Report no: AC824
Integrated Safeguards Data Sheet (Negotiations)
Section I - Basic Information
Date ISDS Prepared May 10, 2004
- Basic Project Data (from PDS)
I.A.1. Project Statistics
Country: POLAND / Project ID: P083093Project: Poland: Hard Coal Mine Closure / Task Team Leader: John E. Strongman
Authorized to Appraise Date: March 1, 2003 / IBRD Amount ($m): 100.00
Bank Approval: June 15, 2004 / IDA Amount ($m):
Managing Unit: COCPD
Lending Instrument: Sector Investment Loan (SIL)
Status: Lending / Sector: Mining and other extractive (100%);
Theme: Land management (P); Other environment and natural resources management (P)
I.A.2. Project Objectives (From PDS):
The project is the second of three proposed operations requested by the Government to support implementation of the Government’s 2003-2006 Hard Coal Sector Reform Program. The 2003-2006 Program, which follows on from the previous 1998-2002 Hard Coal Sector Reform Program, will continue the process of restructuring the Polish hard coal sector so that the sector becomes profitable and is privatized, environmental performance is improved and the negative social impacts of restructuring are mitigated.
The Hard Coal Mine Closure Loan will directly support physical mine closure and reclamation expenditures and is a companion project to the US$200 million Poland Hard Coal Social Mitigation Loan, which will provide support for workers leaving the industry and which is expected for Board presentation in 3QFY2004.
I.A.3. Project Description (From PDS):
It is expected that the project will help finance about 54% of the mine liquidation and post liquidation activities (including land reclamation and dewatering) of the Mine Restructuring Company (SRK) and its Subsidiary Bytom SRK (BSRK) as part of the Government’s 2003 – 2006 Hard Coal Sector Reform Program. This would involve a minimum of three new mine closures over and above previous closures.
The main features of the 2003-2006 Program are as follows:
- Restructuring of the sector by consolidating the 5 weakest coal holding companies into one company (Kompanie Weglowa, or Polish Coal Company) with financial and physical restructuring to support efficiency improvements and then privatization by the end of the Program
- Termination of about 7.8-14million tpy of production and decommissioning and rehabilitation of associated mine sites
- Employment restructuring to reduce employment by about 19,500-25,500 workers from 2003 to 2006
- Financial restructuring of coal industry public debt
- Initiation of privatization of the coal industry by the end of the Program (December 31, 2006)
I.A.4. Project Location: (Geographic location, information about the key environmental and social characteristics of the area and population likely to be affected, and proximity to any protected areas, or sites or critical natural habitats, or any other culturally or socially sensitive areas.)
The Project is located in the Silesia region of Southern Poland. Silesia is highly industrialized with coal fired power generation, steel and other industry in the region. Total population of the region is about 2 million, the majority of whom live in urban, suburban and semi-rural settings. The region does not have any unusual or unique environmental features. The coal mines are not located near to any protected areas or sites, critical natural habitats, or other culturally or socially sensitive areas. There are 3 coal holding companies in the region (operating 37 mines) plus 3 independent mines (for a total of 40 operating mines). Total industry employment is currently about 140,000 people. Over 100,000 workers have left the coal sector in the last 4 years.
B. Check Environmental Classification: B (Partial Assessment)
Comments:
The proposed environmental classification for project is Category B (Partial Assessment). This category is proposed on the basis that the main environmental risks associated with the project are: (i) possible failure to decommission the mines or parts of mines in an environmentally acceptable manner; and (ii) possible failure to deal with subsidence issues in a satisfactory and timely manner. These risks are considered to be well known, modest and manageable as discussed below.
Restructuring of the Hard Coal Sector commenced in 1998 and was supported by two Bank loans, the two tranche Hard Coal SECAL 1 (approved June 1999 and closed October 2000) for $300 million and the single tranche Hard Coal SECAL 2 (approved August 2001 and closed December 2001) for $100 million. Both projects received an environmental classification of B.
