OVERVIEW OF IFC'S SCOPE OF REVIEW The review of this project consisted of appraising environmental, health, safety and social information submitted by the Company, and assessing the Company's operations. This was done through a field visit conducted by the project team in February 2012. The environmental and social (E&S) appraisal team visited the proposed Company operations in Mexico, the proposed project site for one of the plants in Peru and conducted discussions in Colombia with Calidra's joint venture partners related to the E&S issues for the proposed project. PROJECT DESCRIPTION Grupo Calidra S.A. de C.V. (Calidra or "the Company"); Mexico's leading producer of lime, construction hydrated lime, quicklime, dolomitic lime, chemical hydrated lime, and calcium carbonate products; operates twenty plants across Mexico and one in Honduras. Nine of its plants comprise quarrying, calcination, hydration and packaging, 11 plants are combined hydration and packaging operations, and Calidra also has one paper bag manufacturing plant. Its products are used in the construction, steel, chemical, mining, agricultural, waste treatment industries, amongst other industries.The proposed project with IFC includes:Operations in Mexico. Strategic capital investments in Mexico including:Purchase of equipment to increase production capacity as follows:Installation of 400 tons per day (tpd) Maerz kilns at its Sonora and Minorte plantsInstallation of hydration operations at Calidra de Occidente Santa Cruz site (25 tph), Cal de Apasco (11 tph) , and Cal Quimica Mexicana (25 tph)Installation of a dry mortars plant at Calidra de Oriente,Upgrade of the packing operations at various facilities as follows: (a) automatic packing at Calidra de Occidente Santa Cruz and semi-automatic packing at Zapoltiltic sites, (b) Cal Quimica Mexicana, (C) Cal de Apasco (increase existing capacity by 50%)Installation of crushing and screening facilities at Minorte Durazno quarry, Cal de Apasco and Calhidra de Sonora plants;New quarry and quicklime plant in CampecheQuicklime handling facility at Arcelor Mittal in Lazaro Cardenas to support a long term contractJoint venture with two existing lime producers located in central Mexico to implement the following projects:A greenfield project that includes installation of crushing and screening operations, a 250 tpd Maerz kiln, a quicklime handling facility, and solid fuel installations at the Cal Los Arcos plant located in Vizarron, QueretaroA 150 tpd Maerz kiln at the Cal Muro facility located in MichoacanAdaptation of two production sites, Calidra de Oriente and Calidra de Occidente, to use biomass as a substitute fuelOperations in Peru. Construction of two lime facilities in Peru. The Company is establishing a greenfield operation in Peru by associating with the owner of the concessioned quarry, and is planning to open a second facility later in 2013Operations in Colombia. A 50% joint venture with Cementos Argos in Colombia to set up and operate two quicklime plants in the countryMexicoThe proposed upgrades to Calidra's existing operations began in 2012 and will be complete by 2014. For the proposed biomass project, Calidra has already acquired a biomass collection center at approximately 120 km from the Calidra de Oriente Plant.Calidra has established a subsidiary, Plantaciones Comerciales Forestales (PCF), to handle biomass related activities. Initially, PCF will acquire waste from wood processing facilities and will coordinate with plantation owners to acquire the discarded biomass resulting from plantations maintenance and clean-up. Ultimately, PCF will acquire land to establish its own operations. Calidra de Oriente is the first plant in Mexico to begin fuel replacement (18 % biomass) and Calidra de Occidente (36% biomass) will be the second Calidra plant by mid 2014.To ensure biomass quality and quantity, the Company has set up a biomass collection and preparation center located 120 km from the plant, in Chignahuapan, Puebla, from which it sends the biomass to the Calidra de Oriente plant. For the Calidra de Occidente plant, it is considering to use mainly (90%) Agave bagasse with the remaining 10% from wood processors and forestry clean ups. Currently, the Company is developing a Planting and Harvesting Manual intended to identify the suitable species and establish the needed practices a plantation owner should apply aiming to establish a business model whereby plantation owners become PFC business partners and are in compliance with the IFC requirements. A copy of this Plan will be submitted to IFC as indicated in the Environmental and Social Action Plan (ESAP).PeruCalidra anticipates building two greenfield plants in Peru. The land acquisition and environmental permitting process for Calquipa, the first of these two plants, has been completed. The plant will be located in the Callalli district, at approximately 188 km from Arequipa, Peru's second largest city and at 3800 m altitude. Calidra anticipates it will install the second plant by the end of 2012. The two plants will operate in full compliance with local as well as IFC E&S requirements.The Peruvian government has granted a 400 ha quarry concession which will be associated to Calquipa. This quarry located 21 km from the plant and at 4880m altitude, will be operated by Calidra.The plant will install a 400 tpd Maerz kiln to produce between 350-420 tons of quicklime per day. Initially, the plant will use anthracite and pet coke; however it expects to begin using natural gas once the Peruvian government installs a proposed nearby gas pipeline by 2014. The anthracite will be transported by ship from the northern part of the country to the Matarani port where it will be temporarily stored. The anthracite and the pet coke will be transported by railroad respectively from the port and the Matarani Petroperu storage areas to the Chasquipampa station and from there by truck to the plant. The electricity needed will be obtained from the power grid. Water needs will be supplied by the nearby Pulpera River, located 30 m from the project site. In addition to the plant installation, the Company will also build needed internal access roads, a 1.7 km transmission line, and a 2.5 MW electrical substation.Calidra assessed three different sites prior its final site selection for the Calquipa plot based on environmental, technical, and socio economical aspects as indicated in the Environmental and Social Impact Assessment (ESIA) developed for the project.ColombiaCalidra anticipates