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.
PS 1 - Assessment and Management of Environmental and Social Risks and Impacts
Armstrong ZE identifies and manages E&S risks and impacts associated with its operations through compliance with applicable national standards and E&S regulatory permits and requirements. The company’s Environment and Social Management System (ESMS) and EHS organizational structures are yet to be established. Hence, as per ESAP#1, the company will establish a company ESMS commensurate with the E&S risks and impact of its operations, compliant with the national law, and consistent with the requirements of IFC’s Performance Standards, World Bank Group (WBG) General Environment Health and Safety (EHS) Guidelines, and WBG EHS Guidelines for Metal Plastic and Rubber (2007).
The company has undertaken an Environmental Impact Assessment (EIA) for the greenfield tire manufacturing plant (project) in line with national law and received a construction permit in 2023 from the local regulatory authority. The company has also prepared a supplemental environmental and social impact assessment (ESIA) in accordance with the requirements of IFC PSs. As part of the ESIA, the company prepared an E&S management framework (ESMF) addressing the main E&S risks from project construction, as well as a framework for the Stakeholder Engagement Plan (SEP).
Initial screening of climate change projections indicates the region may experience hotter temperatures, heat waves, and short-term drought in the coming years. The ESIA includes an assessment of the impacts of climate change and identifies adaptation measures to be included in the corporate ESMS (ESAP #1) and site-specific construction and operations management plans.
The company started the initial phase of construction work on the workers’ accommodation following the construction permit issuance. The company manages contractors following the requirements of national law and standards. However, the company will augment the management of contractors and, as per ESAP#2, ensure that the contractors prepare and implement a suite of site-specific construction Environmental and Social Management Plans (CESMPs) based on the EIA, the supplemental ESIA, national law, WBG General EHS guidelines (2007), WBG EHS Guidelines for Metal Plastic and Rubber (2007) and the company’s ESMS related plans and procedures. The CESMPs will include but not be limited to air quality and dust management; waste management; occupational health and safety, water and wastewater management; hazardous materials management; noise management; spill prevention and response, emergency preparedness and response plan (EPRP); traffic management; workers accommodation, chance find procedure, Stakeholder Engagement Plan (SEP) and community grievance redress mechanism (GRM) for construction phase.
Prior to the start of operations, as per ESAP#3, the company will develop Operational Environment and Social Management Plans (OESMPs) in line with the national law, the ESIA, WBG General EHS guidelines (2007), and WBG EHS Guidelines for Metal Plastic and Rubber (2007) and the ESMS related plans and procedures. The OESMPs will address all relevant operational E&S risks, including, at a minimum, pollution prevention, water management, hazardous materials, waste management, emergency response, transport, and traffic, community health and safety, environmental monitoring, and stakeholder engagement (including grievance management).
The company will hire contractors for the construction phase. The company will develop and implement a Contractor E&S Management Plan (CMP) as part of the construction ESMS. The CMPs will outline the process of incorporating project E&S requirements into the contractors’ and subcontractors’ responsibilities and selecting, hiring, managing, and monitoring them. In addition, the company will include legally binding obligations in the construction contractor contracts. They will do the same with the sub-contractors to ensure compliance with the requirements of all relevant Environment and Social (E&S) and Health and Safety (H&S) plans contained within the project ESMS, as well as national regulations and IFC PSs (ESAP#2).
Armstrong ZE will develop its EHS organizational structure as part of the project. Hence, (a) the company will hire (i) an Environment Health and Safety (EHS) Manager, who will have overall E&S risk management responsibility, (ii) a certified occupational health and safety officer, and (iii) a Community Liaison Officer (CLO) for the project (ESAP#4a). Furthermore, each construction contractor will establish EHS organizational structure commensurate with risks in line with local regulatory requirements (ESAP#4b).
The company will closely monitor the contractors' E&S and H&S performance to ensure compliance with national law, IFC PSs, and the ESMS procedures. The ESMS will define indicators and monitoring frequency (ESAP#1). In addition, the company will commission an independent third-party labor audit in accordance with national law and the requirements of IFC PS2 during the peak of construction (ESAP #5).
