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 IFC's 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

The proposed investment program is expected to have only marginal adverse environmental or social impact, within a heavily industrialized environment, and certain measures to be implemented will bring about environmental improvements. This is therefore considered an environmental and social Category B project.

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.

Policy: SSL’s sustainability policy is to be fully compliant with all environmental regulation. SSL’s management is committed to promoting environmental protection, health protection, safety at work and improving the quality of life of residents of the municipality of Lukavac, by using its management systems to drive continuous improvement in the environmental aspects of its business.



Social and Environmental Assessment: The Environmental, Health and Safety (EHS) Assessment completed at the time of IFC’s first investment identified several potentially negative EHS aspects, based on which a corrective action plan was developed (ESAP). During the last two years IFC has regularly supervised operations in SSL, implementation of the agreed ESAP and made suggestions for improvements. The Company has gradually improved its EHS performance as observed during the supervision visits and from the Company’s reporting. The one item from this ESAP that remains outstanding is to address effluent quality, work that is ongoing and will be completed in the investment cycle that the proposed IFC investment will support.



Social and Environmental Management System: The Company has developed an integrated quality assurance, occupational health and safety, environmental and food hygiene assurance management system which has been certified compliant with the requirements of ISO 9001:2008, BS OHSAS 18001:2007, ISO 14001:2004 and EN ISO 22000:2005 respectively. In additional production of refined sodium bicarbonate production has received Halal and Kosher certification.



Management Programs, Organization and Training: SSL has a Quality, Health, Safety and Environment (QHSE) Manager, who is a respected engineer, formerly a production engineer at SSL, with separate “chief” level staff managing environmental, occupational health and safety, the laboratory and process control issues. SSL has invested heavily in environmental upgrades since privatization, and has continuous monitoring instrumentation for its boilers and advanced process and utility system controls, and continuous reporting of key parameters.



Stakeholder Engagement, Monitoring and Reporting: SSL has developed a web site through which it reports on all major EHS development and social development activities including report on its production activities, ongoing investments in improving operational efficiency, and compliances with EHS legal requirements. Regular inspections, required as per Bosnian laws will ensure continued implementation of the EHS actions as defined in the permits.

Human Resources Policy and Procedures: SSL’s Human Resources (HR) policy, procedures and manuals are based on the Bosnian Labor law, which is largely consistent with the requirements of IFC Performance Standard 2. The company HR policies define the rights and responsibilities of the employee and employer, including terms of employment and working conditions, grievance mechanisms, and promotion of non-discrimination and equal opportunity.



Working Conditions, Terms of Employment and Workers’ Organization: The current employment is 568 persons. SSL provides written contracts to staff and management interacts regularly with Union and staff on workplace issues. Around 414 workers in SSL are unionized and their working conditions and terms of employment are defined by internal regulations and agreement signed between the Union and the SSL management, which is based on a collective agreement that the National Chemical and Non-Metallic Industry Union has signed with Bosnian government. SSL has an annual labor agreement with its employees, and the agreement was most recently renewed in December 2012. SSL now provides salaries for blue colors workers that are above the currently about 15% above national average salary. The minimum age for employment by SSL workforce is 18 years.



Non-Discriminatory and Equal Opportunity: HR policy of SSL endorses principles of non-discrimination in hiring and uses well developed performance evaluation system as a feedback to management on workforce performance. In hiring new employees SSL uses transparent and competitive procedures through public announcements, newspaper and the internet, and interviews with the potential candidates. For high level position the hiring is conducted and facilitated by Sisecam management.



Retrenchment and Social Program: In 2009 SSL retrenched 79 employees of which 25 had limited physical ability. Although the Company reported that the retrenchment process was designed to meet the requirements of the Bosnian Labor Law Article 98, following criteria including age, qualification and health condition of selected workers, and investigation of opportunities for alternative employment with another employer, the retrenched workers received severance payments as required by the Bosnian Labor Law and established by agreement between the Company and the Union. Subsequently a number of retrenched workers brought court actions seeking reemployment, and around one third of the workers retrenched have been reemployed. SSL does not anticipate another retrenchment program, though it does expect to reduce employment over the next several years as selected workers who reach retirement will not be replaced.



Grievance Mechanism: SSL has disciplinary and grievance procedures as part of their HR framework, incorporating both verbal and written procedures. Complaints submitted by workers and Union are submitted to the HR unit. Complaints and corrective actions are discussed and settled within a re
asonable timeframe. If the employees are not satisfied with decision they may initiate formal grievance proceedings through the Union and file a law suit in local court.



The Company has several means to understand worker grievances. It is able to accept formal representation of grievances, which are reviewed by the legal department and responses made to the party with the grievance. There are also a number of suggestion boxes throughout the company which can be used anonymously if so desired. A monthly company news paper reports on the resolution of grievances, most of which relate to the meals served in the staff cafeteria. Other issues raised have related to use of alternative entrances to the factory site, toilet facilities, and a request for fogging-resistant safety glasses. There is also an annual employee satisfaction survey, which focuses on working relationships with co-workers, line supervisors and more senior managers. This survey has driven training for 1st and 2nd tier management.



