Exolgan S.A.

Environmental & Social Review Summary

This Environmental and Social Review Summary is prepared and distributed in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Board dates are estimates only.
Any documentation which is attached to this Environmental and Social Review Summary has been prepared by the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content.

Project number	27364
Country	Argentina
Sector	Transportation and Warehousing
Department	Infrastructure
Company name	Exolgan S.A.
Environmental category	B
Status	Active

Date ESRS disclosed	March 10, 2009

Previous Events	Invested: August 27, 2009 Signed: June 26, 2009 Approved: June 9, 2009

View Summary of Proposed Investment (SPI), click here

Overview

Category & Applicable Standards

Key Issues & Mitigation

Community Engagements

Client's Documentation

Overview of IFC's scope of review

The review of this project consisted of a field visit to the Terminal and other facilities to assess on-site operation of Exolgan’s Environmental, Health and Safety Management System (EHSMS) and interviews with management and key staff in charge of labor, EHS and social issues. Separate meetings were held with leaders of the community around the Terminal and with the families being resettled. The review also included the Project’s technical, environmental and social reports, as well as key documents of the Company’s EHS Management System.

The following key documents, among others, have been reviewed:

-EHSMS Manual and Procedures
-Terminal Expansion Environmental Assessment (December 2007)
-Summary Review of Dredging Methodologies for Dock Sud
-Soil and Groundwater Studies for the Ammonia Handling and Storing Plant (December 2007)
-Waste Management Procedures
-Waste Water Treatment Manuals
-Hazardous Materials Handling and Storage Procedures
-Emergency Response Procedures
-Spill Response Plan (2007)
-ISO 14001 & OHSAS 18001 External Audit Report (BVQI 2007)
-Human Resources Policy
-Collective Agreements with Unions (2007)
-Traffic Management Plan (2009)

Project description

Exolgan S.A. (“Exolgan” or the “Company”) operates the second largest container terminal in Buenos Aires (“BA”). The terminal is located at the Dock Sud area, about 8 km south of BA. The terminal handled about 500,000 TEU in 2007.

Exolgan is implementing an investment program (the “Project”) including (1) dredging, construction and extension of the berths and the container yard (the “Construction Program”), (2) purchase of new equipment and land; and (3) other investments including upgrading IT system.

Key environmental and social issues and mitigation

Key among the most relevant prevention and mitigation measures identified for the Construction Program’s construction and operation stages include: implementation of community consultation and engagement activities; development of dredging management and dredge spoil disposal plans; adoption of occupational health and safety procedures for civil works; and adequate resettlement of 8 families and 2 companies located in the Terminal’s expansion area. Exolgan has presented plans to address these and other potential Environmental and Social (E&S) impacts to ensure that the proposed Construction Program will upon implementation of the specific agreed measures, comply with the E&S requirements of the host country laws and regulations and IFC’s Performance Standards. The information about how these potential impacts will be addressed by Exolgan is summarized in the paragraphs that follow.

PS1: Social and Environmental Assessment and Management System:

Environmental and Social Assessment: The Environmental Assessment (EA) for the Terminal expansion found no significant E&S risks for the Construction Program’s construction and operation stages and it identified key issues that required mitigation measures. The final version of the EA was approved by the Buenos Aires Provincial Organization for Sustainable Development (Organismo Provincial para el Desarrollo Sostenible –OPDS- de la Provincia de Buenos Aires) on December 2008.

Detailed design of the Construction Program was conducted based on local and international construction standards, including the following: USACE and ASTM 252 recommendations for the design and construction of Foundation Steel Pipes Piles; Technical Standards for Port and Harbor Facilities (Japan 2002); and the Recommendations of the Committee for Waterfront Structures Harbors and Waterways (EAU 1996).

For the Construction Program Exolgan will develop, and the construction contractor will implement, specific Environmental Health and Safety (EHS) Management Plans and procedures in accordance to the EA recommendations and IFC’s PSs and applicable EHS Guidelines. These EHS management plans and procedures will address, among others, the following issues: management of construction waste and disposal, occupational health and safety procedures and training, use of Personal Protective Equipment (PPE), erosion control, management liquid waste, oils, and fuels, and noise and dust control measures. The dredging contractor will be required by Exolgan to dispose of dredged spoils in recintos (containment areas) provided by the Provincial Authority in accordance with local law and regulation as set out in a Dredge Management Plan compliant with local law and regulation incorporating as appropriate international best practice.
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Management Programs and Systems: Social development and environmental sustainability, adequate labor conditions, and a safe working environment are integral to Exolgan’s mission and vision. Since 1998 Exolgan started the implementation of an Integrated EHS Management System (EHSMS) and is certified on ISO 9002 (for quality), ISO 14001 (for environment) and OHSAS 18001 (for health and safety). Exolgan will include IFC’s PSs and applicable EHS Guidelines in its EHSMS’ requirements and update it accordingly. These EHSMS defines a series of procedures to assess, manage and monitor EHS issues related to the operations of the company, including: E&S impact assessment procedures, emergency and contingency plans, effluents, air quality, noise, potable water, fire and life safety, waste management, use of PPEs, health and safety procedures, and community engagement mechanisms, among others.

