The Qinzhou project site is being built on a reclaimed land with the total size of 4.2 ha inside an established petrochemical industry park where no dependencies (physical or livelihoods) or access restrictions (to land use sources) have been reported. Land for the Guizhou project site (about 17 ha), located in Dalong Economic and Technological Development Zone, had been acquired more than five years ago. No physical displacement resulted from acquisition of these lands. Besides the monetary compensation, economically displaced people were offered:1) social insurance (monthly pension) upon reaching the retirement age; and 2) free vocational and skills training.  The E&S due diligence (ESDD) has assessed that there are no pending legacy concerns/grievances and most of the affected persons have been able to restore/enhance livelihoods and income level to pre-acquisition levels. As such PS 5 is not considered applicable for the project.

There is no known biodiversity hot spot based on project ESIAs, IFC’s desk review through Integrated Biodiversity Assessment Tool (IBAT),  and consultants’ site visits. No impacts are expected. As such, PS6: Biodiversity Conservation and Sustainable Natural Management is not applicable. The Qinzhou project site is not located in an area inhabited/used by indigenous people. The Tongren plant is located in Dong ethnic minority autonomous region. The ESDD has assessed that the Dong people at project location do not have distinct characteristics from the majority population in China, i.e. Han People. Dongs intermarry, follow customs, practices, language, lifestyle, festivities, political institutions etc which are same as those of the mainstreamed community. Therefore PS7: Indigenous Peoples is not applicable. The projects are located in highly degraded industrial areas. No culture heritage site is identified during the ESIAs and consultants’ field visits. As such, PS8: Cultural Heritage is not applicable.                                               

     This is a Category A based on IFC’s 2012 Policy on Environmental and Social Sustainability as the project may cause potentially significant adverse environmental or social risks and/or impacts that are diverse, or irreversible. Specifically, the components of EV batteries after disassembly are hazardous wastes.. The recycling and remanufacturing will also generate approximately 1,700 tons of  hazardous wastes and 63,600 tons of industrial solid wastes per annum that need proper further recycles, treatments, or disposals. Large scale hydrometallurgical processes are used to separate and extract heavy metals, which can generate significant amount of wastewater. Besides, the acid leaching and solvent extraction will generate both point and fugitive emissions of acid mists and volatile organic compounds (VOCs). All these pollutions need to be controlled according to WBG EHS Guideline of Waste Management Facilities. Besides, 21 ha lands were converted from modified habitats to industry lands.

Key E&S issues and risks associated with this project include mainly (i) existence and effectiveness of corporate E&S management capacity and practices to control E&S issues consistently at various sites; (ii) wastewater treatment and discharge; (iii) hazardous materials/wastes handling and disposal; (iv) point/fugitive emissions; and (v) community safety.                                              

  Environmental and Social Assessment and Management System. CNGR contracts external experts to conduct E&S assessments for its new projects according to Chinese laws/regulations and its own corporate technical standards. CNGR also has an established corporate E&S management system that applies to all operations. CNGR’s operations are  all certified by ISO 14001 (Environmental Management System) and ISO 45001 (Occupational Health and Safety Management System). The detailed E&S requirements and procedures are described in the company’s EHS and HR management programs. With the IFC investment, CNGR Tongren and Qinzhou sites will also adopt the IFC Performance Standards and the World Bank group (WBG) EHS Guidelines, which will also be applied in the E&S risk assessment and management of these operations. CNGR discloses the E&S assessment documents locally as well as on its website as part of its ongoing stakeholder engagement.

Policy. CNGR’s vision is to become a high-tech company fully mainstreaming sustainability into its business plan. Its E&S policy (2020) states, “Life is above everything else and EHS work is the most important; People-oriented, and building a better life for all.” The E&S policy is disseminated during new employee induction program and all employees have access to the policy and related procedures through the company’s intranet. Tongren site implements the corporate E&S policy through its EHS and process safety procedures, which include well-designed key performance indicators (KPIs) to evaluate and improve E&S performance. Before the production, Qinzhou site will set up an operational E&S management system. Based on this E&S policy review, IFC confirmed the general alignment and consistency of CNGR’s sustainability / EHS policy framework with the requirements of the IFC Performance Standards.

