World Bank Documentdocuments.worldbank.org/curated/en/580251468313765348/pdf/E17… · section mill 600 (1966) plus speciality mills for ball-rolling and structural sections and shapes

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Joint Implementation Carbon Finance Project OJSC “Alchevsk Metallurgical Plant”

Environmental Assessment

1 INTRODUCTION:.............................................................................................................................. 1

2 BACKGROUND: ................................................................................................................................ 1

3 OVERVIEW OF ENVIRONMENTAL ASSESSMENT ON THE JI CARBON FINANCE PROJECT...................................................................................................................................................... 6

4 PROJECT ENVIRONMENTAL MANAGEMENT PLAN .......................................................... 19

5 CONSULTATIONS .......................................................................................................................... 19

6 ANNEX 1. A. MITIGATION PLAN ............................................................................................... 20

7 ANNEX 1. B. MONITORING.......................................................................................................... 25

8 ANNEX 2. CONSULTATIONS SUMMARY ................................................................................. 26

Introduction: 1. In accordance with the World Bank environmental assessment policies and procedures (OP/BP 4.01 Environmental Assessment), the proposed Joint Implementation (JI) carbon finance project being considered by the Bank at the OJSC “Alchevsk Metallurgical Plant” was assigned Environmental Category “B”. As such it requires an environmental assessment (EA) and preparation of an environmental management plan (EMP). The following documents the EA undertaken by members of the project team during the course of project preparation, along with the overall environmental management plan (EMP). In addition to the application of OP/BP 4.01, the possible application of OP/BP 4.12 Involuntary Resettlement to this project has been raised at the concept stage and is also addressed. These safeguard policies and procedures including those applicable to Disclosure of Operational Information were explained and communicated to counterparts.

Background: 2. OJSC “Alchevsk Metallurgical Plant” (AISW) is a large integrated iron and steel plant located in the city of Alchevsk in Lugansk Oblast, Eastern Ukraine. It is part of the Industrial Union of Donbass (IUD), an industrial group that is a major shareholder in a number of metallurgical enterprises in Ukraine as well as in Poland and Hungary. This includes the Alchevsk Coke Chemical Plant that, while a separate corporate entity to AISW, is functionally linked to AISW in terms of its adjacent location and as its exclusive coke supplier. IUD/AISW/Alchevsk Coke has embarked on an extensive long term modernization program involving between over a period 2004 to 2010.

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3. While one of the more modern integrated steel works in Ukraine, AISW was fairly typical of the Ukrainian iron and steel sector up to 2004 in terms of the vintage of technologies and physical plant used, and the characteristic high resultant energy intensity and poor general environmental performance relative to comparable facilities in OECD countries. Using 2004 as a baseline marking the initial implementation of the modernization program, the facility’s nominal capacity was 5.4 million tonnes of sinter (agglomerate), 3.2 million tonnes of hot metal (iron), 3.6 million tonnes of steel and 3.2 million tonnes of rolled finished product. In relative terms it is currently the 5th largest iron and steel producer in the country. AISW and Alchevsk Coke have the following primary production shops1:• Sinter Plant – 6 sinter machines (1959 – 62); • Lime Kilns (1950s) • Blast Furnaces – 4 furnaces (1955 – 1960); • Open Hearth Furnaces (OHF) –3 furnaces of 300 MT (1952) and one tandem furnace

of 600 MT (2005); • Blooming Mill (1954) • Rolling Mills: Sheet and Plate mill 2250 (1952); Plate mill 2800 (1955); Heavy-

section mill 600 (1966) plus speciality mills for ball-rolling and structural sections and shapes.

• Alchevsk Coke Plant: Batteries #’s 5, 6, 7 and 8 were constructed in 1957 and rebuilt in the 1980’s. Battery # 9 was constructed in 1983. Battery # 10 is being commissioned in 2006.

These primary production facilities are also supported by a range of infrastructure, the most important of which from an environmental perspective are the ore and other input raw material handling facilities, waste water treatment and reclaim facilities, and solid waste disposal facilities. 4. Beginning in 2004 and now coming on stream, AMK initiated the extensive modernization program noted above, with the integrated objectives of applying more efficient technology, improving environmental performance, increasing capacity and upgrading the quality and range of steel produced. This modernization program involves technology replacement or upgrade of all major components of the iron and steel making and finishing processes. The program’s initial focus has been on steel production with the replacement of the three old OHF2 with two modern basic oxygen furnaces (converters) integrated with continuous slab casters to replace the existing blooming mill. The first phase of this involving installation of one converter and continuous slab casting line was commissioned in 2006 along with upgrading of waste water treatment and recirculation infrastructure. One of four blast furnaces is currently under reconstruction. The second converter and continuous slab casting line is also currently under construction with addition of ladle furnace upgrades and vacuum degassing capability. Associated with the current work are modernization and specifically installation of fugitive emission capture

1 Dates of commissioning in brackets 2 The 600 MT tandem OHF/bloom caster installed in 2005 which is equipped with modern air pollution control equipment is to be retained

