PS7 (Indigenous Peoples) is not triggered by this Project because the appraisal did not identify Indigenous Peoples (IP) inside or using the project’s area of influence. Nevertheless, IFC has requested the company to include criteria for identification and mitigation of impacts on IP as part of its land acquisition framework and stakeholder engagement plan. PS8 is not considered applicable because the initial assessment has not identified cultural heritage impacts and potential issues that might emerge will be addresses under PS1.                         

 This is a Category A project according to IFC’s Policy on Environmental and Social Sustainability because it may cause significant adverse E&S impacts that may be diverse and irreversible. During its peak construction period, the project will directly employ nearly 8,000 workers with the attendant stress that such a population influx will have on public services and security of nearby municipalities, and the occupational health and safety risks of large construction sites. During operations, the mill will require large quantities of inputs (i.e. wood, chemicals) with the associated risks of vehicular accidents from log hauling and hazardous materials transportation. Wood will be secured from 44,000 ha of existing plantations but the project will require the acquisition (through lease) of additional 26,000 ha. The mill will also generate large amounts of air and water emissions with the potential to impact the air and water quality in the project’s area of influence.           

All Lenzing and Duratex operations are ISO 14001 and OHSAS 18001 certified and LDC will also seek EHS management system certification for the Amadeus project.

Policy

Both Duratex (https://www.duratex.com.br/ir/corporate-governance/regulations-and-policies) and Lenzing  (https://www.lenzing.com/lenzing-group/compliance/) have corporate code of conducts in line with the objectives of IFC Performance Standards that will be adapted to LDC operations.

Identification of Risks and Impacts

Between 2018 and 2019, LDC prepared an ESIA in compliance with Brazilian environmental regulatory requirements to address impacts from the construction and operation of the mill.  The ESIA included an analysis of alternatives to take advantage of existing infrastructure and avoid impacts on sensitive biological and cultural areas. The ESIA includes air and water models to assess the project’s impact on air and water quality. A cumulative impact assessment (CIA) report for the Araguari river was conducted in 2020 at the request of the lenders. According to the CIA, the Araguari river meets the applicable national standard (CONAMA 357/2005 Class 2) in the study area with the exception of phosphorous whose concentration sporadically surpasses the applicable standard during the rainy period. The CIA concludes that the main contributors of nutrients in the study area currently are agricultural runoff and effluents discharge from a beverage bottling company (0.1 m³/s) located 10 km upstream LDC’s planned effluent discharge point. As per the CIA, once operating, LDC will be the largest source of effluents (0.6 m³/s) in the study area. The CIA recommends a series of actions to mitigate cumulative impacts on water quality.  LDC has adopted those recommendations related to its operations. Likewise, LDC will present the study and suggested mitigation measures to the Comite de Bacia Hidrografica of the Araguari river (CBH Araguari), a multi-stakeholder entity whose mission is to promote the participatory management of the water resources of the Araguari basin.   No significant adverse impacts on communities, water users or fishing farms downstream of LDC’s planned effluent discharge point were identified. The Department of Water and Sanitation (DMAE) of the Municipality of Uberlandia is finalizing the construction of a modern and high capacity potable water treatment plant 16 km downstream from LDC’s discharge point, which will ensure that the quality of the water provided to the city of Uberlandia (population 700,000) meets potable water regulations.   

The scope of the ESIA includes the DWP mill and the water intake/effluent system. LDC’s 22-km 138-kV transmission line was not included in the ESIA because transmission lines under 230-kV only require a vegetation suppression permit in Brazil. The transmission line will traverse an agricultural landscape and its trajectory has been designed to avoid the clearance of native vegetation, tree crops, and dwellings. The ESIA did neither include the 5-km access road from LMG-748 to DWP mill site. The access road is an existing internal road across four agricultural farms that will be enlarged and paved. (ESAP item nr. 1) LDC will prepare an addendum to the ESIA to include the identification of E&S impacts and mitigation measures for (i) LDC 138-kV transmission line and substation, and (ii) CEMIG - Companhia Energética de Minas Gerais S.A. dedicated 138-kV transmission line and substation; and (iii) access road from LMG-748 to DWP mill site. The ESIA addendum with identified mitigation measures will be ready before the start of construction.

(ESAP item nr. 2) LDC will also prepare an addendum to the ESIA to address deficiencies in the assessment of risks related to noise during construction and operations, including (i) updated noise baseline in line with good international industry practice (GIIP); (ii) revised noise propagation model including fix and mobile sources (i.e. truck traffic along the access road) at project fence and at sensitive receptors both at Fazenda Quilombo (water intake/substation) and Fazenda Nova Monte Carmelo (pulp mill); and (iii) mitigation measures if required. The noise baseline will include (i) the characterization of background noise levels at potential sensitive receptors; (ii) statistically significant measurement times; (iii) and measurements at sufficient distance from reflective surfaces.

As part of the licensing process, LDC commissioned a cultural and archeological heritage assessment and management plan to qualified consultants. The report – currently based on secondary data – includes the methodology for conducting field research on archeological remains in the project area of influence and was approved by the Brazilian National Historic and Artistic Heritage Institute (IPHAN). As the report does not include procedures in the event of discoveries made during the construction process of the DWP mill and ancillary facilities, (ESAP item nr. 3) LDC will develop a Chance Find Procedure for civil works and will communicate the procedure and require implementation to the contractors.

Within the NMC Forest Unit supplying the proposed mill, Fazenda NMC is currently undergoing renewal of its environmental license for which Duratex has submitted an updated ESIA and a reporting of its environmental compliance to the environmental authority (SUPRAM). Fazenda Brejão has obtained its license and Fazenda Furnas is currently applying for a new license. LDC will obtain the environmental licenses required for additional plantations.

