This is a category A project according to IFC’s environmental and social review procedure, because it has the potential to have significant adverse environmental impacts that are sensitive, diverse, or unprecedented. Plata Panamericana, S.A. de C.V. (Plata), a subsidiary of Pan American, has retained independent consultants (Dew Point International, Clifton Engineering, and Agra) to prepare a comprehensive Environmental Assessment (EA) in English and Spanish. The 4-volume EA includes a Environmental Impact Assessment (EIA) and an Environmental Action Plan (EAP), all addressing several key environmental and social issues associated with the project’s implementation, construction, and operation. The EAP, to be updated and expanded during the development of the project, includes conceptual plans related to health and safety, emergency response, waste management, and mine reclamation and closure. It is anticipated that the first EAP revision will be published in January 2001. The EA was released to the InfoShop and in country on July 25, 2000. Prior to this, an initial version of the Mexican EIA (MIA) was disclosed in Mexico in March 1999.
Public Consultation and Disclosure
In accordance with Mexican and IFC requirements Pan American/Plata prepared a Public Consultation and Disclosure Plan (PCDP) in April 2000. Between March 1999 and July 2000, formal meetings took place during the preparation of the EIA. In addition, a full disclosure meeting took place at the end of the EA process, just before the public release of the EIA. Plata has been working with local residents in the project area since 1997, and there have been several meetings with the local and regional authorities as well as with local leaders. The EIA was made available for public consultation in La Colorada and in the towns of Durango and Zacatecas in early June 2000. The next public meeting will take place prior to construction. Public consultation and disclosure were held in accordance with Mexican and World Bank Group requirements. The result of the consultations have been incorporated into the EIA and appended reports.
Environment, Health and Safety
This is the rehabilitation and expansion of an existing underground mine. Key environmental issues include: air and dust emissions, water resources and water quality, tailings impoundment, erosion control, solid and liquid waste management, handling and storage of hazardous materials, noise and visual impacts, and reclamation and closure. Health and safety issues include mine safety, employee training, occupational health and safety, general housekeeping and fire prevention.
The EIA includes a detailed project description, a review of the current environment, a detailed analysis of environmental effects, and a discussion on mitigation and monitoring. The main impacts relate to atmospheric environment, water resources, and geotechnical. An analysis of alternatives is complete.
The EAP defines the management, mitigation, monitoring and institutional measures that will be taken at the La Colorada Silver Project to eliminate adverse environmental effects and social impacts, offset them, or reduce them to acceptable levels. It defines the specific actions that Plata will undertake to implement these measures and to document their environmental and social performance. It presents Plata management commitments, a set of mitigation measures, detailed monitoring activities, and various management plans. Detailed implementation schedules and cost estimates were developed with clear benchmarks.
The principal mitigation measures include minimization of fugitive sources, improved dust control, minimization of additional land disturbance, integrated water management, process solution and runoff control systems, timely reclamation of surface disturbances, engineering control measures for the tailings impoundment, and enforcement of adequate procedures regarding the preservation of the fauna and flora.
Plata has agreed to prepare a detailed mine reclamation and closure plan (MRCP) and to set aside financial provisions over the life of the mine to implement it. Plata will set aside in an escrow account $150,000 annually for mine closure and reclamation, as estimated in the preliminary MRCP. This money will be used during and at the end of the operation for reclamation measures undertaken by Plata at the mine site.
Plata has established sound company policies on health, safety, environmental and social issues. Plata has organized its company structure to oblige all managers to take individual ownership for the health, safety, environmental and social programs under their jurisdiction. The positions that will serve as the clearinghouse for all of the programs are the Environment Officer and the Safety Superintendent. Both have direct line responsibility through the Project Manager and Managing Director to the Plata Board of Directors and direct access to the Pan American Board of Directors through the Vice President for the Environment.
IFC also carried out a review of Pan American’s environmental practices and management. Environmental and safety issues are integrated into all aspects and stages of their business activities.
Pan American''s Sustainable Development Program
The mine is located in a remote area of Zacatecas, one of Mexico''s poorest states. With IFC assistance, Pan American will develop a social program that goes substantially beyond Mexican legal requirements and will support sustainable development in the local community. SEMARNAP and PROFEPA (the Mexican government agencies responsible for environmental monitoring and protection) support the Pan American program. The main components of the program are described below.
Environmental
Previous operations at the mine have left waste rock and tailings on the surface with no controlled drainage from these areas. Oxidation, generation of acidic conditions, and leaching of metals or other contaminants into the surrounding soils have significantly impacted the water quality in the area. Seepage, runoff and sediment eroded during substantial rainfall events have flushed contaminants out of the wastes and carried them to the surface watercourses. Currently, the water from La Colorada River shows quantities that exceed standards for chromium VI, lead, copper and iron.