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capability in ore handling, construction of two new lime kilns to replace existing facilities, all of which are due for completion in 2007. Downstream upgrading of rolling mill operations is also being undertaken. Other major upstream investments tentatively planed include replacement of the existing sinter machines with 3 new higher capacity machines after 2010 and upgrading of the remaining blast furnaces on a progressive basis, all with BAT pollution control systems. The overall capacity of the plant expressed as steel production will be increased from 3.6 to 6.9 million tonnes/year. A parallel investment program is underway at Alchevsk Coke including the construction of a new dry quench battery (Battery # 10) with an incremental 1 million MT/year of capacity to be commissioned in 2006/2007, and providing capacity for both AISW and other IUD facilities. Associated with this are a series of renovations and additions on the older batteries related to upgrading aspiration systems and oven lids to reduce emissions as well as coke gas desulphurization. 5. The overall investment involved is US$ 1.7 to 2.2 billion over the period 2005 -2010 with financing of currently committed components in part being supplied by IFC through a US$100 million direct loan and participation in a syndicated loan facility in the amount of US$250 million3. The IFC loan project has been assigned an environmental classification of Category B. This determination was made largely on the basis that the modernization and specifically the introduction of converters and continuous slab casting will meet World Bank Group guidelines and approach if not fully meet EU BAT performance standards, as well as represent significant energy savings, improved general emission performance and GHG reductions. This has been supported by a formal due diligence environmental audit covering both AISW and Alchevsk Coke4. The results and conclusion of this work along with an Environmental Corrective Action Program (ECAP) adopted by IUD and provisions for its monitoring are documented in the published IFC Environmental Review Summary used to support the IFC loan’s board approval5. The principle requirements of the ECAP relate to setting emission specifications meeting World Bank Group Guidelines and approaching if not meeting EU BAT, designation of additional environmental investments, and in having assurance that the latter upstream investments (sinter plant replacement, blast furnace upgrading and the associated coke chemical plant improvements) be undertaken. In particular a commitment is made to shut down the existing heavily polluting sinter plants and either replace them or out source the required material elsewhere in Ukraine. The latter upstream investments including sinter plant replacement, upgrading of the blast furnaces, coke charge replacement with coal, and potentially rolling mill upgrading are considered a candidate for a following future carbon finance operation, either under a JI or GIS mechanism. It is also noted that active development on a separate investment in a new combined cycle gas turbine plant to

3 “Industrial Union of Donbas, Summary of Project Information”, International Finance Corporation, April 24, 2006, (http://www.ifc.org/ifcext/spiwebsite1.nsf/2bc34f011b50ff6e85256a550073ff1c/190a1fcb82e6184185257178006439ed?opendocument) 4 “Environmental Audit of ISD – DMK and AMK Steel Plants” WS Atkins International Ltd, May 2006 5 “Environmental Review Summary, Project 24685”, IFC, May 2, 2006. http://www.ifc.org/ifcext/spiwebsite1.nsf/0/c7c3ef9e3563d70d85257162007370c3?OpenDocument

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utilize recovered off gases for power generation is also being pursued with EBRD participation6 and may be subject to separate JI carbon financing. 6. The scope of the proposed JI project specifically covered by this EA involves the replacement of older open hearth furnaces and blooming mills within the steel making plant by basic oxygen converters and continuous casting. This is described in detail in a the carbon finance PDD document7, where the boundaries are defined for purposes of the carbon finance proposal as just the steel making portion of the plant (3 x OHF/bloom casting replacement with 2 converters and continuous casting lines). The comparative baseline for purposes of determining GHG reductions is defined as continuation of the current operations with added capacity fulfilled by new open-heart furnaces and conventional blooming mills. The GHG reductions that are obtained from the steel making component investments are estimated to average 934,213 tonnes CO2 eq./year over a 5 year crediting period, principally from:

(i) Reduced use of natural gas in open heart furnaces in comparison with converters;

(ii) Reduced used of blast furnace gas in blooming mill with saved gas being partly utilized in an existing on site combined heat and power plant and/or for other on site purposes in order to reduce natural gas consumption.8

(iii) Reduced use of raw materials and steel in converters and continuous casting. Figures 1 and 2 provides schematics illustrating the baseline and project boundaries respectively that are used in the JI proposal relative to the overall plant, and including mass inputs and outputs (tonnes x 1000/year).

6 Alchevsk Steel CCGT Facility, Environmental Impact Statement – Non-Technical Summary, WS Atkins International Ltd, July 2006 7 “Revamping and Modernization of the Alchevsk Steel Mill - Using Higher Efficiency Technology to replace Existing Open Hearth Furnaces (OHF), Ingot Casting and Blooming Mills”, PDD version 1 World Bank, January 2007. .8

Additional GHG reductions can be generated by a new power plant utilizing all remaining off gases.

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7. The investment components involved in the proposed JI project have also been subject to a formal environmental impact assessments or OVNS undertaken in 2006 in accordance with the applicable legislation and regulations of Ukraine for approval of such developments. These include: the Laws of Ukraine “On Protection of Environment”,

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“On Ecological Expertise”, “On Protection of Atmospheric Air”, “On Wastes”, “On Ensuring Sanitary and Epidemic Welfare of the Population”, and “On Local Councils and Local Government”, as well as the applicable Water Code, Land Code, and Forest Code. The local environmental assessment review process undertaken in accordance with procedures as determined of the Government of Ukraine, inclusive of the State Environmental Expertise, has concluded that the proposed development has significant positive environmental benefits and that any adverse impacts are not significant as well as being readily mitigated. On this basis, the required local approvals have or are in the process of being issued.

Overview of Environmental Assessment on the JI Carbon Finance Project 8. The basis for the environmental assessment undertaken on the proposed JI carbon finance projects at AISW is to compare actual reported environmental performance for a base line set in 2004/2005, before any effect of the now implemented first stage of the modernization, with those predicted upon completion of the proposed JI project itself in 2009/10 and with that predicted in the longer term upon completing the overall modernization program after 2010. For purposes of doing this, the analysis includes any impacts associated with Alchevsk Coke9. It compares two competing factors. The first is the potential for increased emissions, discharges and waste volumes associated with nearly doubling the plant’s capacity, and the reductions achieved by conversion to modern technology that generally result in lower emission, discharges and waste generation on a unit of production basis. This assessment is primarily directed to the local air emissions, water discharges, and solid waste generation levels but also extends to comment on land use, site contamination, occupational health and safety performance and environmental management capacity. The baseline emissions are as measured by the enterprise and/or authorities, and the post project projections are based on the environmental performance achieved, specified and/or anticipated after detailed design work is completed. The data used was supplied directly by IDU/AISW as well as that recorded in the IFC environmental audit document referenced above. The OVOS documentation and State Environmental Expertise conclusions were also reviewed and used as applicable. It should be noted that it does not independently address impacts associated with GHG emissions and these are taken as estimated in the PDD referenced above which is subject to validation on the Kyoto protocol mechanisms. 9. The IFC assessment indicates that prior to the initiation of the modernization program, AISW and Alchevsk Coke was operating in general compliance with local regulatory requirements as set in the plant specific permits established for the facility and its constituent parts, apart from periodic excursions recorded during upset conditions as occurs with failures in blast furnace emission control systems. However, air emissions

9 Alchevsk Coke is included in the scope of the environmental assessment due to proximity, its role as the sole coke supplier to AMK and the fact that its capacity is being increased in part to service increased requirements from AMK associated with the current investment program.

