The project will be undertaken within the company-owned land at its current location. PS 5: Land acquisition and Involuntary Resettlement is therefore not applicable. The company is located in a modified urban environment, designated as an industrial zone, hence PS 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources does not apply. There are no indigenous peoples in the area, and no artefacts or sites with significant cultural heritage have been identified within the project site. Therefore PS 7: Indigenous Peoples and PS 8: Cultural Heritage are not applicable.

This is a Category B project, according to IFC’s Policy on Environmental and Social Sustainability. Based on the information reviewed during the appraisal, it is expected to have limited adverse environment and social (E&S) risks and impacts that are few in number, short-term and site-specific, and can be avoided or mitigated by adhering to recognized performance standards, procedures, guidelines and design criteria as described in the following sections.

The key E&S risks and issues related to the project include: the adequacy of the Group’s E&S policies and procedures to provide for effective, systemic management of E&S risks and impacts in the operations; availability of competent E&S staff to coordinate E&S management in the operations; management of workforce and working conditions, especially in recruitment, equal opportunity, occupational health and safety (OHS) risk management, grievance management, and management of third party workers; steel scrap supply chain; resource use efficiency, waste and wastewater management; air quality and greenhouse gas emissions; life and fire safety management at the premises; security management; and stakeholder engagement.

Environmental and Social Assessment and Management System:

Blue Nile conducted an environment and social impact assessment (ESIA) in 2018 for the wire annealing and galvanizing plant, in compliance with Kenyan legal requirements and obtained the project environment impact assessment (EIA) license from the Kenyan government. The company also conducted separate ESIA studies for the installation of LPG storage tanks on site and for construction of the wastewater treatment plant (WWTP) and obtained EIA licenses for each of these from the Kenyan government. The ESIA reports included environment and social management plans (ESMPs) to mitigate and manage the potential impacts during construction and operation phases of the project. These ESMPs are under implementation. Blue Nile has already installed 95% of the wire annealing and galvanizing plant and is in the final stages of the construction of the associated wastewater treatment plant and the LPG supply storage tanks. All the construction and installation works are expected to conclude by June 2020.

The ESIA Reports are attached to this disclosure.

Policy and Management Programs:

Blue Nile Group has a Health and Safety (H&S) Policy which outlines the corporate commitments on implementing the best practices and achieving the best standards in health and safety. The policy adequately summarizes specific objectives set by the Group management regarding environmental and social performance, scope of coverage and risk management responsibilities across the business.

The company has included, in the H&S policy document, brief general measures for management of first aid, emergencies, accidents and near misses, electric risks, first aid, housekeeping, employee induction, lighting, manual handling, personal protective equipment, personal hygiene, personal safety, health and safety committees, use of ladders, visitors, store safety and fire risks. To ensure a comprehensive risk identification and management regime in the operations, Blue Nile will conduct a detailed environment, health and safety risk assessment at each business department, based on the Hazard Identification and Risk Assessment (HIRA) process, and develop department-specific as well as corporate EHS risk registers. The company will also improve and consolidate the above existing brief EHS measures into a corporate environment and social management system (ESMS) with formal and documented EHS procedures to address the identified risks. The ESMS will encompass procedures for: occupational health and safety (OHS) management; wastes and hazardous materials management; stakeholder engagement; air quality management; emergency planning and response (further described below); E&S risk identification and assessment; contractor and supply chain management; water and energy management; transport risk management; and security management, for the entire operations (ESAP 1).

Organizational Capacity and Competency:

Blue Nile directors and board members take overall responsibility for all matters concerning health, safety and welfare of the employees and the public who may be affected by the organization’s activities. The department managers and senior supervisors are also expected to oversee operational EHS aspects within their departments. The human resources manager oversees labor related matters in the operations, as well as some staff welfare issues, including EHS incidents. The company has an active safety, health and environment (SHE) committee that assists with workplace risk identification and reporting to the supervisors. To ensure that the commitments in the corporate health and safety policy are implemented, and EHS management in the business is overseen and coordinated by competent staff, Blue Nile will recruit a competent EHS specialist to coordinate the risk assessment process, lead the review and improvement of the of the EHS procedures as well as development of new procedures as required, and oversee their implementation across the business (ESAP 2). The management will also nominate a representative to the SHE committee to ensure workers’ issues are discussed and acted on by top management.

Emergency Preparedness and Response:

Blue Nile has a fire safety policy document that outlines responsibilities, guides on use of fire safety equipment and provides the fire safety emergency response and evacuation procedure. There are no records of fire drills or staff training on fire safety or general emergency response. As part of the ESMS, the company will develop a more comprehensive site emergency preparedness and response plan that includes emergency risk identification process; mapped internal and external parties at risk; resource and equipment allocation; designated responsibilities; internal and external communication, collaboration and training protocols; protocol on mock drills; and draw the site emergency layout maps with evacuation roots and assembly points. The plan will be communicated to all the workers and will be included in ongoing trainings, posted in the notice boards in the working areas and reviewed periodically to address any emerging needs.

