1
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
1
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.
2
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.
2
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); Heavysection 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
The 600 MT tandem OHF/bloom caster installed in 2005 which is equipped with modern air pollution
control equipment is to be retained
2
3
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 approval 5. 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
“Industrial Union of Donbas, Summary of Project Information”, International Finance Corporation, April
24, 2006,
(http://www.ifc.org/ifcext/spiwebsite1.nsf/2bc34f011b50ff6e85256a550073ff1c/190a1fcb82e61841852571
78006439ed?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
3
4
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)
(ii)
(iii)
Reduced use of natural gas in open heart furnaces in comparison with
converters;
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
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).
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. .
6
8
Additional GHG reductions can be generated by a new power plant utilizing all remaining off gases.
5
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”,
6
“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.
3
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.
7
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.
3.1
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 .
“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)
10
8

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.
9
Table 1: Actual 2004 Measured Air Emission Compared to Local Limits and
International Standards as Applicable - AISW
Source
Sinter
Machines
Local
Concentration
Limit Range
mg/m3
World
Bank
G/L
mg/m3
EU BAT
mg/m3
<50
n/a
<500
n/a
n/a
n/a
n/a
<10 for
Hot
Stoves
1-15 for
APC
<
350
(NOx)
n/a
n/a
5-15 w/
bag
filters
20-30
w/ESP
n/a
n/a
n/a
5-15 w/
bag
filters
20-30
w/ESP
n/a
n/a
n/a
333-368
64-99
65-89
3542-3750
607-701
37-97
1220-2292
Not Reported
396-453
101-118
86-91
4405-5056
620-720
39-101
1230-2513
Not Reported
50
750
500
n/a
50
750
n/a
50
NO2
64-71
72-91
750
SO2
25-39
CO
1563-1875
Open Particulate 76-180
27-53
2097-2431
87-180
n/a
n/a
50
NO2
SO2
CO
Open Particulate
87-180
7.8-30
60-134
157
750
n/a
n/a
50
90
32
15
750
n/a
n/a
Blast Furnaces
New
Hearth
Furnaces
Measured
Concentration
Range
mg/m3
Particulate
NO2
SO2
CO
Particulate
NO2
CO
Particulate
Lime Kilns
Old
Hearth
Furnaces
Substance
64-253
7.2-15.4
54-97
78
NO2
71
SO2
24
CO
10.4
* ESP – Electrostatic Preciptator
10
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.
11
Table 2: Comparison of Baseline (2004/05) Total Mass Air Emissions with those Projected after JI Financed Modernization
Program Alone (2009) and the Projected Emissions after Long Term Modernization Program Completion (after 2010) at
AMK in tonnes/year
Key
Processes/
Shops
Emissions Prior to Initiation of
Modernization Program in
2004/05
Projected Emissions upon Completion of JI
Project Alone in 2009
Including
Particulates
Gaseous
Emission
Increase/
Reduction
( +/- )
Including
Total
Total
Particulates
Gaseous
Projected Emissions Completion of Full
Modernization Program after 2010+
Particulates
Gaseous
Emission
Increase/
Reduction
( +/- )
Including
Total
Total,
including
100,767
13,197
87,590
97,455
13,782
83,673
-3,332
45,190
9,070
37,120
-55,577
Sinter
Plant
69,882
8,796
61,086
69,882
8,796
61,086
0
29,624
5,268
24,356
-40,258
6,694
931
5,763
7,630
1,100
6,530
936
3,628
654
2,974
-3,066
6,707
2,620
4,087
4,449
2,246
2,203
-2,258
2,840
1,011
1,829
-3,867
-
-
-
7,824
895
6,929
7,824
4,475
314
4,161
+4,475
Rolling
Mills
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
Blast
Furnace
Process
Open
Hearth
Process
Converter
Process
12
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.
3.2
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
13
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)
Water Consumption
Industrial
Potable
Total
Discharge Sources
Sludge Pit Ponds/Disposal
Area
Oxygen Compressor Shop
Plate Mill Finishing Sludge
Pits
Rail Depot Sludge Pit
Blast Furnace Slag Dump
Drainage
General Site Drainage
Rolling mill Recovery
Cycle Discharge
Total
Off Site Discharge
To Lozovaya River
To Orlovye Ponds
Total
3.3
2005
2009
13,781,000
3,826,000
17,607,000
27,000,000
5,800,000
32,800,000
233,200
233,200
19,700
800
0
0
2,700
8,400
2,700
8,400
207,600
2,386,000
222,200
2,190,000
2,859,000
2,656,500
253,700
2,605,700
2,859,400
233,200
2,423,300
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.
14

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
Sinter
Plant/Abatement
Sludge
Blast Furnace
Slag
OHF Slag
Rejected
Limestone
Dust from Pig
Iron Production
Mill Scale
Ferrous Scrap
Steel Scrap
Generated Imported Utilized Destroyed Exported
To
On-Site
Landfill
67.03
66.38
0.65
89.90
-
4.70
-
-
85.19
59.47
58.23
-
4.70
58.23
-
-
-
89.90
0.27
90.17
-
-
-
109.01
1,365.33
640.81
-
109.01
902.31
1,613.06
-
-
463.02
-
15
Waste Stream
Misc.
