Both Kandil plants are in industrial zones surrounded by other industrial developments. There no additional land requirements associated with the Project and there are no areas with biodiversity value, indigenous people or cultural heritage within proximity to the plants. Therefore, Performance Standards 5- 8 are not applicable to this investment at this time of appraisal.

 This is a Category B project according to IFC's Policy on Environment and Social Sustainability (2012). Based on the information reviewed by IFC, the 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 issues and risks associated with the Project include: (i)  compatibility of the Company's E&S management and monitoring  systems and extent of organizational capacity to assess and manage E&S risks and impacts from its operation; (ii) management of labor  working conditions, in particular grievance management, working conditions of third party  workers  and certain aspects of occupational health and safety (OHS); (iii) comprehensive monitoring and management of air emissions, noise, waste and hazardous materials; and (iv) extent of traffic management.

 Kandil has an established corporate environmental health and safety (EHS) management system. The EHS is designed and certified as an integrated management system (IMS) comprising 9001 (Quality Management System), ISO 14001:2015 (Environment Management System), and 45001 (Occupational Health and Safety Management System).  The IMS includes a EHS policy, risk management manual and a set of EHS risk management and monitoring procedures. However, the EHS management system should be further strengthened with the stakeholder engagement related procedures. Thus, Kandil will revise and update the EHS management system with appropriate procedures on communication, consultation and information disclosure to internal and external stakeholders in line with requirements of PS1; refer to ESAP #13.

The Company has a designated EHS Manager and two EHS officers at each plant.  Each Plant also has an EHS committee comprising workers’ representatives, supervisors, EHS team members and the Plant Manager. The committees meet quarterly to discuss EHS issues which are documented and then submitted to the EHS management for follow up.  The EHS officers and production line managers have EHS responsibilities designated as part of their job descriptions, though the production managers do not have corresponding key performance indicators (KPIs) to evaluate their performance. As defined in ESAP #1, Kandil will develop and implement clear EHS accountabilities and EHS KPIs targets for senior management, departmental managers and departmental supervisors to reinforce a positive occupational safety culture, operational oversight across departments in both plants.

EHS risk assessments are undertaken per an agreed schedule and protocol, typically annually (in the form of internal EHS audits) or should there be a change in the operations. The EHS team conducts regular monitoring of EHS performance with reporting to senior management annually. However, the scope risk assessments are primarily on occupational health and safety.  Kandil will therefore revise and augment the EHS risk assessment procedure to include key environmental risks posed by the operations (air emissions, waste and wastewater management and discharge, soil and groundwater contamination/pollution, and road transport) and add a quarterly environmental monitoring schedule for these risks; refer to ESAP #2.

Company EHS performance matters are not discussed at the Board of Directors level. As noted, EHS reporting to senior management occurs on an annual basis, or unless serious incidents occur in the operations. Per ESAP #3, Kandil will (i) establish an E&S Board Sub-Committee to provide strategic oversight of E&S governance and assurance of compliance with E&S policies and procedures; and (ii) revise the EHS performance reporting regime to senior management from annually to quarterly.

Kandil has documented emergency preparedness and response plans (EPRPs) and appropriate fire safety equipment and systems are available at both plants. Technical design of the fire safety passive and active systems for both plants are based on fire safety risk assessments conducted in line with local building codes, and local fire department regulationsfor and approved by specialised national regulator. The frequency of emergency drills is not documented, thus the Company will develop and implement a program for regular emergency drills at each plant and include this in the ESRP for the respective plants; refer to ESAP #4.

 Kandil employs 1,200 direct workers of which some 15 are female. The Company has outsourced (through HR firms) product packing and general cleaning services, which employ approximately 100 workers. Kandil implements policies on human resources which cover, working conditions, health and safety, anti-harassment and violence, equal opportunity, freedom of association which are all consistent with PS2. Each employee is inducted and given access to the IMS portal to access all policies and procedures. Contract terms are elaborate and include terms and conditions of employment, rights and responsibilities, requirements for following the Company's EHS and ethical standards and the disciplinary process.

