This is a Category B project according to IFC's Policy on Environment and Social Sustainability (2012). Based on information reviewed by IFC, the proposed project will have limited adverse E&S impacts that are few, site specific, largely reversible and readily addressed through existing mitigation measures and good international industry practices (GIIP).

Key E&S issue and risks associated with the project include:

-_Ensuring consistent management of occupational health and safety (OHS) policies and practices, including emergency preparedness and response.

-_Monitoring and management of air emissions, waste and wastewater and hazardous materials.

-_Effective stakeholder engagement external grievance mechanism implementation related to E&S aspects.

Environmental and Social Assessment and Management System / Policy:

Newko Balkan has a documented E&S management system that is certified according to international management system standards i.e., ISO 14001 Environment, and ISO 45001 (Occupational Health and Safety), and is generally aligned with IFC’s PS requirements. Newko Balkan’s environmental occupational health safety policies and management systems will be applicable to the Project.

Organizational Capacity and Competency:

The company recently appointed a new E&S Lead who is supported by a safety technician. The medical team and company lawyer support the team as needed. The E&S lead reports to Deputy General Manager. 

Identification of Risks and Impacts/Management Programs:

The company renewed its operational permit on October 28, 2020 and integrated environmental permit on April 06, 2021. Per the information provided, the new steel cord investment does not require an Environmental Impact Assessment.

The company has a documented procedure to conduct internal environmental assessments and occupational risk analysis on an annual base, and prior to implementation of new processes and tasks; this procedure will be applied to the new steel cord production process. Based on the findings, Newko Balkan develops annual improvement/action plans. The 2021 plan includes trainings and some site improvements including machinery guarding.

Newko Balkan hired an external consultant to undertake an independent occupational health and safety (OHS) risk assessment, which is expected to be completed in June 2021. Based on the findings, an OHS improvement plan will be developed. The requirements associated with the external consultant’s findings, will be incorporated into an E&S improvement plan as defined in the Environmental and Social Action plan item (ESAP) #1. Relative to OHS, the company is required to implement the OHS improvement plan with a specific focus on items that relate to platform improvements, machine safety, electrical safety, hazard/risk/safety measures warnings/reminders, ventilation improvements, chemicals handling and storage, and enhancement of personal protective equipment (PPE) usage.

Emergency Preparedness and Response.

Newko Balkan’s existing emergency preparedness and response plan (EPRP) included storm, flooding, chemical spills, fire and evacuations. In addition, company’s civil defense plans cover response procedures for explosion, terror attacks, civil disorder and hostage situations. Annual drills are limited to fire and evacuation and external local fire brigade is invited. As per the E&S improvement plan, (ESAP#1), additional drills will be included such as for chemical spills and injuries, in line with all emergency preparedness and response plan scenarios.

The emergency response team consists of 30 employees in addition to 10 first aiders. The emergency equipment includes an eight tons water / fire truck, portable fire extinguishers, fire hydrants, alarm system, spill kits/absorbent materials, gas sensors where LPG is in use and water-based sprinkler system in material preparation, the Balbo, trapezoidal belts and conveyor band departments. No map showing the fire extinguishers, hydrants and other emergency response equipment locations exists, therefore as per ESAP#1, Newko Balkan will be required to update its EPRP to include an emergency equipment map, showing exits, fire suppression systems, firefighting equipment, alarms, and other emergency kits.

Monitoring and Review:

As a previously exited IFC client, Newko Balkan monitors and reports its E&S performance including air emissions, wastewater effluent and energy consumption to its senior management. Frequency of monitoring ranges between daily to once in every two years, depending on the parameter/performance indicator.  Incidents are reported immediately. Management reviews are conducted on an annual basis.

Covid Impacts and Measures:

In mid-March 2020, the company stopped operations for about two weeks and restarted its operations partially in April 2020. By May 2020, the production was normalized and Newko Balkan continued operations with special permits and under COVID 19 protection measures. Those measures included staff temperature control at the entrance, implementation of additional hygiene / sanitation rules at the plant and use of protective masks at all times within the plant. Catering services at the cafeteria was cancelled and employees were provided extra benefits to bring their own food from home. Locker rooms and plant cleaning schedules were increased. The tasks and shifts were arranged to allow social distancing in the workplace and remote working options were provided to administration staff as much as possible. The company did not lay off any labor during the pandemic and did not cancel or suspended the contracts with its suppliers and/or service providers.