Both Lenzing and Duratex have mapped the hazards and developed risk registers for all their existing operations as part of their EHS management systems. A similar system will be implemented by LDC in the Amadeus project.

Management Programs 

On September 2019, the environmental authority (COPAM) issued the installation license releasing the site for construction of the DWP mill.  The E&S Management Plan - ESMP (PCA - Plano de Controle Ambiental, in Portuguese) approved as part of the permitting process, includes the environmental and social management and monitoring programs for construction and operation. (ESAP item nr. 4 and 5) As the ESMP is not an operational document, LDC will prepare an E&S Management System (ESMS) for construction and operations including detailed E&S policies and procedures based on the PCA and additional mitigation measures identified by addendums to the ESIA.

Once operating, the DWP mill will have modern computerized systems for process control and maintenance practices used to ensure process safety and minimize discharges and losses. In addition, air emissions and effluents will be monitored continuously to promptly address any exceedances.  Lenzing has also been working in the harmonization of process safety and management of chemicals procedures across their facilities worldwide through their corporate EHS management system, which will incorporate also the Amadeus project. The NMC Forest Unit will continue to be managed under the existing procedures which are compliant with the requirements of Performance Standard 1. 

Organizational Capacity and Competency

LDC has selected six first-class manufacturers for the supply of the equipment (woodyard, cooking, bleaching/evaporation/pulp drying/white liquor, boilers, water/wastewater, power). Equipment suppliers are responsible for the detailed design, procurement of materials and construction under EPC contracts. Construction of linear infrastructure will be executed by several contractors under Engineering, Procurement, Construction and Management (EPCM) contracts. Lenzing and Duratex will act as Owner’s Engineer and Manager and will be responsible to supervise the construction and the Balance of Plant (BOP) with the support of engineering companies.

LDC has appointed an Environmental Coordinator who has been responsible for the licensing process, and an OHS Coordinator who is currently responsible to coordinate and supervise a small number of contractors present on site for earthworks. During construction, LDC will also retain the services of an EHS Management Company to supervise the EHS performance of contractors inside and outside (i.e. water pipeline, transmission line, access road, railway spur) the mill fence.  (ESAP item nr. 6) LDC will also appoint a senior Social Expert with adequate qualifications to manage and coordinate overall social affairs and plans related to all project components during construction and operations (e.g. socio-economic baseline, stakeholder engagement plan, grievance mechanism, land acquisition procedure, influx management, local hiring strategy) to cover the mill and the plantations. (ESAP item nr. 7) LDC will also establish an adequate E&S team to implement all the E&S processes required during construction and operation (i.e. environmental and social programs, plans and procedures). 

Emergency Preparedness and Response

Lenzing’s engineering team has conducted a hazard and operability study (HAZOP) for the DWP mill based on the project’s basic engineering and communicated equipment specifications to suppliers. In addition, the PCA includes a preliminary hazard analysis (PHA) to identify the potential hazardous events that may lead to an accident. No catastrophic nor critical hazards were identified. Scenarios were simulated for four hazards involving explosions and the radius of the vulnerable areas are all within the boundary of the industrial plant. (ESAP item nr. 8) Once the detailed engineering is completed, LDC will repeat the HAZOP study and conduct a Quantitative Risk Assessment (QRA) to confirm no negative impact to people or the environment will take place under worst case scenarios. LDC will submit these studies to the IESC for review as part of their scope of work.

LDC has drafted an emergency plan that identifies the most significant emergency scenarios (e.g. explosion and leakages in the recovery boiler, leakages in the ozone plant) and response procedures. LDC will finalize the plan before start-up and will regularly update it.  The IESC will review the emergency response plan during project supervision as part of its scope of work. According to the plan, the OHS Coordinator will be responsible of the emergency plan and emergency brigades will receive 8-hour refresher training twice per year. LDC will adopt Lenzing’s policy of having at least ten trained first responders per 100 employees.

Fires are the most common emergency in eucalyptus plantations. The NMC Forest Unit has developed a fire prevention and suppression plan detailed under Performance Standard 4.    

Monitoring and Review

Lenzing has implemented a corporate management system that includes the reporting and documentation of all relevant environmental and safety events (accidents, near-accidents, observations) from all facilities into an on-line shared platform (SHEARS). Facilities are regularly audited by Lenzing’s internal audit team and by external auditors, and a management review is held once a year by top management. Lenzing will incorporate LDC operations into its auditing and management review program.

The PCA describes the environmental monitoring programs required as part of the permitting process. (ESAP item nr. 9) LDC will compile these programs into an Environmental Monitoring Plan, covering all project components and summarizing the (i) parameters to be monitored, (ii) monitoring methodology, (iii) location and frequency of monitoring, (iv) applicable references (i.e. Brazilian Regulation, WBG EHS Guidelines, GIIP Guidelines (WHO, EU BAT, etc.), and (v) Numerical Standards adopted by the project.

Lenders will require that a qualified Independent E&S Consultant (IESC) team monitors the project during the duration of the loan. The IESC reports will be submitted to lenders for review.                                                  

Working Conditions and Management of Worker Relationship

Human Resources Policies and Procedures

The project will directly employ 1,000 people during operations (450 people at the mill and 550 in forestry operations). Duratex’s Human Resources (HR) department in NMC Forest Unit has been transferred to LDC. LDC’s HR department is in the process of developing the company’s HR policies and procedures for the project construction and operations. LDC will adopt Lenzing’s corporate policy on Human Rights and Labor Standards, which is in line with Performance Standard 2 (https://www.lenzing.com/lenzing-group/compliance).

