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

All the mines and manufacturing facilities are located in designated industrial areas. There is no community located near Donghai site and there are only a few houses in the Baishan industry zone which is approximately 500 meters from smelter facilities. Moreover, all the expansion activities are located within the existing properties, and all the wastewater generated from manufacturing processes at both sites will be treated and recycled. Air emissions for both sites meet local regulatory requirements. Water and energy consumption rates for unit products will also be reduced due to new technologies being adopted for the expansion.

The key E&S risks and issues include the following:

- Wastewater treatment and recycling
- Occupational health and safety
- Air emissions and abatement
- Energy efficiency
- Solid waste management
- Operational hazards, fire prevention, and emergency response
- Road transportation and community safety
- Community engagement and development

Mitigation measures for the potential E&S impacts have been identified and are incorporated into an ESAP. The potential adverse E&S impacts of this project are therefore few in number and limited to project sites, and may be readily mitigated. This is therefore an E&S Category B project.

All the expansions are within existing properties. No land will be acquired, no natural protected areas or protected species are identified at or near the project sites and thus Performance Standard (PS) 5: Land Acquisition and Involuntary Resettlement and PS 6: Biodiversity Conservation and Sustainable Management of Living Resources are not applicable. Indigenous Peoples were not identified in the project area and no issues related to cultural heritage were equally identified in the project area; thus PS7: Indigenous Peoples and PS8: Cultural Heritage are not applicable.

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.

Land and Natural Environment: CS purchased the fertilizer plant and serpentine mine in Donghai in 2007, constructed the magnesium (Mg) smelter in 2008 and started the dolomite mine operation in 2009. Both the Donghai and Baishan sites are located in a designated industry zone. The nearest community to the Donghai site is 1.5 km. Besides a few houses 500 m from the smelter facilities, the nearest community to the Baishan site is approximately 5 km. The environmental impact assessments for various projects at both sites confirm that there is no natural reserve area or protected species at or near the project sites.



Corporate Environmental and Social Policy: CS has a corporate environmental and social (E&S) policy, which promotes resource efficiency, minimizes emissions, and emphasizes positive engagement with surrounding communities. The E&S policy requires the operations to meet all the local regulatory requirements. The corporate E&S policy is covered during the new employee orientation and induction program.



Identification of Risks and Impacts: CS contracted external experts to conduct environmental impact assessments (EIAs) for all the existing projects according to local regulations. The current E&S operations at both the Donghai and Baishan sites meet all the E&S requirements proposed in the EIAs. As required by the EIAs, CS drafted mine reclamation plans for both the serpentine and dolomite mines. Financial deposits for the planned reclamation fund are paid to the local governments in installments. For the production expansion at both sites CS will conduct environmental and social impact assessment aligned with local regulatory requirements, IFC Performance Standards, and applicable World Bank Group (WBG) Environmental, Health, and Safety (EHS) Guidelines to ensure the future operations meet both local regulatory and IFC requirements.



CS has comprehensive programs to contract external experts for EHS audits at both sites. At the Donghai site, external experts conduct quarterly EHS and process safety audits for the fertilizer plant and annual EHS audits for the serpentine mine. At the Baishan site, external experts conduct annual EHS audits for both Mg smelting/refining and dolomite mine operations. No outstanding issues have been identified in the past audits.



Corporate Environmental and Social Management and Organization: CS has EHS management programs for fertilizer manufacturing, the serpentine mine, Mg smelting/refining, and the dolomite mine which include EHS procedures for each operational position, air emissions and liquid effluents controls, ambient environment monitoring, hazardous material management, industrial solid waste management, and emergency response. The EHS managements at both sites are effective. CS is planning to apply for the ISO 14001 and OHSAS 18001 certification, environmental and occupational health and safety management systems, respectively, for its Mg smelting/refining operations in Baishan.





Environmental management is handled by the EHS department at the Donghai and Baishan sites respectively. The EHS Manager reports to the General Manager who is in charge of the overall operations at each site. There is no corporate coordination for the EHS management at CS. As indicated in the ESAP, CS will establish a corporate EHS coordinator position to assist CS corporate management with EHS issues and manage the corporate EHS database which includes real-time EHS performance data from all plants.



