While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that this investment will have impacts which must be managed in a manner consistent with the following specific 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,
PS 6: Biodiversity Conservation and Sustainable Natural Resource Management, and
PS 8: Cultural Heritage.

Performance Standard 7 on Indigenous Peoples is not applicable since the project is located in an area where there are no Indigenous People. The Project is located approximately 10 km from a Quilombola community located in Lagoa da Pedra, who are Afro-Brazilian descendants of slaves and a recognized minority group. It is not expected that this community will be adversely affected by the Project.

This is a Category A project according to IFC’s Environmental and Social Review Procedure because although the Project is expected to bring economic and social benefits it has the potential to create significant and diverse adverse environmental and social impacts through the construction of water storage and tailing dams, the physical and/or economic displacement of approximately 49 households, industrial operation impacts such as emissions to air, and the risks associated with the mining activities, such as control of erosion and rehabilitation of drill roads, drill sites and trenches, safe disposal of oils, waste materials, dust control; surface and groundwater protection, drainage, etc.

Key environmental and social (E&S) issues associated with the project are summarized below along with specific information on how potential impacts and risks are to be addressed by the Company.

PS1: Social and Environmental Assessment and Management Systems

Environmental and Social Assessment

To comply with Brazilian regulatory requirements and, as part of the project permitting process, Itafós commissioned a multi-disciplinary team of Brazilian E&S specialists to prepare a detailed Environmental Impact Assessment Report (EIA) for the project. The scope of the EIA was extensive and the program of work conducted to support the assessment and the methodologies used was in accordance with Brazilian law. The EIA was submitted to Naturatins (the environmental agency of the state of Tocantins) in July 30, 2010. Naturatins subsequently granted the issuance of the Preliminary Environmental Permit (LP) in December 1, 2010. Subsequent submittal of more detailed Environmental and Social Management Programs and other complementary studies by Itafós resulted in the issuance of the Installation License (LI) for the project on March 28, 2011. Thus, MBAC is currently authorized by the Brazilian Environmental authorities to start construction of the Project.

As part of this project, Itafós commissioned an additional team of E&S specialists to (a) conduct a gap analysis of the EIA to determine the aspects not considered in the EIA and that needed to be assessed to ensure project compliance with the IFC Performance Standards and (b) supplement the EIA as appropriate. The new document completed in April 2011, referred to as the Environmental and Social Impact Assessment (ESIA), is attached to this ESRS and documents the additional project impacts and mitigation measures not previously considered. The ESIA, along with supporting studies conducted during the preparation of the EIA, such as the archeological diagnosis, preliminary risk assessment, social assessment report, speleology report, etc. and new ones conducted such as the social baseline for the community of Campos Belos, resettlement action plan, etc., were used to complement the assessment of risk and mitigations of the project as per the IFC requirements.

The EIA developed a detailed framework for the E&S management plans to be implemented by Itafos. These plans outline the measures to be taken to manage the E&S issues identified by the assessment for the construction, operation and decommissioning phases. E&S Framework management plans include Traffic, soil, speleology, erosion control, solid residues and liquid effluents, vegetation clearing, flora, fauna, risk management, environmental education, social communication, land acquisition, environmental training, underground and surface water quality, air emissions, noise, revegetation, and mine reclamation. The E&S management plans were detailed based on the input from the Bankable Feasibility Study for the mining operations and on the Front End Engineering Design for the industrial operations. The next step in the project implementation is the development of the project detail engineering design.

The E&S management plans framework will be further developed and detailed as project planning and implementation continues safeguard employees, the local communities and the environment and will be submitted to IFC as indicated in the ESAP.

As part of the original EIA process the Company commissioned baseline and assessment studies including biodiversity (fauna, flora), hydrological, as well as noise, air quality, and soil evaluations. The baseline studies were conducted during dry and rainy seasons to adequately determine the baseline conditions of the project site. As the exploration and exploitation for additional mining resources progresses, Itafós will conduct additional in-detail terrestrial flora and fauna assessments, to reconfirm the outcomes of the study area assessment already conducted. For the industrial operations, Itafos will conduct Quantitative Risk and HAZOP assessments as part of the detailed engineering phase and the results with mitigations and recommendations will be submitted to IFC as indicated in the ESAP.

In addition, to complement the EIA initially conducted, wide ranging environmental and socio-economic baseline information in the project’s area of influence was gathered and recorded. As the project is located close to the community of Campos Belos, outside the jurisdiction of the State of Tocantins, additional socio-economic baseline data for Campos Belos was gathered through household interviews and questionnaires. The socio-economic baseline data for the municipality of Arraias was conducted as part of the EIA submitted to Naturatins. Household surveys were also applied to all accessible households directly affected by land acquisition. Cadastral mapping of affected lands was used to identify households affected by land acquisition.

Upon implementation of the management plan along with the mitigation measures summarized below and included in the attached Environmental and Social Action Plan (ESAP), the project will comply with E&S requirements, namely the laws and regulations of Brazil, IFC’s Performance Standards on Social and Environmental Sustainability and the applicable elements of the World Bank Group (WBG) Environmental, Health and Safety (EHS) General Guidelines and WBG EHS Guidelines for Mining and WBG EHS Guidelines for Phosphate Fertilizer Manufacturing.

The E&S management program for construction will be in place prior to the start of the construction work as specified in the ESAP. A separate E&S management program for operations (exploration and industrial activities) will be developed before the start of Itafós facility operations which is anticipated to begin in the last quarter of 2012.

Since development of the project will require physical and economic displacement in the future, due to the progressive nature of the mining operating which will be the cause of the displacement, as part of the ESIA, Itafós has developed a Resettlement Policy Framework (RPF) which outlines the policies and procedures for any future resettlement caused by the project as required by PS5. Full Resettlement Action Plans will be developed as needed prior to physical or economic displacement of affected people in accordance with the PS 5 requirements. In addition, Itafos developed as part of the updated ESIA, a Stakeholder Engagement Plan (SEP) for pre-construction activities. The SEP will be updated prior to construction and again prior to commencement of operations.

Management Program
Key to the construction phase management program will be the HSE and Social management and monitoring of the Contractor(s) selected by Itafós. The responsibility for compliance with the management plans defined by the ESIA including HSE and Social management commitments and management planning will be included in the legal agreements with the Contractors.