Organization: EHS, labor and social issues are under the responsibility of the Company’s Humans Resources and Quality Manager who has a team of full-time EHS staff to support the Terminal’s operations. Exolgan relies on support from consultants to conduct environmental assessments and on per needed basis.

Monitoring and Reporting: Exolgan conducts periodic internal and external EHS audits. The results of these audits, including recommendations and identified corrective actions, are documented and informed to management periodically. The Company’s EHSMS is reviewed and updated annually by senior management. Exolgan conducts ongoing monitoring on key EHS aspects including: effluents, air quality, and occupational health and safety issues, among others.

PS2: Labor and Working Conditions:

Human Resource Policy and Management: As of January 2009, Exolgan employs over 494 people (of whom about 64% are unionized) and it is anticipated that once the Project is completed it will generate over 100 new jobs. Approximately 100 people will be employed during construction by Exolgan’s contractors. All Exolgan’s employees reside in BA and the Company gives priority to hiring people from local communities where their skills match available jobs.

Exolgan has in place HR policies that are in line with Argentinean labor laws and regulations and are consistent with PS2 requirements. All employees receive copies of their contracts upon being hired, which include specific information regarding rights and benefits. As mentioned before an important number of employees are unionized and there are collective agreements in place. The Company does not employ minors and does not engage in forced labor. Exolgan requires all its contractors, subcontractors and service providers to comply with local labor laws.

Occupational Health and Safety (OHS): As noted under PS1, Exolgan has in place OHS management procedures in accordance to OHSAS 18001 and Argentinean OHS laws. These procedures include: standard operation procedures, use of PPE, traffic safety, emergency response and preparedness plans, fire safety equipment, and specific procedures for reporting and investigating incidents and identifying corrective actions, among others. Exolgan has conducted risk and critical points assessments for the Terminal operations and has developed procedures and implemented measures accordingly.

All employees, including contractors and their employees, must be covered by an occupational risk insurance issued by a recognized Occupational Risk Agency (Administradora de Riesgo de Trabajo –ART-) and are required to abide by the Company’s OHS procedures. Compliance is constantly monitored by Exolgan. As mentioned under PS1, the Construction Contractor and the Dredging Contractor will develop and implement project-specific EHS management plans and procedures that will include measures to address any OHS risks related to their activities.

Exolgan has also conducted a fire safety assessment for its facilities and has installed fire safety systems and equipment (including networks of hydrants and wet pipes and sprinklers for selected areas) and has trained fire brigades. Fire and emergency response drills are conducted once a year.

PS3: Pollution Prevention and Abatement:

Pollution Prevention: Exolgan’s main activities include the loading and unloading of containers to and from ships, to freight trains, and trucks, and the temporary storage of these goods. No bulk cargo is handled or stored at the Terminal. Effluents, noise and air emissions generated by the Terminal are periodically monitored by Exolgan and have been found to be within permissible limits.

Waste management: Exolgan operates four small wastewater treatment plants (WWTP) as follows: i) WWTP 1 treats wastewater from the workshop and the nearby waste storage areas; ii) WWTP 2 treats wastewater from the cleaning of the reefer containers; iii) WWTP 3 treats wastewater from the dry container storage and washing area; and iv) WWTP 4 treats sanitary wastewater from the administrative offices. Treated effluents are discharged into the Riachuelo River. Treated effluents are monitored weekly and include measurements of pH, conductivity and suspended solids. Every two months a more comprehensive set of parameters are analyzed by an external laboratory, which include: TPH, pH, suspended solids, detergents, metals, BOD and COD. Any exceedances detected are immediately corrected through the improvement of the management of the WWTPs.

The general waste generated by Exolgan includes solid waste which is handled in accordance to the corresponding waste management procedure and disposed of by a licensed waste disposal company.

Refueling services and ship waste management (solid, bilge waste, ballast water, sewage, and used oils) is conducted by third parties. These companies have to be licensed, insured to cover potential damages and have in place EHS procedures in accordance with MARPOL and Port Authority guidelines. The Company requires contractors to dispose of all waste in accordance with provincial and national requirements at designated sites.

Environmental Legacies: There is a 5,630 m2 plot adjacent to the Terminal that was acquired by Exolgan for the yard expansion. This area was previously occupied by an ammonia handling and storage company. As part of the land purchase agreement, and in accordance with local environmental regulations, the previous owner conducted a preliminary soil and ground water pollution assessment. According to the preliminary findings no impacts existed and the site is appropriate for residential use. Exolgan also conducted, through an independent consultant, an additional Pollution Legacy Assessment and no environmental legacies or required remedial actions were identified.