building two greenfield plants in Colombia. The first plant is expected to be built near the town of Victoria in the department of Caldas (between Bogota and Medellin). It is planned that this facility will have a 400 tpd capacity kiln. A second plant is being evaluated, mainly to attend the export market, and could to be located in the Caribbean coast, near the town of Tolu, in the Sucre department. IDENTIFIED APPLICABLE PERFORMANCE STANDARDS PS1: Social and Environmental Assessment and Management SystemPS2: Labor and Working ConditionsPS3: Pollution Prevention and AbatementPS4: Community Health, Safety and SecurityPS5: Land Acquisition and Involuntary ResettlementPS6: Biodiversity Conservation and Sustainable Management of Living Natural ResourcesPerformance Standard 7 on Indigenous Peoples is not applicable since the project is located in an area where there are no Indigenous People. PS 8 on Cultural Heritage is not applicable since the project will not impact culturally sensitive areas. ENVIRONMENTAL AND SOCIAL CATEGORIZATION AND RATIONALE This is a Category B project, according to IFC's Environmental and Social Review procedures because the environmental and social impacts that may result can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The following potential environmental, health and safety, and social issues were analyzed:- Corporate E&S capabilityRaw materials and resource managementAir emissions and wastewater managementQuarry exploitation and reclamation programsSolid waste management and disposalBiodiversity aspectsFire protection and emergency responseOccupational health and safetyLogistics and transportCommunity engagement and development initiativesUpon implementation of this project along with the mitigation measures summarized below and included in the attached ESAP, the project is expected to comply with IFC's E&S requirements, namely the laws and regulations of the relevant countries, IFC's Performance Standards (PSs) on Social and Environmental Sustainability and the applicable elements of the following World Bank Group (WBG) Environmental, Health and Safety (EHS) Guidelines: (i) General EHS Guidelines, (ii) Cement and Lime Manufacturing, (iii) Construction Materials Extraction, and (iv) Forest Harvesting Operations. KEY ENVIRONMENTAL AND SOCIAL ISSUES AND MITIGATION Major E&S risks of the project include air emissions including GHGs, potential impacts to biodiversity from quarry operation and biomass initiatives, noise at work place, and transportation related accidents.PS1: Social and Environmental Assessment and Management SystemEnvironmental and Social (E&S) AssessmentCalidra has programs in place to prevent and reduce air emissions, liquid effluents, soil contamination, and solid waste, among others. The Company also has preventive maintenance programs for its process and it has a continuous improvement approach to enhance its E&S systems and ensure all established procedures and requirements are duly followed. In addition, it conducts periodic E&S audits of its plants and has procedures in place to conduct Environmental and Social Impact Assessments (ESIA) whenever engaging in plant upgrades or development of new projects.MexicoFor the upgrade of its existing operations, Calidra will identify the additional health and safety potential impacts beyond those from the normal operations and will establish the needed procedures to ensure there are not negative impacts to environment, employees (own/contracted) and communities. As indicated in the ESAP, the Company will provide to IFC an assessment of these potential impacts and mitigations.Calidra is conducting E&S audits to (a) determine the current status and needed mitigation actions for the Cal Muro and Arcos plants and associated quarries to be acquired in Mexico and (b) the impacts and mitigations from the sourcing/transportation/processing of the biomass to be used as alternative fuel. Information on the impacts, mitigations, and implementation timetables for items; (a) and; (b) above will be submitted to IFC as indicated in the ESAP.Once the details of (a) the new quarry and quicklime plant anticipated to be build in Campeche and (b) the quicklime handling facility expected to be established at Arcelor Mittal in Lazaro Cardenas are determined, Calidra will inform IFC of the environmental and social impacts and mitigation as indicated in the ESAP.PeruFor Calquipa, the first of the two greenfield plants in Peru, Calidra commissioned and completed an ESIA that included supporting studies such as biological assessment, soil characterization, and the stakeholder consultations conducted in relation to this project. The ESIA covered potential impacts and risks for the entire project life-cycle from site preparation, construction, operation and decommissioning, as well as the applicable E&S management plans outlining the measures to be taken to manage the E&S issues identified by the assessment for both construction and operational phases.Calquipa received environmental construction authorization from the Peruvian Ministry of Production/Direction of Industrial Environmental Affairs in May 24, 2012.The contractors will be required to develop and implement detailed environmental pollution control and occupation health and safety measures based on the Project's own Environmental and Social Management Plans. The management program for construction will be in place prior to the start of construction work as specified in the ESAP. A separate management program for operations will be also developed before the start of the Calquipa operations as per the ESAP. The EHS Management Plans will include procedures for environmental management, traffic management, dust management, occupational health and safety, labor conditions, community engagement, grievance mechanisms, influx management, etc. Further to this, for employment, the contractors will give preference to directly and indirectly affected communities. In addition, the contractors will have an EHS and social organization consisting of a team of EHS and social professionals on-site throughout the construction phase.For the proposed second greenfield plant expected to be built and operated by Calidra, the Company will also complete an ESIA and conduct stakeholder engagement demonstrating how this plant will comply with Peruvian as well as IFC E&S requirements. As indicated in the ESAP, the ESIA for this plant will be submitted to IFC at least six months prior beginning construction.ColombiaOnce Calidra defines the