Occupational Health and Safety: SSL has improved its OHSAS performance during the period of IFC’s support, and now has a certified OHS management system. As part of the OHSAS certification process SSL has drafted OHS rule book, preformed an OHS assessment of each workplace and drafted OHS report for 2009, which includes an Emergency Preparedness and Response plan. Despite this improvement, some of the accidents reported do appear to be avoidable, for example, one worker was injured when he fell into a hole that he didn’t see because of a steam leak, while splashing injuries could be reduced in severity by rigorous use of personal protective equipment (PPE). Much greater effort is required to build upon the successes and systems now in place, through rigorous enforcement of safety procedures such as use of PPE and carrying of personal gas masks in hazardous areas within the factory.



Part of the proposed investment program is aimed at enhancing the structural safety of some buildings which have been eroded by process chemicals over time, and also replacement of some process equipment no longer considered safe.

Resource Efficiency: Through its investment program since 2007, SSL has reduced its specific use of energy in production by over 20%, and has reduced specific consumption of limestone, brine and ammonia by 15% to 40%, while a cooling tower project reduced water use by 70%. Despite these improvements, due to the age of the main process and utility equipment, specific energy use still does not match best practice standards. The current investment program contains several production machinery investments that will enhance energy efficiency, a new boiler is planned which should be higher efficiency than that units it replaces (75% and 78% respectively), and SSL will increase its power generation by installing a steam turbine which has become available, and by reconfiguring the factory’s steam systems to make greater use of lower-pressure turbine pass-out steam. The turbine will reduce the volume of steam expanded in expansion valves with no useful energy generation.



SSL intends to commission an energy efficiency audit in the expectation that this will identify further energy efficiency opportunities for subsequent investment.



Greenhouse Gases: SSL will review the technical and financial feasibility to collect wood waste from the many sawmills in Bosnia, for possible use in partial replacement of coal used as boiler fuel.



The annual greenhouse gas emissions associated with SSL’s use of energy and limestone and electricity purchases is expected to be around 1,000,000 tpa CO2 equivalent upon completion of the expansion project.



Liquid Effluents: There are three liquid effluent streams from the facility, sanitary waste water, storm water and process effluents. As required by the authorities, these three streams have been separated. Sanitary waste water now passes through a grease separator and biological treatment before discharge. Storm water also passes through a grease separator and sand filter, and except for chloride concentration is in material compliance with local requirements and World Bank Group (WBG) Environmental Health and Safety (WHS) Guidelines. Process waste water is discharged from the factory to the “white sea” settling ponds, and from there overflows without treatment to the Spreca river. This is not compliant with local or WBG guidelines in because this effluent is highly alkaline, with a pH of around 11.5. Neutralization of these process effluents is required.



The physical distance from the processing plant to the white sea makes neutralization at that site, which will be done with boiler flue gases, impractical. SSL will construct a new tailings area adjacent to the current processing site and at this point will use boiler flue gases to neutralize process effluents, and at the same time remediating acidic boiler flue gas emissions which is also necessary. In accordance with SSL’s environmental permit & water permit this work must be completed by the end of 2015.



Emissions to Air: SSL has an
extensive program to monitor point source emissions to air, and also monitors ambient air quality at the edges of its manufacturing site. Ambient air quality monitoring shows that SSL is in a degraded air-shed in terms of particulate matter (PM) and SO2, though the relative contributions to degraded air quality from SSL and other local industry which includes a cement factory and a coal-fired power station has not been established. SSL has continuous monitoring of the exhaust from the coal-fired boilers, measuring PM, NOx, SO2, CO, CO2 and oxygen concentration of flue gases. The majority of point source emissions meet local and WBG guidelines, though SSL will overhaul the main boilers’ (#6 and #7) electrostatic precipitators during 2013 and will add particulate control to the smaller boiler #2.



Boiler flue gas tests undertaken by an external testing agency in October 2012 showed boiler 6 and 7 flue gas concentrations of SO2 of 1,850-1980 mg/Nm3, NOx 300-280 mg/Nm3and PM of 49-46 mg/Nm3 when corrected to 6% oxygen. These figures are compliant with local regulations. However, emissions of SO2 exceed the WBG Thermal Power EHS guideline values for a non-degraded airshed, and the PM, SO2 and NOx figures all exceed WBG Thermal Power EHS guidelines for a degraded airshed. Moreover, boiler emissions are highly dependent upon coal quality which is very variable. Examination of the continuous monitoring records can reveal emissions of SO2 which exceed local as well as WBG EHS guideline values, when high sulphur content coal is burnt. This is likely to become more common, because a local power station under construction will burn the locally available low-sulphur coal, which will force SSL to use lower quality, higher sulphur content fuel.