Emergency Preparedness and Response: Fire hazard and a release of toxic gas are the main operational risks at the Donghai sites; while burns and a release of toxic gas are the main operational hazards at the Baishan site. CS has strict management procedures to control these hazards. Personal electronics are not allowed in the ammonia storage area at Donghai site. There are fire and hazardous gas sensors in high risk areas. CS has its own volunteer fire fighting teams at both sites. At the Donghai site there are approximately 10 volunteer firefighters on each shift and there are pressured firefighting water pipes at all critical locations. There is an onsite clinic at the Donghai site for medical emergencies. Local hospitals and fire stations are within a 10 minute drive for both sites. There is enough firefighting water at each site to sustain 5-hours of firefighting. Emergency response (ER) plans are prepared and updated at both sites. Annual plant-wide ER drills are conducted at each site. CS also coordinates with local fire stations, hospitals, and community representatives to conduct join ER drills every one or two years. There are no large scale ER incidents in CS’s operational history.



Monitoring and Review: EHS engineers monitor and review the EHS performances daily at each process; the workshop supervisors conduct weekly EHS monitoring and review for each process; the EHS manager and production manager conduct monthly EHS inspections for the whole site. There are monthly EHS summary meetings, chaired by the plant general manager, which review the monthly EHS performance, summarize the corrective actions, and evaluate the implementation of previous corrective actions. The proposed corporate EHS coordinator assists corporate management in drafting annual EHS improvement targets with the budgets and implementation plans each year, and these targets will also be reviewed by the year end to ensure proper implementation.

Corporate Human Resources Policy and Management: CS has a corporate human resources (HR) policy that specifies the terms of employment and working conditions. These include procedures related to recruitment, probation, training, performance review, promotion, insurance, salary and compensation, resignation, lay-off and firing, vacation, other leave, and retirement. The Company has HR policy training that is part of the new employee induction, and all employees have access to this policy. The HR issues are managed at each site separately. CS plans to appoint a corporate HR coordinator to manage the corporate HR database and assist the senior management with HR issues.



Working Conditions: All workers are on CS’s payroll and there is no temporary labor. Under the employment terms that strictly follow the national labor law, workers are employed on fixed term contracts which are renewable subject to satisfactory performance and availability of work. Overtime work is uncommon and is usually only associated with emergencies. Staff receive time-off or a cash compensation in lieu of any overtime work at rates regulated by the national labor authority. Overtime work during holidays is compensated on the basis of 2 – 3 times base salary. At both sites the average salary is higher than the average salary of similar industries in the regions. All employees have access to the insurance and pension funds as required by labor law. For employees associated with construction or other contractors who may work at CS sites, the Company requires contractors to fully comply with national labor laws and HR conduct periodic inspections.



Constructions for expansion projects will be contracted out to various qualified contractors. All contractors will be required to align with the requirement of both national labor laws and IFC Performance Standards. As required by CS HR procedures, the contractors’ performance will be routinely inspected by CS to ensure compliance. In line with the ESAP, CS will develop and implement a procedure to ensure contractor’s labor and working conditions comply with Performance Standard 2.



Workers’ Organization: A worker union with elected union leaders is set up at CS as required by the All China Federation of Trade Unions (ACFTU). CS management is committed to keeping the union independent from management and allows collective bargaining.



Non-Discrimination and Equal Opportunity: The HR policy specifies non-discrimination and equal opportunity. No procedures and/or practices have been identified as discriminatory. All the hiring and promotion are merit-based. When candidates have equal qualifications, preferences for hiring are given to local residents, and females. Currently, 30% of Baishan employees are female; 25% of Donghai employees are female. CS plans to recruit more female employees in the expansion projects and increase the percentage of female employees.



Retrenchment: Currently there are approximately 830 and 290 e
mployees at the Donghai and Baishan sites respectively. Retrenchment is not expected for this project. The Company will hire approximately 90 and 600 new employees for expansion at the Donghai and Baishan sites respectively. An undetermined number of employees will be hired for construction through contractors.



Grievance Mechanism: The grievance mechanism is introduced during the new employee induction. The employees can report their grievances to either HR managers or union labor leaders. All the grievances and mitigation measures are recorded. The HR managers/union leaders shall report to the senior management if they could not solve the grievance. A HR email address and a suggestion box is available for anonymous grievances.



