PROJECT

Projects

Environmental & Social Review Summary

Project Number

46903

Company Name

ENTOBEL HOLDING PTE. LTD.

Date ESRS Disclosed

Apr 4, 2023

Country

Viet Nam

Region

East Asia and the Pacific

Last Updated Date

Apr 14, 2023

Environmental Category

B - Limited

Status

Pending Disbursement

Previous Events

Approved : Jun 14, 2018
Signed : Feb 23, 2023

Sector

other

Industry

other

Department

Regional Industry - MAS Asia & Pac

Project Description

Incorporated in 2016, Entobel Holdings PTE (or “Entobel” or “the Company”) is a Singaporean based insect protein manufacturing business with one factory in Dong Nai Province, Vietnam, with a production capacity of 1,000 metric tons (MT)/year of powdered larvae for use in aquaculture feeds.

The manufacturing process is designed to be a zero waste (close-loop system). The basic production process, utilizing Black Soldier Fly (BSF) – Hermelia illucens, comprises of culturing the mature BSF to get them to mating, egg harvesting (eggs recycled for next generation of BSF for egg production), growing larvae on food and beverage by-products, drying the larvae, and grinding or pressing (for powder and oil extraction). Entobel’s insect protein products are used as feed ingredients for the aquaculture industry with lesser E&S impacts than traditional sources of aquafeed, such as fish meal and soy-derived products. The remaining material comprising of left-over organic by-product and pupae excrement, known as “substrate”, is bagged and sold separately as organic fertilizer. Entobel’s insects are fed with beverage by-products (primarily brewing residues), which do not divert human food resources. There is also no use of post-consumer waste or manure as input.

The proposed IFC investment is to (i) commit Upstream funding of US$2.5mn to prove the commercial viability and cost competitiveness of insect feed production at an industrial scale by supporting the establishment of a 10,000 MT industrial insect feed plant in Ba Ria - Vung Tau province, Vietnam (the “Project”) and to support future international expansion of Entobel. The pilot phase (including construction, commissioning, and testing) is expected to run from March 2022 to June 2025. Final commissioning of the Vung Tau facility is expected by September 2023, following which, Entobel is expected to scale up capacity utilization from ~50% in 2023 to ~100% in 2025. The total project cost amounts to $32.5mn and is co-funded by Mekong Capital and Dragon Capital, who are contributing US$25mn and US$5mn respectively; (ii) negotiate and sign a Collaboration Agreement and Warrant Agreement with the Company for the proposed Upstream engagement, including the right to convert IFC’s US$2.5mn contribution (or warrants) into equity in Entobel within a 5-year period, and a right of first offer (ROFO) to arrange and participate in future debt financing to support the Company in its expansion plans across Asia.

Overview of IFC's Scope of Review

IFC’s environmental and social (E&S) review of this investment took place between September 28th, 2021 and October 12th 2021, with a hybrid appraisal process being conducted with a combination of virtual interviews and a site visit to Dong Nai facility December 1st 2021. The appraisal process included interviews with the Chief Operating Officer (CEO) and the Director of Operations. Site visit interviews comprised of Production and Human Resources (HR) Manager and opportunistic interviews with workers. The documents review within the scope of this appraisal included: i) Approved Environmental and Social Impact Assessment (ESIA) for new facility (Vung Tau); ii) Land Use Certificates (Long Term Lease) Vung Tau facility; iii) Provincial issued construction permits and certificate of construction completion for Dong Nai facility; iv) ISO 22000 manual; v) Wastewater disposal contract (Dong Nai Facility); vi) Entobel Code of Conduct; vii) Entobel sample labor agreements; viii) By-product supplier list; ix) Dong Nai environmental monitoring report (October, 2021); x) fire certificate and proof of firefighting training (Dong Nai Facility); xi) Rental/Land Lease agreement Dat Do I industrial park operator (Vung Tau facility). On 23rd August 2022, further ESMS-related documents were provided for IFC review, including (i) General E&S policies and management system; (ii) Environmental policy, waste management and chemical control procedures; (iii) HR policies and management procedures; (iv) OHS policies and management procedures.

IFC’s appraisal considered environmental and social management plans for the project and gaps, if any between these plans and IFC Performance Standards (PSs) requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period, are summarized in the paragraphs that follow and in the agreed Environmental and Social Action Plan (ESAP). Through the implementation of these management plans and the ESAP, the project is expected to be designed and operated in accordance with IFC PSs objectives. IFC’s appraisal used the IFC’s Gender-Based Violence (GBV) risk screening tool to screen for GBV risk in Vietnam and at the project level.

E & S Project Categorization and Applicable Standard

Environmental and Social Mitigation Measures

Stakeholder Engagement

Broad Community Support

Environmental & Social Action Plan