Environmental & Social Review Summary
Project Number
9976
Company Name
Sino-Forest Corporation
Date ESRS Disclosed
Feb 5, 2010
Country
China
Region
East Asia and the Pacific
Last Updated Date
Jan 2, 2017
Environmental Category
B - Limited
Status
Completed
Previous Events
Approved : Nov 16, 2000
Signed : Jul 16, 2001
Invested : Aug 30, 2001
Sector
Wood Panels and Engineered Wood Products
Industry
Agribusiness and Forestry
Department
Regional Industry - MAS Asia & Pac
Project Description
Environmental Review Summary (ERS)
Project Name China - Sino Forest
Region Asia and the Pacific
Sector Timber, Pulp and Paper
Project No. 9976
1. This project is an investment in Sino Forest, a Canadian/Chinese company engaged in plantation management and downstream wood processing for domestic use and export. The company currently produces largely wood chips, but is constructing a particleboard plant and plans to develop further downstream wood processing operations. Through joint ventures with Forest Bureaus in the provinces in which it is working, the company currently has a plantation build-up program of 600,000 hectares. 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.
2. The review of this project consisted of appraising technical and environmental information submitted by the project sponsor, and the technical appraisal and site review completed by IFC’s Technical and Environment Department staff. The following potential environmental, health and safety impacts of the project were analyzed:
· sustainable management and harvesting of plantations
· forest harvesting operations and compliance with Forestry Policy
· social aspects related to local community forest use and employment
· pest management practices
· air, water and solid waste emissions issues in wood processing facilities
· fire and life safety
· general worker health and safety
The information provided about how these potential impacts are addressed in the development of the project is summarized in the paragraphs that follow.
Environmental Management Systems
3. Sino Forest has established an Environmental Management System (EMS), with clear policies on social and environmental aspects of their operations. The company has developed detailed operating procedures which incorporate environmental and social best practice. The company is committed to applying sustainable management to its plantations and to achieving continuous improvement in its environmental performance. The company is planning to apply for ISO 14001 certification in the future.
Plantation Management
4. Sino Forest enters into cooperative joint ventures with state Forestry Bureaus to manage, harvest and replant existing forest plantations using eucalyptus, poplar and pine. Their forestry operations focus exclusively on plantation forests, many of which were originally established through World Bank programs. No harvesting of natural forest is involved, and there is no clearing of any type of natural forest for plantation development. Almost all plantations taken under management are existing plantations at varying stages of growth. The harvesting cycle is 5 years for eucalyptus, 7 years for poplar and 12 years for pine. Sino Forest operates its own nurseries for planting stock, and is developing and testing new varieties for use in its plantations.
5. An independent environmental audit was carried out for Sino Forest’s plantations. This audit ranked the company favorably on most aspects related to forest planning, social issues and environmental protection. Improvements in site preparation practices and in road drainage maintenance were advised, and these issues have since been addressed by Sino Forest and incorporated in their detailed management plans. Sino Forest uses minimal amounts of agricultural chemicals. The company is ensuring that pesticides which may be hazardous to human health are replaced with more appropriate materials. Procedures for safe handling of pesticides have been developed and staff receive training in their use. The company is also in the process of developing an integrated pest management strategy. Biological and other non-chemical disease control measures, along with the use of organic fertilizers, is promoted on all plantations. There have not been any major pest or disease outbreaks in the last five years, which the company attributes to their care in ensuring the use of high quality, disease-free seedlings, proper planting density and consistent monitoring and reporting.
Wood Processing Operations
6. Sino Forest currently chips much of its wood for sale for pulp both domestically and in the region. Some wood is sold locally as logs for processing. The wood chipping operations involve sub-contractors with small-scale machinery which has little or no environmental impact. The company ensures that safe operating rules are followed by workers, including the use of personal protective equipment as appropriate. Safety barriers, fire extinguishers and warning signs are all present in these operations.
7. Sino Forest is presently constructing a particleboard mill at Gaoyao City, Guangdong Province, to produce up to 100,000 m3/yr. The mill will be provided with modern pollution control equipment to enable it to meet World Bank Group guidelines. The mill will have 2 coal-fired boilers (approximately 7 MWe each) which are fitted with high-efficiency multi-cyclones and flue gas treatment technology to reduce particulates and SO2. Emissions are expected to be less than 90 mg/Nm3 for particulates and 1000 mg/Nm3 for SO2, within World Bank Group limits. Presses will be enclosed and vented, and dust from finishing operations will be collected to ensure that workplace concentrations of dust and vapors are within approved limits. Minor process wastewater from cleaning and sanitary wastes will be discharged to the municipal sewage system. Urea-formaldehyde resin is used to produce particleboard to the E1 standard for formaldehyde emissions. The company will ensure that any hazardous materials including glues and resins are properly stored and handled and that fuel tanks are provided with secondary containment in the event of leaks or spills. Appropriate fire detection and control systems will be installed, including water curtains, sensors, sprinklers, hydrants and alarms. Site construction safety practices were observed during the field visit, including the use of personal protective equipment.
8. The company intends that any future processing plants will similarly be constructed to fully meet World Bank Group environmental and health and safety guidelines.
Community Forestry Practices
9. Sino Forest follows a multi-step procedure in establishing a cooperative joint venture (CJV) and obtaining community agreement for their management of a plantation. The community has the right to turn down the contract. The contract gives villagers the rights to a percentage of the timber produced, typically 9%. It can sell to the CJV, if the CJV wishes to purchase it, or market it elsewhere. The contract does not restrict other land uses as long as they do not harm the trees, e.g., building fires. Grazing and the collection of litter for fuel may be the only practical uses after 2-3 years. In several instances, villages have, switched to fuels other than wood because of generally increasing prosperity. Sino Forest is using a double row plantation system that allows intercropping for a longer period. This system is mutually beneficial as tree growth may be double what it is in a single row intercropping system. Village labor is needed throughout the planting-to-harvesting cycle. The contractual arrangements are willing-seller/willing buyer for both the land entitlement and sale of lumber. The plantation system permits, and in some cases encourages, multiple use. The plantations create additional employment for the contracting community. The social consequences of the arrangement are positive.
Indigenous Peoples
10. Sino-Forest has contractual relationships with Zhuang communities in Guangxi Province. The Zhuang are a recognized national minority under Chinese law. Zhuang communities reach contracts with the CJVs under the same willing-seller/willing-buyer arrangements as other villages. Sino-Forest will ensure that Zhuang continue to receive equal treatment as other communities in these contractual arrangements. The Zhuang will be beneficiaries of the project.
11. IFC will monitor ongoing compliance with World Bank Group environmental, health and safety policies and guidelines during the lifetime of the project by evaluating reports submitted annually to IFC by Sino Forest, in a format to be defined by IFC, and by conducting periodic supervision. Monitoring reports will be expected to cover:
· details of community consultation carried out with regard to future formation of CJVs for plantation management
· updates on integrated pest management planning for all operations
· details of emissions and health and safety aspects for all wood processing operations, as they are developed, and
· details on the ISO 14001 certification process, and any other forestry certification which may be sought for these plantations.
12. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that Sino Forest’s proposed project will fully meet World Bank Group environmental, health and safety policies and guidelines and host country requirements. In particular, it will meet IFC’s O.P. 4.36 Forestry Policy, and will serve as an example of sustainable forest management.
Environmental and Social Mitigation Measures
Broad Community Support
Related SII