The new boiler that SSL plans to install has been specified to meet contemporary Bosnian regulations. SSL expects to select a boiler with fluidized bed combustion and lime injection for flue gas desulphurization. The emissions specification of 200 mg SO2/Nm3 represents compliance with local and WBG EHS guidelines and considerable reduction from the current rate of SO2 emissions. One existing boiler (usually Boiler 6, though Boiler 7 will remain as standby) will continue to operate. SSL will investigate options to address SO2 emissions from this boiler, and by the end of 2015 will present to IFC a plan for further SO2 remediation. Options to be considered include end-of pipe treatment for Boiler 6, possibly integrated with emissions neutralization, or even boiler replacement.



Solid Waste Management: The most significant waste disposal issues relate to disposal of tailings (the white sea) and boiler ash, currently disposed of to the “black sea ” tailings area. SSL would like to sell ash to the adjacent cement works, but has been unable to do so because its unburnt carbon content at around 5% does not meet the cement company’s specification. It is expected that the new boiler will enable more compl
ete combustion of coal, which will permit disposal of ash to the cement company.



The white sea was developed in stages, and different areas used for disposal over time. One area now has very low calcium chloride content in the residues, does support vegetation and appears suitable for use as a soil improver, to reduce the acidity of the locally-found acidic soil. As the new storage area is constructed to facilitate effluent neutralization, chloride levels in the existing ponds will gradually reduce, enabling such uses.



SSL has identified PCBs in its transformers. These continue in use, and are bunded and monitored closely.

A large quantity of asbestos-cement roofing was removed in earlier refurbishment work, and this is securely stored on site and is progressively being disposed of by an authorized hazardous materials contractor.

The Faculty of Mining, Geology and Civil Engineering of Tuzla conducted a study in January 2008 on tailing dams/ponds stability and concluded that the risk of the tailing dams collapse is minimal. The study concluded that an addition of 17 meters on top of the existing dam is possible enabling disposal for the next 120 year without jeopardizing community’s safety.

SSL is actively engaged with the community of Lukavac, and has contributed to the development of a Local Environmental Action Plan (LEAP) for the Lukavac municipality for the period 2012-2017. The Company’s web site http://www.sisecam.ba gives an account of the Company’s approach to environmental and occupational health and safety issues, and of the investment program since Sisecam took over the assets and formed SSL.

The Company will carry out a local disclosure of this Environmental and Social Review Summary and the associated Environmental and Social Action Plan (ESAP), in local language, in parallel to IFC’s disclosure. Contact details for the community engagement representative in SSL Bosnia are as follows:

Mr. Nihad Akeljic, dipl. Ing.teh
QSHE Manager, SSL Bosnia
(t): +38735552311
(f):+38733552704
Email:mailto:nakeljic@sisecam.com
http://www.sisecam.ba

Broad Community Support is not applicable for this project

Title	Anticipated completion Date	Status	Comments	Completion Date
Report to IFC on measures taken to enforce appropriate carriage and use of personal protective equipment such as eye glasses and gas masks, whose use has been deemed necessary by the risk assessment process	04/30/2014 12:00:00 AM	Completed	Completed	04/30/2014 12:00:00 AM
Continue to implement program to meet remaining obligations under the terms of the March 2010 Water Permit. This is construction of new tailings disposal area close to the manufacturing site and neutralization of alkaline emissions at this point	12/31/2015	In Progress	In Progress
New Boiler(s) Before placing the order for the new boiler(s), provide a specification that demonstrates that the boiler efficiency will be representative of good international practice, meeting the 2006 IPPC BREF Large Combustion Plant efficiency target of 92% on a lower heating value basis, and that unburnt carbon in ash will be sufficiently low to facilitate ash disposal to the cement company	05/01/2014 12:00:00 AM	Completed	Completed	05/01/2014 12:00:00 AM
Boiler Emissions Controls Develop and install boiler flue gas desulphurization (FGD) and particulate controls that when implemented will enable the planned new boiler(s) of 120 tonnes/hour steam capacity to meet World Bank Group Thermal Power EHS Guidelines Table 6 (c) values for emissions of SO2 and NOx from a solid-fuel boiler of plant capacity between 50 and 600 MWthermal . This action is required independently of Item 2, but the two items may be complementary	12/31/2013 12:00:00 AM	Completed	Completed	12/31/2013 12:00:00 AM
Continue to maintain compliance with local laws and regulations for emissions of SO2, NOx and PM for the main existing power boilers (#6, #7). If at any time the emissions of existent boilers exceeds continuously the allowed limits of the local law, SSL agrees to do the necessary investment within a year	12/1/2015	In Progress	In Progress
SSL will examine its options and develop a plan to comply with current WBG standards for existent boilers	12/31/2015	In Progress	In Progress