Working Conditions and Terms of Employment

Working conditions in Duratex’s NMC Forestry Unit complied with Performance Standard 2. NMC Forestry Unit employees have been transferred to LDC and have been extended similar working conditions aligned with national requirements and Performance Standard 2.  As previously done in Duratex, all employees will hold indefinite contracts and will receive an induction training that includes the company’s code of conduct, health and safety rules, benefits, deductions, time recording, wage and overtime pay. Payslips clearly identify worked hours and overtime compensation.

Workers’ Organizations

Both Lenzing and Duratex have corporate policies respecting the right for collective bargaining and freedom of association in accordance with Performance Standard 2. Conditions of employment for forestry operators are defined under the collective agreement with the local union for rural workers, and for mill operators will be defined under a collective agreement with the local union for pulp and paper workers. For the project construction, LDC is negotiating collective agreements with the main unions involved.

Non-discrimination and Equal Opportunity

Duratex and Lenzing have policies on non-discrimination and equal opportunities. However, the representation of women in both companies is below 15% and currently the Amadeus project does not have a strategy to increase the recruitment of women. (ESAP item nr. 10) LDC will explore options to promote the recruitment and promotion of women during operations both at the mill and forest plantations. The strategy will also identify and address safety risks to women in the worksite (e.g. transportation, work in isolated places, adequate PPE) to ensure safety does not present a barrier to employment opportunities for women in non-traditional roles.

(ESAP item nr. 11) As part of the project, LDC will develop and implement policies and procedures addressing sexual harassment (SH) in the workplace. LDC will also ensure that its employee grievance mechanism is adapted to accept and address issues around SH in the work place.  This will include a mechanism that ensures confidentiality for employees who report SH (survivors and witnesses), involvement of the survivor in decision-making about responses, and consequences for perpetrators of SH in the workplace. LDC will communicate this policy internally and to contractors and suppliers.

Retrenchment

Employees (220) from NMC Forest Unit have been transferred to LDC and no retrenchment was necessary as part of this investment. On the contrary, the number of employees in forestry operations will increase to 550 once the DWP mill begins operating.  Retrenchment will neither take place in Duratex’s processing plants as the NMC Forest Unit currently supplies wood to third-parties. Third-parties have been notified that they will need to find new suppliers by 2022.

Grievance Mechanism

Duratex has a corporate confidential channel to report grievances related to breaches to its code of conduct https://canalconfidencial.com.br/duratex_portal/, which includes breaches to the company’s HR policies. The mechanism is clear on the process to review and address complaints, and it is managed by an interdisciplinary committee. The mechanism is accessible to current and former employees, contractors and suppliers. In addition, the HR department from the Forest Unit regularly conducts site visits (HR Floresta) to proactively address workers’ concerns. Similar systems will be implemented by LDC including a call free number, email and direct access to social assistants. IFC will monitor the implementation of LDC’s grievance mechanism for employees, contractors and suppliers to ensure this complies with the requirements of Performance Standard 2.

During the project construction, the grievance mechanism for contractors will be centralized by a third-party (central of services) in charge of workforce management. Contract workers will also be able to present complaints through the elected representatives of their unions, which will also be registered by the central services. LDC will regularly audit the central of services’ grievance mechanism to ensure the process is understood by workers, the mechanism allows for anonymous complaints to be raised and addressed, and complaints from contracted workers are adequately registered, analyzed and resolved. 

Protecting the Work Force

Both Duratex and Lenzing have corporate policies against the use of child and forced labor, which will be adopted by LDC. Wood planting and harvesting operations in Brazil are sometimes performed by contractors.  Violations of worker rights regulations in this industry segment have been previously recorded in Brazil due to the living conditions of sub-contracted workers.  To mitigate this risk, LDC will not rely on third-party contractors for core forestry operations.

Occupational Health and Safety

Duratex and Lenzing have established Occupational Health and Safety (OHS) management systems across all its operations. OHS systems include identification, prevention and management of OHS risks. Controls include engineering controls, reinforcement of good safety behavior, training, harmonization of procedures and proper reporting. Injury rates are below industry benchmarks for forestry and mill operations (i.e. USDOL 2013). Similar systems are expected to be implemented once the mill is in operations.

LDC’s OHS Coordinator for the Amadeus project has been in place since August 2019, before start of earthworks in the DWP mill site. The OHS Coordinator has prepared an EHS Contract Amendment establishing contractor’s responsibilities related to health, safety and the environment. A contractor who is not complying with the guidelines or action plans to correct non-compliances, can be subject to contractual sanctions. As part of the requirements, contractors are required to present an EHS plan and CV of the EHS Manager for review and approval by LDC. As common in other wood pulp greenfield projects in Brazil, LDC will retain an EHS Management Company for the supervision and reporting of contractors’ EHS performance. Once operational, the DWP mill will adopt the best practices from Lenzing’s and Duratex’s respective EHS management systems.

Once operating, the mill will have a modern computerized maintenance planning system for predictive and corrective maintenance, and a number of maintenance operational staffing, in line with good international industry practice (GIIP).

Supply Chain

LDC is not planning to develop third-party suppliers or purchase wood from the open market. All the wood required for the DWP mill will be sourced from LDC’s plantations (owned or leased).  In the event that LDC procures wood from third parties, the company will inform lenders and define a mechanism compliant with the supply chain requirements of the Forest Stewardship Council (FSC) criteria for controlled wood, which are consistent with IFC Performance Standards requirements for supply chain.

