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
PS 5 – Land Acquisition and Involuntary Resettlement
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

The environmental, social, health and safety, labor (ESHS) impacts and risks associated with the modernization, expansion, and operation of APMTC are expected to be incremental to existing ones and manageable with readily available industry practices. No natural habitat will be affected. Docking grounds of approximately 380 artisan fishing boats will be relocated, but neither access to the fishing resources nor any other source of livelihood is expected to be significantly affected. Therefore this Project has been categorized as a Category B operation.
The Port of Callao is located within a modified coastal habitat, highly intervened by human activity, where the basic ecological functions of the ecosystem have been disturbed for years. As further material disturbances to the basic ecological functions of the terrestrial or marine ecosystems are not expected as a result of the Project, PS6 does not apply. There are no indigenous peoples or territories in the Project’s direct or indirect area of influence and PS7 is not triggered. The concession area does not contain any archeological artifacts. Notwithstanding, APMTC will implement a standard Chance Find Procedure that requires a certified archeologist be present on-site during all construction excavation activities.

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.

Key ESHS impacts and risks during construction include: the need to relocate approximately 380 artisan fishermen boats that encroach on the APMTC concession area; clean-up of previously existing contaminated soil on the site; and impacts related to dredging activities. Other ESHS impacts and risks related to the construction phase are those typically associated with large infrastructure civil works.

Once in operation, the key ESHS impacts and risks are those characteristic of any port operation, such as fugitive and/or accidental spills from vessel and road traffic; treatment and disposal of ship effluent and ballast waters; and occupational health and safety to port and shipyard employees.

The sections that follow describe how APMTC expects to manage potential ESHS impacts and risks of the Project, including proposed mitigation measures necessary to ensure compliance with the IFC Policy and Performance Standards on Environmental and Social Sustainability.

Environmental and Social Impact and Risks Identification Process and Management Programs:

At the corporate level, APM Terminals has a robust integrated quality, environmental, and occupational health and safety (QESHS) management system, which is applied to all of its operations. It includes a Policy that provides an overarching statement of the quality, environmental, social and health and safety objectives and principles guiding the corporation’s ESHS performance, which is consistent with the applicable IFC Performance Standards. This Policy is endorsed by top management, and reflects the company’s core vision, values, and philosophy regarding management of social, environmental, labor, and occupational health and safety risks and impacts of its operations globally. APM Terminals is a signatory of the Global Compact and therefore is committed to live by its 10 guiding principles with regard to respect of human rights, labor, environment, and anti-corruption practices (http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html). The Policy and supporting plans and procedures emphasize the importance of stakeholder engagement and communication, and define requirements for internal communication with employees as well as external communications with clients, vendors and suppliers, regulatory agencies, costumers, labor unions, and other interested parties.

APMTC conducted a full Environmental and Social Impact Assessment (ESIA) for the Project in accordance with Peruvian environmental laws and regulations and in-line with good international industry practices (GIIP) and IFC requirements. This ESIA was approved by the Direction of Environmental and Social Matters of the Ministry of Transport and Communication on September 2012 via license No 1650-2012-MTC/16.

The project’s ESIA identified dredging and historical contamination remediation as activities with potentially significant environmental and social impacts and risks. It recommended two additional targeted environmental
and social impact studies for these two activities be carried out to assess the significance of potential ESHS impacts and risk and propose management measures, one for the dredging activities and one for the historically contaminated soil remediation program at the site.

As part of the ESIA process, environmental baseline conditions were determined, potential impacts of construction and operations assessed, and mitigation and monitoring plans and mitigation measures developed. These include solid waste, water quality, and effluent management programs, ship ballast water management and verification program, and air quality and emissions management and control, among others.

Furthermore, per the concession agreement, APMTC needed to assess any environmental liabilities or contamination legacy issues, prior to assuming control of the terminal. As part of the ESIA, a Phase I (ASTM E1527-05) evaluation of the project site was performed and a total of 62 environmental liabilities were identified, ranging from equipment exceeding air emission standards and piles of domestic garbage to more significant high levels of TPH and heavy metal (namely As, Cd, Co, Cu, Pb and Zn) contamination in the soil.

In addition to the commitment to comply with all applicable Peruvian social and environmental, labor, and occupational laws and regulations, APMTC has developed an environmental management strategy comprised of five distinct plans: Environmental Management Plan, Environmental Monitoring Plan, Contingency Plan, Closure and Decommissioning Plan, and Investment Plan.

