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
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

The proposed investment is expected to have limited environmental and social impacts which are site-specific, temporary and none are regarded to be significant. Those impacts can be avoided or mitigated by adhering to recognized performance standards, procedures, guidelines and design criteria as described in the following sections. Thus, this is a Category B project in accordance with IFC’s Environmental and Social Sustainability Policy. The project is designed to avoid, minimize and manage environmental and social risks and impacts of the Company’s operations in compliance with national legal and regulatory requirements, applicable IFC Performance Standards and World Bank Group (WBG) General Environmental, Health and Safety (EHS) Guidelines.

Key E&S issues applicable to the Project relate to the Sponsor’s capacity to undertake E&S impact assessment and manage future plants in a manner compliant with Performance Standards. Issues applicable to the KRP investment are: (i) operational licenses of ZincOx’s facilities; (ii) environmental, OHS, and social management system, plan and related procedures; (iii) organizational EHS structure at corporate and plant-level; (iv) adherence to national labor law, working conditions, standards and OHS risk prevention and management, including facility’s employees, contractors and nearby communities; (v) Life and Fire Safety (L&FS) provisions and emergency preparedness and response procedures; (vi) use of public utilities (water supply and energy), water and energy use efficiency through design and resource conservation measures, including greenhouse gas emissions; (vii) wastewater collection and treatment, solid waste disposal, air emissions from dryers, RHF stack, boilers and generators, potable water quality, treatment and monitoring, hazardous material handling; (ix) transport safety, and (x) engagement with communities on E&S risks.

PS4: Community, Health, Safety, and Security does not apply as the existing Korean plant and the proposed recycling plants in Russia, Thailand and Turkey are located into Industrial Estates; PS 5: Land Acquisition and Involuntary Resettlement did not apply to the Korean recycling plant as the land which was acquired by the Korean’s central government and then leased for ZincOx for a 50-year period was zoned for industrial purpose and, as such, did not trigger any involuntary resettlement and/or economic displacement. PS6: Biodiversity Conservation and Sustainable Natural Resources Management does not apply as the Korean plant is located within an existing industrial complex (ref. Cheonbuk-myeon). Same situation will apply for the proposed Russian, Thailand (ref. Amata City Industrial Estate), and Turkish (Aliaga Heavy Industrial Zone (“AHIZ”) plot. As such, there has been no conversion of natural or critical habitats. Presence of Indigenous People (PS7) and Cultural Heritage (PS8) has not been identified within the existing and future footprint of ZincOx plants.

Environmental and Social Impact Assessments (ESIAs) for the potential future plants will consider issues anticipated by the Performance Standards, and for this reason issues related to Performance Standards 4 to 8 are expected to be avoided by Project design.

Much of the E&S review summary that follows describes E&S performance of KRP. IFC expects that any future recycling facilities developed by ZincOx will at least match the performance of KRP, which is a model for future facilities.

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 and Social Assessment and Management System: ZincOx’s Korea recycling plant has not been the object of a specific Environmental Impact Assessment (EIA) as the whole Cheonbuk-myeon’s industrial complex underwent such risk assessment during the planning process. ZincOx submitted a detailed business plan to the regional/local authorities which one specific section detailing comprehensive information on ZincOx’ environmental and social management approach for its plant, including EAFD transport process, production/processing process (“Rotary Hearth Furnace” – RHF), and associated potential environmental impacts, such as air emissions. This business plan was viewed during the site due diligence but was only available in Korean. ZincOx provided evidence during the appraisal demonstrating compliance of its Korea plant with Korean legal requirements, IFC’s PSs and relevant WBG EHS Guidelines. ZincOx obtained the approval from the Environmental Department (Central Government) on September 29th, 2011, before the beginning of the construction phase. No specific terms and conditions were outlined in this approval. The commissioning of the plant took place on April 30th, 2012. ZincOx informed IFC that there has been no non-compliance registered since plant commissioning. Going forward, as set forth in the ESAP, ZincOx will be required to ensure that all on-going and planned feasibility studies for other recycling plants, such as in Russia, Thailand and Turkey will fully meet IFC’s Performance Standards and WBG EHS Guidelines, and all country/local regulatory requirements. This will have to encompass potential environmental risks and mitigation measures associated with shipment of EAFD across countries as this is an hazardous waste which transport is strictly controlled.