Workers are allowed to join unions in Egypt and the workers at the plants have formed their own workers union and in accordance with the EHS committee guidelines, conduct periodic meetings and regularly engage with the management on working conditions, including wages.

The Company does not have a documented grievance management system though and this is rather a verbal process which is unclear to some workers.  As such, per ESAP #5, Kandil will develop a grievance management procedure in line with PS 2 which includes an appropriate method for anonymous reporting and communicate this to all workers; the approach to grievance management for contractors will be addressed via the updated Procurement Procedure as noted below. 

As noted, Kandil has EHS officers assigned to each plant along with regular risk analyses including job safety analysis for when there is a new task or a change in process. The Company monitor workplace conditions including illumination, heat stress, noise and air quality to safeguard worker health. The most recent results for air quality, temperature and illumination indicate compliance with national legal requirements. However, workplace noise at cold rolling machine two in Kama plant and at the pickling and galvanizing lines in Galva plant exceeds WBG EHS guideline workplace noise levels. Hence, Kandil will implement technical measures to lower workplace noise levels to noise levels defined by WBG EHS Guidelines, as agreed in ESAP #6. All workers undergo a health examination upon recruitment and annually during employment. The Company retains a nurse and an ambulance at each Plant.

Personal protective equipment (PPE), OHS on-boarding and training is provided to all workers, commensurate with the job hazards and risks. However, there is non-consistent PPE use and a notable recurrence of safety incidents that implies safety culture that needs to be improved further, albeit the incidence rate is within industry norms. Similarly, enforcement of safe work practices by management and supervisors needs improvement. Actions to address this are outlined below.

The EHS team collects and records accidents/incident statistics monthly from each department, including incidents associated with third party workers. The safety performance statistics are available to all workers via the Safety Dashboard. Kandil has a non-conformity follow-up process for early identification and management of unsafe acts among workers. The total recordable incident rate (TRIR) has reduced from 6 in 2017 to 1.8 in 2022, which is within the industry benchmark of 2.8.

As defined in ESAP #7, to support improvement in OHS performance, Kandil will; (i) in addition to the lagging indicators currently being tracked, establish and report on leading indicators and metrics (e.g. corrective actions management, audits and inspections of work practices undertaken by management and supervisory teams, at-risk safety observations) for measuring health and safety performance; (ii) review and update the incident investigation procedure to incorporate clear guidance for undertaking root cause analysis of E&S incidents; (iii) engage a competent third party OHS consultant acceptable for IFC  to conduct an organizational safety culture assessment and to define recommendations to improve the safety culture across all production lines; (iv) engage a third-party to provide safety leadership training to management and supervisory teams; and, (v) develop and implement an effective worker OHS training performance assurance program to support safe and reliable performance of work activities by operations personnel.

Other than the outsourced activities referenced, the Company engaged contractors for construction works within their premises as required. Kandil has a procurement procedure applied during contractor selection and supervision; however, this needs to be enhanced to incorporate EHS provisions. As defined in ESAP #8, the Company will develop and implement contractor selection, evaluation and supervision of EHS requirements in line with IFC PS 2 and Good Practice Note on Managing Contractors’ Environmental and Social Performance and embed these into the Procurement Procedure. This will also address the approach to grievance management by contractors.

 Power for Kandil’s operations is provided by natural gas and electricity from national power grid. Kandil plants also have backup diesel generators used only during power outages. To achieve higher efficiency in energy consumption, the Company has undertaken some initiatives recently including installation of a Regenerative Thermal Oxidation (RTO) unit for one of its production lines; introduction of LED lighting in some areas of its factories, as well as installing electrical and gas consumption metering systems to enhance monitoring and control of consumption rates.

Water for the process and administration use is supplied by the municipal supply system. Process wastewater is cooled, treated at the on-site industrial wastewater treatment plant and recycled into the production process. The residual wastewater after on-site treatment, together, with domestic wastewaters are discharged into the industrial zone sewer systems which is then further treated in the municipal wastewater treatment facility.