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often approach local limits and exceed either World Bank Guidelines10 or EU BAT standards11 for particulate releases. Waste water discharges meet the facilities permit requirements but in some cases exceed the nominally highly restrictive Ukrainian discharge standards. However these are generally consistent with international standards, including World Bank Guidelines, and reflect a level of recovery and recycling approaching that expected in international good practice. Solid waste generation is significant and its disposal may be problematic in terms of capacity and quality of disposal facilities. However, the enterprise does reprocess a significant portion for internal raw material recovery and for utilization as building material aggregate including some reduction of legacy stockpiles. These waste streams generally involve low hazard class material where physical disposal capacity rather than environmental impact is the primary concern. This is consistent with a general conclusion that the existing baseline environmental performance issue is air emissions, particularly particulates, which would be the major focus of any assessment of environmental impact associated with the proposed project. Assessment of Air Emissions 10. Table 1 below as derived from the above referenced documents, summarizes the 2004/2005 performance of the principle plant components along with applicable international reference standards for AISW. This highlights the major air emission environmental performance issue as particulate emissions for all major plant units, particularly the sinter plant, lime kilns and OHF. Data available for the Alchevsk Coke batteries show measured emission ranges of 425-750 mg/m3 for NOx, 70-800 mg/m3 for CO and 720-800 mg/m3 for SO2 with no particulate emission data available. While noting that the SO2 levels are higher than World Bank guidelines and EU BAT, this is a function of the high sulphur coal supply and is reported to have been substantially reduced by installation of a modern coke oven gas desulphurization system. 11. The impact of the modernization program on air emission at AISW has been estimated using data supplied by AISW which is generally based on the technical specifications either applied or intended to be applied to the new or upgraded facilities, typical based on input from established EU suppliers. The following summarizes the measures involved and resultant performance standards utilized in the assessment.

• Sinter Plant Replacement: Existing plant particulate 300-400 mg/m3. No specification yet established but targeting EU BAT (< 50 mg/m3).

• Lime Kiln Replacement: Existing Plant particulate 600-700 mg/m3, Design

Specifications for the two new lime kilns calls for cyclones and bag filters with a performance of <30 mg/m3 .

10 “Pollution Abatement Handbook – Iron and Steel Manufacturing”, World Bank, July 1998 http://www.ifc.org/ifcext/enviro.nsf/Content/PPAH 11 IPPC Best Available Techniques Document on the Production of Iron and Steel, European Commission, December 2001 (http://eippcb.jrc.es/pages/FActivities.htm)

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• Blast Furnace Reconstruction: Currently blast furnace under reconstruction will have secondary particulate suppression/extraction and electric static precipitators (ESPs) and/or bag filters designed to achieve < 35 mg/m3. Reconstruction assumed to be the same or better.

• Open Hearth Replacement with Converters: Based on the current converter, the

conversion will provide each unit with primary particulate extraction to ESPs guaranteed to <35 mg/m3 and secondary particulate to bag filters guaranteed to <25 mg/m3. Existing blast furnace performance unchanged.

• Bloom Casting Conversion to Continuous Slab Casting: Particulate capture and

extraction to bag filters with guaranteed performance of < 10 mg/m3.

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Table 1: Actual 2004 Measured Air Emission Compared to Local Limits and International Standards as Applicable - AISW

Source Substance Measured Concentration

Range mg/m3

Local Concentration Limit Range

mg/m3

World Bank G/L

mg/m3

EU BATmg/m3

Particulate 333-368 396-453 50 <50 NO2 64-99 101-118 750 n/a SO2 65-89 86-91 500 <500

Sinter Machines

CO 3542-3750 4405-5056 n/a n/a Particulate 607-701 620-720 50 n/a NO2 37-97 39-101 750 n/a

Lime Kilns

CO 1220-2292 1230-2513 n/a n/a Particulate Not Reported Not Reported 50 <10 for

Hot Stoves 1-15 for APC

NO2 64-71 72-91 750 < 350 (NOx)

SO2 25-39 27-53 n/a n/a

Blast Furnaces

CO 1563-1875 2097-2431 n/a n/a Particulate 76-180 87-180 50 5-15 w/

bag filters 20-30 w/ESP

NO2 64-253 87-180 750 n/a SO2 7.2-15.4 7.8-30 n/a n/a

Old Open Hearth Furnaces

CO 54-97 60-134 n/a n/a Particulate 78 157 50 5-15 w/

bag filters 20-30 w/ESP

NO2 71 90 750 n/a SO2 24 32 n/a n/a

New Open Hearth Furnaces

CO 10.4 15 n/a n/a * ESP – Electrostatic Preciptator

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12. The Table 2 below provides a comparison of AISW’s total mass air emissions for the 2005/2005 base case at nominal capacity level of 3.6 million tonnes/year steel production and the projected total emissions at the 2009 nominal capacity level of 6.9 million tonnes/year for both the situation upon completion of the JI project investment in 2009 and upon completion of the overall modernization after 2010 specifically of the upstream sinter plants and last furnaces. This comparison indicates that in the long term there is an overall reduction in total mass air emissions of 45% and 31% reduction in total particulate emissions12. Furthermore, the JI project alone where steel making capacity is increased without the upstream investment still reduces total mass air emissions slightly, although a small increase in particulate emissions is estimated. In terms of gaseous emissions reductions in SO2 and NO2 are also estimated in either case. Based on this it is apparent that the adoption of technologies generally meeting BAT should provide a net environmental benefit in terms of air quality notwithstanding the increase in capacity involved. 13. While the JI project alone essentially has a neutral or small positive impact on local air emissions from AISW, the long term achievement of substantial improvement in local air quality is only gained from the installation of new sinter plants meeting BAT emission standards or alternatively purchasing the required material on the open market while shutting down the present operations. While, this along with the elimination of the last OHF has been set as an undertaking in the IFC financing, it must also be acknowledged that in the near term and where agglomerate or pellets are sourced elsewhere air emissions from this primary source are transferred elsewhere to locations where the purchased material is produced. The actual impact will be a function of the performance standards at these distributed facilities but in a worst case scenario might be assumed to be essentially equivalent to the present performance at AISW factored by the increase in sinter requirements for the expanded plant. Therefore, the critical component in the modernization program in obtaining a significant improvement in air emissions generally and particularly a substantive reduction in particulate emissions is that that the existing sinter plant be shut down and replaced with new sinter machines as is IUD/AISW’s long term plan. Alternatively, the selective out sourcing of this requirement based on using facilities meeting or approaching EU BAT performance standards could be considered.

