No new land will be required for the project and as the new facilities will be constructed within the footprint of the Jingmen GEM’s existing plant, which is within a large manufacturing industrial Park, established in 2000. There is no known biodiversity hot spot, indigenous people, or culture heritage site in this built-up industrial area based on both desk review and consultants’ site visit. No impacts are expected that need to be managed in a manner consistent with PS5: Land Acquisition and Involuntary Resettlement, PS6: Conservation and Sustainable Management of Living Resources, PS: 7 Indigenous Peoples, and PS8: Cultural Heritage.

The key E&S issues and risks associated with this proposed investment include: the company’s E&S management capacity, air and fugitive emissions, contaminated rainwater/wastewater treatment and discharge, solid and hazardous waste management and disposal, potential legacy soil / groundwater contamination, labor and working conditions, occupational health and safety (OHS), fire protection and emergency response, community health and safety, and stakeholder engagement.

The current operations at Jingmen GEM are materially compliant with IFC Performance Standards requirements. The soil/ground qualities are monitored routinely and were noted to be within the applicable local regulatory standards. The E&S impact assessment (ESIA) indicates the additional impacts by the proposed project are manageable. Based on the information available, IFC’s review concluded that the potential adverse E&S risks and impacts of this project are few in number, and readily mitigated through the company’s existing robust systems and procedures, allied with implementation of good international industry practice and the agreed E&S Action Plan (ESAP). This is therefore a Category B project according to IFC’s Policy on Environmental and Social Sustainability.   

   Environmental and Social Assessment and Management System

GEM contracts external experts to conduct E&S assessments for its new projects according to Chinese laws/regulations and its own technical standards. GEM also has an established and robust corporate E&S management system that applies to all operations. Jingmen GEM is certified by ISO 9001:2015 Quality Management System, ISO 14001:2015 Environmental Management System and OHSAS 18001:2007 Occupational Health and Safety Management System. The detailed requirements and procedures on E&S are described in the company’s EHS and HR management programs. With the IFC investment, Jingmen GEM will also adopt the IFC Performance Standards and the World Bank group (WBG) EHS Guidelines will also be applied in the E&S risk assessments and operations. Once such E&S assessment reports are finalized, the company will disclose those locally as well as on its website as part of its ongoing stakeholder engagement.

Policy

GEM’s E&S policy reflects its commitments for the sustainable development and the corporate social responsibility. The environmental and safety policies state, “Life is above everything else, no work without safety, no production without environmental protection ; Eliminate Pollution; Emission compliances and reductions” The social policy states “equal rights to all employees; nondiscrimination in all ways”. These policies are disseminated during new employee induction program and all employees have access to these policies. Jingmen GEM implements the corporate E&S policy through its environmental, OHS, and process safety procedures, which include well-designed key performance indicators (KPI) to evaluate and improve E&S performances.

Identification of Risks and Impacts

GEM subsidiaries identify E&S risks from their operations primarily through the local permitting process and their internal procedures and tools. ESIAs help in identifying risks during project preparation stage. An ESIA for the EV battery project was conducted in 2017 and approved by the local regulatory agency. The ESIA is aligned with IFC Performance Standards and applicable WBG General EHS Guidelines requirements. 

During operational phases, EHS risks are identified through formalized auditing programs and informally through frequent inspections. All the audits and inspections are summarized with corrective actions to mitigate the EHS impacts. Jingmen GEM holds a Pollutant Discharge Permit (PDP) valid from January 22, 2020 to January 21, 2023 that covers the current operations and will update the PDP once the project is commissioned.

Management Programs 

GEM’s corporate environmental and OHS/safety management systems has policy to require each subsidiary to establish effective management programs to meet local regulatory requirements and corporate E&S policies. The corporate EHS teams lead the EHS planning and review the EHS risks for all new projects across the corporate.

Jingmen GEM has developed over 70 management procedures covering standard operating procedures (SOPs) and work instructions, internal codes of EHS performance, the inspection programs, human resources management, etc. The environmental department and OHS/safety department are responsible for training and engaging employees to understand and comply with the management programs.