Dredging: Exolgan will dredge a portion of the existing Dock Sud Channel shoreline in front of the Terminal in order to reach the 12 meter draught required for the construction of the proposed berth. To address any potential risks related to contaminated dredge sediments, the Company has measured concentrations of arsenic, several metals (Ba, Cd, Cr, Pb, Hg, and Ni), and total petroleum hydrocarbons at three locations in the area that will be intervened. The concentrations of arsenic and metals were relatively low, particularly for a highly industrialized area. Results were all below the criteria listed in the Construction Program’s EA (Dutch intervention levels criteria) with the exception of chromium concentration. The dredging contractor will be required by Exolgan to dispose of dredged spoils in recintos (containment areas) provided by the Provincial Authority in accordance with local law and regulation as set out in a Dredge Management Plan compliant with local law and regulation incorporating as appropriate international best practice.

Maintenance dredging for the access channel to Dock Sud, which serves various terminals and companies, is the responsibility of the Province of Buenos Aires and it is conducted under the oversight of local authorities following local requirements and dredge soils are also disposed of at the special Government-approved confined disposal facilities.

Hazardous Materials (Hazmats): Handling and storage of hazmats are only an incidental part of Exolgan’s operations. Less than 6% of the total cargo handled by the Terminal is considered to be hazardous under the International Maritime Code (IMC). This material includes flammable and toxic gases, flammable liquids, corrosives, reactive and spontaneously combustible substances, oxidizing substances, etc. Exolgan does not receive, handle or store containers with explosives or radioactive materials.

Exolgan is informed in advance about the type of cargo that will be receiving and all preventive measures are put in place for its adequate handling and storage. Hazmat handling and storage procedures comply with relevant Argentinean requirements and are consistent with the UN Model Regulations. All containers display labels describing the dangerous properties of the goods being carried to allow proper handling by transport personnel or emergency services in the event of an accident. Appropriated hazmat operating procedures and suitable PPE are provided. Exolgan’s emergency response and OHS plans include specific provisions and training for hazmats management. Containers with hazmats are segregated and stored in different areas in order to minimize potential risks.

Some hazardous waste is generated mostly in the maintenance workshop, and comprises the following: i) used lubricant oils for vehicles; ii) filters and oil impregnated rags; iii) water-oil emulsions; iv) hydrocarbon containing sludge; and v) empty paint and oil cans. The hazardous waste is stored adjacent to the maintenance workshop in drums in a covered area that is equipped with a peripheral floor drain. The storage area is clearly marked and separated into different sections for different types of waste. As with other wastes in the Terminal, hazardous waste is collected by a licensed waste manager contractor and disposed of according to local regulations.

Small above-ground fuel storage tanks located within the Terminal are equipped with secondary containment. Integrity testing of the tanks and corresponding pipelines is performed annually by an external contractor.

Emergency Preparedness and Response: In addition to the fire and emergency response and preparedness plans included in Exolgan’s OHS management procedures, as described under PS2, the Company has also prepared a Spill Response Plan in accordance with MARPOL and Argentinean regulations. This Spill Response Plan is aimed at implementing preventive and mitigation measures and defines responsibilities, coordination arrangements with external parties and specific steps to respond to accidental spills of hydrocarbons or other substances that may occur as a result of Terminal operations. The Spill Response Plan includes procedures to inform surrounding communities in case an incident takes place.

PS4: Community Health, Safety and Security:

Community Health and Safety: Some risks associated with traffic and pedestrian safety and dust are expected to be generated by the transport of construction materials, equipment, and workers to and from the Terminal during the construction stage and by an increased volume of truck traffic during the operation phase. Currently, Exolgan has in place a series of measures aimed at minimizing impacts related to traffic from operations such as a scheduling system for transporting companies, which are allotted specific hours in the day when they can pick-up or deliver their cargo, and also a large truck parking area inside the Terminal. In order to further improve current practices and minimize and mitigate impacts related to increased traffic to be generated by construction and operation activities inside the Terminal, Exolgan has prepared a Traffic Management Plan that will also include initiatives that are within the Terminal’s control for traffic outside the Terminal. This plan covers drivers that are directly contracted by the company and third parties and includes measures regarding: signalization; authorized speeds; dust control; safety protocols for large machinery; training and monitoring.

PS5 Land Acquisition and Resettlement:

The Terminal expansion has required the physical relocation of eight families, an ammonia handling company and a sand extraction company, which were located within Government owned lands. The eight families had been living in five households that belong to the Port Authority located within the Terminal area. These are low income families and the houses they inhabited were substandard and did not have access to some public services (e.g. potable water). Exolgan has compensated these families above the replacement value of the houses and have assisted the families in selecting new houses in the surrounding communities in which they will have security of tenure and access to public services. The two companies affected have already identified locations nearby to build their new facilities and all employees are expected to retain their jobs. Exolgan will develop a Resettlement Action Plan (RAP) aimed at documenting the actions implemented so far and describing the steps that Exolgan will take to ensure that the resettlement of eight families and the two companies will allow for improving, or at least restoring, their livelihoods and activities.

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