location of the greenfield plants expected to be built, it will commission and complete the respective ESIAs along with the stakeholder engagement demonstrating how this plant will comply with Colombian as well as IFC E&S requirements. As indicated in the ESAP, the ESIA for the plants will be submitted to IFC at least six months prior commencing construction.Environment Health, Safety (EHS) and Social and Management and OrganizationCalidra has established a Corporate Sustainability Department that reports directly to the Chief Executive Officer (CEO). The Sustainability Manager has a team of qualified environmental, health and safety (EHS) specialists who oversee the EHS performance of the operations. In addition, each plant has dedicated personnel to follow the day to day EHS performance. In addition, to effectively manage the resource efficiency aspects of its operations, Calidra has developed performance indicators and targets (i.e., m3 water/ton of product, energy used/ unit lime produced, unit lime produced/unit raw material extracted, etc.) All plants continue to develop programs aimed to reach best operational targets, lower resources consumption, and zero-discharge operations.The overall handling, reclamation, and safety aspects of the quarries are being handled also at corporate level, with local EHS presence at each of the quarries. To further improve the quality operations of the quarries Calidra has developed an Integrated Quarries Management Plan that includes current status, corrective actions, good practices procedures, and monitoring parameters. Copy of the Quarry Plan for the Calquipa operations will be provided to IFC as indicated in the ESAP.Calidra also manages the EHS performance of its contractors with practices such as conducting induction training about the Company's EHS practices and associated job risks, establishing contractual requirements, conducting audits, etc.Specifically, for the Calquipa project, Calidra will hire a qualified EHS specialist and a social specialist prior to the beginning of the construction, who will report directly to the Corporate Sustainability Department to ensure compliance with the local as well as IFC E&S requirements.For the remaining greenfield projects, Calidra will also closely manage and monitor the projects implementation and operation, will hired qualified EHS personnel and as indicated in the ESAP, it will provide IFC with the hiring time and qualifications of these specialists prior beginning the construction of these projects.Stakeholder EngagementEven though several of Calidra's operations have communities nearby, Calidra's track record of community projects reflects very well in the very low or no complaints from the communities. Calidra's corporate philosophy recognizes that contributing to the community development is both good business, and good ethics. Specifically, Calidra gives preference to hiring locally and to use local suppliers of goods and services whenever possible, it sponsors education programs within the communities it operates, makes construction materials available to local municipalities and education centers at discount prices, and promotes micro enterprises, among many other programs. Calidra is committed to continue with the implementation of these programs as part of this project.In addition, for the Calquipa project, as part of the ESIA development, it conducted stakeholder consultation activities that included plenary sessions in the Pulpera community and Chichas y Callalli communities. The public was given the opportunity to learn more about the project and propose mitigations. The purpose of these initial consultations was to inform stakeholders and affected communities about the project and to solicit feedback to be integrated into the ESIA design process. During this period baseline socio-economic data was also gathered. Follow-up consultations were held after submitting the ESIA to the local authorities. As required by Peruvian law, a written executive summary of the ESIA was provided to the community as part of the consultation preparation process.Calquipa will implement a robust stakeholder engagement process as outlined in the Stakeholder Engagement Plan (SEP) to be developed as indicated in the ESAP. Community relations staff will meet periodically with community members in the directly and indirectly affected communities. The community relations team will also meet with the municipal leaders in the nearby municipalities.Calquipa's General Plant Manager will ensure proper implementation of the SEP, as well as the management of the community liaison team throughout the construction, operational and decommissioning phases of the project.Grievance MechanismIf yet informal, Calidra's operations have grievance systems to handle complaints or comments from the community. Complaints and observations from external groups or members of the local community are received by the plants General Managers who direct the efforts for resolving the complaints as appropriate. Calidra will develop a more formal and consistent grievance system at corporate level and community grievance programs at all its plants as indicated in the ESAP including procedures to receive, register, redress, and monitor grievances as part of its E&S management system. This procedure will be designed to be easily accessible at no-cost for complainants, and to be efficient in addressing/responding to grievances. Complaints are received personally, as well as by phone, internet, and through suggestion boxes located in the communities.For the greenfield projects, both during construction and operation, Calidra will also establish community grievance mechanisms. During construction, the contractors will also develop and implement grievance mechanisms to address any issues raised related to the contractors' activities. Calidra will supervise the effective resolution of grievances raised during this phase. As indicated in the ESAP, the Company will submit details of these programs to IFC prior the beginning of the construction phases.Training, monitoring, and reportingCalidra periodically conducts EHS training for its own employees, as well as contractors. Calidra conducts induction for new employees; targeted training for managers and specialists; specific job risks training; quarterly EHS refresher courses, testing of training effectiveness, etc.The Company has monitoring programs in place to assess its EHS performance. It monitors air emissions, water consumption, liquid