Total
Generated Imported Utilized Destroyed Exported
To
On-Site
Landfill
2,049.05
408.00
2,230.91
0.07
8.93
199.27
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
Sinter
Plant/Abatemen
t Sludge
Blast Furnace
Slag
OHF Slag
Rejected
Limestone
Dust from Pig
Iron Production
Mill Scale
Ferrous Scrap
Steel Scrap
Converter Slag
Misc.
Total
73.06
3.4
Destroyed
Exported
-
Utilized
On-Site
72.35
-
-
To
Landfill
0.71
97.99
-
5.13
-
-
92.86
37.28
74.73
-
0.28
74.73
-
-
37.00
185.70
0.30
183.32
-
-
2.68
127.35
1,488.20
411.05
900.00
2,321.87
5,743.30
444.72
445.02
127.35
983.51
2,466.45
3,939.19
0.07
0.07
9.63
9.65
504.69
411.05
900.00
290.44
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.
16
3.5
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.
3.6
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.
3.7
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
17
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.
3.8
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.
18
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.
3.9
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
19
4
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.
5
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
6
Annex 1. A. Mitigation Plan
Component/
Phase
Environmental
Impact/Issue
All
Required strengthening of
enterprise environmental
management and occupational
health management capacity
All
Workplace health and safety
practices require upgrading to
accepted international
standards to reduce worker
occupational health risks and
the occurrence of workplace
accidents.
Mitigating
Measure
Develop/implement formal
Environmental, Health and Safety
Management System (EHS MS).
Certification of environmental
management system.
Upgrade workplace conditions
specifically related to lighting,
working surfaces (floors), dust
extraction and general
maintenance/housekeeping.
Expand and enforce the use of
mandatory personal protection
equipment, particularly respiratory
protection in high exposure areas.
Timetable/Milestone
Responsibility
Comments
Formal EHS MS in place by
2008/9 with continuous
implementation
Certification by 2010
IUD corporate management
AISW management
ECAP Item C1
Continuous.
AISW
ECAP Item C2
AISW/IFC
ECAP Item C3
AISW/IFC
ECAP Item A1
Review of respiratory exposure
and full implementation of PPE
use by Dec. 2008.
Upgraded house keeping by
Dec. 2008.
Upgraded workplace conditions
fully implemented by Dec. 2008
All
Need for effective tracking of
environmental health and
safety non-compliance with
local and IFC/World Bank
requirements inclusive of
corrective action program
commitments
High particulate releases from
lime kilns
A non-compliance tracking system
will be embedded in the EHS MS as
a core element inclusive of provision
for monitoring corrective action
being taken.
Specifications for new kiln
particulate from main release points
to meet World Bank Guidelines (<50
mg/Nm3) with specification target of
<30 mg/Nm3)
Inclusion in EHS MS that is in
place 2008/9
Non-Compliance and Corrective
Action tracking list with
prioritization and expected dates
supplied to IFC/World Bank by
July 2009
Performance verified when
operational – Sept. 2008
Annex 2. Environmental Management Plan
High particulate and gaseous
releases from sinter plant.
New Blast Furnace(BF No. 1)
performance
Closure of existing sinter plant with
replacement by a new sinter plant
with two lines
Minimium design specifications to
meet World Bank guidelines for
particulate (50 mg/Nm3), SOx (500
mg/m3)and NOx(500 mg/m3), VOC
(20 mg/Nm3) plus meet or approach
and target EU BAT guidelines for
particulate (<50 mg/Nm3),
SO2(<500 mg/m3) and PCDD/F (0.10.5 mg/Nm3).
Closure of existing sinter plants
by Dec 2010
Design specifications to meet World
Bank guidelines, particularly for
particulate (<50 mg/Nm3), plus meet
or approach EU BAT guidelines with
appropriate performance guarantees.
Specific measures per IFC ECAP
Item
Confirmation of main aspiration
points, and predicted emissions
– July 2006.
Existing blast furnace (BF
No’s 2, 3 and 4) performance
particularly high fugitive
emissions and workplace
particulate/fume
concentrations
Progressive reconstruction of BF
No’s 2, 3 and 4 to meet World Bank
guidelines, and meet or approach EU
BAT.
Modernization of BF#5 with
new secondary emission
control system.
Confirmation of major emission
values and design specifications
meeting WB guidelines and
evaluation against EU BAT
guidelines with similar outcomes as
BF#1 (above)
AISW/IFC
ECAP Item A2
AISW/IFC
ECAP Item A3
AISW/IFC
ECAP Item A4
New Line 1 commissioned
2009-2010
New Line 2 commissioned
2011-12
Submit design specifications to
IFC for sinter plant replacement
– July 2008.