The main sources of air emissions include i) particulate matter via ventilation and extraction systems at production areas; ii) vehicular movements within the plants; (iii) fumes from the zinc coating, galvanizing and paint application processes; (v) ammonia injection into steel surface formation process; Air emissions and ambient air quality are monitored annually against nationally regulated limits. Ambient and stack emissions are analysed annually at both Plants, but the monitoring frequency will be changed to quarterly per the environmental monitoring schedule to be developed as part of ESAP #2 above. Ambient air quality parameters monitored include nitrogen oxides (NOx), Sulphur dioxide (SO2), carbon monoxide (CO), and particulate matter (PM10), and all are within the limits defined in the national and WBG EHS Guidelines. Point source stack air emission monitoring parameters include nitrogen oxides (NOx), Sulphur dioxide (SO2), carbon monoxide (CO), and total suspended particulates (TSP). Results from the most recent analysis indicate compliance with national legislation and limits defined in the WBG EHS Guidelines in other parameters, but the concentration of TSP from the stack emissions at the Kama Plant was above the nationally regulated limit. The operations currently emit around 88,000 tonnes of CO2-equivalent of greenhouse gas (GHG) annually. As agreed in ESAP #9, the Company will; (i) implement measure that will result in emission of TSP at Kama Plant being compliant with the nationally regulated limits; (ii) include particulate matter (PM2.5) as parameter in the ambient emissions monitoring and both (PM10 and PM2.5) in stack emissions monitoring schedule for both Plants; and (iii) develop and implement a system for GHG quantification aligned with WBG EHS Guidelines and good international industry practice.

The hazardous substances stored in large quantities on site include hydrochloric acid, ammonia, zinc and paints. The hydrochloric acid and ammonia are stored in specially designed above-storage tanks while the paints and zinc are retained in their manufacturer’s containers and packages in an appropriate storage area until needed. To address fire risks from ammonia gas storage, Kandil will in line with GIIP; (i) develop a standard operating procedure for safe transfer and filling of anhydrous ammonia tanks; (ii) design a maintenance and integrity management program for valves, tanks, joints and pipework; (iii) design appropriate leak detection systems and means of alerting workers in the event of ammonia leakages; and (iv) update the site EPRP based on these and develop external ERP with  neighbouring facilities and ensure the ERP is communicated to authorities concerned; as agreed in ESAP #10.

Kandil has a site-specific waste management procedure for each plant, which clearly identifies and classifies all solid waste streams generated from the operations and ensure transport to appropriate disposal facilities operated by accredited waste management companies. All hazardous wastes generated at the plants are classified, temporarily stored at the plants until they are collected and processed by accredited and specialized companies.

 Key risks to communities’ health and safety linked to Kandil’s operations are mainly related to road transport (of products) and security at the premises. In terms of road safety, the Company has engaged transport contractors for product transport to the Ports. As part of ESAP #11, the Company will develop and implement a road transport safety management plan aligned with the WBG EHS Guidelines and good international industry practice and integrate road transport risk management into the EHS management system. Kandil will integrate the road safety transportation requirements into contracts with the transporters and will periodically monitor and audit them against the established road safety management procedures. 

Security provision is outsourced to a local company that employs unarmed security guards. The Company has a security risk management procedure applicable to all security personnel in line with IFC PS 4 requirements.

 Kandil has identified and mapped key stakeholders and developed a stakeholder engagement matrix and an external grievance processing flow chart. Engagement with these external stakeholders (including neighboring businesses and regulators) occur mainly on a need basis. As defined in ESAP #12, these elements of the stakeholder engagement will be consolidated into a single stakeholder engagement plan with external grievance mechanism in line with PS1.

 Contact Person: Baher Abdelmalek

Company Name: Kandil Steel S.A.E      

Address: Parcel of Land No. 5, Block 13035 – 11771

Industrial Zone, Obour City, Cairo, Egypt      

Email: b.malek@kandil.com   

Phone: +20 1005155036