Workforce Details:

Newko Balkan employs around 225 staff with almost 20% being female. There are no outsourced operations, except delivery/transportation truck operations and waste transfer operations. After completion of the steel cord investment in 2023, the number of employees is expected to increase slightly, from 226 to around 265.

Human Resources Policies and Procedures:

Newko Balkan has a documented HR management system, including its policies and procedures that relate to terms of employment, recruitment, working conditions, harassment and gender based violence performance evaluation, nondiscrimination, equal opportunities and career development, generally, in line with PS2 requirements and Kosova labor laws.  As per ESAP#2, Newko Balkan will be required to provide additional training for all staff on sexual harassment and handling related grievances to ensure procedures are understood and implemented accordingly.

Working Conditions and Terms of Employment:

Every employee has an individual contract defining the terms of employment, benefits, vacations and working conditions.

Workers’ Organization:

Until 2019, Union KSLK was representing almost 180 employees, however at the time of the appraisal, there was no unionized employee. According to Newko Balkan’s management, the previously unionized employees preferred to leave the union as the employee/employer relations are good and Kosovo’s labor laws include freedom of association in line with ILO conventions which provides freedom to every employee for forming/being a member of an association.

Retrenchment:

The company does not anticipate any retrenchment due to the COVID19 pandemic and/or in the future.

Grievance Mechanism:

Newko Balkan has a documented internal grievance mechanism, which allows anonymous reporting through anonymous letters. The system used to include complaint boxes to allow anonymous reporting but according to Newko Balkan’s management, as they were not used, the boxes were removed. Going forward and as per ESAP#3 the agree with IFC on an approach to effectively facilitate anonymous reporting.  Truck drivers and waste collectors have access to the system if needed. The culture is to raise concerns face to face instead of the use of documented forms/letters. In recent years, there were complaints around improvement of labor and working conditions and site improvements that relate to locker room improvement, repairments in the workshop and process areas for rainwater leakages. As a per ESAP#3, Newko Balkan will therefore be required to enhance its approach to internal grievance management so as to ensure all workers are aware of the mechanism and how to access it, and equally ensure all grievances are formally documented along with the approach to how they have been addressed.

Child / Forced Labor

According to the company policy, the minimum age for employment is 18 and there is no forced labour in Kosovo.

Occupational Health and Safety

Workplace monitoring data, including noise, vibration, illumination, workplace dust, humidity and temperature is generally in line with Kosovo’s legal requirements which aligns with WHO/EU limits. However, there are some locations where workplace atmosphere (dust/other chemicals) are above legal limits. As per ESAP#1, the E&S improvement plan will include specific items for ventilation/isolation for exposure to chemicals, dust and noise as needed to ensure compliance with the legal limits.

During the visit to the factory it was observed that some improvements are required to increase the safety and health of workers. These include the need for health and safety improvement that relate to platform improvements (per slip, fall, access related risks), machine guarding, electrical safety, hazard/risk/safety measures warnings/reminders, ventilation improvements, chemicals management, and enhancement of personal protective equipment usage. The E&S improvement plan, which will be developed per ESAP#1, will have a specific focus on the related improvements as discussed here.

Newko Balkan provides induction and refresher trainings, including on workplace risks, safe working instructions, emergency response amongst other. However, due to COVID19, in 2020, there was a gap in implementation of the training plan. As per ESAP#1, Newko Balkan will be required to develop and implement a training matrix to ensure that E&S trainings will be provided to the employees per the identified risk.

