The project involves upgrading an existing grain milling facility and operation in Durban, South Africa by the Bakhresa Group (Bakhresa). Established in 1983, Bakhresa currently operates grain milling operations in Tanzania, Uganda, Malawi, Mozambique and Rwanda. The combined annual milling capacity of the company is in excess of some 2 million tons per annum and IFC is currently invested in the Rwanda and Mozambique operations. Overall the latter projects are complaint with IFC’s requirements with environmental and social performance being satisfactory. Key issues to be addressed to ensure alignment with IFC;’s Performance Standards related to resettlement in Mozambique, and the management of labor, including occupational health and safety during construction, and the implementation of adequate management systems during operations at the facilities in both Mozambique and Rwanda. Construction of these projects is now complete and IFC will be assessing the operations in 2013 to confirm operational aspects continue to be satisfactory.

Bakhresa have purchased a facility that was previously used as a flour mill which requires limited modification to accommodate the milling equipment. The facility will have a milling capacity of 750 tons per day and will primarily service the local market, though flour may be exported to neighboring countries. The mill is located in an industrial area adjacent to the Port of Durban and the total project cost is $80 million with IFC’s providing Bakhresa with a loan of $25 million.

Milling is typically a relatively low impact process and, in this instance, notably so given the project location. Wheat will be imported via a dedicated wheat handling facility within the Port and then transported by bulk road carriers some 3.5 kilometers through an industrial area to the Bakhresa facility. At the site the grain will be offloaded into the grain in-take and transferred to silos. Thereafter the grain is cleaned by means of screening, separation and aspiration and then scoured to remove loose dust on the grain particles. The grain is then dampened and placed in temporary bins for 24 hours following which it is milled by means of a grinding and sifting system. Product is generally 75% flour and 25% byproduct (bran and pollard), although these quantities may vary depending on the quality of the grain received. The flour is then packaged in 25 and 50 kg bags, while the bran and pollard is stored in the bags in which grain was received prior to sale as animal feed. All the milling activities as defined above will occur within enclosed buildings comprised of concrete floors with steel and brick wall cladding.

Limited quantities of grain are sourced from Africa with the majority of the grain being purchased on the spot market and imported from producing areas, such as South America, United States, Australia and Europe, amongst others. Some of the flour will be transported by Bakhresa to end-customers, although the majority will be collected by customers directly from the mill. Bran and pollard will be transferred by road to customers.

Currently, the production is only scheduled to commence at the end of 2014 and Bakhresa is yet to appoint a contractor for the limited civil works required. Equipment for the facility will be sourced from Buhler, one the largest manufacturers of milling equipment globally and from whom Bakhresa has acquired most of their milling equipment previously.

IFC’s appraisal of this project included a site visit to the facility in Durban, discussions with the Managing Director assigned to the project and responsible for implementation, written responses to an environmental and social questionnaire compiled for the project and a review of documentation related to existing investments by IFC in Bakhresa, including that related to occupational health and safety and human resources.

IFC’s appraisal also considered environmental and social management plans for the project and gaps where applicable between these plans and IFC requirements. Where necessary, corrective measures intended to close these gaps within a reasonable period of time are summarized in the paragraphs that follow, and in the agreed Environmental and Social Action Plan (ESAP) disclosed with this review summary. Through implementation of these management plans and the ESAP the Project is expected to be designed and operated in accordance with Performance Standards objectives.