Timbues Soybean Crushing Plant

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	26959
Country	Argentina
Sector	Food & Beverages
Department	Agribusiness
Company name	Noble Argentina S.A.
Environmental category	B
Status	Pending Disbursement

Date ESRS disclosed	December 23, 2008

Previous Events	Signed: June 30, 2009 Approved: June 25, 2009

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Overview

Category & Applicable Standards

Key Issues & Mitigation

Community Engagements

Client's Documentation

Overview of IFC's scope of review

IFC’s environmental and social review included review of project information and documents provided by the sponsor, interviews to Noble staff in Argentina, and a field visit to the site of the future operations in Timbues, Argentina. The appraisal was conducted as a joint effort with the InterAmerican Development Bank (IADB/BID).

Project description

In 2006, IFC provided Noble Argentina, a subsidiary of Noble Group Limited (“The Company”, “Noble” or “Noble Group”) with a $18 million A and $18 million B loan for the creation of a $51.2 million greenfield grain port terminal and storage complex in Timbues, Santa Fe Province, Argentina. The Timbues Port has a storage capacity of 250,000mt and can accommodate a throughput of about 5 million tons of grain per year, consisting mainly of exports of wheat, corn and soybeans.

The company is now expanding the grain operations in the same location with the construction of:

- a 8,500 metric tonne (mt) per day soybean crushing plant,
- a soybean dehulling facility,
- a steam and 17MW electrical energy cogeneration unit,
- meal storage capacity of 110,000mt,
- oil tanks with 45,000mt capacity, and
- storage facility for 300,000mt soybean and
- handling facilities.

The project cost is estimated at $230 million plus $100 million working capital. Construction is expected to start in mid-2009. IFC has been requested to consider providing a $40 million A loan to partially finance the crushing plant expansion.

Key environmental and social issues and mitigation

In order to expand the grain operations, the sponsor has developed a construction design and operational procedures for the future plant. Noble has also presented an Environmental and Social Impact Assessment (ESIA) where potential impacts have been identified. The Environmental and Social Action Plan (ESAP) attached to this document indicates how the proposed project design and future process procedures will address the mitigative measures for potential impacts and ensure compliance with host country environmental regulatory and IFC guideline limits.

1.0 Environmental, Health and Safety, and Social (ESHS) Assessment and Management Systems

The appraisal mission found that Noble is generally an ESHS conscious organization. The company plans to maintain full compliance with the law and regulations of Argentina and IFC performance standards and guideline requirements. The company agrees that it needs to upgrade its management system to formalize and include social and environmental affairs, quality, human resources, and occupational health and safety issues associated with their supply chain, transport, and processing operations. In accordance with the attached ESAP, Noble will implement an integrated environmental and social management system (ESMS) covering all relevant aspects of IFC’s performance standards. It will also include comprehensive yearly evaluations to verify whether the project expectations have been met, and determine corrective measures that Noble will apply. The Company will establish an Environmental and Social Unit, reporting to senior management, will appoint an environmental manager, and will undertake all activities required to implement the environmental and social policy at all levels of operations. Noble will implement a training programme on Environmental and Social issues for its employees, and as part of the content of the induction process for new employees. The company will implement a formal system for monitoring and reporting environmental and social issues to senior management and for reporting back to IFC.

Supply chain policy: Only 1 percent of the soybean supply will be company’s own farms. Approximately fifty percent of the supply of soybeans will be purchased on the spot market. The bulk of soybeans will be purchased from the provinces of Santa Fe, Cordova, and Buenos Aires. Soybeans will be also bought in Paraguay and delivered through the Parana-Paraguay waterway. Less than 2 percent of the soybeans will originate from Chaco and Salta. As part of the ESMS, Noble will develop and implemented a policy to ensure responsible soy purchasing procedures. As part of the policy, Noble will join the Round Table for Responsible Soy (RTRS) based in Argentina. Noble will also develop a pilot supplier database for Argentine Chaco. For this purpose, (i) Noble will update a data base system to collect information on farmer suppliers in the Charata area in the Chaco region and any other collection centers (acopios) in the Chaco region. The new data collection should include information on compliance with national environmental legislation (illegal land clearing); (ii) following additional data collection, Noble will identify any changes in the company's management of suppliers in the Chaco acopios/collection centers to reduce any detected risk from illegal land clearing in the Chaco supply chain. This shall include informing Chaco farmers with whom the company has soy purchase contracts that Noble expects them to comply with Argentine legislation related to new land clearing.

Construction phase: Noble will specify operating policy requirements as well as procedures that must be in place for quality control and compliance with all social (including Occupational Health & Safety issues) and environmental issues during the construction phase (pollution loads, solid waste, etc.).

2.0 Labor and Working Conditions

The project expects to generate 800 direct jobs during the construction phase, and workers will be housed within Noble’s premises. During the operational phase, Noble expects to employ 65 individuals. Noble will have a staffed emergency medical facility during the operational phase.

Revise Human Resources Policy/Procedures: Noble will modify existing procedures to fully comply with the requirements of IFC’s Performance Standard 2 Labor and Working Conditions. It will include reference to child labour, non-discrimination, freedom of association and collective bargaining, and will submit the policy to IFC for review. Noble will also develop and implement a formal employee grievance redress mechanism and will further disseminate the grievance process as part of their ESMS.