Lost time injury frequency rates (number of incidents per million work hours, LTIFR) was 30 in 2018. It improved to 19 in 2019, 17 in 2020 and 14 (year to date - till the end of April 2021). Although there is an improvement trend, LTIFR is high when compared to good international industrial practice for rubber products manufacturing (7.0) or textile (3.0) (www.bls.gov ). The injuries were mainly related to hand injuries (trapped in between the conveyor belts or rotating parts of the machinery), trips/falls, as well as chemical splashes/burns (dipping process for textile to stick to rubber). The E&S management system includes documented procedures and instructions such as safe working practices, incident investigation, transportation safety. In addition and as noted, Newko Balkan has commissioned a third-party consultant to conduct a detailed OHS risk assessment and the recommendations defined therein will be incorporated into an E&S improvement plan, satisfactory to the company and IFC, as per ESAP#1. This will include aspects related to incident prevention and reoccurrence, and as per ESAP#1, a permit to work system, covering high risk task, such as hot works, working at heights, and electrical works, will be developed and implemented.

Workers Engaged by Third Parties:

Third party works / services are limited to truck drivers for delivery/transportation and waste transfer operations There also may be some limited construction/equipment service needs, that might be performed by third parties through a service fee. The safety technician provides basic training to third party employees upon their arrival, and there are contractual covenants referring to Kosovo’s labor/occupational health and safety laws. As per ESAP#1, Newko Balkan will be required to enhance its contractor management system, by developing a contractor management procedure to define and communicate the site rules to them, as wel as referring to a grievance mechanism that third party employees can also use to raise their concerns as needed.

GHG Emissions:

The main source for GHG emissions is one coal fired and three LPG boilers, electrical heaters, fuel oil fired standby generators and small-scale home type air conditioners. GHG emissions are calculated to be around 7.162-ton equivalent carbon dioxide emissions per annum. Upon the steel cord investment completion, GHG emissions are expected to be around the same, i.e.. to be less than 10.000 tpa.

Water Consumption & Efficiency:

Water is supplied through the municipality network for drinking purposes and through four underground wells for production. The production is not water intensive and there is a closed loop system for machinery cooling purposes. There are two pools, used for process water recycling for cooling. The water consumption is around 1.400 m3 / year

Energy Efficiency:

The company implemented several energy efficiencies projects, including installation of variable speed drivers, energy efficiency lightening bulbs and use of natural light. The electricity is provided from the national grid, whereas other fuels are provided from local suppliers. 2021 estimates included approximately 4.250.00 kWh electricity, 700-ton coal, 670-ton LPG and 14 ton fuel oil consumptions. Upon completion of the steel cord investment, water and energy consumption is expected to remain almost the same. The water and energy consumptions will be benchmarked against WBG EHS Guidelines for Metal, Plastic and Rubber Products Manufacturing table 7 and will be reported to IFC annually.

Air Emissions and Ambient Air Quality:

Newko Balkan monitors its point source emission annually and reports the results to local authorities. All of the boilers are below 3 MW. Sulphur dioxide emissions are around 286 mg/Nm3 for LPG and 765 mg/Nm3 for coal (vs. 1700 mg/nM3 and 2000 mg/Nm3 legal limits). Carbon dioxide emissions are around 18 mg/Nm3 for both LPG and coal boilers (versus 100 mg/Nm3 for LPG and 150 mg/Nm3 local limits), and nitrogen dioxide emissions are around 57 mg/Nm3 for LPG and 205 mg/Nm3 for coal (vs. 350 mg/Nm3 and 1000 mg/Nm3 legal limits). Ambient air quality is monitored annually, and particulate material is reported to be around 38 mg/m2 versus 300 mg/m2 legal limit. All measurements are below WBG relevant EHS Guidelines guidance values.

Wastewater:

Process wastewater is in a closed loop for recycling, mainly for cooling purposes. Except for cleaning of the plant/dipping baths, and from the workshop, there is no process wastewater discharge. Newko Balkan has a treatment system, mainly for its domestic and cleaning waste water, but also to treat unused recycled process wastewater, which consists of sedimentation / filtration and the wastewater is discharged to the city’s collection system which ends with a municipality treatment plant. Domestic wastewater is discharged to the same network. There is a separate storm water collection system in place which is also discharged to the city’s stormwater network.