Based on the findings of the ESIA and consistent with APMT corporate Policy, the Environmental Management Plan describes the measures and procedures to mitigate general negative impacts and includes: construction and operation environmental and social impact prevention and control program, environmental and safety education and capacity building programs, environmental and safety signaling program, solid and effluent management program, and social communication and stakeholder engagement program.

Organizational Capacity:

Reflecting its values, APMTC has a strong QESHS team led by a Head who reports directly to the CEO and is supported by an analyst and 4 unit Managers. The Environmental and Health and Safety (EHS) Unit, has 6 occupational health and safety supervisors, 1 environmental supervisor and 2 assistants. The Security Unit has a total of 18 security professionals either in the control rooms or as security guards, who work in three 8 hr-shifts. The Quality and Compliance Unit is responsible for process and document control and has 2 professionals, and the Emergency Response Unit has 3 permanent staff, an ambulance and an open link with the fire department. In addition, also reporting directly to the CEO is the Corporate Communication Head who manages all external communications, including the community consultation, engagement, and management plan as well as all CSR initiatives, a
nd is supported by a total of 2 professionals. Within the Human Resources Division, there is a Training Supervisor who evaluates capacity building and training needs for people responsible for the implementation of ESHS plans and procedures, and sets up their annual training programs.

Monitoring and Reporting:

During the ESIA process, baseline air quality (PM10, PM2.5, SO2, CO, NO2, O3 and H2S levels) was measured in 12 stations within APMTC’s airshed. Noise was measured in a total of 30 stations with day and night campaigns. Soil quality was also sampled and levels of As, Cd, Zn, Pb and TPHs were measured. Water quality (ToC, pH, TSS, nitrates, ammonia, Cr+6, TPH, BOD, COD, As, Hg, PAHs, Oil & Grease) was sampled in a total of 13 stations across the harbor and roadstead in two different events. Marine sediments were also sampled at the same 13 stations used for water quality.

The Environmental Monitoring Plan has the objective of verifying the effectiveness of the proposed impact mitigation measures, and includes procedures to assess air, soil, water and marine sediments quality, as well as noise levels. In addition, this Plan also includes a sub-program to monitor any measurable impact over flora and fauna, a sub-program to assess the effectiveness of the soil remediation measures, and a social management sub-program.

The QESHS Head and 4 line managers, meet on a weekly basis with the Corporate Communication Head, the CEO and the COO, to review project ESHS status and performance, report any relevant issue and propose corrective measures and follow-up as required. Minutes are kept of these weekly meetings.

In compliance with its environmental permits, APMTC presents ESHS compliance reports to the environmental authorities twice a year. At the time of appraisal two of such reports had been presented and a third was under preparation. These reports describe general compliance of both the business and operations as well as the status of the implementation of the construction and remediation management plans. In addition, APMTC has outsourced project supervision to Royal Haskoning (http://www.royalhaskoning.com/en-gb/Pages/default.aspx) and included ESHS as a key performance element.

Human Resources and Labor:

APMTC has a well-developed Human Resources (HHRR) Division staffed with a total of 15 professionals, including the HHRR Head who reports directly to the CEO. This Division has developed two core documents that are the foundations for all of APMTC’s HHRR actions and activities, including those of contractors: Internal Work Regulation – Reglamento Interno de Trabajo, and the Code of Conduct. These documents include compliance with Peruvian Labor Laws, non-discriminatory hiring and promotion policies, as well as a formal Grievance Mechanism which includes a mechanism to report any breaches and/or employees’ complaints, and sets the mechanism and sanctions to manage solutions under basic principles of confidentiality and non-retaliatory practices. All these documents are provided to every employee, and are available via APMTC’s intranet site. Contracts with job description, responsibilities and benefits, etc. are fully disclosed to each employee prior to hiring.

As part of the concession agreement, APMTC agreed to hire 60% of the employees from the previous public port operator, Empresa Nacional Portuaria, S.A. (ENAPU), from a list of 479 pre-assigned candidates. The Company issued offer letters of appointment to a total of 432 or 90% of the pre-assigned list, thus greatly exceeding the requirement under the concession agreement. Many of them accepted, and by September 2012, a total of 368 employees were ENAPU rehires.

Since APMTC assumed control, the company has grown at an average monthly rate of 2%, from 480 direct employees in July 2011 to 654 by September 2012. Of this total, approximately 78% performs mechanical labor (blue collar), and the remaining 22% work in commercial, finances, HHRR, engineering, technical and operation, ESHS, and Management (white collar). The gender distribution is 36% female and 64% male for employees with white collar responsibilities, and 99% male for blue collar postings.

