PS5: Land Acquisition and Involuntary Resettlement is not applicable as KFP’ premises in Kostanai, Kokshetau and in and around Almaty are located either in an industrial area or remotely (in the Kazakh steppe), and have been in operation for a while with no legacy issues or counter claims to the land. As such PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources is also not applicable.  PS7: Indigenous Peoples does not apply as no impacts on such individuals or groups are expected, and PS8: Cultural Heritage is not expected to apply as there are no known cultural heritage sites associated with the existing premises.

The nature of KFP’s operations includes manufacturing of confectionary products, flour, glucose, animal feeds and to-be-launched production of fructose, DDGS and gluten, for which there are effective mitigation measures for the potential E&S impacts.  Based on site visits to the plants in Kazakhstan, a review of documentation and discussions with the plants’ management, this project will have limited environmental and social impacts and these are mainly site specific, largely preventable and/or reversible, and can be addressed through the implementation of specific mitigation measures. Thus the project is categorized as B according to the IFC’s Environmental and Social Review Procedure.

The potential environmental, social, occupational health and safety risks associated with this project relate to: failure to fully complete environmental assessment and management in line with Kazakhstan law and IFC requirements, thereby not identifying, assessing and managing E&S risks and impacts; the need to implement food hygiene and safety procedures, including Hazard Assessment and Critical Control Point (“HACCP”) Principles; operation of OHS system so as to protect the health and safety of workers; appropriate resource (water and energy) efficiency; the need for good international industry practice regarding solid and liquid waste management; life and fire safety in production areas and warehouses; and operation of trucking fleet. 
KFP has presented plans to address these potential environmental and social impacts to ensure that upon the implementation of the specific agreed mitigation measures, the Project is expected to be in line with the applicable Kazakhstan laws and regulations, IFC’s Performance Standards and World Bank Group (WBG) general and sector-specific (Food and Beverage) Environmental, Health and Safety (EHS) Guidelines. Information on how these potential impacts are addressed is contained in the following paragraphs and in the attached Environmental and Social Action Plan (ESAP).

In its operations the company is guided by national law of Kazakhstan in the area of environmental, social, occupational health and safety, labor code of Kazakhstan and voluntary certifications. Certifications are done separately for each of its production facilities. Bayan Sulu and AsiaAgroFood hold certifications with ISO 9001, a quality management system, and ISO 22000, an international standard specifying the requirements for a food safety management system, which integrates the principles of the Hazard Analysis and Critical Control Point (HACCP) system, a system aimed at prevention of biological, chemical and physical hazards in production processes to ensure safety of the finished products, and application steps developed by the Codex Alimentarious Commission, the World Trade Organization body responsible for setting food safety. Bayan Sulu also has the ISO 50001:2001 energy management systems certification, which provides a framework used to develop and implement more efficient uses of energy, set up the corresponding objectives, measure the results and continually improve energy management.  Bio Operations will work to obtain similar certifications.

KFP regularly performs risk analysis, control and planning to ensure compliance with state regulations. To identify risks and impacts associated with its operations and develop measures to manage those, KFP had contracted a third party to perform environmental impact assessment of its operations in all its facilities currently in operation and will do the same for the third one – the BioOperations before it is launched, as required by national legislation. The assessment shall be renewed every 5 years or more frequently in the case there are any changes in operations, which might cause a change in E&S risks and impacts. KFP regularly updates the EIA, as required.

KFP has staff responsible for environmental, social, occupational health and safety matters at each production facility; however there is no person coordinating these issues at the group level. KFP will make a change in its organizational structure to make sure the OHS and E&S officers of its three production facilities report and have access directly to Chief Executive Officer at the Group level to ensure that the E&S and OHS issues are given the due importance. The relevant change in the organizational structure is part of the ESAP item #1.

ESAP action item #2 requires KFP to prepare and submit environmental, health and safety documentation for the Bioethanol facility in accordance with project stages to obtain the necessary construction and production permits, and to ensure provisions and management plans are incorporated into its ESMS and certification programs.