Monitoring and Review:

Blue Nile has retained an external consultant who carries out annual environmental audits; OHS audits; EHS risk assessments; fire safety audits and stack emissions assessments; as required by local law. Each of these audits draws out corrective actions to be implemented by management. To ensure that the corrective actions are adequately addressed and reported, the company will include management of the EHS risks as a performance indicator for each department head, include EHS as a section in the departmental reports discussed during routine management meetings and draw a corporate EHS Action Tracker, overseen by the EHS Manager (ESAP 3). This will ensure that EHS performance is reviewed as a key component of operational performance.

Human Resources Policies and Procedures:

As at the time of appraisal, Blue Nile currently employed 534 workers, comprising 527 male and 7 females. These numbers include both full time and contract workers (472), as well as short-term third-party contractors (55). The company also regularly hires casual workers for short-term unskilled work for activities such a raw material unloading, product loading and similar short-term labor-intensive activities on site

Currently, the company manages its workforce in accordance with local labor laws. Going forward, the company will develop a Human Resources (HR) Manual including policies consistent with the requirements of Kenyan labor laws and IFC PS 2. The HR policies will apply to the direct staff and include measures to oversee compliance of engaged contractors with local labor laws and relevant PS 2 requirements. The policies will clearly outline respect for workers’ rights under local labor laws and any applicable collective agreements, including their rights related to freedom of association, hours of work, wages, overtime, compensation, reward systems, retrenchment, non-discrimination and equal opportunity and benefits upon beginning the working relationship and when any material changes occur (ESAP 4). The Manual will be communicated to all workers.

Working Conditions and Terms of Employment:

Some of the workers are members of a national workers organization. The company respects that and has a collective bargaining agreement with the Kenya Engineering Workers Union. The permanent and contract workers have documented contracts and are provided with sufficient working space and minimum work requirements in terms of equipment and resources. To meet the minimum requirements by Kenyan labor laws and PS 2, the employee contact template will be revised to include, in addition to the current clauses, specific details on overtime compensation, any reward systems, retrenchment management, grievance management and any other employee benefits currently being implemented.

Non-discrimination and Equal Opportunity:

A non-discrimination and equal opportunity policy statement will be developed and integrated into the HR manual to ensure that recruitment, worker training, promotion and salary increase are done with fairness and without any form of discrimination. The policy statement will foster fair treatment at the workplace and values that do not discriminate against employees or job applicants with regard to differences in race, tribe, color, religion, pregnancy, sex, age, national origin, marital status, or physical disability or any other protected characteristics.

Grievance Mechanism:

The company has set up a grievance handling committee made up of workers, the workers’ union representatives and the human resources manager. All grievances are recorded in a grievance form and addressed by this committee. No grievances were recorded in the last year. To ensure consistency, fairness and traceability of the grievance process, Blue Nile will design and implement a grievance mechanism that provides clear channels and timelines for grievance registration, processing and feedback process by both direct workers and contracted workers within the workplace; and allows for alternative avenues for anonymous complaints and feedback, to be included in the HR Manual and the workers’ contract documents (ESAP 5).

Occupational Health and Safety:

The SHE committee assists Blue Nile management in risk identification and worker sensitization on OHS risks at the workplace. The company has provided personal protective equipment (PPEs) to workers. The plant site has a medical clinic equipped with an observation area, a full-time nurse, and a call-in doctor. Blue Nile complies with minimum industry legal requirements on workplace safety, including having fire safety equipment, PPE provision, a SHE committee, accident register and conducting annual OHS and environmental audits. The company will include, in the procedures under the HR Manual, mandatory “fit-for-work” tests for staff at recruitment, and periodic medical examinations at the clinic. The company will ensure that non-discrimination and equal opportunity policies are adhered to during this process.

Some occupational accidents and incidents have been reported at the plant, and most relate to molten steel burns and being struck by metal parts. Others relate to falls from height, collision with moving parts and gas burns. Blue Nile will ensure that the OHS procedures developed as part of the ESMS (based on HIRA) are designed to adequately prevent accidents, injury, and disease arising from, associated with, or occurring in the course of work by minimizing, as far as reasonably practicable, the causes of hazards. The procedures will encompass; (i) identification of potential hazards to workers, particularly those that may be life-threatening; (ii) provision of preventive and protective measures, including modification, substitution, or elimination of hazardous conditions or substances; (iii) training of workers; (iv) documentation and reporting of occupational accidents, diseases, and incidents; and (v) emergency prevention, preparedness, and response arrangements. The senior management will monitor the OHS performance of each department as part of ongoing operations review.