Protecting the Work Force: CS complies with national law and does not hire workers below the age of 18 years. HR checks birth and school certificates during the hiring process. No forced labor practices are used by CS. CS has a strict labor audit program for its major suppliers to ensure no child or forced labor is used by suppliers and the occupational health/safety performances of the major suppliers meets all local regulatory requirements.



Occupational Health and Safety (OHS): CS has routine OHS training, including new employee training and annual refreshers. There have been no fatal or serious accidents in the Company’s operational history. CS management has agreed to improve its current OHS management to address the gaps against the good international industry practices (GIIP), mainly in the fields of personal protective equipment (PPE) provision and enforcement, recordable accident monitoring and prevention, and workplace air/noise monitoring.



Personal protective equipment is not sufficient for some positions. CS plans to provide steel-toe protection shoes to all field employees and provide face-covers for the reduction process at the Baishan site. CS also plans to enforce the personal protective equipment rules at the corporate level. The air quality and noise levels at workplaces across the Donghai site meet both local regulatory requirements and GIIP. The Baishan site does not monitor air quality and noise levels at the workplace. As required in the ESAP, CS will start workplace air quality and noise monitoring at the Baidshan site and start monitoring all recordable accidents and ensure the incidences meet GIIP at all plant sites.



In line with the ESAP, the construction contractors will develop and implement OHS plans and procedures aligned with IFC’s requirements and CS’s EHS department will monitor contractors to ensure compliance with both local and IFC requirements.

Raw Materials and Resource Efficiency: At the Donghai site the main raw materials are coal, sulfur, phosphate rock, ammonia, and serpentine rock. After the expansion the annual resource consumption will be 38,400 MWh of electricity, 210,000 tons of water, and 12,000 tons of coal. Electricity and steam are supplied by an on-site power plant based on sulfur combustion with the remaining 38,400 MWh electricity purchased from the national grid and water is supplied from a nearby reservoir. The energy consumption rate for the expansion project is 40.2 kg standard coal equivalent (sce)/ton compound fertilizer (Si/Mg/NPK) (1 ton sce = 29,270 MJ), which will be reduced by 44% compared with existing production. The water consumption rate for the expansion project is 0.135 ton water/ton compound fertilizer, which is reduced by 83% compared with the existing production. There is no coal based power generation and the small amount of coal consumption is used in the fertilizer drying process.



At the Baishan site the main raw materials are coal and dolomite rocks. After expansion the annual resource consumption will be 675,000 tons of water, 66,000 MWh electricity, 367,500 tons of coal and 787,500 tons dolomite rocks. The electricity will be supplied by the national grid and water will be pumped from a nearby river. The increased water usage for the expansion project will not affect the downstream industry or farming. The resource efficiency benchmarks for Mg smelting/refining in China are 5 ton sce/t Mg and 10 ton water/t Mg. The current resource consumption rates at the Baishan site are 4.6 sce/t Mg and 9 ton water/t Mg. The new patented technology will be adopted for the expansion project and the energy consumption rate will be reduced to 4.1 ton sce/t Mg. There is no coal based power generation and coal is used to generate coal gas which is used as kiln fuel and reduction gas for Mg smelting. CS is also considering using natural gas to replace coal which will further reduce energy consumption and greenhouse gas emissions.



Corporate EHS Performance Management and Compliances: CS has the established EHS performance procedures for different processes and operation positions. The EHS manager and engineer at each site manage the daily EHS performance and identify outstanding EHS issues that need improvement. The outstanding EHS issues are discussed at the monthly operation management meetings, which also proposesmitigation methods and reviews their effectiveness.



At the Donghai site the process wastewater generated is treated to meet local regulatory requirements. However, all the treated wastewater is recycled to H2SO4/H3PO4 manufacturing processes and there is no industry wastewater discharge. Air emissions meet both local regulatory requirements and the WBG EHS Guideline limits with the exception of particulate matters (PM) from both boilers and the fertilizer granulation/drying process; these marginally exceed the WBG EHS Guideline limit. As indi
cated in the ESAP, CS will increase the dust scrubbing efficiency to ensure PM emissions meet the WBG EHS Guideline limit. CS also plans to reduce fugitive dust emissions from the drying process for the expansion project through negative pressure control at the dumping point, widening the conveyor belt and reducing the conveyor speed, and installing covers of the belt conveyors. Similar fugitive dust controls will also be adopted later for the existing process. The ambient air quality and noise levels meet both local regulatory and the WBG EHS Guidelines.