Identification of Risks and Impacts. CNGR subsidiaries identify E&S risks from their operations primarily through the local permitting process and its internal EHS procedures and risk screening tools. ESIAs further help in identifying risks during project preparation stage. ESIAs, including the cumulative impact assessments, were conducted for both projects, and approved by the local regulatory agencies, respectively. The ESIAs are consistent with the environmental components of the IFC Performance Standards and applicable WBG General EHS Guidelines’ requirements with its social part of the assessment consistent with applicable laws and regulations. As described in ESAP #1, the company will complete supplemental ESIAs to ensure that the social aspects of the assessment are also consistent with PS1.  Cumulative impacts  are considered for current and proposed operations in the project areas, including the cumulative impacts for various air emission dispersion models and limited anticipated impacts will occur on neighboring communities. All E&S permits are approved, except safety and the firefighting design for Qinzhou site. During operational phases, EHS risks and impacts are identified through formalized auditing programs and informally through frequent inspections. All the internal / external audits and inspections are summarized into documented corrective action plans, including implementation timeline, responsibilities centers and assignment of CAPEX/OPEX to prevent or mitigate  EHS risk and impacts.

EHS Management Programs. CNGR’s corporate EHS management system has policy to require each subsidiary to establish effective management programs to meet local regulatory requirements and its own corporate E&S policy requirements. The corporate EHS committee and HR department lead the EHS and HR planning and review the EHS/HR risks for all new projects. Tongren site has developed E&S-related procedures covering standard operating procedures (SOPs) and work instructions, internal codes of EHS performance, the inspection programs, human resources management, etc. The EHS department is responsible for training and engaging employees to understand and comply with the EHS management programs. Before the production, Qinzhou site will develop similar E&S-related procedures.

EHS Organizational Capacity and Competency. At corporate level, CNGR has established an EHS committee consisting of top managers and full-time EHS professionals. Each subsidiary also has its own EHS department, responsible for ensuring compliance with its corporate EHS policy and implementation of subsidiary’s EHS management programs. The EHS department at each site reports directly to the respective subsidiary’s general manager with dotted reporting line to the corporate EHS committee. Tongren site has 26 staffs in its EHS department. In addition, each workshop has its own full-time or part-time EHS staffs depending on the EHS risk levels at different processes. Before starting production, Qinzhou plant will set up similar EHS department. 

Human resources (HR) management function in Tongren and Qinzhou plants is managed by a joint HR department with 24 employees. General manager’s front office has dedicated staff for public relationship,  community / stakeholder engagements, and Corporate Social Responsibility (CSR) programs. E&S management teams for constructions are also established at both sites, which will focus on construction safety, solid waste management, and construction labor management. Based on IFC appraisal, it can be concluded that CNGR has assigned competent technical resources at corporate and plant-level to successfully implement its corporate and plant-level management system and programs at both sites

Emergency Preparedness and Response. Tongren site has a comprehensive Emergency Response (ER) Plan, approved by local environmental and safety authorities. The ER plan is updated periodically to reflect production changes. There is adequate firefighting equipment and firefighting water/foams at Tongren site, 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 10-person dedicated firefighting team with one fire trucks and other necessary equipment. The industry park’s fire brigade is approximately 3-5 minutes from Tongren site. The site also has collective ER agreements with other industries in the park for firefighting and other emergency responses. Based on the current ER plan, there are five major ER scenarios(e.g. fire accident, chemical leak, etc.)  at Tongren site. Each scenario is  drilled for at least annually, in which all related staffs join the drills. Depending on the scenarios, local fire brigade, hospital, and related government agencies also join the comprehensive ER drills. Besides the major scenario drills, each process team also conducts its mini-ER drills, according to the site ER plan. Before production, Qinzhou site will develop a similar ER plan.