The totality of the blue collar workers belong to one of two unions, Sindicato Unitario de los Trabajadores de APM Terminals Callao (SUTRAPMT) and Sindicato Unico de Trabajadores de APM Terminals Callao (SUTRAPORT). At the time of appraisal, the company had signed two collective agreements with these two unions for three years, from January 1st 2012 until December 31st 2014. These agreements define compensation and benefits package, responsibilities, work and recess shifts, and annual salary increase. Work is performed in three 8-hr shifts, and extra hours are paid in compliance with Peruvian legislation. All workers receive a total of 14 months of salaries per year, health and life insurance and several loan options. In addition, the collective agreement provides a mechanism to resolve any grievances, conflicts, or disagreements.

In addition to direct employees, APMTC relies on a pool of approximately 950 external stevedores who are casual workers and traditionally paid through one of the stevedoring companies
that service the port. As of November 2012, APMTC signed a collective agreement with stevadores that not only allows APMTC to pay stevadores directly for their service, but brings a greater level of formality and allows for better control, reliability and occupational health and safety training.

Occupational Health and Safety:

It is the company’s policy to conduct its activities in a manner that promotes continual improvement, complies with applicable laws and regulations, protects the health and safety of its employees, and does not harm the health and safety of others. Occupational Health and Safety (OHS) is a priority for APMTC.

APMTC occupational health and safety strategic plan developed at the commencement of the concession clearly states that given that this is a multipurpose port, safety risks are different from the standard layout container terminal APMT is used to operate. This strategy also recognizes that these risks are aggravated by the fact that the majority of staff was retained from the previous public sector operator and may have non-standard job competencies. Equally it recognizes that the stevedores’ skills and safety awareness was below global standards. Since APM Terminals took over the Callao Norte there have been two fatalities.

As a consequence, APMTC top management has a clear and strong focus to improve OHS performance to global standards. Following its Corporate QESHS manual, APMTC started by analyzing all work processes and identifying safety hazards. Significance and prioritization of safety risks was evaluated based on nature of the hazards, magnitude of the risks and consequences, frequency and probability of exposure/occurrence, and potential severity of harm that could result from improper process design or control.

Based on this analysis, APMTC developed specific and measurable objectives and targets for each safety hazard determined to be significant, in an action plan that includes Specific, Measurable, Achievable, Realistic and Time-bound (SMART) criteria to monitor and measure progress towards achieving and documenting attainment of the objectives and targets.

This plan has focused in three areas: empowerment, engineering, and enforcement.

The safety-empowerment component includes (a) the implementation of APMT Global Minimum Safety requirements, (b) stevedore work classification and training, (c) increase operational safety supervision, and (d) the promotion and creation of a safety awareness amongst all of its personnel (e.g. visual signaling, 5-minute safety talks). As soon as APMTC took over the concession, it identified training needs for existing personnel as well as for new hires. Initial focus has been on occupational health and safety which represented the greatest operational risk and great progress has been made. APMTC has developed three core training courses and set a target of 2,000 trained employees for 2012. By the end of September 2012, a total of 1,346 employees had particip
ated in the Safety Induction Training and the ISPS Training, and 736 in the Safety Culture Training.

The safety-engineering components included (a) the implementation of a Zone Safety system that signals an area around heavy equipment and reduces accident risks of pedestrian with large vehicles, (b) implementing a conveyor belt for fishing operation to reduce the risks to stevedores, (c) purchase a new work at height system, (d) implementing a rigger workshop to standardize and certify a common practice, and (e) evaluated and purchase lifting equipment to provide different options for safe operation, reduce injuries, and improve productivity.

Finally, the safety-enforcement component improved supervisors training including vessel safety supervisors, stopped the operation of unsafe vessels, and implemented a system clear rules and disciplinary actions.

From the period July-Dec 2011, APMTC reported 1,382,740 man-hour-worked, with 44 LTI for an end-of year LTIFR of 31.82 per million man-hours. This frequency almost tripled any other APM Terminal operation globally. In 2012 these values have improved, with an accumulation of 32 LTI and 2,430,261 man-hour-worked up to the end of September 2012. This has resulted in a better LTIFR of 13.17 per million man-hours.

Dredging:

To complete phase 1 and 2 investments under the concession agreement and be able to receive post-Panamax vessels, APMTC will need to dredge piers 5 and 11 and the access channels from the current 14 meters to 16 meters of depth. This activity will result in 1.5 million m3 of sediment being disposed at an authorized site off-sea determined by the Port Authority. Dredging required for construction is expected to be performed by Jan de Nul in the last quarter of 2012. Ongoing maintenance dredging will be undertaken every 2 or 3 years.