The Contractor(s) to be selected will have demonstrated experience in the design and construction of similar projects and will be required to follow Itafós HSE and social procedures and systems and hence comply with Performance Standards and relevant EHS Guideline requirements. Itafós will require the Contractor(s) to implement and operate an environmental management system in accordance with international management practices and to develop a detailed project HSE Management Plan for the construction program. . The HSE Management Plan will include, but not be limited to, standard operating procedures on environmental management, traffic management, dust management, occupational health and safety, wastewater control, flora and fauna management, labor conditions, workers accommodation, community engagement, grievance mechanisms, influx management, compensation procedure, during the construction phase. Further to this, the Contractor(s) is encouraged to give preference first too directly, and secondly to indirectly affected communities for employment as specified in the Local Hiring Plan. A brief discussion of skills training to prepare affected community members is discussed later. The Contractor(s) will be required to have adequate capacity to implement the HSE and Social plans through a team of HSE and Social professionals on-site during the construction program.

Organizational Capacity. Itafós has an EHS Manager with international experience in development and implementation of ESMSs. As indicated in the ESAP, for the project, Itafos will establish a HSE Division headed by an HSE Manager who will report directly to the General Director of the project during the construction phase and to the Project General Manager during the operational phase. The HSE Manager will lead three teams: an Environmental team, a Health and Safety team, and a Social and Community team to oversee both the industrial as well as the mining operations. The HSE Division will be responsible for, but not limited to, the implementation of the health, safety, environmental and social program management systems, environmental and social awareness and training, health and safety training, waste management, regulatory compliance, compliance audits, mine reclamation, stakeholder engagement, influx management, management and monitoring of resettlement activities, capacity building, social program monitoring and record keeping, grievance management and documentation.

The alignment of the Contractors’ planning (and other project sub-contractors plans) with HSE and Social project requirements will be managed and monitored closely by Itafós through plans and procedures to be developed by the Company to ensure that the E&S control and mitigation measures are being implemented in accordance with Itafós’ HES & Social commitments and the Contractor(s) contractual obligations. The procedure to be developed by Itafos will be submitted to IFC as indicated in the ESAP.

Community Development. Itafós will develop a Community Investment Program to benefit directly and indirectly affected communities throughout the lifetime of the project. The objectives of the program are to support social and economic activities in the project area and the program will be managed and implemented by the community relations team as indicated in the ESAP.

Grievance Mechanism for Communities. Itafós will develop and implement a grievance mechanism to respond to and address the environmental and social issues occurring during the construction and operational phase as indicated in the ESAP. The grievance mechanism will be available to all Project stakeholders, in particular those who will incur economic or physical displacement by the project. Implementation of the grievance mechanism will include regular reviews of grievances and solutions offered to assess trends that may be caused by lack in implementation of compensation measures or entitlements.

During construction, the Contractor(s) will develop and implement a grievance mechanism to address any issues related the activities of the contractor. Itafós will track, supervise and be accountable for the effective resolution of grievances submitted to the Contractor(s).

Training, Monitoring, and Reporting

The Company will develop the HSE & Social training plan and ensure that the HSE and social training plans for the construction and operational phases will be ready prior to the commencement of these two phases..

In addition, as indicated in the ESAP, Itafós will develop and implement a comprehensive monitoring plan to ascertain that (a) the Contractor(s) will implement the expected HSE & Social measures and (b) assess the performance of the project during the operation phase. This plan will cover, but not be limited to, air emissions, air quality, liquid effluents, noise, flora/fauna status, workplace conditions, social aspects, dams safety, surface water quality, etc. This plan will include the aspects to be monitored, the parameters to be measured, the monitoring methodologies to be used, the frequencies, etc.

In addition, the Company will commission independent third party environmental and social consultants to oversee the HSE and social activities during construction and operation. During the construction phase, the HSE and social oversight will be conducted every six months and during the operation phase, every six months during the first year of operation and annually thereafter as indicated in the ESAP.

Itafós is committed to report on its environmental and social performance to Naturatins, IFC, to the nearby communities of Arraias and Campos Belos, and other interested stakeholders.
PS 2: Labor and Working Conditions
Human Resources Policy and Management

Itafós will develop an overall Human Resource policy and implement a management system to ensure that labor conditions during the construction phase as well as the operational phase will comply with national labor laws as well as with the requirements of the IFC Performance Standard 2 as indicated in the ESAP.

The Itafós Human Resource manager will be responsible for the day to day implementation of the Itafós Human Resources policy and procedures. As part of the Human Resource policy, Itafos will ensure that all employees including employees of contractors will be informed about the Human Resource Policy and all employees will have written documentation of their rights and obligations as part of their labor contract upon direct or indirect employment with the company. Itafós is an equal opportunity workplace and no workers below the age of 18 years will be recruited by the company or its contractors.

The Brazilian Constitution and Labor Laws grant all persons the right to work in an occupation of their choice, and to improve their skills without discrimination on the basis of sex, social class, beliefs or religion. In addition the Labor Law prohibits all forms of forced labor (including compulsory overtime) and provides for the right to strike. The Labor Law also covers a broad range of labor matters, including trade apprenticeship and training, the form and content of employment contracts, and collective agreements, conditions of employment, social security and occupational health and safety. Itafos will establish an audit system to check that labor laws are being followed by all sub-contractors to the project
Itafós will respect all workers’ freedom of association and right to collective bargaining, this will include informing workers about these rights and ensuring that contractors are taking measures to respect freedom of association and collective bargaining as indicated in Itafós Human Resources Policy. In addition, Itafós will establish an internal workers’ grievance mechanism to capture and address concerns raised by employees.

Occupational Health and Safety (H&S)
Itafós will establish a Health and Safety (H&S) at Work policy for the project along with a specific health and safety plan for the construction program, followed by a health and safety plan specific to operations.

Both construction phase and operational H&S risks will be identified using job safety analyses and other industry standard methods to define appropriate measures that will be adopted to avoid or eliminate defined hazards and risks.

During the construction phase the Contractor(s) will be committed through the contractual agreements to ensure the H&S standards comply with the requirements of IFC Performance Standard 2 and guidelines on H&S. Prior to commencement of the construction phase the Contractor will be required to develop a detailed Occupational Health and Safety Management Program to be implemented during this phase.

This Program will be developed following a systematic assessment of construction H&S risk and will include, but not be limited to control of risks associated with construction traffic, excavation, working at height, welding / hot work, hazardous materials management; emergency response; dust, noise, traffic increase, etc. and will define requirements for the use of personnel protective equipment.

The Contractors’ H&S procedures to be developed will include the gathering of records to track and monitor safety statistics, investigate all lost-time incidents and near misses, and amend as needed specific site procedures to prevent re-occurrence of any incidents. Additionally, Itafós will develop a plan to monitor the performance of the Contractor to ensure that labor conditions are in compliance with the contractual requirements. Monitoring will include regular audits, review of Contractors’ internal monitoring reports and documentation as well as review of grievances logged by Contractors’ and subcontractors’ employees.

