IFC’s appraisal considered the environmental and social management planning process and documentation for the Project and gaps, if any, between these and IFC’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through implementation of these measures, the Project is expected to be designed and operated in accordance with Performance Standards objectives.
PS1: Assessment and Management of Environmental and Social Risks and Impacts
Assessment: In accordance with national legislation GRP has undertaken an “Analisis Mengenai Dampak Lingkungan,” (AMDAL), the national equivalent of an environmental impact assessment, for new developments on site. To date, four AMDALS have been completed, the most recent being in 2019 for a training center and workshop. An AMDAL is not required for any of the activities envisaged as part of this investment.
Management systems: The company identifies and manages E&S risks and impacts associated with its operations through compliance with applicable national standards and regulations and application of certified quality, environmental, health and safety standards systems i.e., ISO 9001, ISO 14001 and IS0 45001. This includes a comprehensive health, safety and environment (HSE) policy signed by the President Director. Alignment with the policy is supported via Hazard Identification and Risk Assessments (HAZIP) undertaken for all processes, which then inform the company’s risks register. In addition, an HSE program is developed annually for GRP’s activities.
Capacity: A dedicated HSE team managed by the QHSE Manager and a Sustainability Department at the corporate level managed by a Sustainability Head. The Sustainability Department is focused on developing and implementing GRP’s sustainability and environmental, social and governance strategies. There are weekly and monthly HSE meetings. However, there is a need to strengthen operational HSE teams at the production unit level, improve internal reporting systems and engagement between the HSE team and Sustainability Department, and thereby ensure there is regular feedback to senior management on HSE performance, including the Commissioner of Directors (refer ESAP #1 & ESAP #2 below). This will also ensure the data collected if effectively utilized.
Monitoring & Reporting: The company undertakes regular monitoring of a range of key performance indicators some of which are reported to authorities on a regular basis. This includes material usage, water and energy consumption, workplace monitoring including accidents, emissions, wastewater quality and waste generation, amongst others. Going forward and as defined in ESAP #2, GRP will review their systems for the collection and reporting of HSE data to ensure this is used appropriately and timeously reported to relevant representatives within the company’s organizational structure such that appropriate actions can be taken in response. Since 2021, GRP has published a Sustainability Report providing information on a range of topics and metrics.
Emergency Response: GRP has a documented on-site emergency response plan inclusive of a plan defining the evacuation routes and muster points, and a defined structure for the 30 workers designated as the emergency response team with each shift. There is a fire alarm in the administrative and production areas, firefighting equipment (extinguishers / hose reels) situated throughout the facility including relevant signage. GRP has a dedicated fire truck, and there is ongoing training in emergency response, including by outside organizations; the company may also call on the city services. In accordance with national requirements, the company is also required to have its firefighting and first aid systems certified by the government.
Overall, the scope of the company’s management systems aligns with the Performance Standards (PS) and are consistent with the E&S risks and impacts of its operations. Actions defined in this document will further enhance the effectiveness of the management systems.
PS2: Labor and Working Conditions
Terms and conditions of employment: GRP employs 3,772 male and 166 female direct full-time workers in accordance with a written agreement and/or appointment letter. Workers are either employed on a fixed term or permanent basis and terms of employment comply with national labor regulations.
HR policies and procedures and working conditions: The company has an HR policy consistent with the requirements of this PS2. There is a set of HR policies and procedures that address i) working conditions, ii) rules and regulations, iii) child and forced labor, iv) freedom of association, v) discrimination and equal opportunity, vi) anti-harassment, and accommodation. The company has a collective bargaining agreement with the on-site trade unions.
Discrimination and equal opportunity: The company’s discrimination and equal opportunities policy is included in the employment standards declaration document and the anti-harassment policy in the Code of Conduct. The client will review and update the anti-harassment policy to include all type of workplace gender-based violence and sexual harassment, as well as ensuring worker awareness on updates per ESAP #3.
Grievance mechanism: The company has two grievance handling mechanisms i.e., an internal grievance redressal (through Darwinbox) and a complaint settlement which is governed largely by the CBA and only accessible by direct employees. However, these mechanisms do not define a clear process by which grievances are managed. Further, along with the whistleblowing policies, they do not facilitate anonymous grievances, and reporting of workplace gender-based violence and sexual harassment. Thus, GRP will update their worker grievance mechanisms to address these gaps; ref ESAP #3.