Organizational Capacity and Competency

At corporate level, GEM has environmental and OHS/process safety management teams, respectively. Both the teams report to the General Manager. Each subsidiary also has environmental and OHS/safety departments, responsible for ensuring compliance with the corporate EHS/safety policy and subsidiary’s management program implementation.

Jingmen GEM has 11 staff in environmental department for overall environmental issues and 37 staff in OHS/safety department for overall safety and occupational health issues. In addition, 87 employees in Jingmen Gem are certified safety management personnel with certificates issued by Emergency Management Bureau (EMB) of Jingmen City. The environmental and OHS/safety departments report directly to the respective subsidiary’s general manager with dotted reporting lines to corporate environmental and OHS/safety managers, respectively.

Jingmen GEM has established a Human Resources (HR) department with 10 employees for overall HR management. Jingmen GEM has assigned a dedicated public relationship officer for community and other stakeholder engagements.

Emergency Preparedness and Response

Jingmen GEM has an environmental Emergency Response (ER) Plan and safety ER Plan, approved by local environmental and safety authorities. Per Chinese regulations, these ER plans are updated every three years.

There is adequate firefighting equipment and firefighting water/foams at Jingmen GEM, which are all properly maintained. Toxic gas sensors and automatic fire detectors are installed at critical locations with connection to the central control room. The company also has a 15-person dedicated fire-fighting team with three fire trucks and other necessary equipment. The industry park’s fire brigade is approximately 5 – 10 minutes from Jingmen GEM.

Jingmen GEM conducts biannual comprehensive firefighting/ER drills, which are joined by ER team leads from neighboring plants, local fire brigade, and related government agencies. Each production section at Jingmen GEM conducts monthly ER drills with different scenarios. Each work unit conduct mini ER drills weekly.

COVID-19 Response

To prevent COVID-19, Jingmen GEM set up COVID response program. All plant entrances are equipped with temperature checks and contract reporting system is established. All indoor working positions and canteen tables are rearranged according to social distancing requirements.

Monitoring and Review

GEM corporate EHS teams conducts  quarterly cross audits for all subsidiaries with both internal EHS professionals and external experts. The external experts are contracted for various specialties related to the EHS risks. The environmental and OHS/safety departments at Jingmen GEM conducts daily checks on all critical processes and monthly inspections for the whole plant operations. All the non-compliances are recorded, and corrective and mitigation actions are reviewed in the future audits and inspections. The company also holds monthly EHS performance review meetings, hosted by the general manager.

Jingmen GEM has instituted comprehensive EHS monitoring programs, which specify the Key Performance Indicators (KPIs) and the frequency for EHS monitoring. The KPIs include point source emissions, fugitive emissions, fence line air quality, effluent quality, noise levels, waste storages and disposal, soil and ground water quality monitoring, etc. In addition, occupational health medical examination is provided annually to employees associated with potential exposure to occupational hazards.

The company has also installed real-time monitoring devices for point source emissions, ambient air quality, and effluent quality pertaining to the existing operation and the monitored data are transmitted directly to the municipal environmental agency. The EHS monitoring for this project will be merged under this existing monitoring program.

   Jingmen GEM currently has around 2,500 employees in its Jingmen High & New Technology Industry Park site and is expected to hire no new employees for the operation of this proposed project. Workers will be rearranged and selected from their current positions to work in the proposed project once the development is finished. As part of this project, an undetermined number of construction workers will be hired by contractors. Based on experience, the company expects that most of the construction workers will come from local areas.

Human Resources Policies and Procedures

The HR issues are managed both at GEM corporate level and the plant level, with the corporate HR team coordinating across the corporation and assisting the senior managements.

Jingmen GEM takes the core HR values of GEM corporate into its own HR policy. Terms of employment and working conditions are adequately specified and include procedures related to recruitment, probation, training, performance review, promotion, insurance, salary and compensation, resignation, lay-off and firing, vacation, other leave, retirement, and respectful workplace, including gender equality and harassment. The company has HR policy training during its induction program for new employees, and all employees have access to this policy.

Working Conditions and Terms of Employment

All workers are on Jingmen GEM’s payroll. Only canteen workers are contractors from a service provider. Terms of employment and the rights and responsibilities of workers are formalized into employment contracts and communicated to all direct employees along with the Employee Manual as well as Code of Conduct. Under the employment terms that strictly follow the national labor law, workers are employed initially on fixed term contracts which are renewable subject to satisfactory performance and availability of work.