Operational safety measures for industrial operations will include, but not be limited to: emergency isolation valves, as per design codes; de-pressurization facilities; hazardous emission detectors; protective instrumentation and controls with sufficient redundancy; emergency shutdown instrumentation; emergency alarms; fire protection systems as per design codes.

As part of the detailed engineering design stage, Itafós will conduct the HAZOP for the operational phase and will submit a copy of the HAZOP recommendations and demonstrate its implementation as indicate in the ESAP.

Specific risks to the industrial operations workforce resulting from a major accident (i.e., fire or explosion), will be considered by the detailed quantitative risk assessment to be developed at the detailed engineering design stage. The results of the assessment, which will be submitted to IFC as indicated in the ESAP, will include the associated risks and the sound operational safety measures such as alarm systems, gas detection devices, automatic emergency shutdown systems, emergency drills, erosion controls, etc to be installed to prevent the likelihood of industrial incidents. In addition, procedures will be adopted to control risks to employees and contractors during operational phase operations and/or maintenance. This will include but not be limited to the permit to work system, lock out/ tag out, confined spaces.

Itafos will conduct periodic monitoring of workplace conditions and of employees and contractor employees lost-time incidents & near misses.

The construction phase will require up to 1500 workers at peak periods while during the operational phase about 390 direct jobs will be created. The construction Contractor(s) is committed though their contractual agreement to give priority to project affected communities when selecting employees. This training program will be developed and put in place by Itafós and the construction contractor prior to the construction phase. As appropriate, Itafós will coordinate with the local government to provide vocational skill training to local residents prior to initiation of construction to enhance the potential for local people to be hired.

Workers’ Accommodation will be required during the construction phase. The Contractor(s) will be in charge of constructing the workers accommodation at a location yet to be defined. Itafós will develop a framework Workers’ Accommodation Management Plan outlining the expected quality of workers’ accommodation and the way it will be managed to ensure safe and healthy conditions for the contractor workers and local communities. This Management Plan will be part of Itafós Contractor contractual requirements and Itafós, in close coordination with the Contractor, will develop, implement and monitor the Worker’s Accommodation Management Plan to ensure that potential impacts are mitigated. When the workers’ accommodation has been constructed and prior to use by workers Itafós will assess the standards of all facilities and conduct monitoring once they are operational. Specific training will be provided as required to ensure that personnel at the construction and operation phases have the necessary skills to identify hazards and carry out their work responsibilities safely.

Potential emergency scenarios will also be identified by Itafós for the operation phase and in conjunction with the Contractor during the construction phase and adequate emergency response plans will be developed for implementation. This will include provisions for a trained and equipped emergency response team to be ready to respond to emergency events. These plans will be submitted to IFC as indicated in the ESAP.

The mine is scheduled to work seven days per week or 356 days per year. Each day will consist of three 8-hour shifts. Four mining crews will cover the operation. The industrial activities will operate 24 hours a day in 3 shifts of 8 hours.

Workers health checks will be conducted during the construction and operational phases prior to starting work to establish fitness for work. Regular worker health checks will continue through the construction and operational phase to monitor workers health. Access to health services will be provided during construction and operation phases.

PS 3: Pollution Prevention and Abatement

The design of the project is based on established state-of-the-art and worldwide applied technologies whose performances are both predictable and well proven in operation, meaning that no significant variations are expected to be found between predicted performance and actual performance in the field. In addition, the project has been designed to comply with the most stringent of the Brazilian Standards and the applicable WGB EHS guidelines.

Air Emissions. Air emissions may occur during each stage of the project, in particular, during exploration and exploitation, construction, and industrial operational activities. The main sources include fugitive dust from exposed surfaces such as tailings facilities, stockpiles, waste dumps, haul roads, and infrastructure. Itafos will establish controls systems to ensure compliance with IFC requirements.

The emissions during the mining operation will be controlled by reducing vehicles speed and by wetting and covering material piles as appropriate, maintain the main roads, etc. The ore will be crushed; ground classified though flotation which requires a significant amount of water; filtered; dried; and sent to the production of SSP. The air emissions generated at this stage will be mainly from the grinding and storage of the phosphoric rock. Itafós will install air emission control systems, such as bag filters, at the grinding stage and will install enclosed conveyor belts, among other measures, to ensure compliance with IFC requirements.

The SSP production is based on the reaction between phosphate rock and sulfuric acid. The production of SSP includes these processes: acidulation, granulation, and drying. The anticipated air emissions from the acidulation stage, mainly fluorine, will be converted to fluorosilicic acid and removed from the scrubber control system prior releasing the gases to the atmosphere. The gases generated at the granulator will be sent to a venturi scrubber to absorb ammonia, any remainder fluorine as well as particulate material. The gases released from the dryer will be controlled by cyclones to remove the particulate material and then will be sent to a venturi scrubber to absorb fluorine gas and to remove the remaining particulate material prior releasing the treated gases to the atmosphere. The resulting slurry from the scrubbers will be sent to the liquid effluent treatment system.

The production of sulfuric acid production requires bulk sulfur, which will be purchased by Itafós from local or imported external suppliers. The sulfur will be heated and will react with atmospheric oxygen and steam to form sulfuric acid. Itafós is anticipating using the wet catalytic process, known as the Wet Sulfuric Acid (WSA) technology. This technology recovers SO2 as concentrated sulfuric acid and does not require drying of the flue gas thus reducing energy consumption. In addition, the energy generated during the hydration of SO3 and conversion to H2SO4 will be recovered as hot sulfur combustion air and to preheat the boiler feed water. The various chemical reactions (sulfur combustion, conversion of SO2 to SO3, and SO3 absorption) that take place in the production of sulfuric acid production are exothermic. Itafos will recover this energy as high pressure steam in a heat recovery boiler, which in turn will produce electrical energy in a turbo generator composed of a turbine driven by hot steam and steam for use in process. The WSA technology is expected to co-generate 10 Megawatts with the consequent savings of electrical power consumption. Itafos will confirm that the energy generated during the sulfuric acid process is the maximum amount of energy that can be economically generated and that it is benchmarked with the energy generation with this technology. The sulfuric acid plant will have an SO3 gases scrubber and a gas absorption tower to control its air emissions. The plant will be continuously monitored to ascertain the SOx gases and sulfur mist will be compliant.