Wastewater quality is monitored annually, and the results are reported to local authorities. The effluent wastewater quality, including pH, chemical oxygen demand, suspended solid, total nitrogen, phenol, is in line with local legislation requirements and WBG General EHS Guideline and EHS Guidelines for Metal, Plastic and Rubber Products Manufacturing guidance values. Per the monitoring data of the previous years, the total phosphorus range is 1.46 to 4.25 mg/lt (vs. 2 mg/l legal requirement and 5 mg/lt WBG EHS Guidelines for Metal, Plastic and Rubber Products Manufacturing guidance value). According to Newko Balkan, the local authorities did not charge fines and/or required corrective actions and the company confirmed that there is no phosphorus in its raw materials, cleaning substances maintenance chemicals, and/or lubricant/greases/machinery oils. There are other companies discharging wastes before the monitoring point and according to Newko Balkan, fluctuations might be related to their effluents. Per the most recent monitoring report, dated May 2021, total phosphorus is reported to be around 1.7 mg/lt. As per ESAP#4, Newko Balkan will be required to monitor the total phosphorus content in its recycling pools and city network/underground water supply and report to IFC. In addition, the company will provide annual monitoring reports to IFC, including wastewater quality and will take necessary measures for phosphorus treatment if needed

Wastes:

There is a solid waste management system in place, where rubber, textile, carton, plastic and metal wastes are recycled by authorized recycling companies. The hazardous wastes include used hazardous raw material and/or cleaning/maintenance chemical’s containers, waste lubricant/oil/grease, batteries and waste fluorescent lamps. Hazardous wastes are recycled and/or landfilled/incinerated by authorized waste companies and domestic wastes are disposed in a landfill. In 2020, around 100 tons of waste was generated.

Hazardous Materials Management:

Newko Balkan has a chemical management procedure in place, defining the safe transportation, storage and handling rules for all chemicals on site. Chemical inventory includes more than 70 chemicals, where around 25 % are hazardous, including ammonium hydroxide, formaldehyde, hydrochloric acid and caustic-sodium hydroxide. Material safety data sheets are provided, and storage instructions include separation of oxidizing and flammables, acidic and alkaline materials to be stored separately and in well ventilated areas. The chemicals are stored in their original containers. At the point of usage, they are kept in their original containers and/or safety cans are in use. While it was noted that the floor of the chemical storage areas is impermeable, during the site visit it was observed that some areas of the floor needed to be improved to ensure its impermeability. Thus, as per ESAP#1, the floor of the chemical storage area will be improved to ensure its impermeability, e.g., repairing of the cracks, , and secondary containment will be installed at the point of chemical use. Other measures, such as emergency shower/eyewash, additional fire/explosion proof needs, to ensure storage is in line with good international industry practices, may be identified through the consultant’s assessment and if so will be included the E&S improvement plan. 

Legacy / Historic Pollution Issues:

The production plant is almost 60 years old. Newko Balkan monitors the soil quality on an annual basis and reports to the local authorities. Monitoring parameters include pH, arsenic, cadmium, chromium, mercury, iron, copper, and lead and all results are in line with the legal requirements and WBG EHS guidelines and no deterioration is observed per the most recent report. Considering the plant was built during ‘60s, asbestos might be present in the roof and/or walls as isolation material, As per ESAP#1, Newko Balkan will be required to develop and implement an asbestos screening procedure to ensure that an asbestos survey will be conducted prior to any demolition works and necessary measures implemented during the task (if applicable) and for the management of the related wastes.

Community Health and Safety:

The plant design is in compliance with Kosovo Fire Codes and applicable European norms. Community safety issues are associated with delivery/transportation traffic of the trucks. The plant is located in the urban part of Suhareke City next to the main public road with private households and commercial facilities surrounding the plant. Dust and noise pollution associated with the traffic and noise from the production processes might present additional impacts on local communities. The company has procedures in place for ambient air quality and noise monitoring, where the results are in line with local limits and WBG’s relevant EHS Guidelines. Newko Balkan has developed procedures for transportation safety, chemical management, health and safety protocols for site visitor, emergency preparedness and response plan, including the risks, communication plan and responsibilities that relate to community safety.

Security Personnel:

There are 12 unarmed security employees, hired by Newko Balkan directly. Security guards are local residents, as are other Newko Balkan staff for the most part, which reduces the risk of conflict between the security guards and the local communities. Guards are required to have a medical check, in addition to provide criminal records. Training that relates to defensive use of force and communication is provided to all guards. According to Newko Balkan’s management, no complaints were raised from the community, visitors and/or truck drivers that relate to security arrangements.