As part of the ESIA, the company has prepared the emergency preparedness and response planning framework. However, as part of the project construction and operational phases of ESMPs (ESAP#2 and #3), the company will prepare, implement, and maintain site-specific emergency preparedness and response plans to prepare and respond to accidental emergencies, particularly fire, flood, and earthquakes. This will include evacuation plans/routes, designated and marked assembly points, roles and responsibilities, communication procedures, protocols for conducting the emergency response drills and training frequency.
PS 2 – Labor and Working Conditions
The project construction will last two years, and the workforce is expected to reach approximately 800 to 1000 contracted workers during the construction peak. The average workforce is expected to be approximately 500 workers during project operations.
The company has a Human Resources (HR) department, but HR policies and procedures are yet to be adopted. As per ESAP#6, the Company will prepare and adopt HR policies and procedures compliant with national law and the requirements of IFC PS2. The company will also develop an Employee Handbook and a Workers’ Code of Conduct and ensure that all employees, including contracted workers, have a written employment contract before commencing work. In addition, the company will develop and implement a Worker's Grievance Mechanism (WGM) that is compliant with the national law and requirements of IFC PS2. The company will disseminate information about its use to the workforce (in a language the workers understand). The company will appoint a Grievance/ HR officer to coordinate the implementation of the WGM.
Temporary accommodation for workers will be developed during the project construction phase and approximately 250 construction workers will be housed onsite while the rest will commute from nearby towns and Karachi. The company will accommodate approximately 200 on-site workers in the project's operational phase. As part of the construction of ESMPs (ESAP#2), the company will develop and implement a Worker Accommodation Management Plan as per requirements of IFC PS2 and IFC’s and EBRD’s Guidance Note for Worker Accommodation (2009).
Occupational Health and Safety (OHS) risks and impacts during construction include workers’ exposure to noise, heat, and dust, as well as risks related to construction works (structural, electrical, and mechanical), vehicular traffic, and contingencies (chemical spills, fire). The company will take steps to prevent work-related accidents, injuries, and diseases arising from, associated with, or occurring in the course of work by minimizing, as far as reasonably practicable, the causes of hazards. As per ESAP #2, the construction contractors and subcontractors will be contractually obliged to develop an OHS Management Plan in accordance with the national law and WBG General EHS guidelines (2007), while as per ESAP#3, the company will develop an OHS management plan for operations in accordance with national law and WBG General EHS Guidelines (2007). The OHS Management Plan will include as a minimum (i) identification of potential hazards to workers; (ii) provision of preventive and protective measures; (iii) training of workers; (iv) documentation and reporting of occupational accidents, diseases, and incidents; and (v) emergency prevention, preparedness, and response arrangements. In addition, as per ESAP#7, a third-party Independent Monitoring Company will be hired by Armstrong ZE to manage and supervise E&S and OHS aspects during the construction phase.
The main project-related raw materials will include carbon black, synthetic rubber, natural rubber, sulfur, rubber process oil, silica, stearic acid, wax, zinc oxide, nylon, steel cord, bead wire, and other chemicals. The suppliers have not been selected because the project is in the early construction phase. Natural rubber will likely be procured from suppliers based in Thailand, synthetic rubber from China, and carbon black from China. IFCs contextual risk screening analysis indicates risks associated with child/forced labor and safe working conditions, especially in Indonesia and China. In Thailand, natural rubber production is also potentially associated with deforestation. To comply with the requirements of IFC PSs, the company will conduct an initial risk assessment of primary suppliers of natural rubber (ESAP#8a) in accordance with the requirements of IFGC PSs. An independent third party will undertake this assessment, which will be submitted for IFC’s review before any suppliers are contracted. In addition, the company will develop and implement a Supply Chain Management System (SCMS) as per ESAP#8b. The SCMS will identify and manage supplier’s risk in alignment with PS2 and PS6 and should include as a minimum i) a Supply Chain Policy and Supplier Code of Conduct that addresses child labor, forced labor, and safety issues as per PS2, as well as PS6 supply chain requirements related to reducing risks of deforestation; ii) inclusion of contractual clauses requiring suppliers’ compliance with the code of conduct; iii) a verification process to ensure new suppliers have the policies and procedures in place to meet requirements of the Supplier Code of Conduct (including any relevant certifications); iv) a communication strategy to inform suppliers about the code of conduct; v) a formal process for supplier engagement, remedy or disengagement in case non-compliances that are not addressed; vi) a traceability system to identify sources of high-risk materials and components; vii) a supplier risk screening platform; and viii) a monitoring and verification system. Once the SCMS is developed, the company will implement the SCMS and conduct an E&S risk assessment of all its primary suppliers against IFC PS1, PS2, and PS6-related supply chain requirements, especially for high-risk commodities such as natural rubber.