The production of sulfuric acid requires bulk sulfur, which will be purchased by Itafos from local or imported external suppliers. The sulfur will be melted and will react with dry atmospheric oxygen to form sulfuric acid and as sub product, steam to produce electric energy. Itafos chose the conventional dry catalytic process based on the MECS technology. This technology changes SO2 as SO3 and by double absorption with water, produces concentrated sulfuric acid to 98%. The energy released from the Sulfur combustion and the reaction to obtain SO2 and further conversion to SO3 will be recovered as steam which will be used to move a turbine to produce Electrical energy. The chosen MECS technology is expected to co-generate 7.5 Megawatts with the consequent savings of electrical power consumption. The sulfuric acid plant will have an demister system to collect the SO3 gases in both Absorption Towers and thus control its air emissions. The plant will be continuously monitored to ascertain the SOx gases and sulfur mist will be compliant.

In the Granulation Plant, Itafos will install pneumatic cyclones to collect the particulate matter from the gases releases at the furnace and dryer prior sending them to the scrubber and subsequently to the atmosphere. In addition, all dust collecting points located along the packaging and distribution operations will be sent to a bag filter prior releasing the gases to the atmosphere. The material collected in the bag filter will be transported through conveyors to be re-processed. In addition, Itafos will also install an additional Scrubber which will absorb occasional ammonia gas and dust from the drum Granulator prior discharging the gases to the atmosphere.

The furnace gas emissions from the drying process will be passed through cyclones and then to a bag filter to capture particulate matter prior releasing the gases to the atmosphere. The material collected in the control systems will be recycled back into the process.

The wood from the land clearing due to the project installation will be used as fuel. Later on, Itafós will purchase firewood from Forest Stewardship Council (FSC) certified suppliers. Itafos will source its wood from Luis Eduardo Magalhaes, State of Bahia, approximately 150 km way from the project site. The company has visited three possible FSC certified suppliers, all with supply availability three times greater than Itafos needs, which are estimated to be approximately 120,000 m3/year. Brazil has established a rigorous system through which firewood suppliers need to be certified and properly registered with the Brazilian Institute of the Environment and Natural Resources (IBAMA.) To ensure the soundness of the wood sources, Itafós will develop a certified wood sourcing Chain-of-Custody plan to monitor and ensure that all sourced wood comes from certified managed sustainable forests. The wood sourcing Chain-of-Custody plan will be submitted to IFC as indicated in the ESAP.

Two electricity sources will supply the project: (a) co-generation from the sulfuric acid plant, and (b) a 13.8 kV transmission line to be built by Celtins, which is the State of Tocantins electric power utility and will also serve the Southeast part of the State of Tocantins. Before Celtins begins the construction of this transmission line, it will be required to prepare and submit and evaluation of impacts and mitigations to Naturatins.

All point source air emissions will meet Brazilian regulations and WBG EHS guidelines. In addition, the project will be designed to rely on the gravitational flow of materials, as much as possible, to save energy for transportation of materials.

The ambient air quality baseline conducted indicates that the current air quality in the project area is good since there have never been any industrial activity in the area. To assess the air quality and to confirm its compliance with the air quality requirements, Itafós will design and implement an ambient air quality monitoring program in accordance with international standards, to routinely measure air quality in proximity to its operations and nearby communities. The monitoring program will begin during the early construction activities and will continue during the operation phase.

Greenhouse gas contributions from the facility will be routinely monitored and recorded during operations. Once the detailed engineering design is completed and considering all energy efficiency measures to be implemented, Itafós will be able to determine the approximate CO2 annual emissions to be generated. Itafós will periodically monitor GHG during the operation phase. It is anticipated that the GHGs could exceed 100,000 tons CO2 equivalent: if such amount is confirmed, Itafos will monitor and report to IFC annually the amount of GHGs generated.

Itafós’ commitment to using Best Available Technology will provide higher energy efficiency equipment which will aid in the reduction of CO2 emissions generation. As part of the detailed engineering design stage, Itafós will conduct a site-wide energy assessment to identify areas of energy optimization as indicated in the ESAP.

Tailings Dam. The principal effluents from the phosphate mineral beneficiation process will be the tailings, which will be generated in pulp form (water with mineral particles in suspension). This effluent will be disposed of in a tailings dam to be built as part of the project. Once released into the tailings dam reservoir, the solid particles will precipitate and deposit at the bottom, leaving the water supernatant, which will be pumped into a process water tank to be recirculated back to the mineral processing flotation units.

The waste tailings dam will be located on the drainage of the Bezerra River, upstream of the water dam, and 8.5 km distant from the plant. The closest downstream community is approximately 20 km away and thus would not be expected to be impacted in the event that the dam failed but as described in the section below on Performance Standard 4, this will be confirmed.
This dam will be built in two stages; the first one will accommodate the tailings generated during the first three years of operation and is projected to have a volume of 70 x 106 m³. The final structure will rise from the initial configuration and it is expected to have a volume of 53.1 x 106 m³ and 30 m height. Its inundation area will be approximately 433 hectares and will require a vegetation suppression area of approximately 737 ha. It will be designed for the life expectancy of the project which is 20 years. The analysis conducted indicated that the tailings will have presence of quartz, clay, iron oxides, mica, and apatite waste which are inert. Thus no treatment will be required before disposal on the tailings dam.

Water Dam. The project considered obtaining either groundwater or water from the nearby water bodies to satisfy its needs. However, from the studies conducted it was evident that (a) groundwater would not provide the high volumes necessary to the process and (b) the flow variations of the water bodies (non-permanent year around) in the municipality of Arraias region were not suitable to furnish the high volume process water needs. Therefore Itafós opted for building a water dam along the Bezerra River drainage downstream of the confluence with the Pocao Creek. The design reservoir volume is 7.5 x 106 m³. The reservoir inundation area is anticipated to be approximately 214 hectares. The vegetation suppression area is estimated to be approximately 215 ha.

Itafos conducted a rigorous assessment of technical and environmental options to establish the location of the tailings and water dams. The geotechnical, hydrological, and hydrographical studies as well as hydrological modeling considered dam location selection criteria including average distance from the industrial plant, crest elevation, reservoir volume, volume of the dam mass, flooded area, ratio of volume/flooded area, vegetation impacted by the flooded area, population affected by the flooded area, distance to material borrow areas, and geological/geotechnical aspects. Considering the integrated analysis of these conditions, Itafos considered ten possible alternatives for the tailings dam and three possible alternatives for the water dam.

Itafós conducted all needed hydrological and hydraulic studies and design options to ensure that the dams will be designed and built to maintain a minimum residual water flow of 30 percent of the water flow that is present 95% of the time in the Bezerra River as required by the Brazilian regulation. Thus, Itafós will ensure a minimum water residual flow of 0.040 m3/s, which corresponds to the 30 percent of the 0.132 m3/s original flow present 95 percent of the time. For the water dam it will ensure a minimum flow of 0.090 m3/s from the original 0.301 m3/s. In addition, the Company will also ensure that the characteristics of the residual flow will be the same as those prior to the dams being built, as per the baseline studies conducted during the development of the EIA, and in compliance with the Brazilian and IFC PS6 requirements by conducting monitoring of the characteristics of the river downstream of the dams.