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

EHS Monitoring and Review. CNGR corporate EHS committee organizes quarterly cross audits for all subsidiaries with internal EHS professionals. External experts were contracted for EHS audits at Tongren site. As part of this investment, Tongren and Qinzhou site will contract external experts to conduct EHS audits periodically. The EHS department at Tongren site conducts daily checks on all critical processes. All the non-compliances are recorded, and suggested corrective/mitigation actions are reviewed in the future audits and inspections. Tongren site also holds monthly EHS performance review meetings, hosted by the general manager. Tongren site has established comprehensive EHS monitoring programs, which specify the 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. Tongren site 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 program is in general alignment with WBG EHS Guidelines. The EHS monitoring for the expansion will be merged into the existing monitoring program. Before production, Qinzhou site will develop similar EHS monitoring and reporting programs.

   As of August 2021, CNGR has around 3,000 employees, including 1,044 working in the Tongren (739) and Qinzhou (295) plants. Qinzhou plant is expected to hire additional 3,205 new employees to reach a total of 3,500 employees for its full operation when all three phases of construction are completed. The hiring will be taking place 6-12 months in advance. New hires will be first working in Tongren plant for vocational training and move to Qinzhou plant once the construction is finished. The construction of Qinzhou plant was initiated in March 2021. The workforce at peak estimated to be 4,000 . Based on company’s experience, construction of each phase is expected to take 8-12 months.

Human Resources Policies and Procedures. CNGR has overarching corporate HR policies and procedures in line with applicable national labor laws and regulations, and consistent with IFC’s PS2 objective. The HR policies include prohibition of child labor and forced labor, anti-discrimination and sexual harassment. Terms of employment and working conditions are adequately specified and include procedures related to recruitment, probation, training, performance review, promotion, insurance, salary and compensation, working hours, overtime, resignation, termination, vacation, leaves, accommodation, social security and other fringe benefits; and respectful workplace, including grievance mechanism and regular employee satisfactory surveys. Tongren and Qinzhou plants’ HR management are governed by the corporate HR policy and procedures and managed by a geographically (West-base) centralized HR department for implementation consistently across all operations of CNGR.

Working Conditions and Terms of Employment. All workers, including service providers (such as canteen workers and security guards) are directly employed by CNGR’s respective plant. Terms of employment including workers’ rights and code of conduct are formalized into employment contracts and communicated to all direct employees. All employees sign formal employment contracts. The employee’s handbook accessible to all employees provide more granular details on the HR management implementation procedures and workers code of conduct as well as workplace grievance mechanism. Employment terms strictly follow the national labor law, workers are employed initially on fixed three-year term contracts which are renewable for fixed 5-year term. Employee will then become open-end at the second contract renewal subject to satisfactory performance and availability of work. Working hour (based on job position) is articulated in the employment contract. The two plants applied all three types of working hour arrangements permitted by the national labor law: 1) regular working hours (eight hours a day, 5 days a week); 2) integrated working hours (40 hours a week, flexible arrangements for rest days); and, 3) flexible working hour (no fixed hour but all within the calculated limits of 40 hours a week). The flexible working hour are typically for management and senior management members. All overtime must apply in advance and is justifiable for approval. Any approved overtime work is paid at rates regulated by the national labor authority at 2 – 3 times the base salary. The utilization of those working hour arrangements provided the level of flexibility plants need during operation peaking and effectively minimised the need for overtime.

All employees are entitled for all insurances including medical insurance, unemployment, workplace injury, maternity, and pension that are required by labor law, as well as housing fund which is not mandatory. Salaries are based on annual industrial benchmark (including international or multinational companies operating in the region) conducted by the CNGR HR, and all exceed the regulated minimum wage by large margin.

Workers’ Organization. The company does not restrict staff members from joining a worker’s union. A worker union under the All-China Federation of Trade Unions (ACFTU) is established at Tongren plant and is expected to be established in Qinzhou plant, which can represent to the management any issues or grievances and negotiate collectively for workplace improvements. There is also formal grievance mechanism to address issues at plant level. Key means of management-worker communications are day to day direct dialogue between workers and supervisors during staff meetings, toolbox meetings, telephone contact to supervisors, and the use of the company’s internal and public social media accounts to send messages to management (anonymously).  Worker’s grievance is logged and tracked for timely resolution. In addition, constructive suggestions are collected and awarded if accepted for implementation. 