12 The overall emission levels from steel making are anticipated to be further reduced by 2012 when the last remaining OHF is retired.

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Table 2: Comparison of Baseline (2004/05) Total Mass Air Emissions with those Projected after JI Financed ModernizationProgram Alone (2009) and the Projected Emissions after Long Term Modernization Program Completion (after 2010) atAMK in tonnes/year

Emissions Prior to Initiation ofModernization Program in

2004/05

Projected Emissions upon Completion of JIProject Alone in 2009

Projected Emissions Completion of FullModernization Program after 2010+

Including Including IncludingKey

Processes/Shops

Total

Particulates Gaseous

Total


EmissionIncrease/

Reduction( +/- )

Total


EmissionIncrease/

Reduction( +/- )

Total,including

100,767 13,197 87,590 97,455 13,782 83,673 -3,332 45,190 9,070 37,120 -55,577

SinterPlant

69,882 8,796 61,086 69,882 8,796 61,086 0 29,624 5,268 24,356 -40,258

BlastFurnaceProcess

6,694 931 5,763 7,630 1,100 6,530 936 3,628 654 2,974 -3,066

OpenHearthProcess

6,707 2,620 4,087 4,449 2,246 2,203 -2,258 2,840 1,011 1,829 -3,867

ConverterProcess

- - - 7,824 895 6,929 7,824 4,475 314 4,161 +4,475

RollingMills

15.231 141 15,090 5,411 50 5,361 -9,820 2,411 128 2,283 -12,820

Other 2,273 709 1,564 2,259 695 1,564 -14 2,212 695 1,517 -61

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14. The impact on local air emissions associated with sourcing the increased coke requirements from Alchevsk Coke appears to be relatively minor. The IFC audit concluded that the plant as now being configured and upgraded generally meets World Bank guidelines and EU BAT which will substantially reduce the measured emissions. The specific measures are coke oven gas desulphurization, the new Battery #10 designed to approach if not meet EU BAT, conversion of Battery # 9 to dry quenching, adoption of smokeless charging practices, maintenance of oven doors, frames and piping seals, and upgrading of dust collection systems. Demonstration of EU BAT performance, improved practice to minimize oven lid leakage and upgrading of dust collection systems on older batteries has been incorporated into the ECAP adopted by IUD and incorporated into the IFC loan for implementation by the end of 2006. Recognizing that for purposes of assessing the impact of the capacity increase in AISW that may occur at Alchevsk Coke, this is largely obtained from addition of Battery # 10 and therefore the critical factor in minimizing such impacts will be performance of this unit. Water Consumption and Wastewater Discharge Assessment 15. The current overall site technical water demand at AISW is estimated to be 25 million m3/month but in excess of 95% of this is made up through on-site recycling leaving a make up requirement of approximately 17.6 million m3/ year. Technical water for AISW is primarily supplied from a lagoon, 12 km away, which is fed by a small river. Two additional smaller ponds supplement this main supply. Technical water discharges amount are estimated to be 2.8 million m3/year. For discharges from the settlement pond receiving wet scrubber gas treatment sludge from the lime plant, sinter plant, blast furnaces and OHFs, direct discharges from the oxygen compressor plant and some slag dump run off, these go to the Lozovaya River. The larger discharge volumes from rolling mills, slag processing, site surface run off and blooming mills goes to a series of settlement ponds before discharge into the Belaya River. Potable water is obtained from a well 35 km away with sanitary discharges going to the local municipal system. Discharge concentrations are regularly monitored and reported. They are generally at acceptable levels in relation to World Bank and EU BAT guidance with relatively low suspended solids (5 – 10 mg/l) and slightly elevated levels of oils from the blooming and rolling mills (2-3 mg/l). Alchevsk Coke has a technical and potable water requirement of approximately 3.6 million m3/ year and uses a closed treatment system targeting phenol removal (0.18 mg/l output) with all discharges being re-used for quench water. 16. Table 3 below summarizes the base case (2005) water consumption and discharge volumes by source and receiving body for AISW along with comparative data projected for 2009 after completion of the JI project. While, the modernization program will double water consumption it is anticipated to have a net positive effect on waste water discharges. These are marginally reduced discharge volumes, improved quality given that the technology applied eliminates some highly contaminated waste water streams, and increases in the recovery and recirculation from other processes. Examples of this is the replacement of wet scrubbers with dry scrubbing technology, elimination of blooming mills and replacement of continuous casting with 100% water recirculation (including in

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process treatment) and enhanced water recirculation in rolling mills. Overall the steel production capacity increase should have a positive impact on water utilization given that the capacity of the largest discharge source (rolling mills) does not increase direct capacity but modernization increases water utilization in these mills, while finished product capacity increases in marketable slabs involves reduced water use. Table 3: Comparative Water Consumption and Discharge at AISW (m3 /year)

2005 2009 Water Consumption Industrial 13,781,000 27,000,000 Potable 3,826,000 5,800,000 Total 17,607,000 32,800,000 Discharge Sources Sludge Pit Ponds/Disposal Area

