While all Performance Standards are applicable to this investment, IFCs 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. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

This is a category B project according to IFC’s Procedure for Environmental and Social (E&S) 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 and guidelines.

Key E&S risks and issues related to project include: assessment and mitigation of the Project impacts ; the Company’s capacity and systems to manage its social and EHS performance; assurance of fair, safe and healthy working conditions; utilization of equipment and operational practices that maximizes conservation of energy, water and process materials including recycling and reuse initiatives; management of waste emissions and discharge; handling and management of hazardous materials and hazardous wastes; and the impacts of operations on the local ambient environment.

The Project has been constructed in the well developed industrial zone on the eastern seaboard of Thailand. The ESIE is known as the “Detroit of the East” as it is one of the most integrated automotive industrial estates in the world. It houses manufacturing facilities by auto majors such as Ford, Mazda, General Motors, together with over key 80 auto component manufacturers. ESIE received the Ministry of Science and Technology Award (EIA Award 1998 & 2000 ) for Best Environment Management.

As this Project is located in a well established industrial area close to urban centers, the findings of the Project review indicate that there are no impacts related to Land Acquisition and Involuntary Settlement (PS5), Biodiversity Conservation and Natural Resources Management (PS6), Indigenous Peoples (PS7) or Cultural Heritage (PS8).

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.

- Environmental & Social Assessment: 

Since the Project is located in an industrial area and is not classified as a polluting unit according to the Thai law, a formal environmental impact assessment study was not required. However, the Company has procured all the regulatory permits from the Department of Industrial Works and Pollution Control Department, and complies with the mitigation measures as per the permit conditions.



- Management Systems:



The Company has implemented a quality management system as per ISO9001 and ISO TS16949:2009, which is currently being certified. This technical specification aims to develop a quality management system, emphasizing defect prevention and the reduction of variation and waste. This is critical for the Company that is engaged in very high-precision machining, as described in the following sections.



Production at all facilities, including the new facility in Thailand, is highly automated and is fully integrated with very sophisticated business management software (based on SAP system).



The Sponsor has articulated its EHS policy covering all its operations worldwide. This forms the basis of the EHS management system implemented at the facility in Thailand.



Faber has implemented an environmental management systems (EMS) certified compliant with ISO 14001 requirements for all its facilities in Italy. In line with the corporate policy, and building upon the EMS in the Italian facilities, Chalybs will implement and certify its EMS as per ISO14001 once the new facility is fully operational.



- Organization:

For its operations in Italy, a dedicated team of 5 persons oversee the EHS issues and ensure regulatory compliance related to environmental, safety and fire safety issues. In addition, a dedicated HR department ensures labor related compliance.



For the facility in Thailand, the Company is in the process of recruiting a full time EHS professional. This person will report to the facility head in Thailand as well as the corporate EHS team in Italy.



Monitoring & Reporting:



For its facilities in Italy, the Company has put in place an elaborate monitoring and reporting program that covers all the operational parameters related to manufacturing and safety. Like all other production and operational areas, this monitoring and reporting system too is fully automated and operates in real time using a SAP platform. All the process related key performance indicators (KPIs) are thus available through this system to all concerned staff.



At the Italian operations and as per the national regulatory and reporting requirements, the EHS monitoring program covers air emissions, wastewater, solid and hazardous waste and workplace monitoring. In addition, water and energy consumption are regularly monitored for internal benchmarking and reporting. Similar monitoring and reporting system will be implemented at Thai facility once it becomes operational. This system will cover the local regulatory
monitoring requirements, as well as those parameters covered under the corporate monitoring and reporting for internal benchmarking.



Since the proposed facility in Thailand is not classified as a polluting unit by local authorities and is located in an industrial area, the regulatory monitoring and reporting requirements will be limited to waste generation, recycling and hazardous waste. Much of the information will be submitted to the regulatory agencies through an online system.

Faber currently employs around 450 employees in its Italian facilities comprising shop-floor workers and management staff. For the Thai facility, Chalybs plans to recruit around 100 employees in the coming months. Support functions such as security, cleaning, gardening, canteen etc. will be outsourced to reputed companies.