At Jingmen GEM site, according to the company’s report, there was a temporary overtime period due to the ramping up of production after the local COVID-19 outbreak. Staff receive cash compensation in lieu of any overtime work at rates regulated by the national labor authority and overtime work during holidays is compensated at 2 – 3 times the base salary; however, it was identified that overtime working hours have exceeded the statutory limits. As set forth in ESAP #1 and #2, Jingmen GEM will adopt a clear overtime policy to be communicated to workers that ensures a clear direction as how overtime will be worked and managed by the company in line with the Overtime Management Plan (OMP). Furthermore, as indicated in ESAP #3, the company will provide detailed reporting date with evidence if effective implementation and progress of the OMP and evidence that legal compliance has been achieved.

All employees have access to the social and health insurance and pension funds as required by labor law. Regarding housing fund, a review of all employees’ records shows that the employees with length of service with the company less than 2 years are not covered in this scheme. In line with ESAP #1, Jingmen GEM will update its HR policy to specify that all employees are qualified for housing fund and will communicate this policy to all employees for their understanding of the contribution procedure and its benefits. Furthermore, as indicated in ESAP #4, the company will provide evidence that legal compliance related to the housing fund entitlements has been achieved.

For contractor employees who work at the site, Jingmen has established a contractor management program that requires the contractors to fully comply with national labor laws and company’s HR conducts periodic inspections.

Workers’ Organization

A worker union with elected union leaders is set up at Jingmen GEM’s plant, as required by the All-China Federation of Trade Unions (ACFTU). company’s management is committed to keeping the union independent from management, and information received and reviewed by the external E&S consultants during the due diligence found no evidence of restrictions on workers forming or joining a labor union or entering into collective bargaining agreements.

Non-discrimination and Equal Opportunity

The HR policy specifies non-discrimination and equal opportunity. No procedures and/or practices have been identified as discriminatory. All the hiring and promotion are merit-based. There is no difference in terms of salary for female and male employees with the same experience. Currently, approximately 25% of the company’s employees are women. As indicated, the company has provisions relevant to respectful workplace, including prevention of gender-based violence (GBV), in its HR policies. However, verbal harassment has not been clearly identified in these provisions. The company is seeking to improve this issue in its HR policies as indicated in ESAP #1.

Jingmen GEM has documented process for the anti-sexual harassment policy in its Code of Conduct and all staff are required to be trained about the Code of Conduct during their onboarding. The company has multiple layers of dedicated focal points to receive allegations of sexual harassment in the workplace. In this case, the HR confirmed that focal points are trained to log and treat GBV grievances according to the company’s policy.

Retrenchment

Jingmen GEM expects no retrenchment in the foreseeable future. However, the company will comply with the relevant provisions of IFC Performance Standard 2 if there is need for retrenchment in the future. Based on the information provided by the company, there has been no retrenchment due to the COVID-19 crisis.

Grievance Mechanism

The company has a grievance mechanism which is formalized as part of the corporate policy. The grievance mechanism is introduced to each new employee during induction. The employees can report their grievances to plant managers, HR managers, or labor union leaders. All the grievances and relevant responses and actions taken by the company are recorded at different focal points who receive and handle the case. Senior management’s email addresses are also made public for any concern employee to report anonymous grievances. The company also has policy on protection against identity revelation and retaliation. As part of ESAP #1, Jingmen GEM will update its worker grievance mechanism procedure, including clear flowchart, which will be available for its permanent and contractual workers, as applicable. This procedure will include steps to be taken by workers to manifest any concerns, contact responsible persons, and provide timely feedback, along with ability to raise anonymous grievance.

Protecting the Work Force

GEM has well defined HR policy and procedure for prohibition of forced labor and child labor. Jingmen GEM complies with national law and does not hire workers below the age of 18 years. The HR team checks birth and school certificates during the hiring process. No forced labor practices are used by the company.

