34708 - MMI Mozambique

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Environmental & Social Review Summary

Project Number

34708

Company Name

M.M INTEGRATED STEEL MILLS (MOZAMBIQUE), LIMITADA

Date ESRS Disclosed

Oct 29, 2014

Country

Mozambique

Region

Africa

Last Updated Date

Dec 1, 2016

Environmental Category

B - Limited

Status

Active

Previous Events

Approved : Feb 6, 2015
Signed : Mar 12, 2015
Invested : Mar 30, 2015

Sector

Other Steel Products (Including Wire, Metal Sheets etc.)

Industry

Manufacturing

Department

Regional Industry - MAS Africa

Project Description

The Motisun Group propose setting up new cold rolling, galvanizing, corrugating, and color coating lines in the Special Economic Zone of Nacala-Porto District in northern Mozambique to produce galvanized / color coated roofing sheets and steel tube pipes for the local market. The project will be undertaken by a division of the Group, MM Integrated Steel Mills Mozambique Limitada (“MM Mozambique” or “the company”). IFC is considering a loan to support the MM Mozambique project.

The project will also have the option of including a pre-treatment pickling line in the second phase. Hot rolled steel coils will be imported through the Port of Nacala and cold rolled to the desired thickness at the project facility. After this, the cold rolled plates will be cleaned and galvanized in a continuous galvanizing line. The last part of the process involves cutting to length, corrugating to create strength and structure, and color coating to customer needs. The site for the project is located in the Special Economic Zone along the Nacala-Nampula transport corridor adjacent to the main road. Both sides of this main road are fully established with side-by-side light industries, or sites prepared for future light industrial activities.

Overview of IFC's Scope of Review

IFC’s environmental and social review of this project included site visits to Motisun Group’s existing operating plant in the Mikocheni Light Industrial Area of Dar es Salaam, as well as the project site located in the Special Economic Zone of Nacala-Porto District in Mozambique. The existing plant in Dar es Salaam has cold rolling, galvanizing and corrugating facilities. The project involves setting up similar cold rolling, galvanizing and corrugating facilities by MM Mozambique. The visit to the operational site in Tanzania included review of existing plant operational data and discussions with production team leaders. The visit to the project site in Mozambique included construction site inspection, machinery specification review and a visit to the surrounding area. Logistics and utilities tie-in for the new facility were also evaluated.

IFC’s appraisal considered environmental and social management plans for the Project and gaps if any 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 in 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.

E & S Project Categorization and Applicable Standard

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 project is being developed in accordance with the national regulatory requirements and international standards by the Motisun Group which is committed to sound environmental and social management. The project is located in an industrial development zone and complies with World Bank Group (WBG) General and sector-specific Environmental Health and Safety (EHS) Guidelines. Thus this project is being classified as a Category B project in accordance with IFC’s Environmental and Social Review Procedure.

All raw materials required for this new plant will be imported through the Nacala Port and the finished products will be sent to the end users in the northern provinces of Mozambique via the adjacent Nacala-Nampula highway thereby avoiding significant traffic on secondary roads. All material processing will take place without heating except for the galvanizing bath. The color coating process will be carried out in a closed system with no significant emissions. The process does not involve any discharge that could pose potential public risk outside the industrial area. The facility will only have unarmed guards. Therefore, PS4 on Community Health and Safety is not relevant to this project. The land acquisition was done on a willing seller / willing buyer basis, hence PS5 on Land Acquisition and Involuntary Resettlement does not apply. PS6 on Biodiversity Conservation or Sustainable Natural Resource Management does not apply because the site is a part of an established industrial area occupied by converted / degraded habitat along the main highway from Nacala to Nampula. Finally, given that there are no Indigenous Peoples in Mozambique, PS7 is not considered applicable and given the site location, Cultural Heritage (PS8) is also not considered applicable to this project.