A Sectoral Environmental Assessment (SEA) was prepared under SECAL 1 which included mine specific environmental action plans for each operating mine. SECAL 2 included a commitment by the Government to undertake three additional environmental studies in support of the SEA relating to (i) subsidence; (ii) saline water discharge; and (iii) compliance with environmental requirements.
SECALs 1 and 2 supported implementation of the 1998 – 2002 Hard Coal Reform Program which involved expenditures by the government and the mining companies for closing mines and reducing production, mitigating past environmental impacts and improving present environmental performance.
While the 1998-2002 Program as approved by the Government largely involved mine closures and social mitigation, improving coal industry environmental performance was a key objective under both of the Bank projects. Specifically, these projects included conditions requiring that a Sector Environmental Assessment (SEA) was undertaken and actions were implemented to improve environmental performance.
The main environmental impacts identified in the SEA were from: saline water discharge into the local river system; surface disposal of waste from the mines; coal washing plants; and ground subsidence in certain areas from underground mining and methane release from some mines.
Based on the findings of the SEA, Environmental Action Plans were prepared for each operating mine and were included in the company operating plans. During the period of the two SECALs the main environmental improvements were that salt content of waste water from the mines was reduced by about 30% and surface disposal of solid wastes was reduced by about 25%.
The physical closure and reclamation work under the new project is a continuation of the work started under SECALs 1 and 2 and the Bank is familiar with the risks involved. The main environmental risks for the project relate to (a) possible failure to decommission and rehabilitate the mine sites properly; and (b) failure to address the subsidence issue in a satisfactory manner, especially in the case of mines which operate under urban areas. These risks, which are the same as under SECALs 1 and 2 are considered fully manageable.
With regard to mitigating the first risk, in accordance with the procedures for an environmental B category project, an environmental management plan has been prepared and reviewed by the Bank for the first two mines that will be closed by SRK under the project (namely Katowice Kleofas and Bytom II). In addition, an Environmental Framework has been prepared that will govern the closure of other whole mines and the completion of mines already under closure by SRK and BSRK. The closure of additional whole mines will be carried out by the Mine Restructuring Company (SRK) which was responsible for mine closure under SECAL1 and SECAL2 and has a demonstrated, reliable capability in this regard. With regard to mitigation of the second risk, the observed impacts of subsidence in the region are relatively modest, generally being limited to minor damage, such as cracks in walls of apartment buildings that are subsequently repaired by the coal company responsible for the damage. The government will provide assurance that subsidence activities of SRK and BSRK will be funded in line wit their 2004-2006 plans and an annual progress report will be prepared.
The project will also include continued implementation of environmental improvements at operating mines and will support actions to improve coal industry environmental performance in accordance with the findings of the three studies initiated under SECAL2 . The Reform Program specifies that all the mines/mining companies will be under privatization by the time that the Program is completed in 2006. This creates a potential longer term risk that private owners may not operate in an environmentally responsible manner. Under the first two SECALs, it was determined that Government has good capabilities to monitor the environmental performance of mining companies and enforce environmental regulations with the exception that the coal mining companies (which are all presently state-owned and cash-starved) have only been paying part of their environmental fees and fines. While privatization is much more a matter for the third proposed project (which will support completion of the Program), under this project the Government will be asked to appoint privatization advisors for the largest company (Kompania Weglowa, KW). Privatization advisors for the two other large companies (KWH and JSW) will be appointed as part of the previously approved HCSM operation.