Management Program. ZincOx has adopted an Integrated Environmental, Health, Safety and Quality (EHSQ) Policy in January 2012. In addition, ZincOX’s EHSQ corporate Integrated Management System has been certified to ISO 9001: 2008 (Quality), ISO 14001: 2004 (Environment) and OHSAS 18001: 2007 (Health and Safety) in December 2009. This policy framework and related programs are operationalized into Standards Operating Procedures (SOPs) and will be adopted at future facilities. These procedures include, among others, the following: EHS management structure and responsibilities, occupational health and safety, life and fire safety, wastewater and solid waste management, workplace monitoring (air emissions, noise, heat, incident statistics, point source air emissions, etc.). ZincOx is committed to certify its EHS management system at existing and future each plant. Specifically, ZincOx has embarked into the Procedures Safety Management (PSM) auditing process for the KRP-Phase I to help ensure its operations provide safe workplaces for Highly Hazardous Chemicals Standard. This standard contains requirements for the management of hazards associated with the processes using highly haz
ardous chemicals. Completion date of this process is tentatively scheduled by end of 2013. When this certification will be achieved, ZincOx is planning to undertake the preparation process for achieving ISO 14001 and OHSAS 18001 certification. As these latter two standards requirements are similar to the PSM standard, certification for these should be relatively straightforward. Going forward, ZincOx will develop and integrate the Environmental and Occupational Health and Safety (EHS) management system elements – in line with ISO 14001 and OHSAS 18001 – into an Integrated Management System in compliance with its ZincOx’s corporate EHSQ policy and management system, IFC’s PS1 requirements and applicable WBG General Environmental, Health and Safety (EHS) Guidelines.



Organization. In term of EHS structure, ZincOx’s General Manager is accountable for the effective implementation of the KRP’s EHSQ policy and preside the EHSQ Committee. The full-time EHS manager is responsible for the overall KRP’s environmental, occupational health and safety management, including the development and implementation of the EHS plan and procedures (SOPs), training plan, internal auditing of department’s EHS performance, oversight of employee’ annual health check-up, in accordance with the Korean’s health regulations and, finally, the preparation of the monthly EHS report to be reviewed and approved by the EHS Committee. EHS supervisor, most of the times being Department manager and Team leader, are responsible for the implementation of the EHS plan at department-level, while plant-level electric safety manager and hazardous safety manager provide feedback at Department requests. The EHS Committee provides monthly oversight over EHS plan, training, critical issues (e.g. change of legal and regulatory requirements) and accidents, if appropriate. Worthwhile to underline that there has been no accident which has been registered to date during the construction and operational phase of KRP. Any future recycling facility will have a similar site-based EHS management structure, reporting to ZincOx’s General Manager.



Training. As part of the SOPs, an internal training regulation has been developed and is implemented by the EHS manager. EHS training is provided to all workers, contractors and suppliers (e.g. third-party licensed transport companies). General 8-hour training is provided to all new hire while existing staff are trained every quarter. Records of training are kept in employee’s training record. EHS supervisor provide training to contractual and daily workers.



Emergency preparedness and response plan. Potential EHS incidents that could potentially result in emergencies have been identified at ZincOx operations, including flood, fire, explosion, computer loss, leakage, facility intrusion, earthquake, and civil disorder. Disaster preparedness and response procedure and crisis management plan have been prepared and training is provided by the EHS manager. In c
ase of such event, ZincOx’s general manager summon and activate disaster responsive team and implement accident control, emergency recovery, communication in accordance with the disaster preparedness and response procedure. In addition, EHS manager plans and monitors firefighting training which takes place twice a year.



Monitoring and Reporting. In accordance with the environmental permits and licenses which have been delivered to ZincOx, internal and external E&S monitoring requirements are implemented to ensure continuous legal and regulatory compliance and EHS performance. Internal monitoring encompasses OHS incidents statistics, waste generation record, waste recycling and air pollutant monitoring. External monitoring encompasses workplace monitoring parameters (air concentration, noise, heat exposure) and worker’s medical check-up. Monitoring results are shared with the Ministry of Employment and Labor (central government), the Environmental Department (central government), the Gyeongbuk Province (local government) and the Gyeongju city office (local government). Internal monitoring at future sites will follow similar protocols, while external monitoring and reporting will be compliant with national and local regulation.