233,200 233,200

Oxygen Compressor Shop 19,700 0 Plate Mill Finishing Sludge Pits

800 0

Rail Depot Sludge Pit 2,700 2,700 Blast Furnace Slag Dump Drainage

8,400 8,400

General Site Drainage 207,600 222,200 Rolling mill Recovery Cycle Discharge

2,386,000 2,190,000

Total 2,859,000 2,656,500 Off Site Discharge To Lozovaya River 253,700 233,200 To Orlovye Ponds 2,605,700 2,423,300 Total 2,859,400 2,656,500

Solid Waste Management Assessment 17. AISW generates approximately 4.5 million tonnes of solid waste per year. Of this less than 300 tonnes/year is what would be considered hazardous waste by OECD country standards, principally in the form of waste hydrocarbons and lead batteries, are either re-used internally (waste oils) or recycled off-site (batteries). Disposal of the high volume/low hazard waste streams is accomplished in several land disposal facilities on or adjacent to the AISW site, all of which are considered to have adequate capacity in the medium term. These include:

• OHF Slag Landfill: Iron containing slag from the OHFs is returned to the furnaces/converters, and the remainder graded and stored for use/sale as construction material. There is currently a surplus of unsold material generated.

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• Blast Furnace Slag Dump: AISW plan to introduce a granulation process for blast furnace slag directly at the workshops to minimize transport cost and improve future utilization of this material.

• Wet Scrubber Abatement System Sludge Ponds. Waste water containing high

levels of iron and coal residues from abatement systems at the blast furnace, converters and power plant are routed to a large settlement pond to the north of the site. After water removal, remaining sludge is screened and either land filled in a separate landfill area noted above or returned to the sinter plant depending on iron content.

• Wet Scrubber Abatement System Sludge Disposal Area

• General Solid Waste Landfill

18. The design of these facilities is not well defined. Similarly there is no monitoring data on any impacts to surface or ground water. It is also anticipated that the two landfills as well as re-processing operations are a potential source of particulate emissions. 19. Table 4 provides a break down of the remaining high volume but relatively low hazard waste streams generated in 2005 along with its disposition. Table 5 provides a comparable table of waste generation projected for 2009 after modernization and capacity increase. The JI project is estimated to result in a 27% increase in solid waste generation and 21% reduction in the amount of waste utilized back in the process. The net impact of will be more than doubling of landfill disposal. The latter appears to be largely associated with reduced ferrous and steel scrap utilization, something that could potentially be mitigated depending on offsite scrap markets. Table 4: 2005 Solid Waste Generation and Disposition from AISW (tonnes x 1000/Year) Waste Stream Generated Imported Utilized

On-Site Destroyed Exported To

LandfillSinter Plant/Abatement Sludge

67.03 - 66.38 - - 0.65

Blast Furnace Slag

89.90 - 4.70 - - 85.19

OHF Slag 59.47 - 4.70 - - - Rejected Limestone

58.23 - 58.23 - - -

Dust from Pig Iron Production

89.90 0.27 90.17 - - -

Mill Scale 109.01 - 109.01 - - - Ferrous Scrap 1,365.33 - 902.31 - - 463.02 Steel Scrap 640.81 - 1,613.06 - - -

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Waste Stream Generated Imported UtilizedOn-Site

Destroyed Exported To Landfill

Misc. 2,049.05 408.00 2,230.91 0.07 8.93 199.27 Total 4,528.73 408.27 5,079.48 0.07 8.93 802.90

Table 5: Projected 2009 Solid Waste Generation and Disposition from AISW (tonnes x 1000/Year) Waste Stream Generated Imported Utilized

On-Site Destroyed Exported To

Landfill Sinter Plant/Abatement Sludge

73.06 - 72.35 - - 0.71

Blast Furnace Slag

97.99 - 5.13 - - 92.86

OHF Slag 37.28 - 0.28 - - 37.00 Rejected Limestone

74.73 - 74.73 - -

Dust from Pig Iron Production

185.70 0.30 183.32 - - 2.68

Mill Scale 127.35 - 127.35 - - Ferrous Scrap 1,488.20 - 983.51 - - 504.69 Steel Scrap 411.05 - - - - 411.05 Converter Slag 900.00 - - - - 900.00 Misc. 2,321.87 444.72 2,466.45 0.07 9.63 290.44 Total 5,743.30 445.02 3,939.19 0.07 9.65 2,239.43

Land Use and Site Contamination Assessment 20. The proposed expansion will not increase the current foot print of either AISW or Alchevsk Coke as the new investments being undertaken involve use of available areas within the present sites and those made available by dismantling old facilities. As noted above, current landfill capacity is adequate in the near term but over time an incremental land use impact would be associated with increased solid waste generation, depending on the amount of recovery practiced and potentially any land reclamation that is undertaken. While no documentation or detailed assessments are available, both sites are assumed to have various forms of on-site contamination given the length of time they have been used for this type of industrial activity. While no specific issues have been noted, this could impact ground and surface water. However, the incremental impact on the nature and/or extent of such contamination from the increase in capacity is considered small given that it also involves an improvement in technology and in environmental practice generally. It is noted that the issue of site contamination is recognized in the above referenced ECAP adopted by IUD and incorporated into the IFC loan. More specifically an undertaking is made to undertake a phased site assessment over the period 2007 thru 2012 on both sites of soil and groundwater, inclusive of characteristic contaminants from coke production and steel making.