- Human Resource (HR) Policy, Management 

Faber’s HR policies and operational procedures are in line with Sponsor’s corporate policies and practices and Italian labor law requirements. The labor rules and regulations are as per Italian labor laws and agreements with the labor unions.



Based on the corporate HR rules and regulations, the Company, with the help of Thai labor law experts, has drafted “Working Rules” for the upcoming Chalybs’ facility in Rayong. These working rules cover: working hours, holidays, overtime, wages and overtime payment, leave, disciplinary procedures, the grievance mechanism, termination etc. A copy of the final working rules will be provided to all employees together with the written contract at the time of joining the company.



There are multiple trade unions active in Faber’s Italian facilities. Chalybs will respect the workers’ freedom of association and permit the formation of trade union in the Thai facility as and when requested by employees. In any case, as per Thai labor law, a workers’ Welfare Committee comprising 5 elected representatives of the workers has to be constituted at the Company.



- Training and Human Resources Development



Faber has an extensive human resource development and training programs for its employees, which is managed by the HR department. Several structured training programs are developed for different levels of employees and cover behavioral aspects as well as technical/functional training. The training plan is prepared every year as per quality management system and is agreed by departmental chief and the HR department. The employment contract also specifies the training period for all the employees. A similar approach will be applied at the Thai facility.



The Thai labor law requires minimum 6 hours of training every year, for all workers, but Faber’s training programs for its employees well surpasses this requirement. Training programs also include several safety related topics such as safe forklift driving, first aid, fire safety etc.



- Occupational Health and Safety



Faber has put in place an elaborate safety management system with a Safety Policy that guides overall safety management at the facility. Safety orientation is an integral part of the induction training for all the new employees. The shop floor has hi-technology, high precision machines designed and built in Europe, with automated operations (with the help of robots). All the moving parts are enclosed and normal operation of the machines require minimal contact with workers, thus minimizing the chances of an accident. Detailed work instructions and Standard Operating Proce
dures are prepared and displayed at each machine and operation.



Adequate fire detection and suppression equipment is fitted across the facility in accordance with the potential fire risks. Fire exits and the locations of fire extinguishers are clearly marked. Fire fighting training is provided to the employees and fire drills are regularly conducted.



Personal protection equipment such as gloves, safety shoes, masks and glasses is provided to all the workers on the shop floor, which is commensurate with the nature of operation and potential safety hazards.



Similar systems as defined above will be implemented at the Thai facility when it is operational.



- On-site Emergency Response Plan:



Based on the identified hazards and risks, an on-site emergency response plan has been developed by Faber for its Italian operations. Accordingly, potentially hazardous areas have been identified and evacuation routes and assembly points have been designated and clearly marked. A similar plan is being developed for Thai facility.

The production process for high pressure CNG cylinders for the Project from steel plates iincludes following steps: annealing, flattening, cutting, lubricating (in chemical baths), Cold Deep Drawing (applying high pressure on steel plates to shape them into base of cylinder), flow forming (rolling to reduce wall thickness), neck spinning (a process similar to pottery, where the neck of the cylinders is shaped with a precise spinning process under very high pressure), neck machining, quenching and tempering, Internal and External shot blasting (for surface treatment), neck threading, followed by a series of quality testing and stamp marking, surface coating and packaging.



The process wastes will comprise metal waste as a result of grinding operations and small quantities of chemical effluent from lubricating baths. Process emissions include a mist of machining oil and paints. In addition, domestic solid waste (food waste, paper, cardboard etc.) and domestic wastewater is generated from the process.



For the Project, Chalybs will import raw material and semi finished products from Italy to be completed in the Thai facility. Production steps such as neck spinning, heat treatment, machining, shot blasting, testing at various stages etc., will be done in Thailand. Hence the process in Thailand is entirely a dry process and does not involve any process wastewater generation.