Community engagement. As ZincOx plant is located in an industrial complex, it has joined the Cheonbuk-myeon’ Industrial Complex Development Committee. This Committee ensures the relationships’ coordination among neighboring companies and surrounding communities. ZincOx is committed to harmonious relationship with neighboring companies in the industrial complex and is communicating with neighboring companies and inhabitants through this Committee. In addition, ZincOx has developed a document outlining its EHS commitment and the positive socio-economic impacts of its operations. This document has yet to be signed by the KRP’s plant’s general manager and disclose publicly.

The discussion that follows covers IFC’s findings at KRP. Similar structures will be developed for any new facilities.



Human Resource Policy and Management. ZincOx is employing 62 employees, including 56 permanent and 6 contractual. In term of gender breakdown, 59 employees are male and 3 are female. ZincOx has adopted an internal regulation which related to labor and working conditions. Provisions in this policy include recruitment and selection, job category, probation period, confidentiality, access to workplace, working hours, payment schedule, annual leave and special family circumstances, occupational health and safety and use of Personal Protective Equipment (PPE), access to grievance mechanism, disciplinary measures and cessation of employment, etc. It also includes provision for due diligence requirement before establishing contractual arrangements with licensed service providers, including its registration to the Ministry of Labor, compliance with Korean Labor Law (statement outlining number of employees, payment to the social and health insurance). Generally speaking, there is limited staff turnover in ZincOx (4% on a yearly basis) explained by the seriousness of ZincOx in fully respecting the provisions of its Internal Regulations and the Company’s salary scale and benefits. The regulation is distributed to all employees, open-ended and fixed term, during the induction period. These provisions are operationally translated in procedures (e.g., communication, competency assessment, workplace accident, etc.) in order to ensure effective implementation. Certification of this internal regulation is not required by the Ministry of Labor per se, but there is random audit which take place once or twice a year to ascertain salary payment, safe working environment, etc. Human Resources management is under the responsibility of the HR manager, Mr. Changgu Won, who reports to the General Manager. In addition to the base salary payment, which is on average 20-30% higher than the minimal wage fixed by the Korean central government (ref. 4,861 Korean won per hour; equivalent to US$4.34 dollar), other benefits include health coverage, pension fund, life insurance, subsidized meal, etc. Salary payments are directly transferred on a monthly basis to employee’s bank account. There is one 8-hour working shift for the office and maintenance workers while there are four teams working on three shifts for the processing workers. Changing rooms, toilets and shower facilities are available for workers and respect gender sensitivities.



Grievance mechanism. Grievance rule is outlined in ZincOx’s internal labor regulation (Guideline #306) which defined the steps to be taken for workers to manifest any concern. Employees’ awareness raising on the grievance mechanism procedure take place during the induction session. A grievance committee has been established to receive such concerns. This committee normally meets 1 or 2 times per year, and on needed basis.
In term of process, the HR manager receives the grievance via an application form which is distributed to each department or by phone from the concerned worker, the HR manager calls for a meeting of the joint labor management committee which deliberate the case and notify recommendation on corrective measures. Absolute secrecy is ensured throughout this process. There are 3 or 4 complaints on average which are received on a trimestral basis, mostly related to working conditions, including heat. This mechanism is also accessible to temporary employees, contractors and service provider’ workers.



Workers Organizations. In accordance with Korean Labor Law, ZincOx support the freedom of association of its workers and collective bargaining. Such labor union does not exist as the plant has been commissioned less than one year ago. This being said, as mentioned above, a joint labor management committee, composed of three workers and three managers, has been established. Committee’s agenda include, among others, discussion on productivity improvement, welfare improvement, grievance of workers, and occupational health and safety corrective actions. Minutes of these meetings are registered and required action plan implemented either through the HR and/or the EHS managers.