At the Baishan site the only process wastewater is from dust scrubbing for kiln and coal gasification. The wastewater is recycled to the process after suspended solids settle. There is no industry wastewater discharge. The whole smelter plant is covered by hard surfaces and all rainwater is collected in a two-step settlement tank. The supernatant rainwater is discharged to a nearby river and the sludge is collected by a licensed waste management company. In accordance with the ESAP, CS will monitor the heavy metal levels in the discharged rainwater to ensure compliance with the WBG EHS Guidelines. Fugitive emissions of dust and acid smog need to be controlled at the Mg refining process. As required in the ESAP, a strong and efficient local ventilation system needs to be installed at the Mg refining process. A scrubbing system is also required to remove dust and acids from the ventilation emission. In accordance with the ESAP, the Baishan site also needs to monitor the ambient air quality and noise levels. At both the serpentine and dolomite mines, erosion and dust controls strictly follow the mitigation methods proposed in the EIAs.



Wastes, Hazardous Materials and Operational Hazard: The sanitary wastes are collected by municipal contractors for disposal at both sites. At the Donghai site, the gypsum is sold for cement production. At the Baishan site, the coal slag and smelting slag are sold for brick manufacturing. With more slag from the expansion project CS plans to sell the slag for cement manufacturing.



CS has detailed procedures to manage hazardous materials. Carbon monoxide (CO) and ammonia monitors/alarms are installed at all critical locations. There is no onsite storage of CO at the Baishan site. All acids and ammonia at the Donghai site are stored in above ground tanks with sufficient secondary containment. All the hazardous material storage tanks are routinely checked for integrity by certified external experts. Ammonia is stored at a secured storage area at the Donghai site.



Greenhouse Gases (GHG): At current production rates, CS generates approximately 441,000 tons of CO2-equivalent GHG annually. After the expansion, CS will generate approximately 1.28 million tons of CO2-equivalent GHG annually, mainly from fuel consumption, dolomite calcination emission, reduction gas consumption, and electricity purchases.

Community Health, Safety and Security: Both the Donghai and Baishan sites are located inside designated industry zones. The EIAs confirms the current operations will not impact the few residences located 500 m from the smelting facilities and other major communities located 5 km away at the Baishan site. The nearest community to the Donghai site is approximately 1.5 km. The normal operations at both sites have limited health/safety impacts to the communities nearby. All the raw materials and products are transported to and from sites by trucks to the nearby port or train terminal and the road conditions are good. The dolomite rocks are transported from the mine to the smelter by heavy trucks through the dedicated ore transportation route in the region. As indicated in the ESAP, CS will provide annual defensive driving classes for the dolomite rock drivers and only drivers passing the exams can drive the dolomite rock trucks.



Emergency Preparedness and Response: CS has emergency response (ER) plans available for both sites, and conducts routine drills for firefighting and potential chemical explosion/releases. Communities are informed of the drills. At the Donghai site community representatives are involved in the annual joint ER drills together with local fire brigade and hospitals. Due to relative small tonnage of ammonia stored onsite and distance to the community, communities are unlikely to be impacted in case of a serious onsite incident or ammonia release.



Security Personnel: CS hires an external agency for site security. The security guards conduct routine identity checks at the gates and security monitoring. For any serious security issue, the security guards report to the local police station. The security guards are not armed.

CS engages with nearby communities on a regular basis and there is a formal community grievance mechanism. At each site the administration managers meet with community leaders quarterly to hear the concerns and requirements from nearby communities. Phones are distributed to each village and villagers are allowed to use them to report their grievances to the security guards at plant gates. All the EIAs for new projects are disclosed at the site gate and each village nearby. Formal and informal consultations are held for each project to incorporate the opinions of nearby communities before the finalization of each EIA. Approximately 80% of labor is locally hired at both sites. Many of the laborers are from villages nearby. CS has its own foundation for poverty relief which support activities for poverty reduction in the nearby communities, including village road maintenance, senior housing, pre-schools, etc.