KFP has a program of environmental control of production, which allows monitoring of atmospheric emissions, greenhouse gases, wastewaters, and waste management. The scope of the program resulted from the EIA and is required by law. The reports on atmospheric emissions and implementation of nature protection measures are submitted quarterly to the Ministry of Environmental Protection.  Monitoring of environmental and OHS issues is exercised through regular measurements performed by the corresponding supervising state agencies.  The results of measurements are recorded; if any corrective actions are required, those are implemented. Action plans are adjusted on a quarterly basis and the implementation outcomes are reported to the management.  Nonetheless, currently the ESMS is functioning to mainly satisfy compliance requirements. For example, the company does not go beyond such requirements to assess and avoid, manage or mitigate other project risks, i.e., the client does not systematically document, summarize or analyze the monitoring results and the necessary corrective and preventive actions for the group as a whole. The monitoring programs of the holding’s companies are not overseen at the corporate level; and senior management does not receive periodic performance reports on E&S management. In accordance with the Action item # 3 KFP will review its ESMS so as to ensure a more proactive role of E&S officers in E&S management, so as to  not only ensure compliance with E&S regulations but to  strengthen the E&S management at the group level. The ESMS will include, among other elements, the steps to regularly carry out internal risk inventory, develop mitigation measures, budget, implement, monitor and report on implementation and effectiveness to senior management.

As part of the reorganized ESMS, KFP will also identify risks associated with primary production for its corn fields at Koktal Agro and commit to applying good international industry operating principles, sustainable management practices, and technologies in line with relevant and credible standards. KFP will consider implementing and obtaining certification for Integrated Farm Quality Assurance and Food Safety Program (Good Agricultural Practices [GAP] Management System).  This is covered under item #4 of ESAP.

KFP maintains emergency preparedness and response system, which includes trained emergency response teams, specific emergency response procedures, procedures for interaction with government authorities, emergency contacts and communication systems, clear identification of designated meeting place.

KFP totally employs over 2,500 people.  Each of the holding companies has a human resources (HR) department, which deals with HR issues. Both Bayan Sulu and AsiaAgroFood have HR Policies, as required by, and are in line with, national labor law, which define candidate selection, screening and recruitment processes,dismissal procedures, rights and responsibilities of employees and employer (including the need to manage OHS and life  & fire safety issues), working hours, overtime work, holidays and days-off, bonuses and disciplinary measures. The HR policy and procedures are in line with the national Labor Code, which is compatible with the requirements of the International Labor Organization (ILO), and Performance Standard 2. They are agreed with the workers’ representative before being approved and adopted. The company is regularly assessed by the State Labor Inspectorate on implementation of the labor law.

To have unified approach to HR management at the Group level, KFP will develop a corporate-level HR policy in line with requirements of the IFC Performance Standard 2 on Labor and Working conditions as per ESAP action item #5; which will be later applied to BioOperations as well.

HR Policies of the KFP companies require all workers to have written contracts attached with the corresponding terms of reference and define workers’ rights, among others, to a safe working environment, provision of PPEs and ability to file complaints against the employer in case of non-observation of OHS requirements, equal and timely pay for work, notification of business days and holidays, reimbursement and payment rules, implementation of conditions of labor and collective agreements, participation in development of collective agreement, right to associate, including establishment and/or participation in worker’s organizations, and the procedure to follow regarding termination of the employment contract. Each new employee is made aware of their rights and responsibilities, internal policies and corporate culture during the brief introductory meeting with the head of HR and the head of the particular department which recruited that individual. The company does not engage third parties’ workers.

The principles of equal opportunity and fair treatment in employment are stated in the labor law, and KFP sets up and follows those principles through its HR policy and procedures. Workers can address complaints to the HR Department and to managers directly. The workers are informed about the available channels for communicating their grievances at the time they are hired and inducted by the HR officer. All workers are made familiar with the Labor Code of Kazakhstan at the time of being hired by the company, and informed on the ways to file official complaints under law.  The company does not expect any retrenchments in the near future; the expanded facilities and the new plant will hire new workers.