Occupational Health and Safety

Jingmen GEM maintains general safety and occupational health programs, including new employee trainings and annual refreshers. There have been no fatal or serious accidents in the company’s operational history. The personnel protective equipment provided onsite is adequate. For current operation, no occupational disease is identified based on annual occupational health medical examinations. The air quality and noise levels at workplaces meet both local regulatory requirements and good internal industry practice (GIIP).

GEM Jingmen has established an accident reporting procedure. To further improve OHS management and in accordance with ESAP #5, Jingmen GEM will start to register and manage all recordable accidents to minimize potential lost time injury. As for the new project, a job hazard analysis (JHA) was conducted for the EV battery recycling and assembling, and mitigations are proposed based on JHA results.

For onsite construction contractors, the company has contractor EHS management program, which will apply to the construction works for the EV project. Together with other permit applications, Jingmen GEM is planning the firefighting design, occupational health pre-assessment, and occupational health design for the EV project prior to the construction in April 2020.

Supply Chain

Jingmen GEM has a supply chain office (SCO) to manage all the suppliers. Electronic wastes are initially collected and stored by specialized e-waste suppliers. The company will purchase the e-wastes from these specialized suppliers. EV batteries will be purchased directly from EV manufacturers. SCO conducts initial qualification review for any new suppliers and annual review of all existing suppliers, which include E&S reviews. The E&S review are based on local regulatory requirements and GEM policy/procedures in the areas of EHS performances, social responsibility, and child/forced labors. The suppliers are automatically disqualified if they cannot pass the E&S review during initial or annual reviews.

   Resource Efficiency

At Jingmen GEM, electricity and water are supplied by the industry park. Approximately 60% of used water is recycled after proper treatment. Heat is provided by natural gas-based boilers, and heat recovery boiler is installed for the incinerator cooling. The regulatory agencies conduct biennial clean production inspections for resource efficiency and pollution reduction. External experts are also hired during quarterly GEM EHS audits for resource efficiency.

The EV battery project is expected to consume approximately 20,000 m3 water and 11,500 MWh electricity annually. Water is mainly for sanitary and battery discharging purposes. Electricity is mainly for productions, pollution prevention equipment operations, and lighting.

GHG Emissions

The EV battery project is expected to generate approximately 9,000 tons of CO2eq per annum, mainly from electricity consumption.

Waste and Emission Management for EV Battery Project

The ESIA for EV battery project predicts that there is limited wastewater generated; air emissions are mainly fugitive dust; dead batteries and waste circuit boards are recycled at other processes at Jingmen GEM; other solid or hazardous wastes are sent to licensed waste management companies for recycle and disposal. The air emission dispersion model and noise model show limited impacts to the environment and communities outside the industry park. 

Wastewater

All the wastewater, including contaminated rainwater, generated at Jingmen GEM is pretreated onsite, then discharged to the industry park’s industrial wastewater treatment plant (WWTP) for further treatment. The sanitary wastewater is pretreated in onsite septic tanks, then discharged to municipal WWTP for further treatment. About 10 m3/month of brine wastewater generated from the EV battery project will be mixed with other industrial wastewater and pretreated onsite before discharged to the industry park WWTP.

There is an emergency collection storage pool with effective capacity of 2,000 m3, for the storage of accidental wastewater and first 15 min initial contaminated rainwater. All the initial rainwater from the contaminated workplaces should be collected and sent to onsite WWTP for pretreatment. Based on the review, not all the initial rainwater is collected from the contaminated workplaces, including onsite roads. As required in ESAP #6, Jingmen GEM will conduct plantwide surface water flow survey and developed action plans as needed, to collect and treat all the initial contaminated rainwater.

Air Emissions and Noise

There is an onsite cracking furnace at Jingmen GEM, which is designed and constructed according to EU standards. Its emissions meet all EU standards, including dioxins/furans. The other emissions meet both local regulatory requirements and applicable WBG EHS Guideline limits, with the exception of hydrogen chloride (HCl) for zinc/copper slag recycle process, which exceeds WBG EHS Guideline limit. As indicated in ESAP #7, Jingmen GEM will increase alkaline scrubbing for HCl emission and make sure that HCl emission meets WBG EHG Guideline limit.