Protecting the Work Force, Non-discrimination and Equal Opportunity. The HR policies include prohibition of child labor and forced labor and does not hire workers below the age of 18 years. Age verification including review of credible official documents (such as birth certificate, education diploma/certificates, ID card, etc.) during recruitment process. Non-discrimination and equal opportunity are established and stated in the HR policy and procedure. Implementation of these policies is effective as woman employees account for 40% of the total workforce in Tongren plant and similar gender breakdown is expected in Qinzhou plant once operation started. Employees of minority ethnic groups (Dong) account for 60% of workforce in Tongren plant which is located in the minority autonomous region. Position of jobs and salary level were offered based on qualification. Promotions are merit-based. There is no discrimination in terms of working condition, benefits and career development opportunity between local and non-local workers, or between female and male workers. However, rejection of applicants with underlined infectious diseases is articulated which may not always be job-related selection element. CNGR will revise its Recruitment Management Procedure and Recruitment Requirement Letter and remove non-job-related elements to meet the statutory requirements for employment equality. CNGR will also modify its non-discrimination with clear language that the company will not make employment decisions on the basis of personal characteristics (such as gender, race, nationality, ethnic, social and indigenous origin, religion or belief, disability, age, or sexual orientation) unrelated to inherent job requirements (ESAP#2).

Workers’ accommodation. CNGR provides accommodation at no cost to employees. Worker’s accommodation is typically for 2-3 persons in an 40-50 sqm apartment, with decent living and hygiene conditions. Firefighting equipment (such as fire distinguisher, water hole) in the dormitory provided but were not inspected regularly. CNGR will ensure that worker accommodations are designed and operated in accordance with local standards and against IFC / EBRD Guidance Note on Workers’ Accommodation by undertaking an assessment to understand/verify the gaps and develop timebound corrective actions for any identified gaps and develop a checklist to regularly monitor effective implementation of worker’s accommodation conditions against Part II performance-based standards (ESAP#3).

Workers engaged by third-parties. Construction contractors were selected following CNGR’s tendering process. Regulatory requirements in China do not require the company to provide direct oversight of wages, working or living conditions of subcontracted labor. Terms of employment for contractors are as per national laws and the company relies on regulatory agencies for ensuring contractors. The company bonded the contractor with legal obligations to comply with applicable labor laws. The construction teams are all major well-known construction companies with provisions of PPE and enforcement clearly established. There is a construction camp onsite with area large enough to accommodate all construction workers, workers accommodations are in the forms of container covering an average size of 10-16 sqm with curtained window and door, 3-4 workers per room, public hygiene facilities, running water (hot and cold). The number of accommodation containers could be increased with the need accordingly with no restrictions. The project site is located in area accessible to existing urban settings, all workers have free access in and out.The company’s oversight is limited to technical specification, construction quality and progress through a specialized/certified inspection company. Moving forward, the company will develop a contractor oversight management procedure to supervise the performance of contractors in line with PS2, including standard for workers’ accommodation, migrant workers, and management of influx.  (ESAP #4).

Occupational Health and Safety. CNGR has adopted an OHS policy, as part of meeting ISO 45001 standard at all operations, including the proposed ones in Tongren and Qinzhou. CNGR has established workplace risk assessment procedures. For any new or modified equipment, a job hazard analysis (JHA) is conducted, and operation procedures may be revised based on JHA results.

Tongren site maintains general OHS programs, including new employee trainings and annual refreshers. There have been no fatal or serious accidents in the Tongren’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). From January 2021, Tongren site started to track the Loss-Time Injury Frequency Rate (LTIFR), following the GIIP and will start to register specific OHS leading and lagging KPIs and manage all recordable accidents to minimize potential lost-time injury. Before production, Qinzhou site will establish similar OHS management programs. As indicated in ESAP#4, Qinzhou site will develop a contractor E&S management procedure, which will apply to the construction work site. Together with other permit applications, Qinzhou site is working on safety pre-assessment, occupational health pre-assessment and the firefighting design, as indicated in ESAP#5.