effluents, ambient noise, ambient air, efficient resources use, as well as workplace conditions and work-related accidents/incidents. The monitoring results of the parameters measured reflect an overall reduction in environmental and safety impacts (tons of air emissions released, volume of wastewater discharged, amount of energy used, etc.) and number of accidents. In addition, Calidra prepares annual monitoring reports for the local environmental authorities and international lenders.As part of this project, Calidra is committed to continue with these programs and to establish training, monitoring and reporting procedures for the various initiatives and expected greenfield projects.PS2: Labor and Working ConditionsHuman Resources Policy and ManagementCalidra has a Human Resources (HR) department in charge of implementing the Company's HR policy and systems for all its operations including ethics code, training protocols, work conduct, employee competencies models, mechanisms to handle and resolve employees and contracted laborers' grievances, etc. These policies and procedures are fully compliant with local requirements and IFC's PS2 requirements. For the new operations in Peru and Colombia, Calidra will implement an update as needed or develop an HR management system to ensure that labor conditions during the construction and operational phases comply with national labor laws and IFC PS2 requirements. As indicated in the ESAP, the Company will submit to IFC copies of the HR policies and procedures for its operations in Peru and Colombia six months prior beginning construction.The Company is an equal opportunity employer. All hiring and promotions are merit-based. The same approach will be maintained in its operation in Peru and Colombia.There is no child or forced labor at any of its operations. The Company also ensures that the contract laborers are at least 18 years old. In addition to the compliance with in-country labor laws, the Company provides additional benefits to its employees (i.e., extended health insurance to employees' families, alphabetization programs, educational support, loan programs for employees, etc.) The Mexican authorities conduct periodic labor audits and have not found any irregularity. Calidra is committed to apply the same to the new operations to be established in Peru and Colombia.It is anticipated that the projects in Mexico will generate approximately 1800 direct and 1200 indirect positions. Calidra employees have the right of association as per the Mexican labor laws. Currently the Company has 689 unionized employees. For Calquipa, Calidra anticipates hiring 58 direct employees and 180 indirect employees during construction and 27 direct employees and 18 indirect employees for operation. Calidra is committed to hiring the majority of workers locally starting with the rural communities and spiraling out to the larger urban centers.Even though Calidra does not have anticipate any retrenchment, as part of this project, it is committed to prepare and submit to IFC a retrenchment plan prior any labor reduction taking place. This plan will include the actions/agreements/additional initiatives the Company will carry out to comply with the local labor laws and with applicable requirements of PS2.For its current operations, Calidra has established a worker's functional grievance mechanism that defines communication channels and includes the option of submitting grievances by mail, phone and in person. The Company maintains a database with information regarding grievances results of which are reported quarterly. The grievance mechanism is communicated to all employees and is an integral part of the human resources policy.For the greenfield projects, Calidra is committed to ensure that the contractors will comply with the labor plan to monitor the performance of the contractors including regular audits, review of the contractors' internal monitoring reports and documentation as well as review grievances logged in accordance to the requirements of IFC Performance Standard 2. Calidra will review the contractors and subcontractors employees as specified the ESAP to ensure that labor conditions are in compliance with the contractual requirements. In addition, it will also set the grievance mechanism for its own employees at the greenfield operations, as indicated in the ESAP.For the projects in Peru and Colombia, Calidra will follow the local law labor regulations.Occupational Health and Safety (OHS)Calidra has an OHS management system in place to coordinate all relevant OHS aspects of its operations. Key OHS programs include assessing employees' general and occupational health, evaluating work-related risks and preventing occupational impacts, workplace monitoring, maintaining records of accidents and incidents, and implementing corrective measures to reduce negative EHS impacts. It has appropriate medical services at all its operations and conducts regular medical check-ups including those for employees working in dangerous and hazardous areas. It provides personnel protective equipment (i.e., uniforms, respiratory protective devices, boots, etc.) which are required to be used at all times. The Company has response equipment and trained personnel, available at all times, to handle fire/emergency response actions.Calidra continues strengthening its OHS systems to reduce the likelihood of accidents. Calidra anticipates further reduction in frequency of lost time incidents with the development of the procedures needed to obtain the OSHAS 18001 certification, with the implementation of the OHS action plan Calidra has already developed, and with the work place risk assessment currently on-going. Specifically, the Calidra de Oriente plant already has its OSHAS 18001 certification. The remaining plants have sound H&S management systems as well and have received national safety awards.Worker Accommodation may be required during the construction phase of some of the greenfield facilities. Specifically for Calquipa, all workers will live in the nearby communities. However, as indicated in the ESAP, Calidra will develop a framework Worker Accommodation Management Plan outlining the expected quality of worker accommodation and the way they will be managed to ensure high levels of safety and health among workers and local communities in case any of the investment greenfield projects requires workers accommodations. Calidra will in close coordination with the contractors to finalize and implement the Worker Accommodation Management