Retrenchment: GRP retrenched 81 workers in December 2022, and this was undertaken in accordance with national legislation. Any potential retrenchment shall be aligned with PS2 requirements (refer ESAP #2) and include the need to analyse alternatives to retrenchment, development of a strategy to reduce adverse impacts of retrenchment on workers if retrenchment is the only viable option, and ensure the process is consultative and based on the principle of non-discrimination; ref ESAP #3.
Contractor and third-party employees: GRP has a contractor management system, and two outsourcing companies provide cleaning, gardening, and security services (677 employees), and transportation is also outsourced. Per ESAP #4, GRP will review and update their contractor system to include contractual obligations to comply with national laws, ensure oversight and monitoring of contractor performance pertaining to working conditions and OHS, and facilitate access to the company’s grievance mechanisms, if applicable.
Accommodation: The company accommodates staff (approximately 200) on site in standalone houses and an accommodation block. GRP will review and update its accommodation policy in alignment with the IFC/EBRD Guidance on Workers’ Accommodation (2009) standards, including those related to gender segregation; refer to ESAP #5. In addition, GRP will review the approach to emergency response at the accommodation block to ensure it aligns with the requirements of the World Bank Group General Environment, Health Safety (EHS) Guidelines.
Supply Chain: The client supply chain includes several domestic and international metal scrap suppliers. GRP has a supply chain procedure including a supplier code of conduct (CoC). GRP will review and update the supplier CoC to ensure compliance with PS:2 supply chain requirements, which include the prohibition of forced labor, child labor, and management of significant safety issues. In addition, the procurement contractual obligations will be enhanced to comply with PS2 supply chain requirements per the updated CoC, and add screening and monitoring of suppliers in the existing supply chain procedures to ensure alignment with the company’s requirements (refer to ESAP #6)
Occupational health and safety: As noted, HAZIP’s are undertaken for all processes which informs the annual training program. The safety training program is audited by the British Standards Institute annually as part of the ISO 45001 management system certification and the Government audits the safety systems every 3 years. Safety meetings are held at the start of every shift, and safety is an agenda item in the regular weekly and monthly HSE meetings. Aside from the HSE management and supervisory staff (three), there are 5 dedicated safety officers. There is a comprehensive list of procedures to manage OHS and relevant safety signage was observed in process areas. All staff are provided with personal protective equipment (PPE), though in some areas, the observed use of certain items, such as hearing and eye protection requires improvement. Workplace monitoring is undertaken (air quality, noise, illumination and vibration) bi-annually by an independent company and the results are submitted to the authorities bi-annually in accordance with the Ministry of Health regulations; all parameters are within the applicable standards. Workers are subject to medical check-ups annually, which is a legal requirement, and there is tracking of potential occupational impacts e.g., hearing loss, in the differing work areas.
The company monitors safety incidents, and there was one fatality in 2021 in the past (5) years. Lost time injury rates are currently well above the industry norm of 0.6 per annum though. Thus, in accordance with ESAP #7, GRP will commission a suitably qualified consultant to review the approach to OHS risk management, including staffing, training, staff welfare conditions, and root cause analysis of injuries. The study will include a time-based action plan to address the findings and ensure OHS performance aligns with good international industry practice.
PS3: Resource Efficiency and Pollution Prevention
Resource Efficiency: GRP is currently expanding its rooftop solar as part of its carbon footprint reduction efforts. Water usage is in a closed loop system and circulated back to the cooling system. Slag from the furnace is used to manufacture aggregates for use in the construction industry. Where feasible, general wastes and used oils are recycled or sold as by-products.
Electricity, Water & Raw Materials: Energy at the facility is provided via electricity supplied from the municipal grid, natural gas (piped directly to the site) and diesel. Natural gas is the largest source of energy (52%), electricity (47%) and the remainder from diesel and rooftop solar. Water is extracted directly from the river traversing the facility; the company has the necessary permits for this. Scrap, hot briquetted iron and pig iron are the primary raw materials. The quantities of energy, water and materials used in the production process are all documented in GRP’s Sustainability Report (ref link to be include).
GHG emissions: GRP has an existing GHG intensity of 0.86 ton of carbon dioxide (CO2) per ton of steel which is lower than the average carbon intensity of steelmakers aligned with the 1.5-degree pathway of 1.13 ton of CO2 per ton of steel produced by 2030. The company has committed to achieving net zero by 2050 and developed a comprehensive road map to facilitate this. GRP is also engaging with IFC’s Advisory Services to develop and implement a decarbonisation strategy which will support the net zero target.