Occupational Health and Safety

KFP strives to provide a safe and healthy work environment for both employees and visitors at its two production facilities in Bayan Sulu and AsiaAgroFood through application of several practices. For example, as required by Kazakhstan law, once every 5 years KFP outsources an independent firm to carry out an assessment of occupational hazards and risks. The assessment looks at jobs that have hazards associated with use of chemicals, and that also have biological and physical hazards, including excessive noise, vibration, and possible exposure to radiation. Jobs with associated hazards are subject to engineering and administrative measures to eliminate or, where elimination is not possible, to reduce the risks to levels that can be managed so as to protect worker’s health and safety. KFP maintains an occupational health and safety management system to ensure measures remain in place on an ongoing basis. There are qualified personnel with the sufficient training background appointed to supervise the OHS issues at both plants. The company has an induction program and training program on occupational health and safety and safety instructionsfor employees. All workers are regularly trained on OHS risks and protection measures, and the corresponding training records have been reviewed and appear to be well maintained. All workers are provided with PPEs, and their use is enforced. The OHS and E&S officers perform regular visits to all production areas to make sure the hazards identified are sufficiently mitigated and the OHS measures are implemented. There is a system allowing for documentation and reporting of occupational accidents, diseases and incidents. This information is annually reported to the state statistics agency. According to the information provided by the company, injuries per million hours worked are at the level of 1.16

IFC observations during the visit determined that the OHS system is fully implemented and, with the exception of some minor shortcomings identified particularly at the AsiaAgroFood (such as lack of illumination at workplaces, stumble, slipping and trapping hazards, wearing unsuitable footwear, poor discipline in wearing PPEs (earplugs in particular), etc.) was seen to be effective in protecting worker health and safety.  According to the Action Plan item #6 KFP will make sure the OHS practices are unified at the Group level, and will strengthen those at AsiaAgroFood, in particular, and develop the sufficient ones at Bio Operations, when it starts operating. As part of this process, KFP will carry out internal OHS audit, including the luminance audit, at the AsiaAgroFood and design the corresponding action plan for OHS improvements as the Action Plan item #7 suggests.

KFP has a documented life and fire safety (LFS) system, which consist of written procedures, a designated on-site fire-fighting team, and fire-fighting equipment.  Nonetheless, the deficiencies in fire safety system implementation were observed at both sites during the visit, e.g. access to fire safety equipment blocked, overstocking of materials in storages, which restrains access in case of fire, lack of fire detection equipment (at AsiaAgroFood in particular) in some premises, hanging wires. KFP will strengthen the fire safety system, both technically and in terms of its implementation in practice (particularly in storage facilities of AsiaAgroFood). For that, the corresponding action plan shall be designed and agreed with IFC before disbursement of project funds. This is part of the Action Plan, item #8.

KFP monitors the use of resources (such as energy and water) and implements measures to reduce their consumption. The electricity is supplied from the national grid; facilities also utilize gas to produce steam and heat; the back-up generators are run both on gas and diesel; and the fleet of vehicles is run on automobile fuel. KFP monitors the energy consumption and implements technological adjustments, where necessary and feasible, and ensures proper maintenance of the equipment to reduce energy losses. The water comes from the municipal water supply system in Bayan Sulu and from the wells at AsiaAgroFood and Bioethanol. The wells are properly maintained, and the corresponding documentation and studies required by law to operate the well have been prepared. The company recycles water in its production cycle, where appropriate, to reduce its usage. The corresponding contracts for electricity, gas and water supply are available and have been reviewed during the visit.

The Company monitors GHG emissions and reports those, as required by Kazakh legislation. The emissions are at the level of over 25,000 tons of CO2 equivalent, and, as such, KFP will continue quantifying its direct emissions from all facilities annually in accordance with internationally recognized methodologies and good practice.

The project expansion will result in an increase in energy consumption. This will result in increased GHG emissions, which the Company will continue monitoring. The similar GHG monitoring system will be set up at the BioOperations. The company will consider alternatives and implement technically and financially feasible and cost-effective options to reduce project-related GHG emissions during the design and operation of the project.

KFP’s air emissions from all its current production facilities are assessed in detail in the EIA documentation and then regularly monitored. The corresponding records have been reviewed during site visit and were found compliant with the relevant provisions of the WBG EHS Guidelines. The corresponding mitigation and monitoring measures are provided therein. KFP follows the recommendations, and monitors emission to make sure those are within the admissible limits calculated for the facilities.  These measures are accounted in company’s action plans and regularly reported internally and to the state supervisory agencies.