Plan and monitor the plans for workers accommodation including their location to ensure that potential impacts are mitigated. When the worker accommodation has been constructed, Calidra will assess the standards of all facilities and conduct monitoring once they are operational.For the greenfield projects, Calidra will develop the procedures/requirements to be imposed to contractors so that the workplace conditions of the contracted employees are in accordance to PS2. Procedures will include H&S induction training for all site personnel thus ensuring its personnel have the necessary skills to identify hazards and carry out their work responsibilities safely. Other procedures will include the recording and recordkeeping of all incidents and near misses and follow-up to prevent re-occurrences and the establishment of its own workplace conditions monitoring program with which it will routinely report to Calidra on E&S performance. Potential emergency scenarios will also be identified by Calidra in conjunction with the contractors and adequate emergency response arrangements will be developed for implementation. This will include provisions for a trained and equipped emergency response team to be ready to respond to emergency events. Details of the procedures/requirements will be submitted to IFC as indicated in the ESAP.For the operational phase, the Company will develop the H&S programs prior commencement of operations as indicated in the ESAP.Health checks will be made on workers during construction and operational phases prior to starting work to establish fitness for work, and regular worker health checks will continue throughout the construction and operational phases to monitor workers health. Health service facilities will be provided during the operational phaseSpecific risks to the workforce as a result of a major accident, such as fire or explosion at the facility will be significantly mitigated with the establishment of sound operational safety measures such as alarm systems, gas detection devices, automatic emergency shutdown systems, emergency drills, etc.PS3: Pollution Prevention and AbatementRaw Materials and Resource ConsumptionCalidra owns and operates most of its quarries with the exception of that for Incal in Honduras and those supporting the Cal de Apasco, Minorte (Garco and MAS) and Zapoltitic plants which are operated by contractors. As part of its overall optimization approach, Calidra aims to exploit its limestone in a way to maximize the use of its raw material. To that effect, since it began taking over the operation of its quarries, it has enhanced the overall exploitation scheme of its quarries.For the current hydration operations, the Company obtains the water for its process needs mainly from own authorized wells. Calidra has been assessing alternatives to optimize its water use, particularly at those hydrating plants located in water scare areas. Specifically, Calidra has begun recovering water released to the atmosphere from the hydrators at its Calasa Plant where it currently collects approximately 1.5 m3 per hour. It also has programs in place to do the same at its Calidras de Oriente and Cal Quimica plants by 2013 and 2014 respectively. In addition, Calidra is implementing systems to collect rain water at its Cal Quimica, Tecolotlan, Cal de Apasco, Xico, and Cal de Oriente plants. This initiative is incipient at the remaining plants.Even though the Company has a diversified fuel sources by using pet coke (approx. 58%), natural gas (approx. 40%), and wood (approx 2%), it is looking forward to reducing the use of non-renewable fuels and increase the use of alternative energy sources (i.e., biomass, eolic, etc.)As indicated earlier, Incal, Calidra's plant in Honduras uses 100% wood processing waste as fuel. The Project is aiming to replace up to 30% of its fossil fuel usage at the Calidra de Oriente plant by wood. During the fourth quarter of 2012 Calidra will source 20% of it's electrical consumption from a wind farm located in the state of Oaxaca. Calidra has established a contract with DEMEX for 18 years in which Calidra has been assigned 4 wind generators of a capacity of 2 MW each; it is estimated that the efficiency of this equipment will be between 36 to 42%. The electricity produced will go to the CFE grid. Two generators have been assigned to Calidra de Oriente, one to Cal Quimica Mexicana, and one to Calidra de Occidente.PeruThe design of the project is based on established state-of-art and worldwide applied technologies whose performances are both predictable and well proven in operation. The use of state of the art technology will also help the project making optimal use of energy. In addition, the project will be designed to comply with the most stringent of local standards and applicable WBG EHS Guidelines.The site preparation phase entails site clearance and leveling. Specific activities include the identification/collection/removal of the scarce flora and fauna in the project site, collecting and re-using top soil; excavation, quarrying and burrowing, preventing soil erosion (protecting cut slopes, vertical & horizontal drainage and grass planting); drainage management in construction areas and along access roads, etc. The key environmental impacts related to the construction activities are on air, water, noise, and land. Air and noise pollution is expected from all excavation, blasting drilling, civil construction, and construction machinery and traffic related activities. Noise will be monitored and mitigation measures applied where necessary which may include the erection of temporary noise barriers, the scheduling of the noisiest activities during daylight hours and the notification of residents prior to the specific activities.ColombiaIt is anticipated that Calidra will apply the same procedures/approach to resource efficiency and optimization when designing and operating the Colombia operations. Details of those will be submitted to IFC as part of the ESIAs to be developed for these projects.Air Emissions, Ambient ConditionsMexicoEight of its eleven calcination plants have already completed the installation of efficient Maerz kilns and currently there are new Maerz kilns to increase capacity being installed at the Sonora and Minorte plants.Calidra has been consistently working towards reaching compliance with the IFC requirements and it is committed to ensure that the air emissions of all its existing kilns maintain compliance with the IFC and local air emission requirements. With