As part of its commitment to environmentally responsible mining, Pan American would work with IFC specialists to plan and implement a cleanup of historical tailings that have negative impacts on the water quality of the La Colorada River. Similarly, Pan American will improve the community wastewater treatment plant by creating a state of the art solid waste management facility. The current sewage treatment system does not adequately treat wastes prior to discharge into La Colorada River. This has negative environmental and social impacts due to agricultural use downstream of the facility. As part of the development plan, the water system will be monitored in order to assess the downstream social impacts from mine water discharge to La Colorada River.
Social
Mineral extraction and beneficiation represent the largest percentage of household income in the Zacatecas State (15%), followed by food retailing (8%). The state is therefore highly dependent on ongoing mining development for its economic and social wellbeing. Approximately 35,000 people live in the surrounding areas of the mine and a significant proportion of them have traditionally been dependent, directly or indirectly, on the mine and now suffer from severe unemployment and sharply reduced incomes. Local residents have an average income of US $2.60/day and have been forced into seasonal migration to supplement meager agricultural earnings.
In the immediate area of the mine, small-scale farming has developed to service the mines and provides means of subsistence to the families involved in this activity. However, migrant farm labor has increased due to the poor performance of the mine and most men currently travel for large parts of the year, living away from their families and communities. Migration to the major city, Zacatecas, provides little relief as average earnings of employees fell by approximately 20% since 1994, following the signing of NAFTA and the "Peso Crisis".
The project will have a net beneficial impact on the communities in the local town of Sombrerete and in the surrounding villages of La Colorada, Chalchihuites, Ranchera, Canoas, and San Juan de la Tapia. The expanded La Colorada operation and potential local economic development program will provide jobs and income generating opportunities in this economically depressed area. The mine will employ approximately 250 persons directly. However, research on mining economies has indicated that each additional job in mining supports approximately 5 jobs indirectly. In this region, each worker can support five or more persons, and thus La Colorada mine could potentially impact the lives of over 4,500 people (over 12% of the population of the Chalchihuites region).
In order to maximize the impact of the mine on local employment, Plata will preferentially hire residents of the surrounding communities. The recruitment program includes a training component to teach mining skills to the local population.
In addition, Pan American will work with the local community and other stakeholders to promote local economic development opportunities by developing local suppliers. In the first phase of the Project, it is expected that local contractors would provide the catering and transportation services. Further opportunities would exist for local supplier development in areas such as security, maintenance, contract mining, cleaning, small fabrication shops (e.g. welding), electrical services, and storage facilities.
The Mining Department and SME Department is jointly developing a SME program for the area that would foster linkage between the project and local product and service providers. The first phase would support a consultant''s analysis of the supply chain of the La Colorada project to identify products and services that could be provided by existing and new SMEs. The consultant would conduct gap analysis of SMEs on business plan, financing, quality, volume, and on time delivery, in order to prepare them to provide the product and services that could meet standards set by La Colorada and other mines in the region. The consultant would also identify existing government programs at a local, state and national level that could be useful in the mine region
Plata would participate as a key stakeholder in such a program, which would draw on World Bank Group funds and expertise to support the development of income-generating activities in the nearby communities.
Infrastructure Initiatives
Plata will also implement a number of infrastructure initiatives that could significantly improve the quality of life of local residents as well as provide a foundation for encouraging local economic development. The Project will provide potable water to the town of La Colorada. Currently, a contractor trucks potable water from a well located several kilometers from the mine. The company will treat water discharged from the mine to ensure that there is a long-term potable water source. Pan American will spend US$250,000 to construct a new 13 kilometer, 34.5 kV power line connecting the site to the Durango grid. A government-owned power company will build this line. The new system will have approximately 6.5 MW capacity and demand for power for the mine will use up approximately half of this. This will enable the local villages and nascent SMEs to obtain reliable power that has not been provided by the existing line. In addition, Plata has committed US$120,000 to upgrade infrastructure along the access road during mine construction.
Environmental and Social Supervision
This project will receive close supervision from Environment Division staff in order to monitor EAP implementation and compliance with applicable World Bank Group and Mexican Government requirements.
Annual environmental and social monitoring reports (AMRs) will be required which detail project performance against the requirements of these documents, host country regulation and any other requirements incorporated into the investment agreement.
Location of environmental documents In locally affected community
-Plata Panamericana Durango office: 20 de Noviembre No. 1920 Ote. Piso 1, Col. Guillermina, Durango, Dgo, Mexico 34270
-Semanarp Office (Environmental Agency), Gonzales Ortega 410, Col. Sierra de Alica, Zacatecas, Zac - CP 98050.
- Mine Site: Mina La Colorada, Chalchihuites, Zacatecas.