- Pollution Prevention and Resource Conservation:



The design of the new facility in Thailand uses state of the art energy efficient equipment and infrastructure. The roof is insulated with rockwool material (made from actual rocks and minerals) to reduce the heat load. In addition, transparent sheets are provided in the roof to reduce lighting requirements during the day, while nearly 40 turbine roof ventilators are provided for improved air circulation.



Moreover, the Thai Energy Conservation regulation requires the facilities to assign a responsible person and identify areas for reducing energy consumption for different equipments. Accordingly, the Company will identify and implement additional energy conservation measures in its Rayong facility once it is operational.



- Water Supply and Effluent:

Water requirements for the Thai facility are met with that provided by the industrial area authority. The Company has storage capacity for 180 m3 of water for industrial, domestic and gardening purposes, while over 500 m3 of static water storage is provided for fire-fighting purposes. The Company has its own water treatment system on site, even though the industrial estate provides treated water.



The domestic wastewater is discharged to sewer after pre-treatment (oil separation system), which is further treated in the centralized treatment plant. The final effluent is then sent to the central wastewater treatment plant in special trucks after due documentation.



- Solid and Hazardous Waste:



Chalybs has developed systems and infrastructure to comply with r
elevant regulations for the storage, handling and disposal of hazardous materials used in the production process. The notified hazardous wastes will be disposed through licensed waste management contractors, as per the regulatory authorizations. Adequate storage area have been built for this purpose, with control procedures being finalized for storage and handling, The Company will monitor the quantities of solid waste generated and disposed of, and report to the Thai authorities through the online manifest system.



- Air Emissions



The Company has gas fired boilers and furnaces and thus there are no major air emissions from the Project.



- Energy Sources and GHG Emissions:



Primary inputs for the manufacturing process are metal and energy i.e., electricity and gas for the furnaces and other hot processes; this applies to all the facilities in Italy as well as in Thailand.



Electricity required for the Project is procured from the national grid. Gas for the furnace is supplied by the utility company. In addition, small capacity diesel generators are installed on site as backup generators, for use in the rare case of a power failure.



The GHG emissions of the Project are, therefore, dominated by those due to the electricity and gas consumption. The project has estimated emissions of 7,500 t CO2e per annum.



While the project results in limited GHG emissions the Company’s products (CNG cylinders) greatly contribute to lower GHG emissions from cars as compared to their diesel and petrol variants.

As the Project is located in the well established major industrial area, impacts on the nearby communities – including increased vehicular traffic - due to Chalybs’s operations, are minimal. However, the Company is developing an Emergency Response Plan as outlined above.



The Company contracts with a nationally certified security agency for 24 hour surveillance of the facility, with unarmed security guards.



On the basis of the above information, it is concluded that the Project has been designed and will be operated in compliance with IFC’s PS and relevant World Bank Group BG EHS Guidelines.

As the Company is located in an industrial zone, there are no communities in the immediate vicinity of the facility. Also, the Company is still in the process of setting up its facility, and hence has not yet extensively engaged with the neighboring communities; this Environmental and Social Review Summary is the first public document describing the environmental, health and safety, and social aspects of its facility in Rayong.

The Company will however develop a community engagement program and a grievance mechanism for the nearby community to address any concerns related to EHS performance.

Faber will disclose this ESRS locally at the following address:

Chalybs Cylinders Ltd.,
Eastern Seaboard Industrial Estate, Rayong Province, Thailand

and

Chalybs Cylinders Ltd.
23rd Floor, M Thai Tower
All Seasons Plaza Place
87 Wireless Road
Lumpini, Pathumwan
Bangkok 10330, Thailand

All inquiries and comments may be directed to:

Mr Guido Degano
General Manager
Chalybs Cylinders Ltd.
23rd Floor, M Thai Tower, All Seasons Plaza Place
87 Wireless Road, Lumpini, Pathumwan
Bangkok 10330, Thailand
Tel: +66 (0) 2 627 9456
Fax: +66 (0) 2 627 9001
Email: mailto:guido.degano@faber-italy.com

Broad Community Support is not applicable for this project

Current client performance is aligned with applicable Performance Standards and EHS Guideline requirements. No ESAP is required.