Supply Chain. CNGR has a corporate procurement office to centrally handle all raw material supplies. The procurement office conducts initial qualification review for any new suppliers and annual review of all existing suppliers, which include E&S performance reviews (e.g prohibition of child/forced labors). Used EV batteries are mainly purchased from EV manufacturers. Due to transportation costs, the EV batteries for this investment are mainly from Guizhou/Guangxi or neighboring provinces in Southwest or Southcentral regions of China. The processed ores are mainly purchased from large international mining/smelting companies. With more available EV batteries in the next few years, the used EV batteries will gradually replace the processed ores.                                                

  Resource Efficiency. At both sites, electricity and water are supplied by the industrial parks. Steam for Tongren site is supplied by a neighboring plant. The steam for Qinzhou site is currently planned from onsite coal-fired boilers. CNGR is working to source steam supply from neighboring plants inside the industrial park. If approved by the industrial park, coal-based boiler will be phased out.  Both plants are expected to consume approximately 853,000 m3 water and 21,000 MWh electricity per annum. Water is mainly for hydrometallurgical processes 3nd steam purposes. Electricity is mainly for productions, pollution prevention equipment operations, and lighting. Approximately 87% of used water is recycled after proper treatment at both sites. External experts were contracted for energy saving/efficiency evaluation and improvement during the design phases of both sites.

GHG Emissions. This investment is expected to generate approximately 176,000 tons of CO2eq per annum, mainly from coal boilers, steam purchase,  and electricity consumptions. When the steam is purchased from a neighboring coal-based plant at Qinzhou site, the GHG emission will be slightly reduced.

Wastewater. The process wastewater at Tongren site is first recycled through reverse osmosis. The remaining wastewater is treated onsite to meet metallurgical industry wastewater discharge standards before being discharged into the industrial park’s wastewater treatment plant (WWTP) for further treatment. The sanitary wastewater is pretreated through onsite septic tanks, then discharged to municipal WWTP for further treatment. There is a 2,300 m3 initial contaminated rainwater storage pool. There is also a 780 m3 emergency collection storage pool for the storage of ER/firefighting wastewater. In case of emergency that the treated wastewater could not meet WWTP inlet limits, this wastewater will be sent to emergency or contaminated rainwater storage for further retreatment later. If the water in either storage cannot meet direct discharge standards, it is sent to the onsite wastewater treatment system. Qinzhou site will have similar design for wastewater collection and treatment system.

Air Emissions and Noise. There is no on-site incinerator at Tongren site. The emissions are mainly from acid leaching and solvent extraction processes. All the emissions are collected at each process for centralized scrubbing operation. The air emissions meet both local regulatory requirements and the applicable guideline limits for acid mists and VOCs listed in Table 1 of the Base Metals Smelting and Refining WBG EHS Guidelines (2007). Negative pressure design helps in collecting most of the fugitive emissions. To control fugitive emissions, Tongren site monitors the air quality outside of process buildings and at fence lines, which all meet local regulatory requirements. Noise levels are also monitored along the fence line, and the noise levels meet local regulatory requirements and GIIP. Qinzhou site will have similar designs for air emission controls and noise levels monitoring. 

Industrial and Hazardous Wastes. The electrolytes from disassembled EV batteries are treated with activated carbons and UV photolysis. The other disassembled plastic/metal pieces are assorted and sent to licensed industrial waste management companies for recycle or disposal.

The acid leaching generates slags, which are tested by a third party to decide toxicity through toxicity leaching procedures (TCLP). If TCLP indicates non-hazardous, the slags are disposed as industrial solid wastes at licensed waste management companies. If hazardous, the slags are disposed as hazardous wastes at licensed waste management companies. Used activated carbons and wastewater treatment sludges are also disposed as hazardous wastes. The extraction solvents and agents can be reused after back extractions. Qinzhou site will have similar designs for industrial and hazardous waste management.