Design specifications meeting
World bank and EU BAT
Guidelines – Confirmed
September 2007
Performance verified when
operational – December 2007
Confirmation of main aspiration
points, and predicted emissions
and submission of design
specifications. – Confirmed
September 2007
Construction schedule from
2007-2008
Shut down for modernization
after commissioning of BF#2
(estimated mid to end of 2009)
Commissioning mid to late 2010
AISW
Annex 2. Environmental Management Plan
JI project
JI project
JI project
New BOF Converter No’s 1
and 2 performance
Design specifications and
construction meet World Bank
guidelines, and meet or approach EU
BAT.
Specific requirements as specified in
IFC ECAP item C5
Confirmation of main aspiration
points, predicted emissions,
submission of design
specifications, and confirmation
of performance – September
2007
AISW/IFC
Open hearth furnaces will be
replaced by converters
All original open hearth (Units #1 to
#4) will be shut down progressively
as BOF #1and #2 come on stream.
(BOF #1 – End 2007, BOF#2 –
beginning 2008) with all four units
shit down by June 2008.
Progressive shut down from end
of 2007 completing June 2008
AISW
Reporting of monitoring results
to IFC for assessment of
performance – July 2006,
AISW/IFC
ECAP Item A6
AISW/IFC
ECAP Item A7
New tandem open hearth
furnace emission performance
New continuous caster and
ladle furnace performance
New converter sp will have a EF
primary gas cleaning system
designed to achieve emission levels
at <35 mg/m3. Secondary gas
cleaning system, consisting of bag
filters, will allow for achieving
emission levels of <20 mg/m3 in
compliance with IFC/WB
guidelines.
Installation of gas collection system
including bag filters or ESPs
Performance based on monitoring to
meet EU BAT particulate guidelines
(5-15 mg/m3 for bag filters or 20-30
mg.m3 if ESPs used)
Longer term closure of the tandem
open hearth furnaces.
Supplier performance guarantee,
technology selection, provision of
aspiration and bag filters and closed
loop water cooling system to meet
EU BAT guidelines.
ECAP Item A5
Closure of Open hearth
operation – December 2012
Performance verified and
validated by IFC verified
Compliance verified
by IFC
Annex 2. Environmental Management Plan
Reconstructed rolling mill
performance
Materials blending yard
performance
Design and construction of water
system to meet BAT.
Provision to be made for efficient
water re-circulation with scale
removal.
Inclusion of dust suppression
systems in design specifications in
compliance with EU BAT
guidelines.
AISW/IFC
ECAP Item A8
AISW/IFC
ECAP Item A9
Alchevsk Coke/IFC
ECAP Item AK1
Performance verified–
September 2007
Submission of design
specifications for dust
suppression to IFC for
assessment on BAT – June 2008
Performance verified when
operational - 2009
New coke oven battery (10bis) environmental
performance
Coke oven lid leakage
Plan 2 cokeside aspiration
system performance
ineffective resulting in
significant emissions.
Design specifications and installation
to meet World Bank guidelines, and
meet or approach EU BAT.
Application of best practice
standards respecting operation and
maintenance
Specific requirements as specified in
IFC ECAP item CK1
Submission of expected
performance to IFC for
assessment relative to world
Bank Guidelines, and EUBAT –
Verified by IFC, September
2007
Replacement of coal dust slurry with
a fire cream slurry if feasible
Installation of replacement aspiration
system designed to meet World Bank
Guidelines and meet or approach EU
BAT.
Implemented – Dec. 2006
Alchevsk Coke
ECAP Iten AK2
Submission of expected
performance and design details
to IFC for assessment relative to
world Bank Guidelines, and EU
BAT – Evaluated by IFC
September 2007
Alchevsk Coke/IFC
ECAP Item AK3
Performance verified when
operational - December
20072007
Performance verified when
operational – September 2007
Annex 2. Environmental Management Plan
All
All
7
Potential site contamination
resulting in soil and/or ground
water environmental legacies.
Waste management practice
environmental performance
Undertake a phased site investigation
involving both soil and ground
water, focusing on potential metals,
organic and inorganic compounds
associated with steel making (as per
IFC ECAP A13, AK4)
Based n findings undertake clean-up
as agreed with local authorities
Undertake the inclusion of the long
term waste management plan
inclusive of evaluation of
environmental performance (surface,
ground water and hydrological
barriers) of existing landfills, future
capacity requirements, and
maximization of solid waste
utilization in the (EHS MS) and
associated corporate environmental
management plan.
Investigation study scope and
milestones set – Dec. 2008
AISW/Alchevsk Coke/
Local Authorities
ECAP Items A13,
AK4
Investigation and
implementation of clean up –
2007 thru 2012
Waste management plan
developed and incorporated in to
the (EHS MS) – June 2009
IUD/AISW
Annex 1. B. Monitoring
Environmental monitoring of production processes at AISW is being undertaken by the laboratory of the Department of Environment of AISW
in accordance with Ukrainian legislation. This laboratory is certified to undertake monitoring and it uses certified equipment and monitoring
techniques. As noted above the schedule of monitoring is as agreed with local authorities.
Annex 2. Summary of Consultations
8
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 aircleaning 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.