the exception of the newly acquired operations and 6 (formerly 14) old kilns at Calidra de Occidente (producing 620 tpd of quick lime) which are also expected to be compliance as indicated in the ESAP, all existing operations comply with the IFC requirements. All greenfield projects will be designed and operated in compliance with the IFC and local air emission requirements.The hydrators are equipped with air pollution control devices; 21 out of 25 hydrators are in full compliance with the local and IFC requirements. The total number of hydrators will be in full compliance by 2012 as indicated in the ESAP.Silos and raw material/intermediate and final products transfer points are also controlled to prevent the release of fugitive dust emissions. Most of the packing areas are automatic and are controlled to prevent dust releases to the atmosphere and to ensure sound respiratory workplace conditions. As indicated earlier, packing areas will be upgraded as part of this project.The newly acquired plants as well as the biomass preparation operations will also have controls systems to ensure air emissions compliance with the Mexican and IFC requirements.PeruAs part of the ESIA, Calquipa conducted ambient air monitoring in the project area to establish the baseline ambient air quality conditions. The results demonstrated very good ambient air quality conditions since not much anthropogenic activates have taken place in the area.Expected air emissions from the site preparation and construction phases include mainly combustion gases from energy generation and vehicles and machinery, and dust. Key control measures to be implemented during these phases include dust suppression though covered transport of excavated earth; water road spraying during the dry season, especially during strong wind conditions; regulated vehicle speeds; regular road maintenance; grading and compacting road surfaces to prevent uneven running surfaces to prevent both noise and dust impacts. In addition, mandatory preventive vehicles and equipment maintenance to reduce generation of combustions gases will be also implemented.Expected main process air emissions include particulate matter, carbon monoxide, carbon dioxide, sulfur dioxide and nitrogen dioxide from the kiln. The plant will install bag filters at the kiln and will have air pollution control devices at material transfer points and storage silos. The limestone rock coming from the quarry will be stockpiled. The grinding fines will be stored in silos and the pet coke will be stored in enclosed storage areas. It is anticipated there will not be negative ambient air quality impacts in the project area since Calquipa is the first industrial activity in the area and with adequate air pollution controls devices able to control air emissions to stringent international levels.The additional greenfield operations to be installed will have air emission control systems for the construction and operation phases to ensure local and IFC stack emissions and ambient air quality requirements.Water Usage and Liquid EffluentsCalidra operations generate process, storm waters, and domestic wastes. The effluents are treated prior to discharge; however, the following plants still need to enhance their controls to satisfy full compliance with IFC requirements by 2013 as indicated in the ESAP: Calhidra de Sonora, Caleras de la Laguna, Calidra de Occidente, Cal de Apasco 3 and Incal. Domestic wastes are either discharged into the municipal system or into well maintained septic tanks.PeruFor construction and operations phases, water will be mainly used for domestic purposes. All water needs will be obtained from the Pulpera River for which a permit is being obtained from the local authorities. The water for consumption will be treated prior to use to comply with the local as well as the World Health Organization drinking water levels. This source has sufficient water to provide to the project without causing negative impacts to surface or underground water bodies. The fire water will be stored in a 12,000 gallon tank and it will be available at all times.The wastewaters to be generated include storm waters, cleaning process areas, and domestic wastewaters. The project will have internal separate drainage systems for each type.The domestic wastewater generated during site preparation, construction and operation will be treated in a biological wastewater treatment plant and use to water the green areas to be established surrounding the plant. Storm water collected in the production area will be sent to a sand trap and then reused.Even though Calidra has not yet concluded the engineering details of the water balance for the project to establish how much will be reused and will be discharged, it has been estimated that it will have a maximum consumption of 0.0912 m3/h; it will reuse 100% of the treated wastewater thus there will be no effluent discharge to the environment.Details of water consumption and wastewater treatment for the additional greenfield projects to be established will be presented in the ESIAs to be developed for those projects and will be compliant with local and IFC requirements.Solid and Hazardous WastesCalidra has a solid waste management system and all current plants have segregation programs. The program ensures that once segregated, the hazardous and non-hazardous wastes are properly disposed following local requirements. Specifically, the hazardous wastes (i.e. waste oils, materials contaminated with the oils, etc.) are properly collected, stored and sent for final disposal by authorized contractors. Calidra continues making efforts to reduce the generation of solid wastes. Specifically, it reinjects back into its kilns the particulates collected in the air pollution control filter from the kilns at the Calidra de Oriente, Calhidra de Sonora, Cal Quimica Mexicana, Tecolotlan, Cal de Apasco, and Caleras de la Laguna plants.Solid residues during construction and operation will be mainly non hazardous. The project will have a solid waste management plan that will be submitted to IFC as per the ESAP. Specifically, the waste generated during the construction phase will be segregated and stored in roll-off containers at waste yards managed by the contractors. Domestic solid waste will be properly stored and disposed off at the authorized municipal landfills. Hazardous wastes generated in construction such as used lubricating oil, batteries, empty drums of paint/solvent/additives, floor sweepings from material storage yard, oily