· Lumber
· Elements
· Crate Packaging and Pallets
· Laminated Block Boards
· Finger-jointed Elements

The objective of this project, expected to be completed at the middle of 2000, is to install a new line producing finger-jointed elements and laminated blocks. The sawmill will be upgraded and expanded to include softwood production as well as the current hardwood. All of the thermal energy is produced in the company’s boiler, while water and electricity are supplied by the existing utility infrastructure. MANJACA currently employs 170 people; however, the workforce will be increased to 200 employees by project implementation.

2. This is a category B project according to IFC’s environmental review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. IFC’s Environment Division’s review of this project consisted of appraising technical and environmental information submitted by Crystal Bank (the Agent Bank), the IFC Field Office, and MANJACA. The following potential environmental, safety and health impacts of the project were analyzed:

· wood supply source and management
· chemical usage, storage and handling
· air emissions and workplace air quality
· water supply and effluent discharge
· solid and hazardous waste management
· emergency response and fire protection
· employee health and safety, and training.

The information provided about how these potential impacts are addressed by MANJACA is summarized in the paragraphs that follow. MANJACA is developing plans to address outstanding issues and to demonstrate that the proposed project will comply with the host country’s applicable laws and regulations and the World Bank Group’s applicable policies and guidelines. The company has appropriate permissions in compliance with national and local laws and regulations for the project and will receive permits for each new machine or construction throughout the project.

3. Wood Supply, Source and Management. MANJACA acquires beech logs from the state-owned logging company, Srpske Sume, based on yearly contracts. The logs are delivered to Mrkonjic Grad, for processing, mainly from the division located in close proximity to the plant, an area known as one of the best beech wood locations in the world. Srpske Sume is professionally organized and managed, working according to annual forest management and reforestation plans. There is no indication that MANJACA is causing over-harvesting in the region. Presently, the company is purchasing about 15,000 to 20,000 m3 of logs a year.

4. Chemical Usage, Storage and Handling. Chemicals used in production will include laminating glues and small quantities of finishing lacquers for beds. At present, lacquers are applied by a hand wiping technique. Materials were separately stored in a segregated, flammables/explosives storage warehouse, in a manner designed to prevent spills and minimize accidents. This facility still exists, but is empty. There are plans to use it for the project, since there will be glue used to make the laminations and finger-joints. This entire production area is free of chemicals and in good condition.

5. Air Emissions and Workplace Air Quality. The potential sources of air emissions at the facility include the boiler used to generate process steam; cutting, milling and sanding operations; and wood finishing processes. The boiler (approximately 6 MWe capacity) is permitted by local authorities and burns wood waste only. The company will engage the Ecological Institute in Banja Luka to conduct updated stack emissions analysis. If warranted by this analysis, MANJACA by final disbursement will have in place a corrective action plan to improve boiler operations or controls in order to ensure compliance with World Bank Group guidelines for emissions of particulates, SO2 and NOx. Particulates from woodcutting, milling and sanding areas are controlled through the use of a dust collection system. This system consists of several Moldow units: one has two cyclones; another has one central storage cyclone: and another has a small feeder cyclone. These are not in good working order with leaks and non-functioning motors or no hook ups, in some cases. The Investment Plan calls for refurbishment of the ventilation and collection system in total. This system will keep the air in the workplace clear of excessive dust and also feed sawdust to boiler silos where it is stored as fuel. Ambient air from the production areas will be adequately controlled by building ventilation, recirculation, and air filtration systems, also included in the Investment Plan. MANJACA by final disbursement will have in place a corrective action plan to upgrade the collection systems, which will considerably reduce dust and particulate matter in the buildings and in the vicinity of the boiler.

6. Water Supply and Effluent Discharge. The water for industrial process, as well as for workers and sanitary purposes, is supplied from the municipal water supply system. In addition, there is a 300 T reservoir filled with lake water (direct hook-up) for the fire protection system. The municipal water used is relatively low volume for boiler feed water and general washing. MANJACA generates process effluents from steam pits, as well as employee sanitary wastewater and truck washwater. Sanitary waste is discharged to an on-site septic system. Currently, there is treatment of liquid discharge, using a settling system. Except for sanitary waste, all wastewater, including stormwater, is currently discharged directly to this system (co-owned with the metal factory next-door) and then to the Black River. This treatment facility was constructed approximately 10 years ago. MANJACA has all appropriate permits from statutory authorities to discharge pretreated waste effluents to the river. MANJACA has engaged the Ecological Institute to test the influent from MANJACA to the system and to test the effluent of the system. By final disbursement, MANJACA will ensure the Agent Bank, via a report from the municipality and the Ecological Institute, that all process effluents do not exceed local and IFC guidelines, or will have corrective action in place.

7. Solid and Hazardous Waste Management. Solid wastes generated include wood off cuts; bark; sawdust and wood chips; cardboard and other packaging materials; lacquer cans and plant trash; and sludge. The wood dust particles are collected and transferred through the negative pressure ventilation system to boiler silos to be used as fuel. Other wood off-cuts and residuals are chipped and then burned as fuel. The company was burning waste rags and empty lacquer cans in open fires. The company has been instructed to stop this practice and to find alternative means for acceptable waste disposal (e.g., sending it municipal authorities for proper disposal, burning the rags in the wood-fired boiler or sending them to a permitted industrial laundry for reuse). Plant trash is collected and removed by the municipality. The sediment and sludge which is collected in the tanks of the water treatment/settling system is drawn off periodically by a licensed firm from Banja Luka and removed in a tanktruck to a municipal facility for proper disposal.

8. Emergency Response and Fire Protection. All employees receive training in emergency response. However, the physical fire prevention system was partially destroyed during the civil war and requires reconstruction and upgrading. The system included a complete series of hydrants around all factory buildings and alarms in main factory areas. The system also includes a water reservoir of 300 tons. The reservoir will respond to fill the system within several minutes. The city water is also connected to the system. There is a fire truck on site, belonging to the state-owned forestry company. The town fire hall is 500 meters away. CO2 canisters presently on site are labeled with dated municipal inspections. The company will execute a refurbishment plan per the local authorities and will begin routine inspections. The entire system is under the management of a dedicated emergency, health and safety department, which will regularly inspect and test the systems, once refurbished.

9. Employee Health and Safety, and Training. The company is addressing all aspects of employee health and safety including workplace hygiene, and general health and safety and training. MANJACA has a worker health and safety training plan and program. All staff receives training on the company’s policies and procedures in general safety upon employment. MANJACA has access to the medical center one kilometer away for regular medical checks as well as emergencies. The Ecological Institute’s recent report noted noise level issues in the sawmill production area, and MANJACA has purchased ear phones for employee protection. The Institute called for an updated Health and Safety Plan, which MANJACA is preparing. In the updated H&S Plan, all equipment that performs cutting and milling operations will have safety guards to protect the operators. By second disbursement, the updated H&S plan will be in place.

10. Crystal Bank, as agent for IFC, will monitor compliance with the relevant environmental, health and safety policies and guidelines during the lifetime of the project. MANJACA will provide an annual report to Crystal Bank that includes details of environmental and social issues, and Crystal Bank staff will conduct periodic supervision missions to the project. Crystal Bank will provide an annual environmental performance report to IFC covering this project.

11. Based on its review of available information regarding potential environmental and social impacts and proposed mitigation measures, IFC concludes that this proposed project will meet the World Bank Group’s applicable environmental, health and safety policies and guidelines and the applicable requirements of the Republic of Srpska.