The aquatic life baseline assessment conducted on the Bezerra River indicated that there are only very few common fish species with none of commercial or recreational value and phito-plankton, zoo-plankton, and benthonic species that will not be affected by the flow reduction since they are part of the intermittent water cycle. In addition, the impacts assessment indicated that there are scattered subsistence farmers in the vicinity of the river and that given the low non-permanent water flow of the Bezerra River and the brackish characteristics of it, these communities rely on either groundwater or cisterns for their water needs.

Water Consumption. The Project’s total water consumption is estimated at approximately 2,474 m³/ h, of which about 72% (or 1,887 m³/h) will be recycled water from the tailings dam and 28% (or 686 m³/h) will be water from the water dam.

The estimated drinking water demand during the operation phase is 40,000 l/day, totaling 14,240 m³/year. This water shall be treated in a 30 m³/h water treatment facility and will comply with the World Health Organization drinking water standards. The treated water will be stored in a dedicated fresh water tank.

Liquid Effluents. During operations, the project will generate process and sanitary wastewaters. The scrubbers used to control air emissions will be the main source of process liquid effluents. Other sources include the SSP production unit which will have a residues containment basin for drainage waters and the sulfuric acid unit which will also have a water drainage containment basin. Process liquid effluents will be treated in a wastewater treatment plant in accordance to the Brazilian and WBG EHS Guideline requirements prior releasing them to the environment.

Construction domestic waters will be treated by the Contractor(s) and the domestic waters generated during operation (exploitation and industrial activities) will be treated in a dedicated wastewater treatment system. Both systems will be designed and operated in accordance with the Brazilian standards and applicable WBG EHS guidelines.

In addition to monitoring the treated wastewater quality to be released to the environment, Itafós will also establish a ground water monitoring program at the mining and industrial site to ensure there is no groundwater contamination as a result of its operations.

Itafós will establish groundwater monitoring wells to monitor groundwater quality at the facility and will implement a groundwater testing program during the construction and operation phases.

For the mining operations, Itafos will ensure the following: minimize the creation of new access corridors; decommission and re-vegetate exploration access routes, as well as installing obstacles to limit access, Attenuating surface runoff from high precipitation events using on-site storage and water management infrastructure (e.g. storage ponds, sumps, low gradient ditches, clean water diversions; maintaining, to the extent possible, natural drainage paths and restoring them if they are disrupted; protecting stream channel stability by limiting in-stream and bank disturbance, and employing appropriate setbacks from riparian zones.

Soil and Erosion. As part of the exploitation, Itafos will implement a soil management program to ensure the organic soil layer to be removed as well as the soil characteristics are maintained while they are stored for the reclamation phase of the mine. Itafós will develop and implement an erosion control program to ensure no loss of soil from erosion occurs due to the project. The drainage system (i.e., drains, culverts, etc.) designed at the mine, will ensure proper water flows, control of soil erosion and thus of surface water quality. In addition it will establish a vegetation curtain to help in soil retention, reduce the dispersion of dust around the project outside area, and reduce visual impacts.

The sulfuric acid plant’s floor will have an anticorrosion coating and containment basins to prevent soil contamination and collect occasional spills.

Solid and Hazardous Waste Management. The waste generated during the construction phase will be segregated and stored at waste yards managed by the Contractor(s). Domestic solid waste especially from the workers’ accommodation will be collected and disposed of in a municipality landfill. Hazardous wastes generated during construction (i.e., lube oil, batteries, empty drums of paint/solvent/additives, floor sweepings from material storage yard, contaminated soils from spills, off-specification materials, electrical and mechanical components, etc.) will be stored, clearly marked in drums and containers at the waste yard established by the Contractor(s), and then transferred, by the Contractor(s), to a licensed waste treatment facility. In addition, prior to the start of the construction activities, the Contractor(s) will develop a waste management plan for both hazardous and non-hazardous waste as part of the HSE construction management plan.

Itafós will build a dedicated, roofed, well ventilated hazardous waste management area in the downstream wind direction, meeting all relevant fire code requirements, with impervious sloped floor, drainage channel, sump, and pump system. This area will have segregated areas by chemical characteristics; restricted entrance/exit and eye wash and showers. Itafós will develop a waste management plan for both hazardous and non-hazardous waste for the operational phase and submitted to IFC before Itafós facility operations begin.. All wastes will be strictly controlled and the plan will define waste management procedures to be implemented to ensure storage, treatment and disposal of all generated wastes in accordance with national legislation and IFC requirements. Only government approved facilities will be used for waste treatment and disposal. As part of the waste management plan, Itafós will develop a tracking system for the collection, transportation, treatment and disposal of all hazardous waste streams leaving the site location.

Hazardous Materials Management. Itafós will design the project ensuring proper handling of hazardous materials. Itafós will have the appropriate prevention measures to absorb or contain liquid from entering drains, ditches or waterways. The ore, crushed ore, and phosphate rock will be stored in stockpile yards. Sulfur which will be supplied in bulk in solid form will be stored at the dedicated storage yard. Caustic soda, used to ensure an alkaline pH of the pulp prior to been fed to the flotation stage; and hydrogen peroxide, used in the scrubber of the sulfuric acid plant will be both delivered by truck and stored in storage tanks. Sulfuric acid will be also stored in storage tanks. Ammonia, which will be delivered by tank trucks, will be stored in tanks with leakage-proof valve systems. Other materials such as hydrated lime will be stored in a closed warehouse. Itafós will develop and submit to IFC a Hazardous Material Management Program prior to beginning construction and operation phases.
Itafós will ensure that all storage tanks have double containment, and that there will be a database accessible to all employees with the Material Safety Data Sheets (MSDS) for all hazardous materials; all hazardous liquids will be segregated and securely stored in appropriate secondary containment to prevent soil contamination in case of accidental spillage.
Emergency Response. Itafós’ design philosophy is to provide sufficient process safeguards to protect personnel and equipment and the surrounding communities.

During the construction phase, accidental environmental impacts at construction sites will result mainly from oil spills during routine loading/unloading and transportation and use of hazardous materials. The cleanup of such spills generates oil-contaminated sands, floor sweepings and general debris.

