Central Asia Cement (the “Company) is a leading cement producer in Kazakhstan and the principal cement supplier to the Astana region. The plant dates from the 1960’s and attained a design capacity of 3 million tons/year in the late 1980s.  Current output is around 670,000 tons/year.  The plant includes both wet and dry processing technology as well as associated quarries.

Since the late 1990s, primarily due to depressed demand resulted from the regional economic down and insufficient funds for maintenance and repairs, only the wet lines have been operated and the plant has become run-down. The planned investment programme is aimed at rehabilitating one of the dry cement lines and increasing production to 1.3 million tons/year. This will include the replacement of certain of the old installations, specifically, the kiln, pre-heater and cooler together with associated environmental abatement equipment. The investment programme also includes environmental investments aimed at improving the environmental management and overall performance of the remainder of cement plant.

Environmental classification and rationale

The project was screened B/1, requiring an Environmental Audit and Environmental Analysis in line with the EBRD’s Environmental Policy and Public Information Policy. The modernisation of the existing cement plant focussing mainly on rehabilitating an old line is associated with a number of environmental issues, which can be readily identified, assessed and mitigated as part of an Environmental Analysis. An independent consultant has undertaken the Environmental Audit and Analysis.

Key environmental issues and mitigation

The key environmental issues are associated with dust emissions from point and fugitive sources. Due to lack of funds for maintenance and repairs, and overall lowering of demand for cement in the early 1990s, the dry lines where mothballed and not used. The plant has relied on the less efficient and more polluting wet lines for production purposes. The performance of the existing environmental abatement equipment has gradually declined and dust emissions are a problem at the plant. A considerable amount of product is also lost as a result of the poor condition of dust arrestment equipment, which also has economic implications.

The planned modernization will focus on re-commissioning one of dry cement process lines with key process elements being newly constructed incorporating relevant environmental abatement equipment. The modernized line will be designed in line with EU IPPC requirements inclusive of dust, SO2 and NOx controls. As part of the investment programme an environmental management system will be incorporated into day-to-day operations at the plant. A continuous monitoring system will be installed on the rehabilitated dry line.

Additional investments will be made at the wet lines focusing on air abatement equipment aimed at significantly reducing dust emissions and improving work condition. The wet lines may remain in operation depending on market conditions and additional investments may be required in the future to ensure compliance with international best practice. One of the wet lines has been repaired and the remaining 3 wet lines shall be completed by May 2006.

Water consumption and wastewater discharges are an issue at the plant as the wet process lines result in higher water use. Although there are no reported problems with the current systems in place, and the water and wastewater management meets local requirements, the plant has committed to reassess the water management practices in due course once the dry line is operational. Works to repair the piping for both industrial and drinking water have already started.

Waste has been an issue at the plant, mainly associated with waste product and dust deposited on structures. Construction debris and redundant equipment is also an issue. The environmental action plan includes measures for addressing these issues to reduce environmental and human risk. As part of the on-going expansion plan, cleaning works have started on both the Line 5 & 6.

Asbestos is used at the plant, and the modernization programme will include the development of an asbestos management plan to address this issue. Overall, the health and safety culture at the plant has been inadequate and this will be upgraded as part of developing an environmental, health and safety management system.

Environmental opportunities

The proposed project is expected to bring significant environmental benefits, as the re-commissioned dry plant will be operated to modern international environmental standards and have a higher overall efficiency. Investments at the existing wet lines will also allow for substantial improvements to be made to the environmental management and operation of the plant. The increased efficiency of the dry line is likely to lead to reduction of dust and lower energy use per ton of cement produced. This will yield possible carbon reduction opportunities. ERBD is progressing this issue and some additional investments may take place once Kazakhstan ratifies the Kyoto protocol.

Summary of Environmental Action Plan

The Company will continue to adhere to Kazakhstan environmental, health and safety regulations and adopt certain EU environmental standards. All relevant permits will need to be obtained during the modernization process.

An Environmental Action Plan (EAP) has been developed following the due diligence and has been agreed. The EAP addresses inter alia air emission control, need for continuous air monitoring systems, asbestos management, house keeping, and the overall management of the environment, health and safety issues at cement plant and associated auxiliary operations.  An updated environmental assessment, focused on benchmarking with best international cement manufacturing standards (including EU IPPC) is to be undertaken by 2008.

Monitoring and reporting

The Company will monitor the environmental impact of its operations in accordance with national law and regulations. The EBRD will evaluate the project's compliance with the applicable environmental and social requirements during the financing of the project by reviewing annual environmental reports prepared for the project covering:

1. On-going performance of project-specific environmental, health and safety activities as reflected in the results of periodic and quantitative sampling and measuring programmes, and
2. The status of implementation of environmental mitigation and improvement measures. The EBRD’s representatives will also conduct periodic site supervision visits when deemed appropriate.

An update environmental assessment is to be undertaken by an independent consultant in 2008.

If required, the EBRD will carry out monitoring visits to the plant.