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Occupational Health and Safety Assessment 21. The IFC due diligence audit indicated that overall the OH&S practices at both AISW and Alchevsk Coke were satisfactory and show a steady reductions in lost time accidents in both plants. However, it is noted that they could be improved. It was specifically noted that the fatal accident rate at AISW is significantly higher than comparable OECD country statistics and there were significant housekeeping and PPE13 use deficiencies. The ECAP includes an overall requirement for a corporate review of worker exposure with specific reference to enforced use of respiratory protection equipment as well as improved lighting and housekeeping. Environmental, Health and Safety Management System 22. There is no integrated EHS MS presently operating within IUD, although AISW and Alchevsk Coke each devote significant resources in this area to environmental protection, monitoring and management. The ECAP includes an overall corporate requirement to formally establish such a system by 2008/2009 and to seek ISO 14000 or equivalent certification by 2010. This forms a key part of the EMP described below. Social Impacts 23. AISW and Alchevsk Coke are the predominate employers (24,000 people) in the city of Alchevsk (population 120,000). The expansion program is projected to have no material effect on employment, except potentially to mitigate and reductions that might come in the event of reduced competitiveness should modernization not occur. Consequently, no incremental negative social impacts within the local community are foreseen and in general it should be positive in that it contributes to economic stability and growth. 24. One indirect potential social impact that is noted relates to the possible reduction of the sanitary protection zone around the AISW plant that may occur as a consequence of realizing reduced air emission levels resulting from overall plant modernization and expansion and taking place mostly outside of the boundaries of this JI project. Currently, there is residential development within the existing sanitary protection zone that is nominally illegal under Ukrainian legislation, and could require relocation of households. However, historically relocation has been slow – according to AISW during 1995-2003 only 123 persons were relocated to other areas in the city. The anticipated reduction in the zone is expected to substantially reduce the requirement for relocation, although may not entirely eliminate it. This possibility is reflected in the ECAP adopted by IUD and incorporated into the IFC loan through inclusion of an undertaking that a smaller sanitary protection zone be investigated and potentially be established by 2010, and that AISW would potentially then be required to relocate any households in the new zone on a time table agreed with authorities.

13 Personal Protection Equipment

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25. The existence of the IFC conditionality within the framework of their loan to IUD raised the question during the Bank project concept review of whether Safeguard Policy OP/BP 4.12 on Involuntary Settlement was applicable to the proposed JI project. Following the direction of the concept review meeting, the project team undertook a further factual assessment of the issue with the following findings. i) It was confirmed that no additional land acquisition is required for either the

proposed JI project or in fact for subsequent investments contemplated during the longer term AISW investment program. On that basis it can be concluded that any involuntary resettlement would not directly result from the proposed JI project and within that context OP/BP 4.12 would not be triggered.

ii) Review of OVOS and consultation with AISW confirmed the size of the present

Sanitary Protection zone extends in the range of 300 to 1000 meters from the emission sources and has been in effect since 1990. Within in that zone there is an estimated 450 residences housing 1050 people.

iii) AISW is planning to launch a formal OVOS to potentially justify reduction of the Sanitary Protection zone in January 2008. This would entail a number of preparatory steps including an inventory of residents, housing and property This will be made by enterprise jointly with city authorities (housing, architecture, sanitary epidemiological station and others) since the territory of the Sanitary Protection zone belongs to the city. This inventory is scheduled to start in August 2007. The technical design of the Sanitary Protection zone is expected to be produced by December 2008.

iv) AISW and local authorities agreed to keep the Bank and the local population informed of any actions related to the current sanitary protection zone and its occupancy status.

System of Environmental Monitoring 26. Monitoring of air quality in the Sanitary Protection zone is undertaken on a monthly basis at eight pre-determined points located at the boundaries of the zone according to schedule, agreed with sanitary-epidemiological authorities. Air monitoring in the areas of industrial solid waste is being undertaken at three points on a quarterly basis. The schedule of monitoring has been agreed with city sanitary-epidemiological authorities. Maximum allowable concentrations of pollutants (MAC) in air emissions are being monitored at 88 sources of pollution according to monitoring schedule agreed with Lugansk Oblast State Department of Environmental Protection. Frequency of MAC sampling – one to four times a year per emission source. Sampling of wastewater, surface and ground water is being undertaken at 21 sampling points according to schedule agreed with Lugansk Oblast State Department of Environmental Protection. Hydrochemical sampling cover 28 compounds/elements and is being undertaken 1-2 times a month.

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Monitoring laboratory of the enterprise is accredited according to Ukrainian legislation. Accreditation certificate and list of substances/pollutants monitored by the laboratory is on project file. Conclusions and Impact Mitigation Actions 27. The overall conclusion of this EA is that the impacts associated with the long term modernization and capacity expansion program at AISW are positive in that they can substantially improve environmental performance respecting local air emissions as well as water use and discharge, while having manageable impacts related to solid waste generation. At the same time a major positive global environmental benefit is achieved through the significant reduction in GHG emissions. Therefore it is concluded that the improvement in environmental performance derived from replacement of major process elements with technology meeting World Bank Group Guidelines and approaching EU BAT more than offsets increases in mass pollutant generation from the increase in capacity. 28. For the proposed JI carbon finance operation where capacity is increased but before the upstream modernization specifically to the sinter plants is completed, the impacts on local air quality are essentially neutral, water impacts are positive and solid waste generation with its manageable impacts are increased. However, the proposed JI project alone does provide a substantial portion of the overall global benefits in terms of GHG reduction. Additionally, its role in strengthening the financial capacity of AISW will contribute to the ability and timeliness of completing the overall program with its more significant positive local environmental benefits. 29. The above long term positive conclusion is qualified by two important assumptions. The first of these is that the assumed investments at the front end of the overall process outside of the JI project boundary, namely sinter plants and blast furnace modernization be undertaken. In any event the existing sinter plant needs to be shut down and either replaced by a new facility or the required material be imported from facilities elsewhere. The second of these is the need to have assurance that the assumed environmental performance standards meeting World Bank guidelines and approaching EU BAT are in fact achieved, recognizing that design of various key components such as the new sinter plant are not well advanced. 30. These two key qualifications along with other mitigation measures have been well documented ECAP adopted by IUD and incorporated into the IFC loan. This was summarized in the CAPEX program to be implemented along with the modernization projects. The program is posted at AISW web-site14. In September 2007 following an audit visit by IFC, this was updated and made more specific. The EMP for the proposed JI project adopts this updated EMP as set out below.

14 http://www.amk.lg.ua/rus/eko_aug.html

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Project Environmental Management Plan 31. The following tables (Annex 1) summarize the EMP developed and adopted by IUD/AISW inclusive of mitigation and monitoring plans based on this EA and the IFC ECAP.