Protecting the Workforce: During the construction and operational phases, Noble will ensure that child labor is not used and that ILO Conventions 138 on Minimum Age, and 182 on Worst Forms of Child Labour are fully observed in all its operations. Noble will ensure that contractors and suppliers are in compliance with a) workers legal benefits; b) wages paid on time, c) safety regulations, and d) ILO Conventions 138 and 182 are fully observed.

Occupational Health & Safety Plan (OHS): Noble will upgrade its Occupational Health and Safety plan consistent with an internationally recognized certification (e.g. OHSAS 18000) for the occupational health and safety management system, to ensure the correct use of personal protection equipment, proper protection from heat, dust, hazardous materials, etc., and working procedures to reduce the risk of injuries and/or accidents. Such OHS plan will be also enforced during the construction phase. Noble will perform at least three fire drills per annum.

Operational Safety Plan for site infrastructure: This plan will include the implementation of pavement markings, traffic signals, regulatory signs, vehicle speed limits, and warning signs, according to international standards, to ensure safety of the workforce.

3.0 Pollution Prevention and Abatement

The planned design and future operational procedures presented by the company in their ESIA shows that emissions to the environment (air and water) will be out of compliance with IFC/WB guidelines.

Air emissions: The operation will be connected to national electric energy grids, yet the energy will be self-generated by two boilers (using diesel or natural gas) and one turbine. One of the boilers could be also operated burning wood chips. Projected air emissions in the ESIA indicate that the expected NOx of the Nebraska boiler will exceed IFC limits of 460 mg/Nm3. Projected hexane emissions (140 mg/Nm3) will exceed the IFC limits of (100 mg/Nm3). The study also indicates that, when burning chips, the Vyncke boiler will exceed the limit of 150 mg/Nm3 for particulate matter. Noble will provide design and equipment assurances that the operational procedures will comply with regulatory limits of Argentina and IFC guideline requirements for ambient air concentrations during the operational phase.

Dust generated during the preparation process of grains will be controlled by a dust vacuum and filter devices, etc., to reduce the risk of explosion.

Effluent: Emissions will include effluents from the crushing facility, stormwater, and sanitary wastewater. The effluent from the extraction process is estimated in 480m3/day (projected levels of BOD ranging from 500-1000 mg/l; COD = 1000-2000 mg/l; TSS = 20 mg/l; Ph = 5.0). Effluent from sanitary wastewater will be mixed with effluent from the cooling tower (projected BOD = 550 mg/l; COD = 730 mg/l; TSS = 400 mg/l; Ph = 7.5, Temperature = 20 oC). Projected solid wastes from operations will include 1800 metric tons of sludge per month. Noble will provide design and equipment assurances that the operational procedures will ensure effluents are in compliance with regulatory limits of Argentina and IFC guidelines during the operational phase.

Pesticide management: Noble will outsource pest control for minimizing populations of rodents and insects within the premises. Noble will review and eliminate as feasible WHO Class 1a and 1b chemical formulations for pesticides. Noble will ensure that contractors and suppliers are in compliance with providing adequate personal protection equipment, will provide to IFC the protocol used for cholinesterase testing of workers applying pesticides, and will inform if there is any rotation policy of these workers.

Hexane management: Noble estimates the use of 1675 metric tons of hexane per annum. Operational procedures include compliance with National Fire Protection Association (NFPA) codes and standards to prevent fire and explosions during the operation phase (NFPA36 - commercial scale extraction processing of vegetable oils and fats by the use of solvents, and applying to the unloading, storage, and handling of solvents). The Company will report the results of quarterly samples of hexane concentration in the air.

Hazardous and Non-hazardous Waste Management Programme: As part of the expected operational procedures Noble plans to implement a waste management programme, segregating all wastes for either disposal in a landfill or sale to authorized recycling groups.

4.0 Community Health, Safety and Security

Community Engagement Plan: Noble does not have any communities living in close proximity to its operations. The community of Timbues is the closest to the project area. Noble lacks a formal community grievance system and will implement a formal plan for community engagement and grievance mechanism, including a monitoring system and the ability to express concerns. The Company will ensure it is clearly communicated by posting on the company website and included in relevant written public communications.

Transport of hexane and raw materials: Noble will develop clear safety guidelines to be enforced on all contracted transport of hexane and raw materials. The Company has agreed to avoid passing through Timbues, and to use exclusively the access from the north end. Such Company policy is listed in Noble’s website (www.noblegrain.com.ar/nobleinfraestructura.html).

5.0 Land Acquisition

There is no involuntary resettlement associated with this project. Land acquisition of the project site was done strictly one of willing buyer- willing seller, following Noble procurement policies.

6.0 Biodiversity Conservation and Sustainable Natural Resource Management

Natural or critical habitat or endangered species: There are no legally protected areas in the vicinity of Noble’s operations. The Company operations do not involve modification, conversion, or degradation of any critical habitats.

Sustainable Water Resource Use: According to the ESIA, projected water requirements for the plant are 20,000 m3/second. Water will be obtained from Rio Parana, and treated before sent to the crushing plant. Given the geographical location of the plant, the ESIA has not identified any hydrological linkages with other areas (extended area of influence), nor any potential negative environmental impacts on the downstream uses by populations, such as farming, livestock, watering, washing, etc.

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