Workers Engaged by Third Parties

Blue Nile engages third party contractors for major maintenance, construction or installation activities, in cases that require specialized or highly skilled work. The contractor and supply chain management procedures, to be developed as part of the ESMS, will be applied in contractor selection and supervision for any future works. The procedures will include minimum E&S criteria (including labor practices and OHS issues) for evaluation of candidate firms, as well as minimum E&S supervision and reporting requirements during the contract period.

Supply Chain

The main supply chain risk in the business is local metal scrap sourcing. Blue Nile has a contract with a scrap metal agent, who has engaged two dealers to deliver metal scrap at the plant site. Metal scrap are typically collected by individuals and families and delivered at dealers’ yards. Once consolidated at the dealers’ yards, the scrap agent will ensure dealers deliver them at the Blue Nile scrap yard. The main risks in this supply process include; traffic accidents, injuries to the collectors and during transportation to the plant, health risks from exposure to hazardous fumes or materials and possible engagement of child labor for scrap collection.

While Blue Nile does not have direct control on the collection and aggregation by the scrap dealers, the company is sensitive to the potential health and safety and harmful child labor risks in this part of its supply chain. As such, the company shall develop a supply chain management plan for scrap sourcing. The plan will include measures for mapping and assessing the risk of child labor for each supplier, and significant safety risks in the scrap supply chain. The plan will include schedules for regular sensitization sessions with the scrap dealers to inform and build their capacity to mitigate child labor and managing significant safety risks in their business (ESAP 6). The company may partner with local organizations to deliver the sensitization sessions, as appropriate. If child labor instances are identified, the company will take appropriate steps to remedy them on the best effort basis, including moving away from dealers found engaging in child labor.

Energy: Grid electricity is the main source of power at the plant, used mainly for lighting, office operations, and steel production processes (powering the induction furnace). The company has a 10MW transformer within the compound and consumes approximately 20,000,000 kWh annually in its operations. To power the operations during outages, about 180,000 liters of Heavy Fuel Oil (HFO) is stored on site as fuel for generator unit. Approximately 2,000,000 litres of the HFO is consumed annually. As part of the project, the company is also installing two 22.5 LPG storage tanks on site. To supplement energy needs for office work and lighting purposes, Blue Nile installed 1 MW capacity of solar panels, to be scaled up to 2.5 MW in the next year as part of the company’s commitment to progressively greening its operations. Once the annealing and galvanizing plant is operational the total projected annual energy consumption from grid electricity by Blue Nile is 21,000,000 kWh.

Water: Water used at the facility is supplied by the national water and sewerage company, supplemented by its own borewell. Water at the plant is mainly utilized for steel product cooling but also for general cleaning, office kitchen and sanitary facilities. Water released from process cooling is collected, cooled and re-injected into the process. The current annual municipal water consumption at the plant is about 16,000 m3 while the current borewell water consumption is 4,400 m3. Once the annealing and galvanizing plant is operational, the total projected annual water consumption by Blue Nile is 120,000m3.

Greenhouse Gas (GHG) Emissions: The main GHG emission sources in the plant include HFO used in jump-starting the induction furnace and to continuously power the pre-heating furnace; back-up diesel generators; and use of LPG in cutting scrap, steel billets and for welding purposes (Scope 1); in addition to those due to grid electricity consumption (Scope 2) The total emissions from the plant, once the GI unit is integrated, are projected at 14,500t CO2eq/annum after the first year of operation at full capacity, while the emissions from the GI section only are estimated to be about 2,800 t CO2eq/annum after the first year of full operation.

The primary air emissions emitted from the operations include Sulphur Dioxide, Nitrogen Oxides, Carbon Monoxide and Particulate Matter (PM). Blue Nile has installed a cyclone and bag filters as a means of controlling emissions at the induction furnace stack. The company is yet to install any air pollution control at the billet reheating furnace. The 2019 stack emission test results indicate that average concentrations of these pollutants are within regulated concentrations by local laws and WBG EHS Guidelines for Integrated Steel Mills for the induction furnace, while Sulphur Dioxide, Nitrogen Oxide and PM concentrations exceeded these limits for the re-heating furnace. The 2020 stack emission test results indicate that the average PM concentrations are above the recommended values by the WBG EHS Guidelines on Integrated Steel Mills. The GI Plant design PM emission performance is above the recommended levels by the WBG EHS Guidelines for Integrated Steel Mills for stack emissions. Blue Nile will engage a technical expert to review the air pollution control system at the melting furnace; and design an air pollution control system for the re-heating furnace and GI annealing furnace (especially for PM emissions). The company will implement the recommended emissions control measures to effectively manage these emissions and comply with local laws and the WBG EHS Guidelines. (ESAP 7).