Workers Engaged by Third Parties

The Amadeus project expects to maintain about 5,000 contracted workers averaging 24 months of site construction (excluding preparation and commissioning phases), with a mid-2021 estimated peak of 8,000 mobilized workers. LDC will rely on the services on a specialized company to standardize the management of workers. The central of services will review each worker’s documentation (e.g. contract, affiliation to social security, professional affiliations) and deliver the induction training before the worker is released a badge for accessing the project site. The central of services will also verify the correct time recording and payment of wages by contractors and will be responsible for the inspection of basic services provided to workers by contractors and subcontractors such as catering, accommodation, waste collection, transportation and medical services. The responsibilities of the central of services and contractors are defined in a document called “Central Services Scope”, which is attached to the contractors’ contract and is part of the requirements. To prevent non-compliances by contractors, LDC does not allow labor outsourcing and subcontracting the entirety of Contractor’s Work. Outsourcing an activity that is the core business of the contractor is under most EPC contracts practically not possible. All subcontracting was either pre-approved by LDC in the scope of work or, if proposed at a later stage, will have to be approved or can be rejected by LDC beforehand.

(ESAP item nr. 12) To ensure workforce management during construction complies with all the requirements of IFC Performance Standards, LDC will prepare a Workforce Management Plan for construction, including (i) local recruitment strategy and procedure; (ii) workers’ accommodation plan in line with the Brazilian Ministry of Labor NR-18 Regulatory Standard on Working Conditions and the Environment in the Construction Industry and IFC/EBRD Guidance Note on Workers’ Accommodation; and (iii) demobilization plan to mitigate negative impacts on workers and receiving communities (e.g. notice period, mechanism to ensure payment of severance package, proactive programs to ensure re-entry of non-local workers, mitigation of workers’ liabilities in hosting communities such as unpaid bills and damage compensation, etc.). LDC has prepared a request for proposal (RfP) for the provision of workers’ accommodation services, which already includes the requirements under the Brazilian Ministry of Labor NR-18 Regulatory Standard on Working Conditions and the Environment in the Construction Industry and IFC/EBRD Guidance Note on Workers’ Accommodation.

(ESAP item nr. 13) As the influx of a large male-dominated workforce and increase in truck traffic is likely to increase the risks of gender-based violence (GBV) in the project’s area of influence, LDC will prepare a code of conduct for managers and workers engaged in construction which adherence will be mandatory. The code of conduct will clearly state zero tolerance for GBV and define the expected behaviour in the construction site and project area of influence – including sexual harassment in the workplace, sexual exploitation and abuse in local communities, and rules for interactions with local communities – and will be integrated in the induction training and in communication campaigns inside the workplace and within communities at risk.                                                     

The project will produce dissolving wood pulp (DWP). New DWP fiberlines are similar to paper grade fiberlines (use of kraft process) but require more extensive cooking and washing to remove all lignin and hemi-cellulose. DWP has typically a yield of about 35-38% (on wood) while the yield for paper grade pulp is in the 50-55% range. As the pulp yield for DWP mills (35-38%) is lower than for paper pulp (50-55%), the DWP mill requires a larger recovery boiler which will generate higher electricity production available for sale thus higher air emissions per ton of product.

The design of the mill complies with the Best Available Technology (BAT) and techniques identified in WBG EHS Guidelines for Pulp and Paper. LDC will use total chlorine-free (TCF) bleaching avoiding the formation of Adsorbable Organic Halides (AOX) such as dioxins. In addition, LDC will not use metal chelating agents (i.e. EDTA) in the bleaching process as EDTA has been found to increase the availability of metals and the risk of eutrophication of water bodies receiving the effluents of pulp mills.

Resource Efficiency

The DWP mill will consume 64 MW of electricity corresponding to 1100 kWh/ADt of DWP, which is in line with WBG EHS Guidelines for Pulp and Paper (Table 1a for Kraft Bleached Pulp). All the electricity and steam required will be generated on site from the biomass and recovery boilers. The excess generated electricity will be available for sale. The lime kiln will consume about 100,000 Nm3/day of natural gas. The gas will be trucked to the site with high-pressure cylinders.

The expected water demand from the DWP mill, including water used for cleaning and process restart, is estimated at 1,900 m3/h (0.61 m3/s), which is less than two percent of the low flow (40 m3/s) and less than 0.2 percent of the medium flow (430 m3/s) of the Araguari river at the extraction point. According to the operators of CCBE, the hydropower plant has continuously operated at least one turbine in the last 16 years, which requires a minimum flow of 144 m3. Water consumption per unit of production (32 m3/ADt) will also comply with WBG EHS Guidelines for Pulp and Paper (Table 1a for Kraft Bleached Pulp). About 80% of the water intake will return to the Araguari river as treated effluent. Eucalyptus plantations are not irrigated.

Pollution Prevention

Air Emissions and Ambient Air Quality

The main sources of air emissions are the recovery boiler, the biomass boiler and the lime kiln for the reprocessing of calcium carbonate into calcium oxide. Equipment performance guarantees provided by manufacturers comply with WBG EHS Guidelines for Thermal Power Plants (Table 6c. Boilers) and for Cement and Lime Manufacturing (Table 2. Lime Manufacturing). Predicted performance levels for air emissions are expected to comply with WBG EHS Guidelines for Pulp and Paper (Table 2) taking into consideration the bigger size of the DWP recovery boiler compared to paper pulp.  Both diluted non-condensable gases (DNCG) and concentrated non-condensable gases (CNCG) will be burnt in the recovery boiler for control of malodorous gases.