Consultations 32. The final draft Environmental Assessment and EMP were released to the public prior to appraisal. Public disclosure was made in Ukrainian and through media accessible to interested stakeholders.

33. Stakeholder consultation on the EA and EMP was organized by AISW on October 29, 2007. A summary of the main findings is included in Annex 2.

Annex 2. Environmental Management Plan

Annex 1. A. Mitigation PlanComponent/

PhaseEnvironmentalImpact/Issue

MitigatingMeasure

Timetable/Milestone Responsibility Comments

All Required strengthening ofenterpriseenvironmentalmanagement and occupationalhealth management capacity

Develop/implement formalEnvironmental, Health and SafetyManagement System (EHSMS).Certif ication of environmentalmanagement system.

Formal EHS MS in placeby2008/9 with continuousimplementationCertif ication by 2010

IUD corporatemanagementAISW management

ECAP Item C1

All Workplacehealth and safetypractices requireupgrading toaccepted internationalstandards to reduceworkeroccupational health risks andtheoccurrenceof workplaceaccidents.

Upgradeworkplaceconditionsspecifically related to lighting,working surfaces (floors), dustextraction and generalmaintenance/housekeeping.Expand and enforce theuseofmandatory personal protectionequipment, particularly respiratoryprotection in high exposureareas.

Continuous.

Review of respiratory exposureand full implementation of PPEuseby Dec. 2008.

Upgraded housekeeping byDec. 2008.

Upgraded workplaceconditionsfully implemented by Dec. 2008

AISW ECAP Item C2

All Need for effective tracking ofenvironmental health andsafety non-compliancewithlocal and IFC/World Bankrequirements inclusiveofcorrectiveaction programcommitments

A non-compliance tracking systemwill beembedded in theEHS MS asacoreelement inclusiveof provisionfor monitoring correctiveactionbeing taken.

Inclusion in EHSMS that is inplace2008/9Non-Complianceand CorrectiveAction tracking list withprioritization and expected datessupplied to IFC/World Bank byJuly 2009

AISW/IFC ECAP Item C3

High particulate releases fromlime kilns

Specifications for new kilnparticulate from main releasepointsto meet World Bank Guidelines (<50mg/Nm3) with specification target of<30 mg/Nm3)

Performanceverified whenoperational – Sept. 2008

AISW/IFC ECAP Item A1


High particulateand gaseousreleases from sinter plant.

Closureof existing sinter plant withreplacement by anew sinter plantwith two linesMinimium design specifications tomeet World Bank guidelines forparticulate (50 mg/Nm3), SOx (500mg/m3)and NOx(500 mg/m3), VOC(20 mg/Nm3) plus meet or approachand target EU BAT guidelines forparticulate (<50 mg/Nm3),SO2(<500 mg/m3) and PCDD/F (0.1-0.5 mg/Nm3).

Closureof existing sinter plantsby Dec 2010

New Line1 commissioned2009-2010

New Line2 commissioned2011-12

Submit design specifications toIFC for sinter plant replacement– July 2008.


New Blast Furnace(BF No. 1)performance

Design specifications to meet WorldBank guidelines, particularly forparticulate (<50 mg/Nm3), plus meetor approach EU BAT guidelines withappropriate performance guarantees.Specific measures per IFC ECAPItem

Confirmation of main aspirationpoints, and predicted emissions– July 2006.

Design specifications meetingWorld bank and EU BATGuidelines – ConfirmedSeptember 2007

Performance verified whenoperational – December 2007


Existing blast furnace (BFNo’s 2, 3 and 4) performanceparticularly high fugitiveemissions and workplaceparticulate/fumeconcentrations

Progressive reconstruction of BFNo’s 2, 3 and 4 to meet World Bankguidelines, and meet or approach EUBAT.

Confirmation of main aspirationpoints, and predicted emissionsand submission of designspecifications. – ConfirmedSeptember 2007Construction schedule from2007-2008


Modernization of BF#5 withnew secondary emissioncontrol system.

Confirmation of major emissionvalues and design specificationsmeeting WB guidelines andevaluation against EU BATguidelines with similar outcomes asBF#1 (above)

Shut down for modernizationafter commissioning of BF#2(estimated mid to end of 2009)

Commissioning mid to late 2010

AISW


New BOF Converter No’s 1and 2 performance

Design specifications andconstruction meet World Bankguidelines, and meet or approach EUBAT.Specific requirements as specified inIFC ECAP item C5

Confirmation of main aspirationpoints, predicted emissions,submission of designspecifications, and confirmationof performance – September2007


JI project Open hearth furnaces will bereplaced by converters

All original open hearth (Units #1 to#4) will be shut down progressivelyas BOF #1and #2 come on stream.(BOF #1 – End 2007, BOF#2 –beginning 2008) with all four unitsshit down by June 2008.

New converter sp will have a EFprimary gas cleaning systemdesigned to achieve emission levelsat <35 mg/m3. Secondary gascleaning system, consisting of bagfilters, will allow for achievingemission levels of <20 mg/m3 incompliance with IFC/WB

guidelines.

Progressive shut down from endof 2007 completing June 2008

AISW

JI project New tandem open hearthfurnace emission performance

Installation of gas collection systemincluding bag filters or ESPsPerformance based on monitoring tomeet EU BAT particulate guidelines(5-15 mg/m3 for bag filters or 20-30mg.m3 if ESPs used)Longer term closure of the tandemopen hearth furnaces.

Reporting of monitoring resultsto IFC for assessment ofperformance – July 2006,

Closure of Open hearthoperation – December 2012


JI project New continuous caster andladle furnace performance

Supplier performance guarantee,technology selection, provision ofaspiration and bag filters and closedloop water cooling system to meetEU BAT guidelines.

Performance verified andvalidated by IFC verified


Compliance verifiedby IFC


Reconstructed rolling millperformance

Design and construction of watersystem to meet BAT.Provision to bemadefor efficientwater re-circulation with scaleremoval.

Performanceverified–September 2007


Materials blending yardperformance

Inclusion of dust suppressionsystems in design specifications incompliance with EU BATguidelines.