PS 3 – Resource Efficiency and Pollution Prevention
The new facility will rely on electricity from the power grid to meet its energy needs. Two backup diesel generators or gensets (1.8 MW) will be used in case of power breakdown. Coal will primarily be used to produce steam (11 tons per hours) in the boiler and the expected usage is approximately 25,000 kg of coal per day. During phase 1 of project operations, approximately 5000 tyres per day will be produced, and the electrical consumption will be 1200 kWh/ton. During phase 2, approximately 10,000 tyres per day will be produced, and the electrical consumption will be 900 kWh/ton. The water consumption will be 0.24 Ml/day during operations.
The primary source of fugitive emissions from the new plant operations will relate to the loading and unloading of chemicals, compounding and mixing additive chemicals, and coal handling processes. The process boiler stack will emit point source air emissions, including carbon, nitrogen, sulfur, and hydrocarbon oxides. As part of the supplemental ESIA, the company commissioned air dispersion modeling for sulfur dioxide, nitrogen dioxide, carbon monoxide, and total suspended particulates, and results indicate that air emissions will not result in pollutant concentrations that reach or exceed relevant national ambient air quality standards. As part of the operational ESMPs, the company will prepare and implement an air quality management and monitoring plan. If air ambient quality monitoring results indicate an exceedance of national ambient air quality standards, the company will augment air emission pollution control measures to align these with the requirements.
Project Greenhouse Gas (GHG) emissions are expected to be emitted from coal in the boiler, diesel in the generator, and electricity and gas purchased for manufacturing operations. Some emissions are also expected from using biomass (rice husk) in the boiler. The annual project emissions from Scope 1 and Scope 2 are expected to be 28,317 tons of CO2 equivalent per year.
Water consumption: The project will use groundwater for its operations. The groundwater will be sourced from the fourth aquifer, approximately 100 meters below the ground surface and hydro-geologically separated from the shallow aquifer(s). The project will not use groundwater from shallow depths aquifers. According to the supplemental ESIA, the daily water usage for the project during the operational phase will be approximately 65,000 gallons. Of this, 42,300 gallons will be used as process water, and 22,700 gallons will be used for on-site domestic purposes (e.g., accommodation areas, kitchens, and lavatories. Approximately 92,800 gallons will be drawn from the deep groundwater aquifer to kickstart the cycle. Subsequently, approximately 60,400 gallons of treated water from the Effluent Treatment Plant (which meets reverse osmosis (RO) feed water standards) will be utilized to maintain the daily water balance requirement, and approximately 32,400 gallons per day will be sourced from groundwater. As per ESAP#9, the company will conduct a Water Resource Vulnerability Assessment for groundwater to evaluate both short and long-term adequacy of groundwater for the project, as well as other competing users such as neighboring industries, agriculture, local communities. All recommendations and mitigation measures of this assessment will be implemented by the company.
Wastewater management: The new facility will process wastewater from cooling, heating, vulcanizing, and cleaning operations. The wastewater would contain suspended solids, oil, and grease. In addition, the operation of the RO plant will generate wastewater, while domestic wastewater will be generated from the kitchen and lavatories of labor accommodations. According to the ESIA, an estimated 61,000 gallons of wastewater will be generated daily. The company will design and construct an onsite Effluent Treatment Plant (ETP). The ETP efficiency will comply with national regulations and effluent levels defined by WBG EHS guidelines for Plastic, Metal Rubber (2007). The project aims to minimize water consumption by using treated wastewater for various purposes, including recycling in process streams, sprinkling/suppressing coal ash, and landscaping, thus gradually achieving the company’s zero wastewater discharge target. The sludge generated by the ETP will be collected and disposed of by a specialized and licensed contractor. The company will develop a wastewater management plan as part of the OESMPs (ESAP#3).
