program, which facilitates training and communication of safety aspects at the plants.

-Monitoring and Reporting: Latapack has a suitable set of environmental and OHS indicators, which are monitored periodically and corrective actions are taken as needed. A comprehensive monitoring system is in place, it includes periodic analysis for liquid effluents, air emissions, use of natural resources, and occupational exposure. Corrective measures are defined and implemented in a timely manner. New production lines will be monitored and benchmarked to best practices in the sector.

Labor and working conditions

-Human Resources Policy and Management: Latapack has Human Resource policies and procedures that are communicated to the employees. Human Resources aspects are in compliance with Brazilian regulations. Furthermore, Latapack was voted as one of the best companies to work in Brazil by Exame Você S/A Guide 2010. Aspects covered in the HR policies include description of benefits, hours of work, conditions of employment, promotion procedures, and disciplinary procedures. The existing policies of Latapack will be applicable to new production lines in Alogoinhas, Simões Filho and any other new developments. If applicable, the Company will adapt the internal policies to comply with local requirements.

-Terms of Employment and Workers Organizations: Terms of employment are communicated to the employees in writing during the induction period. Individual contracts describing terms of employment are in place for all the employees. The Company’s salaries are above the minimum Brazilian salary and above comparable industries in the regions where the Company operates. Latapack is committed to maintain competitive compensation on the sites where it operates. Employees are entitled to benefits such as dental treatment, medical assistance and life insurance. Terms of employment are in accordance to local legal requirements.

Latapack has signed agreements with the metal –working union in all its existing plants. The Company does not impose restrictions on worker’s rights to form or join employees’ associations. New projects will retain the same policies and the Company will guarantee freedom of association.

-Retrenchment: The Company has increased its workforce over the last years. The new plant in Três Rios has required the hiring of near 130 employees. The proposed projects are expected to create near 160 new direct jobs, and several hundred indirect jobs during the construction of the new facility through contractors. Therefore, retrenchment is not expected from this project.

-Non-Discrimination, equal opportunities and protection of the workforce: Latapack has a formal policy for non-discrimination and equal opportunities. Latapack does not discriminate in employment or advancement based on personal characteristics or gender. The Company encourages internal promotion and advancement, which are done based on skills and performance. Working conditions comply with local regulations, no employees under18 years are contracted as required by the local Law. No child labor or forced labor is used by the Company.

-Occupational Health and Safety: The Company has a comprehensive and functional Occupational Health and Safety Management System. It includes the identification of risks, implementation of controls and monitoring of working conditions. The risks are identified with the participation of the employees, controls are implemented and its functionality verified. Latapack’s OHS system has a strong learning component through the sharing of learned lessons and the existence of the Behavior-Based Safety (BBS) program.

Working conditions are assessed through audits of CIPA (Internal Commission for Accident Prevention) and prevention campaigns. Latapack’s monitoring program includes annual routine medical examination, noise exposure monitoring and exposure assessment to potential chemicals such as VOC’s. Corrective measures are actively implemented by the Company. Positive OHS practices are reflected on the low accident rate of the Company, remarkable housekeeping and compliance with the use of Personal Protective Equipment (PPE). New production lines will apply best OHS practices as done for the existing production lines.

Pollution Prevention and Abatement

-Resource Conservation and Energy Efficiency: The new production plant is planned to use technology that allows efficient use of resources. In particular the Company has focused on reducing the use of raw materials per can and per can end (aluminum, varnish, and coatings). Latapack considers energy and water efficiency in the selection of the equipment; for example, water used to wash the cans is treated and reused on-site. This project will include the replacement of the compressors in the can end plant at Simões Filho facility in Bahia, which will improve the energy efficiency of that plant and is expected to reduce occupational noise levels.

-Air Emissions: Latapack has small boilers at each facility, such boilers operate with Natural gas and are below the size threshold at which IFC require emissions monitoring. The main sources of air emissions are the drying ovens at the Jacareí and Três Rios plants, this will be as well the case for the new facility in Alogoinhas. Over time the Company has reduced the use of lacquers with high Volatile Organic Compounds (VOC) content to those used now, which have a low content of VOCs. The Company has monitored air emissions, including VOCs levels, at all the discharge points at Jacarei and emission levels are in compliance with local and IFC’s requirements. The Company has commissioned the monitoring of the emissions at Três Rios, but results were not ready at the time of this review; however, emissions at the Três Rios are expected to be in compliance based on design parameters, and the results of Jacarei. The new production plant in Alogoinhas will be designed to ensure air emissions from the drying ovens meet IFC and local requirements.