Ambient air quality baseline information was collected by monitoring for two seven-consecutive-days campaigns during the dry and rainy seasons. Levels of NO2, CO, total reduced sulfur (TRS) and H2S were below detection limits, and levels of SO2 and PM10 were below the current applicable intermediary ambient air quality guideline values (padrao intermediario 2 in CONAMA 491/2018). LDC will continue to monitor ambient air quality and report results to lenders as part of the Annual Monitoring Report (AMR).

As part of the environmental licensing process, LDC also prepared an air dispersion model with AERMOD. The study models concentration of pollutants at 12 sensitive receptors including the municipalities surrounding the project and the closest school located 6 km away from the mill.  The model includes regular and worst-case scenario air emissions from the lime kiln, recovery boiler and biomass boiler. No other large emitters are present in the area.   Based on the air quality monitoring conducted by LDC as part of the ESIA environmental baseline, the airshed is non-degraded, and modeled concentration of pollutants at sensitive receptors contributes less than 25% of the applicable ambient air quality standard as required by WBG EHS General Guidelines for non-degraded airsheds. More precisely, emissions of PM10, PM2.5, SO2 and NO2 contribute less than 2%, 3%, 8% and 15% respectively, of the most stringent guideline values (padrao final) of the national air quality standards (CONAMA 491/2018) at sensitive receptors.  Furthermore, the emission rates used in the air dispersion model are the ones published in the ESIA, which are multiple times higher than the predicted performance values. Hence, the project is not expected to significantly impact ambient air quality at sensitive receptors.

Air emissions during construction are typically dust generated from earth moving activities and fumes from heavy equipment. Management of these conditions are contemplated in the ESIA and management plans are defined in the PCA.  Road dust in the construction site is currently controlled through water tanks and roads will be paved before releasing the site to contractors for equipment installation. Condition of equipment (including emission of fumes) is verified by LDC before is released to be used in the construction site.

GHG Emissions

About 2.3 million tons of CO2 will be sequestered annually by the 70,000 ha of eucalyptus plantations. Most of this carbon will be transformed into fiber pulp and renewable energy. Nevertheless, a portion of it will be permanently sequestered as soil carbon (at least ~ 0.1 million tons CO2/year). The excess electricity generated from wood waste in the recovery and biomass boilers – about 675,000 MWh per year – will be sold into the Brazilian grid. Considering the Brazilian grid emissions factor (0.2 kg CO2/kWh), this represents 136,000 tons of CO2 avoided emissions per annum.

The main source of GHG emissions from the DWP production process is the consumption of natural gas in the lime kiln (about 90,000 tons of CO2 per year) as all the electricity required will be generated on site from wood waste in the recovery and biomass boilers. The client forest management and harvesting operations as well as log transportation to pulp plant are expected to emit 28,000 tons of CO2 equivalent per year. LDC will measure and report annually GHG emissions as part of the Annual Monitoring Report (AMR).

Wastewater and Water Quality

DWP mill

Process effluents will be treated in a wastewater treatment plant with an installed hydraulic capacity of 2,700 m3/h. Effluents will be released into the Araguari river between two man-made reservoirs (Miranda and Capim Branco) at an estimated rate of 1,900 m3/h. The performance guaranteed values for the wastewater treatment plant are designed to comply with WBG EHS Guidelines for Pulp and Paper (Table 1a. Kraft bleached pulp). The mill will use total chlorine-free (TCF) bleaching avoiding the formation of Adsorbable Organic Halides (AOX) such as dioxins. In addition, the mill will not use metal chelating agents (i.e. EDTA) in the bleaching process as EDTA has been found to increase the availability of metals and the risk of eutrophication of water bodies receiving the effluents of pulp mills.

LDC has conducted effluent dispersion (CORMIX) and depuration (AQUATOOL) studies to assess the impact of the effluents on the Araguari river. These models were revised after publication of the ESIA considering updated effluent emission levels which are lower and closer to the performance guaranteed values of the equipment supplier for the wastewater primary and secondary treatment plant. This revised CORMIX and AQUATOOL models were submitted to the environmental authorities and are included in the environmental license.

CORMIX modeled the mixing zone of biological oxygen demand (BOD), color and total phosphorus with low (Q7,10 = 40 m3/s) and medium (Qm = 430 m3/s) flow. The only aspect of concern is the concentration of total phosphorus during low flow as it will need about 300 m from the release point to achieve a concentration of 0.03 mg/l, which is the applicable national standard for surface water quality of class 2 rivers for lentic environments (CONAMA 357/2005). The model, however, did not include the baseline concentration of total phosphorous in the river, which during the rainy period tends to be above applicable water quality standards.

AQUATOOL simulated scenarios for dissolved oxygen (DO), BOD, organic nitrogen (NO), ammonia (NH3), nitrate (NO3-) and total phosphorus. The model assessed the impact of effluents on the Araguari river along a 46-km stretch, starting from a national water quality monitoring station (ANA ID. 60356000) and ending past the Capim Branco reservoir, distant 20-km downstream from the project’s effluent release point. The model includes water quality baseline data from the ANA monitoring station and effluent discharges from point and non-point sources along the 46-km stretch. Similar to CORMIX, the only parameter of concern is total phosphorus as the river requires 7 km from LDC’s effluent release point to return to its baseline conditions.