Soil and Groundwater. Tongren site is designed to prevent soil and groundwater contamination. All the production and storage areas for industry wastes have multiple layers of pavements with impermeability equivalent to 1.5 m clay of  1×10-7 cm/s; all areas for hazardous materials/wastes, including used EV batteries, have pavement of HDPE layer and epoxy resin coatings, which has the impermeability equivalent to 6.0 m clay of  1×10-7 cm/s.  The hazardous materials are temporarily stored in containers according to their classification and compatibility with other materials.  There are 3 groundwater monitoring wells (one at upstream, one at downstream, and one at site) and 7 soil sampling locations at and near Tongren site. The site conducts annual soil and groundwater monitoring for heavy metals and other indicator parameters. No evidence of soil and/or groundwater contamination are detected. Qinzhou site will set up similar soil / groundwater monitoring program before the operations.

Operation Hazards. At Tongren site, the raw and auxiliary materials all contain components of hazardous materials or hazardous wastes. Hydrometallurgical processes need multiple hazardous chemicals for heavy metal leaching and extraction. Storage and handling of these materials are strictly managed at Tongren site. There is no underground storage of any hazardous materials/wastes. All hazardous liquid storage tanks 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.

Tongren site installed liquid sulfur dioxide (SO2) storage tanks in May 2021. A quantitative risk assessment (QRA) shall be conducted for the onsite SO2 tanks (ESAP#6). CNGR will undertake corrective actions based on the QRA outcomes to ensure employee and community safety  If needed, the SO2 storage installation will be modified to ensure the exclusive zone under credible worst-case scenario does not cover any residential community. Qinzhou site will have similar designs for the operation hazard controls. No SO2 storage is planned for Qinzhou site.                                                   

  Community Health and Safety. Both projects adopt hydrometallurgical processes to reduce potential impacts to the nearby communities. All combustible organic wastes are sent to offsite hazardous waste management facilities for incinerations. Therefore, the direct EHS impacts to the nearby communities are limited. To minimize potential fugitive emissions impacts, fence-line monitoring will be conducted at each site.  The fence-line/ambient monitoring results at the existing Tongren site and air emission modellings in the ESIAs for both sites show that the normal operations have limited impacts to communities outside of the industry park. The ESIA noise models also show limited impacts to community nearby. Noise management for both construction and operational phases will be managed according to the ESIAs, including equipment selection, sound barrier, and avoidance/minimization of construction at night. 

Both sites have soil/groundwater monitoring programs to detect the presence of key potential contaminants. The groundwater pollution diffusion models in the ESIA indicate that the groundwater sources are relatively distant in case of onsite soil/groundwater contamination. All the raw materials and products/wastes are transported through roads and railroads. The road system is in good condition and road transportation ranges are within 500 km, or less than one day’s trip. CNGR inspects the truck conditions and all permits/manifests before loading hazardous materials/wastes. In line with ESAP #7, CNGR shall only contract transportation companies that have defensive driving programs, acceptable safe driving records, and sufficient emergency response methods, and evaluate the transportation companies annually. CNGR will also develop an off-site emergency response plan. The company will require the transportation company with long-term contracts to report on its accident rates biannually.

Emergency Preparedness and Response. Tongren site has ER plans available and conducts routine drills for firefighting and potential chemical explosion/releases. Communities are informed of the drills. In case the impact ranges cover any residential communities based on the QRA findings for SO2 storage, the ER drills will involve the impacted communities for joint drills (ESAP #6). Besides SO2 storage, there is no other emergency scenario that can impact the nearby communities.

Security Personnel. Both Tongren and Qinzhou plants are located within established industrial parks. The local residents and communities are outside of the 200 meters buffer zone. CNGR has its own security personnel trained by qualified agencies for plant site security monitoring and conducts routine ID check at the gates. Security personnel are unarmed and working in shifts, with 1-3 people each shift.