Fugitive emissions are collected at each process for centralized scrubbing operation. Negative pressure design helps in collecting most of the fugitive emissions. To control fugitive emissions, Jingmen GEM monitors the fence line air quality for ammonia, sulfur dioxide, hydrogen fluoride, hydrogen chloride, and volatile organic compounds, which all meet local regulatory standards. Noise levels are also monitored along the fence line, and the noise levels meet local regulatory requirements and GIIP.

Industrial and Hazardous Wastes

There is an onsite waste fracking furnace for resource utilization and disposal of waste circuit boards. Organic materials are separated from circuit boards through cracking, then incinerated to inorganics, such as water, carbon dioxide, sulfur dioxide, etc. The exhaustion gases are scrubbed and meet the emission standards. All other industry solid wastes and hazardous wastes are separated accordingly based on further recycle or disposal purposes. These wastes are sold or sent to waste management companies for further recycling or final disposals. All these waste transactions are registered and closely monitored by the government environmental agencies through an online Industry Solid Waste and Hazardous Waste Manifest System. All the sanitary wastes are collected by the municipal contractors for recycle/disposal.

Soil and Groundwater

Jingmen GEM plant was designed to prevent soil and groundwater contamination. All the production and storage areas for industry wastes have multiple layers of pavements with equivalence to 1.5 m clay of  1×10-7 cm/s impermeability; all areas for hazardous wastes, including batteries, have HDPE and other layers of pavements with equivalence to 6.0 m clay of  1×10-7 cm/s impermeability. Jingmen GEM conducts annual soil and quarterly groundwater pollution monitoring. There are 8 soil sampling points and 7 groundwater sampling points, which are set up by external experts according the plant process layout and groundwater flows.  The main monitoring parameters for soil are heavy metals, and monitoring parameters for groundwater are pH, fluoride NH3-N, permanganate index, and heavy metals.

All soil/groundwater monitoring results in the past three years meet Chinese regulatory requirements (control levels). However, cobalt concentrations in three soil samples in 2019 exceed screening levels, though still compliant with control levels. According to the site survey, the elevated levels are only at surface soil levels, not in mid/deep soil levels. In line with ESAP #8, GEM is planning a Phase II soil/groundwater site investigation to identify all potential hot spots and remove the contaminated soils if identified. 

Operation Hazards

At Jingmen GEM, the raw and auxiliary materials all contain components of hazardous materials or hazardous wastes. Hydrometallurgical processes need multiple hazardous chemicals for heavy extraction and reduction. Storage and handling of these materials are strictly managed at Jingmen GEM. There is no underground storage of any hazardous materials/wastes. The hazardous liquid storage tanks all have proper bottom and secondary containment structures with sufficient holding capacity in case of leak. 

All hazardous material/waste storage areas, tanks, and pipelines are inspected daily. The integrity of liquid tanks is inspected periodically according to regulatory requirements by external experts. Fire detectors, leak detectors, and toxic gas sensors are installed in all key locations and are connected to the central control room. Quantitative risk assessment (QRA) was conducted for the onsite ammonia storage tank. The exclusive zones under credible worst-case scenario are all within Jingmen GEM fences.

  Community Health and Safety

Jingmen GEM is located inside a large industry park. The nearest scattered residential houses are 600 meters away from the fences. The cluster houses are at least 1 km away. The regulatory safety protection zone is 200 meters. The monitoring results, including fence line monitoring, and the project ESIA indicate that the normal operations have limited impacts to communities outside of the industry park. The company also has its own ambient air quality monitoring station, which can cover an area of 3 km2 and automatically transfer the monitoriung data to the local environmental agency.

All the raw materials and products/wastes are transported through roads and railroads. The road system is in good conditions and road transportation ranges are within 500 km, or less than one day’s trip. Jingmen GEM inspects the truck conditions and all permits/manifests before loading hazardous materials/wastes.

Emergency Preparedness and Response

Jingmen GEM has ER plans available and conducts routine drills for firefighting and potential chemical explosion/releases. Communities are informed of the drills. In line with ESAP #9, GEM shall only contract transportation companies that have defensive driving programs, acceptable safe driving records, and sufficient emergency response methods. The company will require the transportation company with long-term contracts to report on its accident rates biannually.

Security Personnel

Jingmen GEM has its own unarmed security personnel for plant site security monitoring that conducts routine ID check at the gates.