Environmental and Social Mitigation Measures

The local approval procedures for production facilities similar to the MM Mozambique’s cold rolling and sheet processing facility require the preparation of a production principle description document for obtaining the building permit, preparation of a detailed process document and compilation of an Environmental Impact Assessment (EIA) report; based on these the operational permits will be issued.MM Mozambique is following these permitting requirements and has provided IFC with the necessary documentation as evidence to confirm that the final operation will comply with both the local regulations and the WBG General and sector-specific EHS Guidelines. The final production permit documents and approvals will be obtained in accordance with the local procedure and will be presented to IFC for confirmation before the production commences. Documentation for the pickling line evidencing performance in compliance with the local regulations and with the WBG EHS Guidelines will be presented to IFC for acceptance should the company decide to move ahead with the addition of the pickling line to the project. These latter requirements are defined in the project ESAP.

The MM Mozambique team for operating the plant is in the process of being developed. Similarly, the other organizational and administrative systems including those related to health and safety, human resource (HR), and environmental management are being set-up. As part of the ESAP for this project, MM Mozambique will be required to provide copies of the policies and operational procedures to IFC’s satisfaction for each of the above organizational functions before commencing commercial operations to ensure that the company makes an operational start in compliance with IFC’s Performance Standards.

Based on;(i) a review of the Motisun Group’s existing operations in Tanzania that consist of a fully integrated operation spanning scrap steel melting, plate making and hot rolling,(ii) a review of the upcoming Mozambique unit’s operations consisting of cold rolling, galvanizing and coating / corrugating lines, tube mill, pickling line and (iii) discussions and review of agreements with the parent company on the need for corporate management systems covering this new facility, it has been concluded that the environmental and social risks posed by this proposed project are limited; these risks mainly relate to the assurance of continued implementation of proven systems and technologies. The mitigation measures agreed with the Sponsors focus on continued development and implementation of systems already in use with the Motisun Group’s existing operations in Tanzania. The company will report on the procedures and approvals needed prior to commencement of operations, and will report yearly on the continuous mitigation measures.

Although the potential for community engagement is limited, the company will develop and implement a grievance mechanism should issues and concerns arise regarding the com
pany operations.

Stakeholder Engagement

The MM Mozambique facility is located along the main highway from Nacala to Nampula with no direct neighboring villages to make disclosures in. The company will therefore disclose this document on its Group web page and at the offices in Nacala and Nampula at the addresses given below:

Zona Industrial II, Bairro Muanona,
Nacala Porto, Moçambique

Rua de França, Bairro de Carrupeia,
Nampula, Mozambique

Broad Community Support

Environmental & Social Action Plan

Title	Anticipated completion Date
MM Mozambique will, in corporation with its parent company, develop a clear environmental and social policy, approved by its board at the corporate level as well as the country board level. This policy will align with the requirements of ISO 14001 and IFC’s Performance Standard 1.	12/31/2014
MM Mozambique will complete and publicly disclose the Environmental Impact Assessment (EIA) required for obtaining of the operational permit in accordance with Mozambican regulations and ahead of production start. Thereafter MM Mozambique will comply with the conditions defined in the environmental permit and report on compliance regularly to IFC.	12/31/2014
MM Mozambique will, in corporation with its parent company, prepare and implement an Environmental and Social Management System (ESMS). This system will be aligned with the requirements of this ISO 14001, OHSAS 18001 and Performance Standard 1.	12/31/2014
MM Mozambique will, in corporation with its parent company, prepare and implement an effective external grievance mechanism.	12/31/2014
MM Mozambique will, in corporation with its parent company, prepare and implement an occupational health and safety policy, management system, and organization in line with OHSAS 18001 and Performance Standards 1 and 2. This management system will include a reporting routine that ensures all occupational accidents are reported directly and immediately to the in-country CEO as well as the responsible person in the parent company’s management.	12/31/2014

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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Environmental & Social Review Summary

Project Description

Overview of IFC's Scope of Review

E & S Project Categorization and Applicable Standard

Environmental and Social Mitigation Measures

Stakeholder Engagement

Broad Community Support

Environmental & Social Action Plan

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Environmental & Social Review Summary

Project Description

Overview of IFC's Scope of Review

E & S Project Categorization and Applicable Standard

Identified Applicable Performance Standards

Environmental and Social Categorization and Rationale

Environmental and Social Mitigation Measures

Environmental and Social Mitigation Measures

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

Stakeholder Engagement

Stakeholder Engagement

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Environmental & Social Action Plan

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