sludge, contaminated soils from spills, electrical and mechanical components etc., will be stored in drums and containers at the waste yard established by the contractors, and then transferred to licensed waste treatment contractors. It will conduct the identification of authorized hazardous wastes management and disposal contractors prior beginning operations as indicated in the ESAP.Calidra will extend its solid waste management system to the plants to be acquired in Mexico, to the biomass operations and those greenfield plants to be built in Peru and Colombia.Hazardous MaterialsHazardous materials at Calidra operations include fuel oil and explosives. The fuel oil, at plants that use it, is stored in above ground storage tanks with double containment and safety measures to prevent spills during loading and unloading. Since Calidra also provides fuel for vehicles and equipment at the quarries, the associated fuel storage tanks also have double containment safety systems.Some of the quarries have safe, dedicated areas to store the explosives with rigorous safety handling procedures in accordance with the IFC requirements. There are also periodic audits conducted by the Mexican military forces to ensure all operations, procedures and systems to handle and use explosives comply with the local requirements. For the remaining quarries, Calidra has contractual agreement with explosives providers so that they bring the explosives to the quarry when they are needed thereby eliminating the need of storing explosives on-site and within the quarry premises.Calidra will extend the same safety practices for the handling of hazardous materials to the acquired plants in Mexico and the greenfield plants to be built in Peru and Colombia. The Company will ensure all storage tanks have double containment, there will be a database accessible to all employees with the Material Safety Data Sheets (MSDS) for all hazardous materials, all hazardous liquids will be segregated and securely stored in appropriate secondary containment, and in case of spillage incidents, Calidra operations will have the appropriate prevention measures to absorb or contain liquids so that they do not enter drains, ditches or waterways. As indicated in the ESAP, Calidra will develop and submit to IFC the Hazardous Material Management Programs for the greenfield plants prior to beginning construction.ReforestationAs part of the Integrated Quarries Management Plan, Calidra's quarries have reforestation programs as part of their quarry reclamation activities. For the greenfield projects, Calidra will also establish reforestation programs as part of quarry reclamation. The specific details for each project will be included in the quarry reclamation plan to be developed for each of these projects.Operational SafetyCalidra has established procedures to ensure the safety of its operations including a program of supervision and risk control, periodic internal audits, and integration of EHS aspects. Calidra's plants have continuous gas leak detectors, sound alarms, and permanent pressure and temperature controls. The E&S audit to be developed for the new operations to be acquired in Mexico and to be submitted to IFC, as indicated earlier, will identify the needed safety measures and the implementation timetables.PeruThe temporary and definitive anthracite and pet coke storage areas will be placed distant from the process equipment and there will not be permanent stockpiles to prevent the possibility of spontaneous combustion. The ground and stored anthracite will be maintained in an inert environment to prevent fires and explosions. Both storage areas will have fire detection and prevention equipment and measures. In addition, throughout the plant there will be alarms, extinguishers and a pressurized water system to respond in case of fire.For the greenfield projects, Calidra will also identify the operational safety measures to be established. The specific details for each project will be included in the ESIA to be developed for each of these projects.Emergency Preparedness and ResponseFor each plant Calidra has developed emergency response and contingency plans. Key elements of these plans include procedures for internal/external communications and the response of organizations/contacts at neighboring plants in mutual aid plans for the transport of hazardous materials.All plants have prevention/response programs in place (i.e., trained fire/emergency response brigades available at all times, periodic emergency response drills, fire prevention/response equipment such as alarms, sprinklers, signals, hydrants, dedicated fire water tank, and extinguishers throughout the operations sites.) Calidra also keeps an incident log to register the emergency situations and the mitigation actions.PeruFor the construction phase the contractors will be required to develop and implement an Emergency Response Plan and have qualified personnel and equipment response to potential emergencies. For the operation phase, Calidra will develop an Emergency Response Plan. This plan will identify likely emergency scenarios, appropriate response equipment, calibration and maintenance of the equipment, emergency training and drill frequencies, identification of appropriate supporting parties, etc. Qualified personnel to respond to any emergency will be available at all times. Calidra will submit a copy of this plan prior to operations to IFC as indicated in the ESAP.For the greenfield projects, Calidra will also identify the operational safety measures to be established. The specific details for each project will be included in the ESIA to be developed for each of these projects.Energy Efficiency and Green House Gases (GHGs)Calidra has established energy efficiency initiatives at its current operation. It has a energy tracking system at several of its plants that is helping to identify specific energy optimization/reduction opportunities at the plants. It has established clear energy reduction targets for 2013, such as:a) ensure that 20 percent of the electricity consumed is generated by renewable sources (i.e., it will begin using clean energy at its Oaxaca plant in November 2012 from an 8 MW wind farm from the Desarrollos Eolicos Mexicanos, DEMEX wind farm supported by Calidra; uses biomass as fuel at Incal, its plant in Honduras; and as part of this project will use biomass at all least two of its plants in Mexico, etc.)b) reduce the specific electricity consumption to less than 50 kWh/tonc) install the energy