Solid waste generated by the project will include uncured rubber, cured rubber, off-specification rubber waste, scrap from thermoplastic polymers, metal scraps, plastics, used drums and cans, wooden scrap, and chemical bags. As part of the OESMPs, the company will develop and implement a waste management plan per national law and WBG General EHS Guidelines. Certified and specialized waste management companies will segregate and collect recyclable items.
The coal-fired boiler will generate combustion wastes such as bottom ash, boiler slag, and fly ash. The company will test ash residues at the start of new plant operations to verify their classification as hazardous or non-hazardous. Based on testing results, the company will manage ash reuse and disposal. The project design includes a five-day ash storage yard. The non-hazardous ash will then be transported via covered trucks to the coal ash pond to be developed along the southwestern project site boundary. The ash will be reused in the production of cement and concrete blocks. A specialized and licensed contractor will collect and dispose of ash categorized as hazardous.
The main hazardous materials used by the project will include diesel, industrial oil, solvents, sulfur, corrosive chemicals, gas cylinders, and chemicals such as Zinc Stearate, 2,2,4-trimethyl-1,2-dihydroquinoline (TMQ), and phenyl phenylenediamine (6PPD). As per national regulatory standards, hazardous material will be stored in a dedicated, enclosed, secure facility with a roof and a paved/concrete floor. Hazardous waste generated by project operations will include oil, lubricants, sludge from effluent treatment plant, and rejected tyres. The wastes generated during operations shall be classified, quantified, segregated, and stored before disposal. The project Hazardous Substance Management Plan prepared for the construction and operational phase of ESMPs (as per ESAP# 2 and 3) will establish procedures for handling, storage, and disposal of chemicals/hazardous substances.
PS 4 – Community Health, Safety and Security
The new facility is located in a Special Economic Zone. Major industrial and commercial entities located in the vicinity of the project include the Daniyal Farm (0.3 km), Green World Farmhouse (0.72 km), Green Acres (1.70 km), Royal Ranches (0.66 km), Jinxian Chinese Company (0.80 km), Agha Ice Factory and Cattle Farm (1.62 km), Global Poultry Farm (0.72 km), Tappal Gatta (1.22 km), Jeelani Rice Mill (1.63 km) and Pioneer Feed poultry farm (1.88 km). The communities identified within the project Area of Impact include the two settlements of Mallah community (one adjacent and one 420 m from the project), three settlements of Kohli (435 m, 715 m and 1205 m), Bukhero and Mallah settlements (60 m), Hashim Bukhero (950 m), Lashari Baloch (528 m), Bhambro (583 m), Umrani Baloch (612 m), Samoo and Jhokio settlements (950 m). Community health and safety issues associated with the project construction and operations will be monitored and managed through the construction and operational ESMPs (ESAP # 2 and #3) and the company ESMS.
The company will hire armed guards through third-party contractors to provide security at the site. As per ESAP #10, the company will conduct a Security Risk Assessment and based on outcomes, prepare a related Security Management Plan (SMP) in line with the requirements of IFC’s PS4. The SMP will be guided by the principles of proportionality and good international practices and include procedures to: assess risks posed by security arrangements, especially armed guards; ensure hiring, rules of conduct, training, equipping, and monitoring of security workers; provide for background verification on security personnel’s character with no incidents of past abuses; train security guards to exhibit appropriate conduct towards plant workers and neighborhood communities including Gender-Based Violence and Harassment (GBVH); and to receive and resolve grievances about the security arrangements and acts of security personnel. The plan will be aligned with IFC’s Good Practice Handbook on the Use of Security Forces: Assessing and Managing Risks and Impacts.
Life and fire safety: The facility's design includes a life and fire safety master plan prepared in line with the national building and fire safety codes. The passive and active fire safety and alarm systems will comply with the NFPA (National Fire Protection Association) Codes and Standards and Factory Mutual Standards.
PS6 - Biodiversity Conservation and Sustainable Management of Living Natural Resources
The company intends to procure natural rubber from Thailand. IFC screening for the natural rubber supply chain in Thailand has identified a risk of conversion of natural and critical habitats within this jurisdiction. The requirements to ensure PS6 compliance for supply chain requirements are outlined under PS2.