Occupational Health and Safety (OHS). ZincOx has made a strong commitment to ensure safe working conditions of all its workers. Using an OHS risk approach, ZincOX has developed and implemented a specific SOP and Quality Management Procedure, which is equivalent to a dedicated OHS regulation. In addition, for high OHS risk work place (e.g. confined space, energized electrical work, excavation, hot work, lifting, work at height, etc.), ZincOx has developed a specific SOP and QMP regulating issuance of work permission for dangerous work to ensure worker’s safety. ZincOx is providing and ensuring strict use of Personal Protective Equipment (PPE), including safety helmet, safety shoe, mask, safety belt, safety glasses, ear plug, etc.) as well as oxygen mask, heatproof clothes set, etc. as protection equipment. Workers’ occupational health is closely monitored by external workplace health clinics twice a year while full medical check-up is undertaken by external hospital once a year. As mentioned above, these results are reported to the Ministry of Employment and Labor (central government). Stretchers, first aid kits and eyes cleansers are available on site for medial urgency in case of accident. There is no on-site clinic with assigned medical personnel or nurse as the number of employees are below the regulatory requirement for such measure. During its first year of operations, more than 129,951 man-hours of work were recorded at KRP with no workplace accident registered.



Life and fire safety. L&FS internal regulation has been developed and is implemented. Fire prevention system, including fire hydrant, mean of egress, and evacuation point has been observed during the site visit. O
n-site water tank with compression station has been observed. ZincOx has provided to IFC during the due diligence supporting evidence of firefighting team training which takes place twice a year.

Energy use and greenhouse gas emissions. Provision of energy to ZincOx recycling plant is provided by the electrical energy company. In addition, natural gas is consumed. Energy consumption is closely monitored and consumption data has been provided for the period of April-December, 2012 and for the period covering January-July, 2013. Specific energy consumption for ZincOx (electricity, natural gas and coal) is estimated at 3.5 GJ/ton of zinc oxide (HZO) while it is estimated to 4.2 GJ/ton for ZHBI product.

ZincOx is not reviewing other industry’s data to assess energy efficiency of its operations. This being said, ZincOx is planning to reduce its natural gas consumption going forward by optimizing hot air injection and increasing de facto turbulence into its furnace as well as enriching air supply with oxygen for its RHF’s burner. ZincOx does not own its transport fleet, as the EAFD is transported to the plant by the steel mill suppliers, while the coal and waste (e.g. slag, sludge from wastewater treatment plant) are transported by licensed third-party transport companies. Due diligence of these transport companies, including presence of emergency preparedness and response procedure, are taken place before establishing contractual arrangements. Estimated greenhouse emissions, in CO2 tons equivalent, is ….



Air emissions monitoring. Air emissions parameters from the dryer and RHF’s stack are monitored on a weekly basis. These are, on average, more than 20% below the Korean air quality emissions requirements for SOx, NOx and dust. These are also below WBG EHS Guidelines for point source emissions to air (PM10: 50mg/Nm³; NOx: 460mg/Nm³; SO2: 2000mg/Nm³). The two on-site boiler of 1.0 ton capacity for steam generation operates on electricity basis.



Water use and efficiency. Water is sourced from municipal distribution system. Total water consumption is well monitored through installment of water meters. Water is mostly needed for cooling the gas handling system as well as for workers’ facilities. ZincOx has its own raw water treatment facility which includes mainly coagulation and flocculation. As the price of raw water is relatively high (1447KRW/m3, equivalent to $US1.29/m3), ZincOx is ensuring recycling of its water use, to the extent possible. Volume of water use during the period of April-December 2012 has been 190,000m3 while it has been 103,893m3 for the period of January –July 2013. On-site water tank has been established for firefighting, including a compression station.



Wastewater Treatment. ZincOx is treating its wastewater on site and the whole amount of treated water is reuse for the gas cooling system. Processing capacity of the WWT plant will be sufficient to accommodate Phase II of the KRP, if needed. As there is no release of any water effluents, there is no specific monitoring that take place.