Waste Management

The main solid wastes from the current operations include office waste, furnace ash, furnace slag, off-spec metal bars broken sleeve pipes, electronic wastes and old vehicle tyres. Office wastes are consolidated and burnt in the furnaces; kitchen, some old vehicle tyres and electronic wastes are regularly collected by registered waste transporters; ash from the furnaces are mixed with water and reused back to plaster the furnace walls; slag wastes are consolidated over time and used for pot-hole surface levelling within the workplace; reject metal bars are consolidated and recycled into the induction furnace; and non-conforming scrap metal are handed back to the suppliers. Blue Nile will include these positive measures into the waste management procedures to be developed as part of the company ESMS. The procedures will include measures for waste segregation and quantification.

Wastewater Management:

Wastewater are generated by surface run off during rains and cleaning activities, sanitation and kitchen activities, and product cooling or quenching processes. The stormwater, kitchen water and cleaning waters are directed into open drainage channels in and outside the plant and released into public drains. The sanitation facilities are connected to the Water and Sewerage Company sewer lines. Product cooling and quenching processes are collected, cooled and recycled back into the same operations. The waste management procedures to be developed by the company as part of the ESMS will cover wastewater management.

Ferrous metals develop an oxide coating in the process of manufacture. During the metal galvanizing process, this coating is customarily removed from low carbon steels by pickling in acid and rinsing with water, releasing spent acid from the pickling baths and the rinse water. To manage these toxic wastewaters Blue Nile is setting up a wastewater treatment plant (WWTP) for treatment of hydrochloric and sulphuric acid rinse waters and spent acid. The treated waters will be reused for gardening, lime tank preparation, and re-injected into the wire cleaning process. The WWTP is design is expected to meet the local regulatory requirements as well as WBG EHS Guidelines and its construction was underway at the time of appraisal. Blue Nile will submit the treated effluent quality analysis reports after the first treatment cycle (after commissioning) for IFC review against Kenyan requirements and EHS Guidelines (ESAP 8). If any gaps are identified, Blue Nile will draw a corresponding improvement plan to close such gaps.

Hazardous Materials Management:

Hazardous materials in the operations include oils and grease, contaminated scrap, LPG, diesel and HFO, metallic dust and oil-contaminated wastes. The oils, grease, diesel and HFO are contained in their respective locations, and only accessed when needed. The contaminated wastes are lumped together with other wastes and disposed through the NEMA-accredited waste transporters. The waste management procedures to be developed by as part of the ESMS will cover all hazardous materials and wastes – segregation, quantification, recycling/reuse options and safe disposal. No chemical or hazardous substances facing international bans or phase-out are being be used in the operations.

Blue Nile has submitted an application to the local regulatory authorities for the installation of two 22.5 MT LPG tanks for use in the GI plant.

Community Health and Safety:

Infrastructure and Equipment Design and Safety: The plant site is situated away from local community, in a designated industrial zone. The galvanizing plant consists of mostly a closed loop process, and is integrated with full fume extraction system, water recycling system and waste management system. These components contribute in the reduction of wastewater discharged to public systems, avoids contamination of external environment from acidic wastes from the process, and limits fugitive emissions that may affect health of nearby residents. The air pollution control system at the billet reheating furnace will be reviewed and improved to reduce potential risk to public health, as recommended in ESAP 6. The LPG and HFO storage areas have been designed to achieve at least 110% containment, and the storage tanks are built to regulated standards to sustain the fuel pressures. Fire suppression systems are included in these areas.

The company owns a fleet of trucks, mainly used for product delivery to clients. Transport risk management procedures to be developed as part of the ESMS will include measures for driver training on road safety and OHS, and truck safety management.

Security Personnel:

Blue Nile has directly employed unarmed security personnel for daytime security provision and engages informal locally hired armed security personnel for night security. The company will develop, as part of the security management procedures, code of conduct for the locally hired armed security providers and conduct regular training on human rights-based security management.

Blue Nile has regular engagements with various stakeholders, including suppliers, clients, contractors, government agencies, local community, the police and medical service providers. The company will develop a formal Stakeholder Engagement Procedure (as part of the ESMS) that also addresses external communications and grievance redress mechanism, to guide the systematic identification, mapping and engagement of all key stakeholders.

Contact Person: Kotni Ramasankara Rao

Company Name: Blue Nile Rolling Mills Ltd

Email: info@bluenile-group.com

Phone: +254 737 812174/739 996511