GHG emissions (scope 1 & 2) from the GRP facility vary to some extent as this depends on the production capacity. Current GHG emissions are 489,000 tons of CO2 per annum and with the company’s focus on achieving net zero, this is expected to decrease with time. Going forward GRP will report GHG emissions to IFC in the Annual Monitoring Report based on an internationally accepted methodology.
Air Pollution: Emissions from the EAF and reheating furnaces are monitored bi-annually by an independent consultant with the results submitted to the authorities; a similar approach applies to all other monitoring as referenced below. There is also continuous monitoring of particulates on the EAF. Ambient air quality is monitored at two locations (defined as upwind and downwind of plant). All monitoring results indicate compliance with the national standards and the WBG EHS Guidelines for Integrated Steels Mill, 2007 (for the EAF and reheating furnaces).
Noise: Environmental noise is monitored at two locations bi-annually with the results indicating compliance with national legislation. However, the facility is situated in proximity to residential areas, and in some instances, residences are directly adjacent to GRP’s boundary. Thus, per ESAP #8, GRP will review the approach to environmental noise monitoring to ensure this effectively evaluates air quality and noise levels / associated impacts on adjacent communities. This data will be reported to IFC in the Annual Monitoring Report and on this basis, the need for potential mitigation measures will be defined if necessary.
Water/Wastewater treatment: River water is monitored upstream and downstream of the site as is intake water. Water used in the production process is treated before use and water used in the administrative area and accommodation is also further treated and tested before use. Wastewater from the accommodation and administrative areas and the on-site ablution facilities is discharged via an on-site sewerage treatment plant and then discharged to the river. All effluent quality monitoring data reviewed indicated compliance with national effluent standards. Water quality discharged from the water system associated with the production process is monitored before discharge and aligns with national standards and the effluent requirements in the WBG EHS Guidelines for Integrated Steels Mill (2007). However, the extent of parameters monitored is limited relative to that defined in the guidelines referenced. Thus, GRP will augment the environmental monitoring plan to align with the WBG EHS Guidelines for Integrated Steels Mill (2007) effluent parameters. Based on the results, the company will then assess the need to improve wastewater treatment to align with the WBG EHS Guidelines for Integrated Steels Mill (2007) effluent parameters (refer ESAP #9).
Hazardous Materials and Waste Management: GRP has detailed information on all hazardous materials stored on-site and these are in designated areas, typically within the production areas. In addition, there are above ground tanks for the storage of oil. Some areas where hazardous materials are stored do not have appropriate bundling. Thus, GRP will address this as defined in ESAP #10.
Waste: Solid waste is separated on-site and then stored in designated areas prior to collection. Waste storage areas observed were satisfactory, with the necessary bundling if required. Hazardous materials (oils, grease, acid regeneration plant waste, etc.) are collected by companies registered for such activities and, if not recycled, disposed of at government-operated hazardous waste facilities. There is a waste manifest system and GRP receives records to confirm that wastes are appropriately disposed of. General waste that is not recycled is collected and disposed of by the municipal services.
Stormwater: Stormwater is collected in a network of stormwater collection drains on-site and then discharged into the adjacent river. Stormwater may be contaminated with on-site materials such as oils and wastes that accumulate in the drains. Thus, GRP will review the approach to stormwater management such that the drains are regularly cleaned and contaminated and uncontaminated stormwater is separated and contaminated stormwater is treated e.g., via oil water separators, before discharge into the adjacent river; refer ESAP #11.
Soil and groundwater quality: There are two groundwater monitoring boreholes; one located outside the site within a residential area and the other within the site. The results from both indicate compliance with relevant national standards. Given the nature of GRP’s activities, the proximity of the communities, and the that they may access groundwater for potable use and others, the company commissioned a Phase 1 environmental site assessment (ESA) in accordance with ASTM E1527-21: Standard Practice for ESA’s. The ESA findings recommend improvements to the storage and handling of materials on-site. In addition, three on-site areas were identified where localized soil and groundwater testing should be undertaken as part of the Phase II ESA. Hence, as part of the ESAP #12, the company will undertake the Phase II ESA per the ASTM E1903-19 Standard and implement corrective actions as may be identified as part of this assessment.
PS4: Community Health and Safety
The facility generates some 200 truck movements daily, and there are also deliveries on-site between the various departments. GRP has undertaken a traffic analysis to assess the impact of traffic, has a traffic management procedure and the required traffic flow c is clearly defined for the differing traffic types e.g., scrap metal, finished product etc. Designated truck staging areas have been developed to address community concerns regarding impacts on road access due to waiting trucks. Unarmed site security checks vehicles when they enter the site e.g., to confirm drivers are wearing appropriate PPE.