Accuracy of the location of the dredge discharges in the disposal site will be monitored via a GPS system installed in the dredgers. The dredging heads being used are designed to minimize material dispersion. Dredging disposal will follow national and international standards and good international industry practices, such as dispersion models and standard water, sediment, and aquatic biota monitoring. Sampling campaigns will be performed before, during and after (six month, a year and eighteen months), and include water quality at different depths as well as phytoplankton, zooplankton, and fish sampling. Sediment quality of the dredge material is also required for heavy metals, namely lead, copper, hexavalent chromium, zinc, cadmium and mercury.

APMTC is following local Peruvian requirements for construction related dredging and has presented and Environmental Monitoring Protocol aligned with international industry practices that will assure that disposed dredge material is stabilized at the government mandates off-shore site causing no harm. For any operational dredging and as a condition for IFC´s financing, APMTC will present an Environmental Monitoring and Dredging Management Plan aligned with GIIP and PS3.

Historical Contamination:

Although APMTC is not legally liable for the historical contamination at the site, as part of the Concession terms, the Company has agreed to cover all costs associated with the clean-up assessment and execution and then get reimbursed by the granting authority. Remediation measures proposed in the ESIA include a detailed identification of the extent of the contamination (e.g. depth), removal of contaminated equipment and excavation of the contaminated soil, disposal at appropriately permitted landfills, and re-profiling of the land. Total remediation cost has been estimated at US$ 6 million. In addition, this preliminary remediation plan includes continuous monitoring of remediated soil and surface and ground waters until up-to two years after the remediation process has been completed, ensures traceability of waste and soil resulting from the process, and documents and reports results to the environmental authorities. As part of IFC’s financing, APMTC will present a detailed Environmental Liability Remediation and Management Plan.

Pollution Prevention and Control:

As stated above, APMTC’s environmental management strategy has a detailed Environmental Monitoring Pl
an with the objective of measuring and documenting any incremental impacts related to its construction and operation activities as well as the effectiveness of the proposed mitigation measures. This Plan includes 4 air quality and 7 noise monitoring sites to be measured on a quarterly basis during construction and twice a year thereafter, and 8 water and marine sediment quality sampling sites to be measured on a monthly basis during construction and quarterly thereafter.

Construction and operating activities are not expected to materially worsen the existing environmental conditions, and APMTC has in place standard pollution prevention and control practice aligned with GIIP, such as:

Effluent Waste Management: During the construction phase, portable toilets are being used by the workforce and wastewater will be disposed by a DIGESA (Direccion Genral de Salud Ambiental) registered waste service company (EPS– Empresa Prestador de Servicios) at the municipal wastewater treatment plant. Boats used for construction are equipped with wastewater treatment plants that will discharge into the sea at levels allowed by local authorities (Resolucion Jefatura No 0291-2009-ANA). The Company segregates and treats wastewater, storm water, and runoffs throughout the facilities, including oil/water separators and grease traps, especially at vehicle maintenance areas. APMTC is connected to the municipal sewage system, so domestic wastewaters are evacuated and treated by SEDEPAL, the local wastewater municipal company.

During operation, liquid wastes generated by ships (i.e. bilge waste, ballast water, sewage, and used oils) will be managed by DIGESA approved EPS, in compliance with MARPOL 73/38 Annex V guidelines. APMTC’s QESHS department will supervise appropriate collection, treatment, and disposal of any operational liquid effluent, and will assure to maintain the appropriate documentation.

Solid Waste Management: The construction and operation ESMPs include a hazardous and non-hazardous solid waste management plan that includes an evaluation of potential sources of solid wastes and defines procedures for its reduction, handling, storage, segregation, recycling, transportation, and final disposal. Both hazardous and non-hazardous solid wastes are collected by a DIGESA licensed EPS and disposed in permitted sites.

Management of Hazardous Materials (Hazmats): There is limited use of hazardous materials during both construction and operation. APMTC has clear procedures in place for the storage, handling, and final disposal of hazmats in compliance with its globally applied practices. Handling and storage of hazmats is expected to be minimal and only a minor fraction of the total cargo handled will be considered hazardous. The container terminal’s layout includes an appropriate designed section for dangerous cargo as well as an area to isolate any hazmat containing cargo that may be damaged or leaking. Furthermore, even though pier 7 is a hydrocarbon’s dock
, APMTC only provides docking services and connection to an underground pipeline that transports hydrocarbon liquids to a site outside of APMTC’s concession area, which is own and operated by a third party.