For the construction phase, the Contractor(s) will be required to develop and implement an Emergency Response Plan and have qualified personnel and equipment response to handle potential emergencies. Itafos will further detail the emergency response plan and risk assessment framework already developed in the EIA (i.e., accidents from releases of dangerous materials, dams fault -overfilling, flood, etc.) as indicated in the ESAP. The emergency response plan will confirm/identify likely emergency scenarios, appropriate response equipment, calibration and maintenance of the equipment, emergency training and drill frequencies, identification of appropriate supporting parties, etc. Qualified personnel to respond to any emergency will be available at all times. Itafós will submit a copy of this plan to IFC as indicated in the ESAP prior to the commencement of the operation phase.

PS 4: Community Health, Safety and Security

As part of the impacts assessment, Itafos developed detailed dams safety management plans for the construction phase. These plans take into consideration the characteristics of the construction materials, the detailed design follow up which is based on the project design already completed, the qualifications of the dams building contractor, geotechnical monitoring program during the construction phase, development of the standard operation manuals, etc. As part of project implementation, Itafos will commission independent annual dams’ safety audits to ensure the safety operation of the dams as indicated in the ESAP. These audits will include, but not limited to, structure behavior, pluviometric registers, fill level, evaluation of the physicochemical characteristics of the stored tailings, etc.

As part of the management of environmental and social impacts to nearby communities, Itafós will develop a Community Health and Safety Management Plan based on the framework already developed in the ESIA and other plans to be developed that affect the communities including site hazards, traffic safety, health impacts, etc. This management plan will be adjusted by Itafós for the operational phase.

Itafós will include measures (noise barrier/insulation, periodic maintenance plans) to limit noise disturbance outside the site boundary and will establish a noise monitoring program at the facility boundaries to ascertain the project’s compliance with Brazilian standards and WBG EHS Guidelines. Noise monitoring will be also routinely carried out during the facility construction program and measures will be taken to minimize noise disturbance where necessary.

In addition to the health and safety of Itafós workforce, the health and safety of the communities near to the Itafós facility is very important to Itafós. Major risks to the surrounding communities from the facility will be assessed with the quantitative risk assessment to be conducted as part of the detailed design phase. This risk assessment will consider worst-case scenarios such as dam incidents, explosion, fire and leaks based on the facility layout and technology to be used and will include proposed mitigation measures to prevent the possibility of such incidents and negative impacts on the neighboring communities.

Itafós emergency response planning for their activities will be developed and will involve the local authorities and the communities. Itafós will assist the local authorities in the preparation in the development of community preparedness planning in the event of a major incident. The emergency response plan will be widely communicated to directly affected stakeholders.

Construction activities will result in some community disturbance and nuisance, mainly in relation to noise, dust and project-related traffic. Noise will be monitored and mitigation measures applied where necessary which may include the erection of temporary noise barriers, the scheduling of the noisiest activities during daylight hours and the notification of residents prior to the specific activities. Dust suppression methods will be also employed.

To ensure the safety at all times and prevent negative impacts, Itafós will commission independent dams design assessment to determine appropriate construction and safety methods as well as additional environmental impacts that can be identified at the detailed design stage. The study will ensure that the dams’ design and construction will comply with best international practices and as required by Performance Standard 4 to protect the communities from potential structural damage. Itafós will submit a copy of the water and tailings dams’ assessments to IFC as indicated in the ESAP. In addition, Itafós will develop and implement safety management programs for the water and tailings dams. The dams’ safety management programs will be completed prior to the operation phase and will be submitted to IFC as indicated in the ESAP.

Traffic volume to transport equipment and materials to the construction site will be considerable. Itafós will conduct and submit to IFC as indicated in the ESAP, a detailed traffic impact assessment for both construction and operation, to establish the traffic volumes required and its impact in relation to the existing conditions, identify the possible transportation routes, and to define traffic management measures to be employed that will reduce impacts including infrastructure upgrades, optimum route selection and vehicle management as well as the staggering of working hours and optimum site access provisions. Itafós project–related vehicles (own and contractors) will be modern and they will be continuously monitored to ensure their quality to minimize noise and vehicle emissions.

Hazardous materials ((ammonia, sulphur, NaOH), as well as wood and finished goods will be safely transported to and from site using vehicles and procedures that are in accordance with Brazilian and international standards during both construction and operations, for which Itafós will develop a Safety Transportation Management Plan . Storage of hazardous materials will also follow Brazilian and international standards whereby adequate, secure and fully contained storage facilities in separate designated areas will be used on site.

In addition, Itafós will develop and implement an Influx Management Plan based on the principles outlined in the framework management plan in the ESIA as indicated in the ESAP. This process will include a stakeholder analysis, participatory consultation, influx risk assessment and development of policies and procedures for managing influx and mitigating impact. The Plan will be developed in close coordination with municipal authorities.

As determined by the impacts assessment, the Bezerra River is seasonal and consequently is not a reliable source of water for irrigation. In addition, the river’s rocky substrate makes the Bezerra River water “brackish” further limiting its use for leisure, fishing and/or human consumption. The main sources of water in the area of the project are cisterns or deep tubular wells. Agriculture is not practiced much in the directly affected area due to the lack of water and the poor soil. The agriculture practice is primarily family subsistence agriculture with irrigation limited to cisterns and tubular wells. Even though currently there is little use of the Becerra river downstream, Itafos will conduct an assessment to reconfirm there are no negative impacts to potential downstream users from damming.

Exposure to diseases. The arrival of a large amount of workers during the construction phase will increase the risk of transmission of communicable diseases including sexually transmitted diseases. In order to monitor potential health impact on the local communities Itafós will establish a health baseline for the surrounding communities prior to the inception of the construction phase. In addition Itafós will develop and implement an Influx Management Plan base on the principles outlined in the framework management plan in the ESIA as indicated in the ESAP.

Itafós will also require the contractor to develop a Communicable Disease Management Plan, on the basis of the framework outlined in the ESIA within six months of the contract award. This plan will include the measures to be established to prevent the breeding of mosquitoes and vectors in all water deposit storage reservoirs. As part of this effort Itafós will implement a communicable diseases awareness campaign jointly with the Contractor(s) and in coordination with relevant stakeholders such as the women’s associations, youth groups, municipal authorities, health workers and representatives from affected communities as indicated in the ESAP.

Security forces. Itafós will hire unarmed private security contractors for the security of the Itafós personnel and property. Itafós will conduct training for the private security personnel to ensure appropriate conduct with neighboring communities and compliance with Itafós’ code of conduct. Itafós will establish and implement a security management plan as indicated in the ESAP which will include assessment of human rights’ record of all employed security firms, definition of rules of engagement, and ongoing audits of security contractors.