C. Safeguard Policies Triggered (from PDS)
(click on for a detailed description or click on the policy number for a brief description)
Policy / TriggeredEnvironmental Assessment (OP 4.01, BP 4.01, GP 4.01) / Yes
Natural Habitats (OP 4.04, BP 4.04, GP 4.04) / No
Forestry (OP 4.36, GP 4.36) / No
Pest Management (OP 4.09) / No
Cultural Property (OPN 11.03) / No
Indigenous Peoples (OD 4.20) / No
Involuntary Resettlement (OP/BP 4.12) / No
Safety of Dams (OP 4.37, BP 4.37) / No
Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) / No
Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* / No
Section II - Key Safeguard Issues and Their Management
D. Summary of Key Safeguard Issues. Please fill in all relevant questions. If information is not available, describe steps to be taken to obtain necessary data.
II.D.1a. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts.
Following is an assessment of the applicability of the Bank’s safeguard policies
Environmental Assessment – the project supports physical mine closure activity and this safeguard policy is applicable
Natural Habitats - The hard coal industry is located in Silesia, a relatively well developed, industrialized and urbanized region of Poland and the project does not impact natural habitats.
Forestry - the project does not impact forestry so this safeguard policy is not applicable
Pest Management – this is a coal mining restructuring project and there are no pest management issues, so this safeguard policy is not applicable
Cultural Property - there are no cultural property issues so this safeguard policy is not applicable
Indigenous Peoples - there are no indigenous peoples involved so this safeguard policy is not applicable
Involuntary Resettlement - Mines are being closed not opened so there are no resettlement issues.(either involuntary or voluntary) so this safeguard policy is not applicable
Safety of Dams - the coal mining involved is underground and there are no waste rock or tailings dams so this safeguard policy is not applicable
Projects in International Waterways – there are no international waterways involved so this safeguard policy is not applicable
Projects in Disputed Areas - the project is not in a disputed area so this safeguard policy is not applicable
With regard to the applicability of the Environmental Assessment Safeguard Policy, as discussed in the previous section, the main environmental issues for the project relates to sound mine decommissioning and mine site reclamation. This involves sealing underground mine workings, demolishing surface plants and removing reusable equipment; rehabilitating mine sites and waste disposal areas, and ensuring that no future subsidence will occur and that any present subsidence had been properly mitigated. Because all mines are underground mines, mine sites and ancillary facilities and infrastructure such as waste dumps are quite small and impacts are localized.
The environmental issues at the mines or parts of mines to be closed can be identified because under the first two SECALs Environmental Action Plans (EAPs) have been prepared for each of the mines to be closed, as well as for the mines that remain in operation. Mine closures were undertaken properly under SECALs 1 and 2 and there are no new issues or circumstances to be dealt with. Implementation of the environmental action plans started under SECAL1 and was continued under SECAL2. The project will support continued implementation of these Environmental Action Plans.
The project has no large scale, significant or irreversible major negative environmental impacts. To the contrary the project will support clean up of past environmental liabilities through the environmentally responsible decommissioning and rehabilitation of closed mine sites. The project will also include continued implementation of environmental improvements at operating mines.
To the extent that there is a major risk, it relates to social issues. There is a significant change for the new 2003-2006 Program (which this project supports) compared to the previous 1998-2002 program (which SECALs 1 and 2 supported) in that the additional proposed mine closures and redundancies must take place at a time when the national and regional unemployment rates are now about 20% compared with about 6% when the program started in 1998.
This risk is well recognized by both the Government in preparing the Program and the Bank team and are being addressed under the companion HCSM loan that was approved on March 30, 2004. Approval of the HCSM loan would be a precondition for approval of the HCMC loan. Both the Program and the HCSM project each place a very strong focus on designing and implementing social mitigation actions to support workers who are being made redundant in the present difficult labor market situation. In addition, structural reforms to help realize increased economic growth and higher employment are at the heart of the recommended economic measures and proposed Bank activities in the recently approved November 2002 Country Assistance Strategy.
II.D.1b. Describe any potential cumulative impacts due to application of more than one safeguard policy or due to multiple project component.
Not applicable.
II.D.1c Describe any potential long term impacts due to anticipated future activities in the project area.