Management of solid and hazardous wastes. Characterization and tonnage of wastes is closely monitored. Solid/hazardous wa
stes include the following: waste synthetic resin from cardboard; wastewater sludge, slag and dust generated from the plant. Waste synthetic resin is stored in a waste storage container and then collected and recycled by a licensed waste recycling company; wastewater sludge is generated during wastewater purification. Chemical analysis for heavy metals of this sludge has taken place once. This sludge is going to normal landfill site. Lastly, in relation to the slag, after the zinc oxide is extracted and concentrated from the EAFD process through the RHF process, the residue (slag) is transported to a temporary landfill site for future valorization, including recycling the slag for iron recovery. ZincOx is presently testing several technologies for this concentration process. Finally, dust generated during the EAFD transfer from steel mills to KRP and production line cleaning cannot be recycled due its heterogeneity (mixture with others foreign substance) and is sent to a hazardous landfill. Appropriate secondary containment structures consisting of walls capable of containing more than 110 percent of diesel tanks for the emergency power generator has been observed during site visit. In addition, ZincOx is using oxygen and acetylene bottle for welding purpose. These are inflammable and explosive. Therefore, these bottles are secured in a locked gas container (ref. custom-made in accordance with Korea legal requirements) and divided between full/empty bottles.

Community Health and Safety. ZincOx recycling plant is located in an industrial complex. As such, there is a potentially limited impact on surrounding communities, aside from induced traffic. It is possible that dust could be emitted due to operational incident. This being said, during normal operation, dust emission is extremely limited and there has not been any operational failure since plant’s commissioning. ZincOx provides special safety training for its forklift operators and has established a log book for all these type of operation. All the forklift operators are certified and supporting evidence has been provided during the due diligence. There is also a control for drivers from the sub-contractors, including driver license verification.



Security Personnel. Security personal is composed of ZincOx’s contracted employee. These are provided for regular training, such as regular fire drills, emergency preparedness and response, first aid, etc. Security officers are not armed and are trained for defensive measures.

The ESRS and the attached ESAP will be made available via the World Bank Group’s InfoShop. ZincOx will be requested to place an advertisement in a local newspaper at proposed sites as well as on its website (http://www.zincox.com) to inform the public of the results of IFC’s environmental and social review and ESAP’s corrective action items.
Name/Address:
Mr. Andrew C. Woollett, Chairman
ZincOx Resources plc
Knightway House
Park Street, Bagshot, Surrey GU19 5AQ
Tel: +44 (0) 1276 450100; Fax: +44 90) 1276 850281; E-mail: mailto:info@zincox.com

Broad Community Support is not applicable for this project

Description of the Action Item	Anticipated Completion Date
Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts
ZincOx will review its corporate Quality, Environment, Occupational Health and Safety (QEHS) and Social Policies which will apply to all its existing and future operations in order to make direct reference and a commitment to comply with applicable country legal and regulatory requirements, IFC Performance Standards and relevant WBG’s EHS Guidelines.
- Submission of the draft corporate QEHS policies for IFC review and approval;	- December 2013
- Adoption of the updated QEHS policies by ZincOx’s Executive Committee.	- January 2014
ZincOx will ensure that all on-going and planned feasibility studies for other recycling plants, such as the ones proposed in Russia, Thailand and Turkey will fully meet the IFC''''s Performance Standards and WBG EHS Guidelines, national''''s legal and regulatory requirements, not to mention ZincOx''''s corporate EHS&Q policies, management systems and SOPs.
This will have to encompass potential environmental risks and mitigation measures associated with shipment of Electric Arc Furnace Dust (EAFD) across countries as EAFD is a hazardous waste and its transport is strictly controlled.
- Feasibility study (ies) to be shared with IFC for review and approval;	- Prior to the commissioning of each facility.
- Environmental license provided for every proposed plant as well as for the transport of EAFD	- Prior to the commissioning of each plant
Zincox will design and implement a plant-level Environmental and Social Management System (ESMS) applying to all its existing and new operations, to be reviewed and approved by IFC, defining roles and responsibilities, and other necessary elements (manual procedures) to enable it to comply with country laws and regulations, IFC Performance Standards and applicable WBG’s Environmental, Health and Safety Guidelines and ZincOx’s EHSH corporate Integrated Management Systems.
- ESMS design in place and approved by IFC	- Prior to the commissioning of each plant
- Evidence of complete implementation (e.g. draft documentation of the ESMS, plans, manual procedures and programs, e.g. training logs, monitoring records, minutes of progress reviews).	- Three months after each plant’s commissioning