Following a complaint from the Department of Water and Sanitation (DMAE) of the Municipality of Uberlandia, who is finalizing the construction of a modern potable water treatment plant with an initial planned capacity of 2 m3/s to provide water to the city of Uberlandia (population 700,000), the project design to discharge eight kilometers upstream from the original discharge point. The effluent discharge will be now located 16 km upstream from DMAE’s water point. This revised design, described in the project’s environmental license, included an analysis of alternatives for the location of the discharge point.

The Araguari river presents good water quality in the project’s area of influence with the exception of phosphorous whose concentration intermittently surpasses the applicable national standard (CONAMA 357/2005 Class 2) during the rainy period.  The design of LDC’s wastewater treatment plant approved in the environmental license includes primary treatment with mechanical screens and a clarifier and secondary biological treatment using activated sludge. The design also includes emergency and stormwater basins to redirect effluents into the treatment plant if needed.

(ESAP item nr. 14) While the plant is already designed to comply with national effluent standards (CONAMA 430/2011 and COPAM 01/2008) and WBG EHS Guidelines for Pulp and Paper (Table 1a for Kraft Bleached Pulp), as a precautionary measure, LDC will install and operate a wastewater tertiary treatment plant to further reduce the concentration of nutrients and COD in its effluents as necessary.

In addition, LDC will grant DMAE access in real time to its online continuous monitoring data relating to the waste water treatment effluence allowing them to verify the performance of LDC’s wastewater treatment plant. (ESAP item nr. 15)  LDC will as well present the results of its water quality and effluent monitoring program in open meetings to the members of the Comite de Bacia Hidrografica de Araguari (CBH-Araguari) regularly to the extent that the CBH agrees to promote such meetings and receive LDC results.

NMC Forest Unit

To determine potential impacts to surface runoff from silvicultural activities, Duratex monitors surface water quality in one micro-basin (Bacia Hidrográfica Córrego Piçarrão) inside Fazenda NMC. Turbidity, total phosphorus, ammonia, potassium, BOD and dissolved oxygen are measured monthly. In the last decade, minor exceedances have been monitored for these parameters in a limited number of cases (less than 5%). In 2019, water quality analyses were done for 86 parameters including metals and glyphosate. All results were below detection limits and/or below relevant Brazilian standards.

Wastes

DWP mill

The DWP production will generate about 170,000 tons of non-hazardous wastes per annum. All wastes will be composted and reutilized as soil amendments. However, the ESIA also indicates that some of these wastes may go to an industrial landfill as an alternate destination.  Currently, the waste management plan is included in the PCA. However, the document is neither comprehensive nor practical for implementation in a construction site. There is also no evidence to indicate that a database to register the waste or a full custody chain (in the form of a manifest) exists for the whole project. (ESAP item nr. 16 and 17) LDC will prepare a Waste Management Plan and Database in line with requirements of Performance Standard 3 to ensure that waste is treated and disposed in an environmentally safe manner and to guarantee its traceability.

Hazardous Materials

DWP mill

LDC will consume about 37,000 tons/year of caustic soda (sodium hydroxide), sodium sulfate, sulfuric acid, hydrogen peroxide, magnesium sulfate, and aluminum sulfate to produce 500,000 tons/year of TCF DWP. Oxygen and ozone will be produced on site. Liquid chemical transportation will be carried out in bulk through tank trucks. As mentioned under Performance Standard 1, Lenzing has been working in the harmonization of management of chemicals procedures, and these will be adopted by the Amadeus project. To prevent and adequately respond to emergencies associated with the transportation of hazardous materials, LDC will prepare a Transportation Safety Plan as described under Performance Standard 4.

NMC Forest Unit

Storage of hazardous materials (agrochemicals) in Fazenda NMC is in line with GIIP. The storage facility is fully fenced and locked with access by a supervisor who must accompany staff into the facility. The interior of the facility is clean, well organized, well signed and ventilated. Protective clothing, material safety data sheets (MSDS) and emergency kits are available on site. The floor of the storage room drains towards a canal that drains into an external spill collection container.  Empty agrochemical containers are triple-rinsed, and the rinse water is reused for new applications. Empty containers are also lock up in the storage facility and disposed by an authorized company. The other main sources of hazardous waste are used oils and oil-contaminated wastes from equipment maintenance. These are temporarily stored in adequate areas with secondary containment and disposed by authorized companies.

Pesticide Use and Management

NMC Forest Unit

None of the pesticide active ingredients reported in Duratex’s FSC public summary report (License: SCS-FM/COC-00029P) is included in the WHO’s (World Health Organization) Class 1a or 1b lists of Extremely or Highly Hazardous substances. Glyphosate-based products along with Sulfentrazone-based and Flumioxazin-based herbicides are used for weed control. Detailed technical instructions for the use and application of these materials, including health considerations, are documented in procedures. Sulfluramid-based products are employed to control leaf-cutter ants. Sulfluramid is an organic persistent pollutant included in the Stockholm Convention; Brazil holds an exception under Annex B of the Convention for its use as ant bait. Duratex applies Sulfluramid about 3-months prior to planting and in case of ant infestation. In 2018, an average of 4.35 kg/ha of Sulfuramid-based products were applied in the Fazenda NMC. IFC will require LDC to report the use of Sulfuramid as part of its annual monitoring report (AMR) and will monitor trends in the use of this pesticide by the company.  Other pests attacking eucalyptus plantations are the gall wasp (Leptocybe invasa), Gonipterus weevils, and Cylindrocladium fungal diseases in nurseries. Pesticides are not applied systematically but only in case of infestations. Biological control (Beauveria bassiana) is used for the control of Gonipterus. Duratex is a member of the Brazilian Forestry Science and Research Institute (IPEF) and participates in the Cooperative Program in Forest Protection (PROTEF) to promote integrated management of forest pests and diseases and find alternatives to products listed as dangerous by FSC.                         