Emergency Preparedness and Response: APMTC has developed a comprehensive Contingency Plan. Based on a risk analysis, this Plan defines procedures, training, personnel and equipment needs, and chain of command in case of fires, explosions, earthquakes, tsunamis, hydrocarbon spills, ship collision, crushed workers due to accidental falling of heavy cargo or equipment, electrocution, and man-in-water, among others. The plan also provides a list of all the near-by hospital and emergency response organization, such as firemen, coast guard, and civil defense.

Resource Efficiency: To be able to set resource efficiency targets and reduce overall impacts, APM Terminals has a system to track its global environmental footprint. This systems tracks fuel and electricity consumption, accidental spills, water consumption and waste generated at all sites, and helps APM Terminals to determine its global climate footprint. Most of the GHG emissions at APMTC come from fuel and electricity consumption. For the first nine months of 2012, APMTC reported a consumption of 1,156,314 liters of diesel, 24,642 liters of gasoline and 6,471,562 kwh of electricity, resulting on a total of 3,820 TCO2 or 12.58 kgCO2/TEU. In this same period, APMTC reported no accidental spill, having consumed a total of 198,555 m3 of water, and generated a total of 1,033 tons of solid waste.

The project is located in an industrial zone, where nearby communities have coexisted with port activities for many years, and the nearest residential area is located approximately 500 mts away from APMTC facilities. The principal risk to neighboring communities relates to increase accidents between cars and pedestrians with port-related traffic. APMTC’s new traffic logistics design is expected to improve the existing flow and limit port traffic from circulating in the main road of the city of Callao to enter the terminal.

Fishermen have also coexisted with port marine traffic for over 40 years, and have learned to navigate outside ship navigation routes and roadstead. As part of the Fishermen Relocation and Engagement Management Plan (FREMP), APMTC will include a navigation safety awareness and emergency respond program.

Emergency Preparedness and Response: The Contingency Plan identifies the A.H. Puerto Nuevo, Barrio Chacarita and Barrio Frigorifico as the three communities in the area of concern in case of emergency situations. In case of emergencies that could affect third parties, APMTC response is expected to be coordinated with government agencies and the community. APMTC will assess any government capacity shortcomings to adequately aid the community in emergency response and update its Contingency Plan to compensate for government capacity shortcomings.

Security: APMTC applies the International Ships and Port Facilities Security (ISPS) Code to avoid and control any illicit activity or terrorist act involving international ships. Such acts include piracy, armed attacks, terrorism, sabotage (alteration or stealing of cargo), contraband and/or people’s trafficking. APMTC holds a Level I ISPS Code certification, which requires an access control system, electronic personnel identifications and guard patrols, internal cameras and TV 24/7 surveillance (101 cameras), and specific security rules between terminal port and ships.

Prior to APMTC’s engagement, the Coast Guard surveillance capacity was limited to one single boat for 100 km of the Peruvian coast. In order to provide additional security to both APMTC clients and the fishermen communities, APMTC financed three engines to equip 3 additional coast guard boats. Two of these boats are now dedicated to the harbor and roadstead areas of the Callao Port. The other two are used to control the North and South access to the Callao area.

As part of the ESIA process, APMTC performed two formal participatory public consultation events, in May 2012 and August 2012. This process engaged over 30 institutions and organizations at the national and regional level, and representatives from the communities of A.H. Puerto Nuevo, Barrio Chacarita, Barrio Frigorifico, Barrio Fiscal, Barrio San Pedro and Callao. In addition, 12 artisanal fishing groups participated, including broad participation of ARUPACC.
The Environmental Management Plan includes a comprehensive Social Communication and Stakeholder Engagement Program that is divided in five sub-programs: Community Relations sub-program, Local Hiring sub-program, Sustainable Development Initiatives support sub-program, Artisan Fishers Support sub-program and Participatory Supervision Sub-program. The latter has the intention of assuring that representatives of the potentially Affected Communities are involved in the supervision of compliance with the mitigation and monitoring measures described in the ESMPs, and it helps to create trust among the different stakeholders and maintain a continued engagement and communication process. To this end, APMTC will create a Community Management Committee (Comite de Gestion) that will be integrated by representatives of the communities in the direct area of influence, union representatives and members of ARUPACC.
Furthermore, in recognition of the volatile situation relating to the relocation of the DPA docking sites, and as an essential component of the Fishermen Relocation Communication, Engagement and Management Plan (FRCEMP), APMTC has committed to strengthen community engagement and communication activities with ARUPACC, to best assure that this situation is resolved in a good faith and negotiated manner, and the 380 fishing boats are accommodated in safe and commercially sound areas, acceptable to all parties involved, before any physical relocation takes place.

Please contact:
Henrik Kristensen
Managing Director APMTC
Av. Contralmirante Raygada 111. Callao – Perú
+511 200 8800

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.