Liquid effluents are managed in different ways depending on the nature of production found at each production site. The wastewaters in Bayan Sulu are discharged to the municipal collector; pre-treatment facilities are lacking. The regular measurements on wastewater parameters are undertaken, and those indicate that current pretreatment operations are insufficient to meet the required effluent limits for discharge to the municipal system.  Bayan Sulu considers construction of wastewaters pre-treatment facilities, and the firm agreements on that, i.e. agreements with the sub-contractor and the corresponding staged action plan will be developed and agreed with IFC prior to disbursement of funds as stated in the Action Plan item #9. The same applies to the BioOperations – the wastewater treatment facilities capable of handling the wastewaters from the plant efficiently to meet the admissible limits prescribed by law and as defined in the WBG EHS Guideline shall be put in operation when the plant starts production, which is covered under the same action Plan item. The corresponding agreement and plans shall be prepared by the time of disbursement of IFC funds. The wastewaters at AsiaAgroFood are treated on biological treatment facilities and then the treated water is discharged to a canal and used for irrigation. The wastewater treatment facilities are sufficient to handle the current wastewater stream; however the company is constructing additional capacities to be able to handle the wastewaters from the expanded production. The wastewater measurements are implemented regularly, and the current data presented during the visit indicate some increase of the chemical oxygen demand parameter. The company will be required to monitor the parameters and regularly submit the data (parameters and the corrective measures implemented in case of exceeded values) as part of reporting requirement to IFC.

Waste generated by the company is inventoried and the waste streams are separated and managed accordingly. KFP has contracts with specialized companies, which reuse, processes or treat the waste accordingly. The contracts were presented for review during the visit. The non-reusable and non-recyclable waste is collected in metal containers and regularly picked up to be transported to the municipal landfill according to the agreements with licensed waste disposal companies. Nonetheless, during the visit some deficiencies were observed at both sites – Bayan Sulu and AsiaAgroFood, namely overstocking of waste on site, no lids on waste containers, and others. The company will need to improve the waste management practices on site accordingly, which is a part of the Action Plan item #10.

Companies under KFP have a system of pest control – the insects are controlled using high-voltage devices, rodents by traps, and bird access is restricted by nets. Those are installed and serviced by a specialized organization under a contract. There are logs, where regular visual inspections of those are registered. However, during the visit the poor maintenance of pest control system was observed, e.g. bait being outside of a trap, traps non-identified, insufficient number of traps, etc. The company will need to revise and strengthen pest control (at the mills in particular) throughout the facilities, which is part of the Action Plan item #10. 

A minimal amount of chemicals are used on site. Those are mainly cleaning chemicals and water treatment chemicals, which are not considered hazardous; and used oils and used reagents from laboratory’s product analysis. All chemicals are stored in special storage facilities appropriately marked. However, some hazardous materials are used as well. During the visit the poor conditions of the hydrochloric acid storage were observed, and the company informed that the ISO22000 annual audit conducted for the company also made a recommendation on that, which is included in the corresponding audit follow-up and will be implemented as a priority. KFP will undertake an immediate action on improvement of storage of hydrochloric acid at the AsiaAgroFood facility and carry out the corresponding training on handling hazardous substances for related personnel, which is also part of the Action Plan, item #11.

KFP will conduct review of pesticides on site and prepare detailed list of pesticides used, the quantities and application methods and where appropriate formulate and implement an integrated pest management (IPM) to ensure that pesticides are not accessible to personnel without proper training, equipment, and facilities to handle, store, apply, and dispose of these products properly (Action Plan item #11). The client will not purchase, store, or use products that fall in WHO Recommended Classification of Pesticides by Hazard Class Ia (extremely hazardous); or Ib (highly hazardous).

Possible threats to community health and safety from KFP operations may result from fire, road accidents with the company’s vehicles, and pathogens or microbial contaminants associated with processed food products. KFP’s plants are located in industrial areas far from communities; hence the possible negative impacts are minimal. The company has strict procedures to avoid potential road accidents, which include hiring only professional drivers with the corresponding driving permits (e.g. for operating track or special vehicles), testing drivers for alcohol and their health status before they leave the site every morning. The company ensures that vehicles are well maintained. According to the company, there were no accidents associated with its vehicles in the past. The risk of pathogens or microbial contaminant associated with processed food products are handled as part of ISO22000 food management safety system implemented at both current production sites.

KFP will make the current ESRS/ESAP locally available, in Russian language, at the company’s office in Almaty, and inquiries can be addressed to: 132A, Dostyk Ave., Almaty, 0500051, Kazakhstan, tel.: +7 727 258 2692

Fax: +7 727 2582677, Email: omadina999@gmail.com; attention of Ms. Madina Orazimbetova, Project Manager.