Project-induced in-migration

The Amadeus project expects to maintain an average of 5,000 contracted workers during 24 months of site construction with a mid-2021 estimated peak of 8,000 mobilized workers. It is estimated that about half of these workers will not be local. The project-induced in-migration due to job expectations and formal and informal business opportunities is likely to be much larger. The municipalities likely to receive project-induced immigration are Indianopolis (population 7,000), Araguari (population 120,000), and Uberlandia (population 700,000).

LDC has developed positive relationships with municipal authorities, but the company has not yet prepared an influx management plan. (ESAP item nr.18) LDC will prepare an Influx Management Plan to assess, mitigate and monitor impacts from project-induced in-migration on (i) public services (i.e. medical, schools, water and sanitation); (ii) public security; and (iii) gender-based violence (GBV). Base on the initial assessment, the plan will distinguish measures for vulnerable groups and small municipalities with low capacity to manage impacts. The plan will identify the socioeconomic indicators to be monitored; examples of indicators that will be monitored are inflationary trends, population increase, security incidents (assaults, drugs and alcohol abuse), GBV incidents, prevalence of communicable diseases, etc.  As part of the Influx Management Plan, the client will implement a participatory monitoring committee in each impacted municipality – adapted to the level of risk – to monitor impacts and implement mitigation measures as needed.

The influx of a large male-dominated workforce and increase in truck traffic is likely to increase the risks of gender-based violence (GBV) in the project’s area of influence. LDC has signed a service contract with World Childhood Foundation https://www.childhood.org.br/ to provide GBV prevention and awareness raising. The contract includes: (i) a first phase of diagnosis, consultation with target populations: children, young women, sex-workers (close to transportation routes and areas where workers are concentrated) and a mapping of health services; and (ii) a second phase for implementation of internal and external training programs and the definition of social indicators.

Transportation of wood logs and hazardous materials

DWP production will require the transportation of large quantities of hazardous materials (sodium hydroxide, sulfuric acid, hydrogen peroxide, magnesium sulfate, natural gas in high pressure cylinders), wood, and finished product (fiber pulp). About 100 truck trips per day will be necessary to supply materials to the DWP mill and 80 trips to transport finished product. During operations, most log hauling will take place inside the NMC Forest Unit and finished product is likely to be transported by train, reducing road traffic and the risk of vehicular accidents involving the public.

LDC commissioned a traffic study using the methodology mandated by the Brazilian National Department of Transport Infrastructure (DNIT). The traffic study determined the project will not adversely impact traffic flow on public roads providing access to the site (BR-365/MG and LMG-748) and identified necessary road improvements along LMG-748 (i.e. roundabouts, hard shoulders) which have been financed by LDC. (ESAP item nr. 19) In addition to the existing mitigants, LDC will prepare a Transportation Safety Plan to mitigate risks to the environment and communities exposed to increased traffic as a result of project’s activities (e.g. transportation of equipment, hazardous materials, wood, finished products, etc.). The plan will include the identification of vulnerable locations and procedures for emergency response, and it will be developed in consultation with appropriate groups and organizations. The plan will include a damage compensation procedure linked to LDC’s external grievance mechanism. Simple brochures on what to do in case of an emergency will be distributed among the population at risk.

Forest fires

Fire prevention, detection and response capabilities and procedures in NMC Forest Unit are described in Duratex’s document “Plano de Monitoramento e Combate a Incêndios Florestais”. In NMC Forest Unit, prevention is undertaken through public education on preventing and reporting fires including contacting communities and neighbors at the beginning of each dry season. There is a rail line that crosses through the farm and fuel build-up is monitored and cleaned (as required) along either side of the line. Duratex has a monitoring center for early fire detection within the Fazenda NMC. The center includes 24-hr (dry season) and 16-hr (wet season) live monitoring of the entire farm (including Furnas and Brejão) and the immediately adjacent area. The system involves the uses of three tall monitoring towers (60 to 70 m) with rotating digital cameras. The three- tower system allows for triangulation of any point which provides very accurate positioning and mapping. Fire detection is also provided through the use of vigilance using staff with motorcycles and cars. When a fire is detected, the monitoring center identifies whether or not the fire is located on company property and responds accordingly. Fire response capability in the NMC Forestry Unit includes over 50 water access points, six water trucks, four pick-up trucks with rapid response equipment (shovels, damping mats, axes, hoes, and scythes), and a water forwarder vehicle for access within forest blocks. All vehicles have 24-hr radio communication equipment to maintain contact with the main gate. Although Duratex does not maintain permanent fire brigades in this forestry unit, staff are trained in fire response actions with a core response team of over 40 individuals. The incidence and area of burned forest has been very low generally affecting less than 1% of the forest base through 2018. However, 2019 showed an increase in area burned with 1,465 ha which corresponds to 3.3% of the planted area. The root-cause analysis determined that the fire was started by an illegal electricity connection by a neighbor; the company has reinforced its communication with neighbors to prevent a reoccurrence.  

Security personnel

LDC’s forestry assets are safeguarded by a team of unarmed mobile patrols. Access to LDC’s industrial site will be controlled at checkpoints by unarmed security officers. All employees, visitors, and contracted workers entering the site will carry an identifying badge issued by the company. No armed custody will be used for the transportation of materials and finished products. LDC does not plan to change these security arrangements and if needed an assessment in accordance to PS4 will be required.                                                   

Protection and Conservation of Biodiversity

The project’s terrestrial area of influence is classified as modified habitat. Patches of natural habitat, generally located closer to the river Araguari, are small and highly fragmented and have limited potential to sustain natural communities over the long term. None of this area is therefore designated as critical habitat as it is highly unlikely that there are critical habitat qualifying species occurring with adequate concentrations to justify that designation.