CS will disclose this document in Chinese at both Donghai and Baishan sites.

At Donghai site, this document will be disclosed at a bulletin board outside of the plant gate, located at Shanzuokou Xiang Xugou, Donghai County, Lianyungang City, Jiangsu Province, and the bulletin boards of the following nearby villages:

Local access of project documentation:
• Zuozhuang Village: Villager Committee, Sanzuokou Zuozhuang Village, Donghai County, Lianyungang City, Jiangsu Province
• Luzhuang Village: Villager Committee, Sanzuokou Luzhuang Village, Donghai County, Lianyungang City, Jiangsu Province
• Shuanghu Village: Villager Committee, Sanzuokou Shuanghu Village, Donghai County, Lianyungang City, Jiangsu Province
• Shiqiaohe Village: Villager Committee, Sanzuokou Shiqiaohe Village, Donghai County, Lianyungang City, Jiangsu Province


At Baidhan site, this document will be disclosed at a bulletin board outside of the plant gate, located at No. 1 China Magnesium Valley Park, Hunjiang District, Baishan City, Jilin Province, and the bulletin boards of the following nearby villages:

• Huxia Village: Villager Committee, Liudaojiang Zhen Guxia Village, Hunjiang District, Baishan City, Jilin Province
• Heigou Village: Villager Committee, Qidaojiang Heigou Village, Baishan City, Jilin Province

For inquiries or concerns about the environmental and social impacts of this project please contact:

Donghai Site:
Mr. Jingchao Chi
No. 1 China Magnesium Valley Park
Hunjiang District,
Baishan City, Jilin, PR China
Phone: +86-439-511 7818
Fax: +86-439-511 7880
Baishan Site:
Ms. Juan Wu
Shanzuokou Xiang Xugou
Donghai County,
Lianyungang City, Jiangsu, PR China
Phone: +86-518 8702 7688
Fax: +86-518-8716 2222

Broad Community Support is not applicable for this project

CenturySunshine2(33903) Supervision Disclosure Snapshot – Version 3
Description	Anticipated Completion Date	Status	Comments	Completion Date
Establish a corporate EHS coordinator position to assist the CS corporate management for EHS management	31-Mar-2014	Completed	Completed	8/6/2014
Set up a corporate EHS database, which includes all the EHS performance data from each plant and is managed by the corporate EHS coordinator.	31-Dec-2014	Completed	Completed	9/16/2014
Develop and implement a procedure to ensure contractor’s labor and working conditions comply with Performance Standard 2: Labor and Wording Conditions.	30-Jun-2014	Completed	Completed	7/30/2014
Monitor the workplace air quality and noise at the Baidshan site.	30-Jun-2014	Completed	Completed	9/16/2014
Establish a system to monitor all recordable accidents and incidents and ensure the incidences meet standards as defined by Good International Industry Practices.	31-Dec-2014	Completed	Completed	9/16/2014
Submit the OHS documentation (safety plan, procedures, work instructions etc.) for the contractor constructing the expansion facilities to IFC to confirm compliance with the Performance Standards and the WBG EHS Guidelines.	30-Jun-2014	Completed	Completed	7/30/2014
Increase the dust scrubbing efficiency for boiler and fertilizer granulation/drying process at the Donghai site to ensure particulate matter emissions meet the World Bank Group EHS Guideline limit.	31-Dec-2014	Completed	Completed	5/27/2015
Install an efficient local ventilation system at the Mg refining process at the Baishan site. A scrubbing system is required for the ventilation emission to remove dust and acids to ensure the emissions meet both local regulatory and IFC requirements.	30-Sep-2014	Completed	Completed	8/11/2014
Monitor the heavy metal levels at the discharged supernatant rainwater from settlement tanks at Baishan site.	31-Dec-2013	Completed	Completed	9/16/2014
Monitor the ambient air quality and noise levels at Baishan site.	30-Jun-2014	Completed	Completed	7/30/2014
Provide annual defensive driving classes for the dolomite rock drivers and ensure only drivers passing the exams can drive the dolomite rock trucks.	30-Jun-2014	Completed	Completed	8/6/2014