-Liquid Effluents: The Jacarei and Três Rios production facilities have industrial wastewater treatment plants (WWTP). The WWTP at Jacarei has been upgraded during the last year, new sedimentation tanks and filters have been installed, the liquid effluents discharges are currently in compliance with local and IFC requirements. The WWTP at Três Rios was designed to comply with IFC’s requirements and to handle the full operation of three production lines. The effluent levels at the Três Rios plant have been analyzed and are in compliance with local and IFC requirements. The plant of Simões Filho does not generate industrial effluents. The new plant in Alogoinhas will have in place resource efficiency mechanisms to reduce the amount of liquid effluents generated and will have an industrial wastewater treatment plant to ensure compliance with IFC and local requirements. Latapack will meet IFC’s and local effluent discharge requirements for the new plant in Alogoinhas.

Sanitary wastewater from all the existing facilities is treated on-site and is in compliance with local and IFC requirements. Latapack will ensure compliance with local requirements.

-Solid Waste Management: Latapack collects and separates the waste according to risk. The Company optimizes the use of raw materials; therefore, the waste generation is minimized. Residuals from aluminum are recycled and sent to the manufacturer; others re-usable materials such as paper, wood, cardboard, and plastic are also recycled. Hazardous waste generated includes waste water sludge, used oil, ink-contaminated materials and used PPE. Latapack has a proper waste management program which includes the disposal of wastes through authorized companies; verification of the proper disposal of the materials; and retention of destruction records. The existing mechanisms to manage the waste will be applied on the new proposed projects.

-Greenhouse Gas Emissions: Greenhouse emissions of the operations are associated with electricity consumption and the use of natural gas for the ovens. The Greenhouse emissions of the current operations have been estimated around 9,500 tons of CO2.

Community health, safety and security

-Community Health, Safety and Security: The design and construction of the production lines considers structural and safety issues. Aspects considered include the storage of chemicals, fire safety protection and emergency procedures. The existing plants are located on industrial areas and have proper fire protection and pollution controls on place. The new lines in Três Rios and Simões Filho will operate under the existing safety procedures of those plants and new developments will address structural and safety issues in its design.

-Emergency Preparedness and Response: Latapack has formal mechanisms to response to potential emergencies in all its facilities. It included detailed inspections of the fire safety system (hoses, extinguishers, hydrants, emergency kit for chemical spills, etc) provision of training for the brigade and all employees, and periodic evacuation exercises.

Stakeholder Engagement

Latapack has active community development and social engagement programs in the areas around its plants, Initiatives has included: collection of food and clothing, blood donation campaigns, and voluntary campaigns. The Company has been active on supporting local education for areas related and non-related with Latapack activities in order to foment the skills needed to facilitate the integration of local communities to the active workforce.

This ESRS and the Environmental and Social Action Plan will be publicly disclosed locally in the following locations:

Latapack’s Main Office
Rua do Rocio, 199 – 7º andar
Sao Paulo, SP – Brazil
04552-000

São Paulo Plant
Rodovia Geraldo Scavone, 2400
Jardim Califórnia
CEP.: 12305-490 - Jacareí – SP - Brasil

Bahia Plant
Via Ipitanga n.º 468 - Cia Sul
CEP.: 43780-000 - Simões Filho - BA

Três Rios Plant
Rodovia BR 040, Km 20
Moura Brasil – Três Rios – RJ
CEP.: 25821-490

The Company will make adequate public disclosure of this transaction in the Brazilian business and trade press. Once Latapack select the new site in Alogoinhas, it will disclose locally the intention to build a new plant previous to initiate the construction and will communicate to IFC the disclosure site

To contact the project Company, please write to:

Jorge Angel Rosa Garcia, CFO
Rua do Rocio, 199 – 7º andar
Sao Paulo, SP – Brazil
04552-000
Phone: + 55 11 2171-2423
Facsímile: +55 11 2171-2401
jangel@latapack.com.br

Client Documentation

File Name	Actions
Latapack Growth EAP Oct 2010.pdf

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

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