Submission of designspecifications for dustsuppression to IFC forassessment on BAT – June 2008

Performance verified whenoperational - 2009


New coke oven battery (10-bis) environmentalperformance

Design specifications and installationto meet World Bank guidelines, andmeet or approach EU BAT.Application of best practicestandards respecting operation andmaintenanceSpecific requirements as specified inIFC ECAP item CK1

Submission of expectedperformance to IFC forassessment relative to worldBank Guidelines, and EUBAT –Verified by IFC, September2007

Performance verified whenoperational - December20072007

Alchevsk Coke/IFC ECAP Item AK1

Coke oven lid leakage Replacement of coal dust slurry witha fire cream slurry if feasible

Implemented – Dec. 2006 Alchevsk Coke ECAP Iten AK2

Plan 2 cokeside aspirationsystem performanceineffective resulting insignificant emissions.

Installation of replacement aspirationsystem designed to meet World BankGuidelines and meet or approach EUBAT.

Submission of expectedperformance and design detailsto IFC for assessment relative toworld Bank Guidelines, and EUBAT – Evaluated by IFCSeptember 2007

Performance verified whenoperational – September 2007

Alchevsk Coke/IFC ECAP Item AK3


All Potential sitecontaminationresulting in soil and/or groundwater environmental legacies.

Undertakea phased site investigationinvolving both soil and groundwater, focusing on potential metals,organic and inorganic compoundsassociated with steel making (as perIFC ECAP A13, AK4)Based n findingsundertakeclean-upasagreed with local authorities

Investigation study scopeandmilestonesset – Dec. 2008

Investigation andimplementation of clean up –2007 thru 2012

AISW/Alchevsk Coke/Local Authorities

ECAP Items A13,AK4

All Waste management practiceenvironmental performance

Undertake the inclusion of the longterm waste management planinclusive of evaluation ofenvironmental performance (surface,ground water and hydrologicalbarriers) of existing landfills, futurecapacity requirements, andmaximization of solid wasteutilization in the (EHS MS) andassociated corporate environmentalmanagement plan.

Waste management plandeveloped and incorporated in tothe (EHS MS) – June 2009

IUD/AISW

Annex 1. B. Monitoring

Environmental monitoring of production processesat AISW is being undertaken by the laboratory of theDepartment of Environment of AISWin accordance with Ukrainian legislation. This laboratory is certified to undertakemonitoring and it uses certified equipment and monitoringtechniques. Asnoted above thescheduleof monitoring is as agreed with local authorities.

Annex 2. Summary of Consultations

Annex 2. Consultations summary

Joint Implementation Carbon Finance Project OJSC “Alchevsk Metallurgical Plant”

Environmental Assessment

Summary of public consultations 29 October 2007, Palace of Technics of AMK, Alchevsk

Draft EA/EMP document and invitation to stakeholders and the public to take part in

consultation on the draft were posted on the Alchevsk Metallurgical Plant (AMK) web site on October 22, 2007 (http://www.amk.lg.ua/rus/). Invitations, signed by N.Antonov, Deputy Director General of AMK, were also passed by telephone to Alchevsk city authorities, trade union organization, local self government and citizens groups, media and educators. Invitation was also published 25.10.2007 in the local newspaper "Za metall". Participants of the meeting: Citizens of Alchevsk, representatives of local communities - 13 Faculty of Alchevsk branch of Donetsk Technical University - 5 Students of Donetsk Technical University - 30 Trade union of AMK - 1 Environmental inspectorate of the city of Alchevsk - 1 Also parrticipated: N.Antonov, Deputy Director General of AMK; Yu.Popov, Head of the Department of environmental protection of AMK V.Vovchak - Director of the Department for Foreign Economic Relations, Institute for Environment and Energy Conservation, Kyiv V.Tykhyy - Consultant, World Bank Presentations, Questions and Answers: V.Vovchak: Kyoto protocol and joint implementation projects (Briefly described the need for greenhouse gas reduction, basics of carbon quota trade and JI projects implementation, financial benefits of the JI project for AMK) Q. Were there other similar JI projects in Ukraine? A. This is the first project, and it demonstrates that AMK is forward-thinking Q. Who and how will measure CO2 enissions? A. CO2 emissions are calculated using technical parameters of manufacturing processes. Q. Where we can find information on Kyoto protocol and JI projects? A. Some web-links will be provided by email. V.Tykhyy: Environmental Policy of the World Bank (Provided general information on the WB environmental policy, environmental assessment and disclosure of environmental information and environmental management plan for each WB project)

Annex 2. Summary of Consultations

Yu.Popov: Characteristics of environmental protection measures integrated in AMK JI project (Indicated that significant air emissions reduction, waste generation and reduced water use will be achieved by introducing modern technologies with reduced use of natural gas better environmental protection. Displayed a number of photos of new air-cleaning facilities (attached). Emphasized that emissions into air, especially of particulate matter, will be significantly lower than at present) Q. The JI project’s aim is to reduce CO2 - how air pollution will be reduced? A. Modern technology is more efficient, it was developed to meet much stricter environmental protection standards, so it is much cleaner. All we need is investment to replace outdated technology by new. Q. We have had experience that you install good air filters, but then they do not work and emissions go directly in the air. A. This is not possible with modern technology. If air filters and other equipment do not work, technological process will be stopped. Q. Many people live in the sanitary protection zone of the plant. What will be done to solve this problem? A. In the past, this was the responsibility of city authorities. These days AMK jointly with city authorities is getting more involved in these issues, and will pay even more attention in the future. We gradually move people from sanitary protection zone, we provide them with new housing, however, some of the residents refuse to move. Summary of consultations:

In the opinion of participants, the project promises significant benefits for population. It is very important, however, that AMK delivers on its promises and implements what is envisaged by the environmental management plan.

Documents

World Bank Documentdocuments.worldbank.org/curated/en/580251468313765348/pdf/E17… · section mill 600 (1966) plus speciality mills for ball-rolling and structural sections and shapes