Decommissioning and rehabilitation of mines in the project area are expected to lead to improvements in the natural environment. Future land use is uncertain but could include new business and light industrial development and any land use planning activity would require due attention to environmental aspects. The Government of Poland is fully cognizant of these aspects.
II.D.2. In light of 1, describe the proposed treatment of alternatives (if required)
There are considered to be no alternatives to closing excess coal mine capacity. Keeping excess capacity open would involve large operating subsidies which the Government is not prepared to pay and which the Bank would strongly discourage.
II.D.3. Describe arrangement for the borrower to address safeguard issues
The borrower has addressed safeguard issues and taken actions to minimize and mitigate potentially adverse impacts, not only of the project, but also of the overall industry through environmental management plans developed under SECALs 1 and 2, as described above. The borrower will continue to adhere to these commitments under the current project. Three environmental studies that began under SECAL2 have since been completed and will influence the overall program.
II.D.4. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people.
The major stakeholders under the projects include national Government, mining companies, trade unions, employees and their families, and local and regional Governments. The potentially affected people are (i) mineworkers who will be made redundant and their families; and (ii) communities impacted by subsidence.
NGOs, local government officials and community representatives have been informed of the Bank's activities through various informal meetings and consultations throughout the Banks support of the restructuring program (in SECALs 1 and 2). The Bank conducted a detailed survey of stakeholders and a workshop with all key stakeholders to discuss the results of SECAL 2. The surveys and workshop results are shown in the ICR. Environmental improvement were noted as one of the successes of the project. Consultation with stakeholders is ongoing. A meeting with local NGOs was held in Katowice in January 2003 and a half day consultation workshop was held in Katowice in May 2003. Further consultations will be held throughout project.
The ICR for SECAL2 is a public document and other materials will be prepared and released in accordance with the Bank's disclosure policy
E. Safeguards Classification (select in SAP). Category is determined by the highest impact in any policy. Or on basis of cumulative impacts from multiple safeguards. Whenever an individual safeguard policy is triggered the provisions of that policy apply.[ ] S1. – Significant, cumulative and/or irreversible impacts; or significant technical and institutional risks in management of one or more safeguard areas
[X] S2. – One or more safeguard policies are triggered, but effects are limited in their impact and are technically and institutionally manageable
[ ] S3. – No safeguard issues
[ ] SF. – Financial intermediary projects, social development funds, community driven development or similar projects which require a safeguard framework or programmatic approach to address safeguard issues.
F. Disclosure Requirements
Environmental Assessment/Analysis/Management Plan: / Expected / ActualDate of receipt by the Bank / 2/28/2004 / 5/03/04
Date of “in-country” disclosure / 3/15/2004 / 5/05/04
Date of submission to InfoShop / 3/31/2004 / 5/05/04
Date of distributing the Exec. Summary of the EA to the Executive Directors (For category A projects) / Not Applicable / Not Applicable
Resettlement Action Plan/Framework: / Expected / Actual
Date of receipt by the Bank / Not Applicable / Not Applicable
Date of “in-country” disclosure / Not Applicable / Not Applicable
Date of submission to InfoShop / Not Applicable / Not Applicable
Indigenous Peoples Development Plan/Framework: / Expected / Actual
Date of receipt by the Bank / Not Applicable / Not Applicable
Date of “in-country” disclosure / Not Applicable / Not Applicable
Date of submission to InfoShop / Not Applicable / Not Applicable
Pest Management Plan: / Expected / Actual
Date of receipt by the Bank / Not Applicable / Not Applicable
Date of “in-country” disclosure / Not Applicable / Not Applicable
Date of submission to InfoShop / Not Applicable / Not Applicable
Dam Safety Management Plan: / Expected / Actual
Date of receipt by the Bank / Not Applicable / Not Applicable
Date of “in-country” disclosure / Not Applicable / Not Applicable
Date of submission to InfoShop / Not Applicable / Not Applicable
If in-country disclosure of any of the above documents is not expected, please explain why.