PS 5: Land Acquisition and Involuntary Resettlement

The concession area for the project is characterized by land of low productivity primarily used as pasture for cattle but also for small-scale subsistence farming. The populations surrounding the project are largely rural, subsistence farmers living on farms of several hectares. There are however, several non-resident landowners of large ranches. The primary economic activity practiced by the affected households includes farming manioc, rice, beans and fruit trees as well as cattle and goat raising. The permanent land requirement for development of the project is around 1,620 5 hectares. Project land take will affect approximately 49 households mostly dedicated to subsistence farming but also including large-scale cattle ranches. Of the 49 households, 13 households will have more than 50% of their land affected but may not need to be resettled; and 8 households will need to be resettled. The impacts to the remaining 28 households will be evaluated and addressed on a case by case basis. Land acquisition has already been initiated with the purchase of 6 properties. The majority of land owners (33) have formal title to the land they own, the remaining households are informal land owners.

It is expected that all resettlement will be conducted prior to the project’s construction period. The Company will proceed with this resettlement according to a Resettlement Action Plan (RAP). The following principles in particular will apply to the affected households: land for land compensation will be prioritized, compensation will be at replacement value, and livelihood restoration programs will be implemented and monitored. As part of the RAP, Itafós will provide support programs to vulnerable households. Any additional land acquisition required that is not included in the RAP will be managed according the principles outlined in Resettlement Policy Framework.

The RAP will be developed in close coordination with project affected people. Given the relatively small scale of the resettlement efforts and the diversity of affected people’s situation, efforts will be made to address each case individually rather than building a resettlement village. One component of the livelihood restoration package will be preferential construction employment if qualified. The RAP will be disclosed to affected households prior to negotiation and compensation will be complete prior to impacts. Itafós will make available third party expertise to affected households in the negotiation process where needed.

Itafós will monitor the resettlement process on an ongoing basis to ensure the process is being implemented to IFC Performance Standard 5 requirements as indicated in the ESAP. The community relations staff will implement ongoing monitoring of grievances, and progress of resettlement activities including restoration of livelihoods and Project Affected Person satisfaction with the resettlement process. Third party auditors will conduct annual audits: to review adequacy of land acquisition, resettlement processes, and to define completion of the resettlement process (typically 36 months after impacts and ensure that the livelihood restoration is being completed. Once the resettlement and livelihood restoration are complete and PS5 objectives are thereby fulfilled the annual audits will stop.

Itafós has developed a Resettlement Policy Framework that outlines the policies and procedures that will be the basis on which future land acquisition and resettlement will be conducted to ensure livelihood restoration and security of tenure. The Resettlement Policy Framework has been disclosed together with this review and will be disclosed locally. The survey of affected households identified 15 vulnerable households. These households will be provided additional assistance through a Livelihood Restoration Plan as well as assistance (if needed) identifying appropriate resettlement housing and moving.

Consultation with Afro-Brazilian Communities. A Quilombola community (Afro-Brazilian descendants of slaves) is located outside the area of direct influence of the project. Afro-Brazilian communities like the ones are accorded ethnic/indigenous/minority group status by the government of Brazil. No direct impacts to this community are anticipated, and indirect impacts are expected to be largely positive. In order to enhance the potential for positive socio-economic impacts from the project and to protect the community’s intangible cultural heritage, Itafós will use a participatory process to design and implement a Quilombola Community Support Program.

PS 6: Biodiversity Conservation and Sustainable Natural Resource Management

The region of the Arraias municipality, where the project will be located, is in the Cerrado biome which is the second largest biome in area in Brazil. This biome has biological importance because it shelters a great variety of species, some of which are identified as threatened and thus protected by IBAMA. However, many areas of Cerrado are considered modified habitat, due to intense anthropogenic intervention namely through forest clearing, burning, replacement of native flora by crops or cattle, use of pesticides, water exploitation, construction of roads, etc. The biome’s project area comprises mainly altered natural areas (56%) or areas of intensive human use (37%) with only 7% of the original landscape preserved. The habitat associated with this Project is considered modified habitat, as defined by PS6, with small remnants of natural habitat.

Currently, the State of Tocantins has 14 Conservation Units (UCs), 12 are state-owned and two are Federal owned. None of these UCs is within the municipality of Arraias. However, the municipality has identified “priority areas for conservation”. One of these is located in the center of the municipality, comprising the Serra de Arraias, or around 100,000 ha, located at approximately 9 km from the project site, and another, located in the southwest region, comprising the Serra do Bom Despacho, of approximately 34,000 ha is located at approximately 50 km from the project site. No Tocantins UCs will be adversely impacted by the project.

Itafós conducted a detailed baseline to identify the flora and fauna species within the study area using Worldview 2 high resolution satellite imagery and further confirmation with visual inspections and support from studies previously conducted in the project area.

Out of a total project area of approximately 1,600 ha, Itafós anticipates impacting approximately 928 ha of highly degraded native vegetation distributed among Cerrado and riparian vegetation areas (590.30 and 242.96 ha, respectively.) Out the 928 ha there are only 95 ha in good conservation stage. To ensure that there will be no net loss of preserved natural habitat Itafós will establish a biodiversity offset program in areas identified by the Brazilian environmental authorities for which it has already identified and proposed four alternatives to be considered by the Brazilian environmental authorities including Monumento Natural das Árvores Fossilizadas [fossilized tree natural monument], Parque Estadual [state park] do Cantão, Parque Estadual do Lajeado, and Parque Estadual do Jalapão. Itafós will submit to IFC a copy of the biodiversity offset program and the location chosen by the Brazilian authorities as indicated in the ESAP.

Within this area, the baseline identified some floristic species that the State of Tocantins has defined as species that only can be affected after an approved and authorized sustainable forestry management plan has been submitted.
The baseline assessment identified 194 species and 18 endemic but not endangered mammal species of which several are considered threatened due to the significant habitat loss resulting from anthropogenic activities (agriculture and livestock). The area also has a rich and diverse avifauna (identified 837 species). The results of the field studies found an occurrence of a migratory species and the occurrence of 6 avian species endemic of the region. Two species found are considered vulnerable according to the IUCN and BirdLife International and are in the Brazilian list of endangered species; and one of these two is included in CITES. Eleven species are considered “near threatened” according to IUCN/BirdLife International. The area also enjoys a diversity of reptiles and amphibians of which none was found to be endangered or threatened. The biodiversity offset program will also address the impact posed on threatened fauna species and will conduct additional baseline programs of the existing conditions of the areas to be mined in the future as well as detailed monitoring programs during the project life cycle of the biodiversity offset areas to determine the level of success in repopulated the area with the flora and fauna species affected by the project.