Removal of native vegetation is limited to 1,200 trees for the construction of project infrastructure (i.e. pipelines). Compensation – through regeneration of 30 ha of native vegetation – will occur in an area to be conserved for the long term (i.e. Area de Proteção Ambiental) within the company’s landholding. The ESIA also includes measures to educate company drivers to minimize wildlife mortality on roadways although the cumulative effects of public highway use will likely result in animal mortality in any case.

The project’s aquatic area of influence retains a representative portion of the native community of organisms but shows important signs of modification in terms of the effect of the river already being impounded and the introduction of non-native species, which are now abundant (e.g., tilapia). The project’s mitigation plan includes a commitment to monitor water quality and aquatic fauna during the dry and wet seasons.

Alien Invasive Species

Duratex has identified 19 exotic species of which 15 are considered invasive across its seven forestry units. Within the NMC forestry unit, only pine (Pinus sp.) is formally controlled. The construction of the new mill within Fazenda NMC, along with its associated linear infrastructure could result in the introduction of additional exotic species/invasives to the farm and its protected areas.

Sustainable Management of Living Natural Resources

The project will require 2.9 million cubic meters of wood per annum mostly to be sourced form 44,000 ha of existing eucalyptus plantations (NMC Forest Unit). The three farms comprising the NMC Forest Unit – Nova Monte Carmelo, Furnas and Brejão – are registered in the Environmental Rural Cadaster (CAR) and are Forest Stewardship Council (FSC) certified. Duratex has a track record of managing the plantations in a sustainable manner, through the application of forestry good management practices as confirmed by FSC. FSC audits are conducted annually and no major non-compliance has been identified in the last three years. Any additional area leased for the expansion of forest plantations will be FSC certified and the company will not use areas deforested after 1994.

The plantations supporting the proposed mill maintain wetlands and Cerrado native vegetation in conservation lands (about 20% as mandated by the Brazilian Forestry Code for the Cerrado and Mata Atlantica biomes). Duratex has a long history of biodiversity research and monitoring across its forest areas in close cooperation with universities. Research and active management have included species inventory and investigations of honeybee species, development of ecological corridors, control of exotic species in conservation areas, characterization of native vegetation, and native species planting in forest fragments and degraded areas.

Appropriate measures are being undertaken by Duratex in the plantations to minimize soil compaction (i.e. maintenance of slash, efficient forest road layout) and soil erosion, in line with WBG EHS Guidelines for Forestry Harvesting Operations. Soil erosion control includes the use of riparian buffers, controlled access at water-taking locations, use of drainage canals/reservoirs along road edges, minimization of stream crossings and good bridge maintenance. Also, the topography in this area is flat to gently rolling limiting uncontrolled runoff and permitting standard harvesting techniques. Nutrient management is supported through detailed soil mapping and soil analysis (pre-plant and post-planting).                                                  

The project's area of influence includes medium-sized municipalities with metropolitan dynamics such as Uberlândia and Araguari, and small municipalities with no capacity to absorb and manage additional pressure on social and physical infrastructure such as Indianopolis, Estrela do Sul and Nova Ponte. LDC conducted public consultation meetings in Indianopolis and Araguari as part of its licensing process and maintains a positive dialogue with the current Mayors of these municipalities and with project’s neighbors as well consultation activities according to the current Stakeholder Engagement Plan. In addition, LDC has performed a participatory social diagnostic which determined environmental community programs. However, LDC will require an adequate socio-economic baseline and robust Stakeholder Engagement Plan (SEP) to support the mitigation of complex social impacts derived from the project such as: induced in-migration, local employment expectations, housing and transportation of workers, increase in traffic, increase in forest management areas, and water extraction and effluent discharge. 

(ESAP item nr. 22) LDC will prepare a socio-economic baseline for the project’s area of influence according to the level of impact and focused on the identification of vulnerable groups. The baseline will include (i) primary data points or census for people affected by land acquisition and for neighbors adjacent to the project’s components (i.e. forest plantations, DWP mill, transmission line, water system, main transportation routes); and (ii) secondary data points or macro-data for the municipalities of Indianopolis, Estrela do Sul, Nova Ponte, Araguari and Uberlandia.

(ESAP item nr. 23) Based on the socio-economic baseline, LDC will update its SEP for all project components. The SEP will include: (i) identification and prioritization of key stakeholders; (ii) stakeholder mapping and categorization; (iii) criteria for identification of vulnerable groups; (iv) information to be disclosed to each stakeholder group; (v) strategy for information disclosure, consultation, and collection/analysis of feedback; (vi) grievance mechanism  for complaints presented directly or through interaction with contractors; (vii) key performance indicators (e.g. grievances received vs solved, meetings executed vs planned, etc.) and  (viii) socio-economic monitoring.

(ESAP item nr. 24) As a mechanism to build trust with water users downstream of LDC’s effluent discharge point, LDC will use commercially reasonable efforts to develop a joint water quality monitoring program, as described in the SEP.                                          

Contact Person: Cosimo Giovanni Rettl

Company Name: LD Celulose S/A

Address: Avenida Alfredo Egídio de Souza Aranha, 177 – 1º andar – Vila Cruzeiro – SP - Brazil

Email: c.rettl@lenzing.com

Phone: (11) 99845-0300 / (11) 4632-0636