Itafós also identified several caverns of mainly ecological interest, within the project area. As designed, the project does not impact any of those identified. However, Itafós will develop and implement a Speleology Management Plan to ensure that neither those identified nor possible new ones to be found are impacted by the project. A copy of this plan will be submitted to IFC as indicated in the ESAP.

The flora and fauna management programs to be developed by the Contractor and by Itafós will outline procedures to ensure all employees are prohibited from hunting activities in the project area. Itafós will also rehabilitate borrow pits and quarry sites immediately after the completion of the construction and monitor the effect of the project on common species and provide additional mitigation measures as required. Itafos will also establish an aquatic flora and fauna protection plans. Copies of these plans will be submitted and will include at a minimum comprehensive monitoring programs (identification of indicator species and key indices – through periodic surveys and sampling, trends, etc.) and programs for periodic sampling and analysis of physical/chemical characteristics (temperature, salinity, dissolved oxygen, pH, etc.).

The water and tailings dams will affect the Bezerra River. However, this intervention will not result in significant impacts to native vegetation because these two water courses have been thoroughly affected by human intervention, mainly cattle raising in the past and as a result they show signs of highly degraded riparian vegetation. In addition, the area where the dams will be built is in a highly degraded Cerrado area presenting low forest height and individuals with an average stem diameter below 10 cm, which is very uncharacteristic of Cerrado vegetation. This vegetation is significantly degraded, most probably due to the constant interferences caused by agriculture and livestock activities and by fires. These lands have been used by the region’s land owners to manage pasture areas.

As part of the dams construction Itafos will establish a 100 m ecological corridor around the dams. This is a set aside area around the dams where riparian native vegetation will be planted and maintained.

At the mine site, the sterile material will be stored at exhausted mining areas to be used later on during the mining site reclamation stage.

Since Itafós will use firewood as furnace fuel, it must register with the Brazilian Institute of the Environment and Natural Resources (IBAMA) as a consumer of sustainable forest raw materials and as indicated above it buy firewood exclusively from firewood suppliers who demonstrate to be certified and properly registered with IBAMA. As indicated earlier, Itafos will establish an FSC or FSC-like certified chain of custody for the sourcing of the firewood.

PS 8: Cultural Heritage

Archaeological field surveys were undertaken in 2010 to gather information from the local population, and to establish the archaeological potential within the areas that will be affected by the project.  The surveys resulted in the identification of 16 archaeological sites, 16 occurrences and 2 areas of historic occupation totaling 34 areas. Out of these, 14 sites (in which three or more pieces at a maximum distance of 30 meters from each other are found) and 8 occurrences (isolated pieces) were identified inside the area directly affected by the project.

The cultural heritage baseline surveys also identified numerous caves that have speleological importance. In particular, 3 caves were mapped near the plant area, with an additional 11 natural caves identified in close proximity to the project footprint that are considered of high relevance. One cave in particular in the study area has religious implications for the local residents. These caves will be avoided and thus not impacted.

The project prepared a report of the findings, “Archaeological Non-Interventive Diagnostic of the phosphate exploration and beneficiation Project in the region of Arraias, Tocantins” and submitted the study to the Brazilian Institute of Cultural Heritage (IPHAN in Portuguese) to be able to receive permitting to construct in the area. Monitoring, prospection, surveying and archeological salvage campaigns will be performed to identify and preserve materials of archeological interest in the areas directly affected by the project. A chance find procedure will be in place prior to commencement of construction as well as a speleological management plan to ensure protection of the caves as indicated in the ESAP.

The communities directly and indirectly affected by the mine sites, industrial facilities, dams and transportation corridors have been identified by Itafós as the key project stakeholders. The directly affected communities are those impacted by either land acquisition or construction impacts in or adjacent to the project footprint. Indirectly affected towns include the urban centers of Campos Belos, Cana Brava, and Arraias. In addition Itafós staff has been closely engaged with local authorities in the municipalities of Arraias and Campos Belos.

Itafós is committed to productive community relations through an ongoing community engagement process as outlined in the Stakeholder Engagement Plan (SEP) attached to this review. A more detailed stakeholder analysis will be conducted prior to the construction phase to identify additional key stakeholders on local, national and international level as indicated in the ESAP. As part of the SEP, Itafós will establish information offices in Campos Belos and Arraias to ensure ongoing information dissemination to stakeholders.

The details of the community engagement activities already undertaken by Itafós are outlined in the SEP. These activities include consultation related to development of the Brazilian EIA in coordination with local authorities which took place in August and September of 2009. The EIA summary was available for public review from August 31, 2010 to September 21, 2010. The purpose of these initial consultations was to inform stakeholders and affected communities about the project and to solicit comments to include in the EIA scoping process. During this period, baseline data was gathered and the socio-economic/perception survey for Arraias stakeholders was applied. A Public Hearing in the municipality of Arraias was carried out to disclose the EIA. It took place on September 21, 2010 and approximately 300 people participated. The event was previously publicized through newspapers (Jornal do Tocantins and Diário Oficial do Estado), as well as by means of invitations handed over to public officials and radio broadcasting throughout the region.

In March of 2011, consultation of Campos Belos was undertaken along with gathering data for baseline studies and the application of the socio-economic survey and perception study of Campos Belos. The perception studies (2% of total municipal population) indicated that there was incomplete knowledge of the project expansion plans but very high support for the Project as described by the surveyors with the expectation of increased employment opportunities, government revenues and economic activity. Survey participants did express concern that the project could negatively affect the environment.

In May 2011, the project is initiating a process of communication and consultation of project related plans with a focus on resettlement impacts and employment. As required by Brazilian law a written executive summary of the ESIA was provided to each community after the EIA approval by the Brazilian government in December 2010.

Prior to the commencement of the construction phase, Itafos will recruit a Social and Community Manager (SCM) to be responsible for implementing the stakeholder engagement plan as well as additional staff to manage the resettlement, community investment and ongoing stakeholder engagement efforts.

The SCM will be in charge of managing and expanding the community liaison team as needed throughout the construction, operation and decommission phase of the project. Itafos will make available this ESRS along with all supporting material in the office to be attended by the SCM is made available to all interested parties.

Secretariat da Educacao – Biblioteca de Arraias, Arraias Library
Address: Brigadeiro Felipe street, number 1 downtown mail box 77330-000 phone 63 36531051

Biblioteca municipal de Campos Belos – Campos Belos library
Address Rui Barbosa street quadra 13 lote 1 Setor Aeroporto 1 mailbox 73840-000 phone 62 3451 3363

Itafos office
Address: Praca Dr. Joao de Abreu Square number 9 downtown Arraias –TO
Mail box 77330-000