tracking monitoring system at all its plantsd) develop and establish the biomass program in Mexico aiming to produce at least 15% of the total lime produced in 2013 with renewable fuelse) at its greenfield plants, install vertical Maerz kilns which are well known for their low energy consumption. Their estimated specific energy consumption is between 820 to 900 kcal/kg of lime produced, whereas a rotary kiln can consume between 1400 to 2000 kcal/kg of lime producedCalidra's operations are a significant source of carbon dioxide (CO2) from its process as well as carbon dioxide and other GHGs from its fuel consumption. By optimizing its operations by replacing obsolete technology with efficient kilns (vertical Maerz kilns), Calidra is reducing/avoiding CO2 emissions from fuel consumption and low product yield. All current operations have installed efficient Maerz kilns which represent a reduction in CO2 generation from energy used by 185,000 tonnes/yr of CO2 with the same production. In addition as part of this project, it will continue measuring the CO2 emissions produced and aims to reduce the CO2 emissions generation by 6% in 2012 by installing the biomass project at one kiln at the Calidra de Oriente plant, and by reducing the consumption of indirect energy. Calidra operations generated approximately 2,5 million tonnes of CO2/yr in 2011.The plants to be acquired in Mexico will also undergo improvements to begin the reduction on energy consumption. The specific actions to be implemented will be included in the E&S audit to be conducted and submitted to IFC as indicated earlier.PeruBased on design information currently available and considering all energy efficiency measures identified, the approximate annual GHG combined emissions of the Project are estimated to be approximately 0.15 million tonnes/yr of CO2 (0.097 million tons/yr from the process and 0.05 Million tons/yr from energy use). For electricity the factor of 0.69 tons of CO2/ MWh, and 3.25 t CO2/ t of solid fuel was used.The commitment of the Company to install to state of the art technology for its greenfield projects will ensure high energy efficiency and as part of their environmental and social management system will have energy management procedures and systems in place. As indicated earlier, once the details of the greenfield projects are determined the GHG calculations will be also provided.PS4: Community Health, Safety and SecurityInternal and external communication is important for Calidra. This includes both consultation with communities located near Calidra operations as well as internal training programs designed to fill the gap between job needs and the actual worker capabilities and education. The Company has established monitoring programs to assess potential impacts to the community. The monitoring results indicate that potential negative impacts affecting the communities may be ambient noise and ambient air. Calidra has established programs to reduce the possibility of impacting the nearby communities.TransportationCalidra's transportation of raw materials and products is by both its own and subcontracted vehicles. In its effort to minimize traffic accidents, Calidra has developed and implements at some of its plants Safety Transportation Management Plans. As part of this project, Calidra will develop and implement Safety Transportation Management Plans for the existing operations pending a plan, for the new acquisitions in Mexico, and the greenfield operations as indicated in the ESAP. In addition, for the Calidra de Oriente facility, as indicated in the ESAP, it will build an alternative route to avoid the transportation of raw materials and products through the Acajete nearby community by the end of 2012 and prior to starting, it will submit to IFC the impacts and mitigations associated to such project.As indicated earlier, for the Calquipa plant, fuel and raw materials will be transported via truck. It is estimated that the project will have between 2-3 trucks operating 16 hours/day to transport around 1100 tons/day from the quarry to the plant. Even though, the roads between Arequipa and Chivay are in good condition, the transport will be conducted at high altitudes (curves/snow risks.) The state owned road between the quarry and plant is in poor condition, thus Calidra will upgrade this road as part of the project.Calidra will develop emergency response plans for the construction and operation phases of the greenfield operations which will include the communication to and training of the communities related to response to emergencies, list out equipment needed, emergency drills procedures, involvement of the local authorities in the community preparedness planning in the event of a major accident, etc. In addition, as in the existing plants, it will also ensure the plants have facilities (i.e., toilets, rest areas, parking, etc.,) for truck drivers.During construction/upgrades, Calidra will establish noise monitoring programs at the facilities' boundaries to ascertain the projects compliance with the local standards and IFC guidelines. These plans will include periodic noise monitoring and measures, as needed, will be taken to minimize noise disturbance to nearby communities. Calidra will also include measures (noise barrier/insulation, periodic maintenance plans) to limit noise disturbance outside the site boundary.Influx/Induced In-MigrationMexicoIt is not expected that the projects in Mexico will cause any induced influx of job seekers.PeruIt is anticipated that there is the potential for induced influx of job seekers because of the Calquipa project. The Influx Management Plan, to be developed by Calidra as indicated in the ESAP, will seek to minimize influx impacts by bussing employees to site, housing any external works in the larger urban centers with sufficient capacity in social services, and hiring locally. This plan will include a stakeholder analysis, participatory consultation, influx risk assessment and development of policies and procedures for managing influx and mitigating impact.The Company will broadly communicate its plan to prioritize local hiring and will conduct an employment survey to determine the capacity of the local workforce. In addition to the rural workforce in the area of direct influence, the Company will have access to an urban workforce in the cities of Chichas and Callalli.For the additional greenfield projects to be built, as part of the ESIAs to be developed, Calidra will evaluate the likelihood of induced influx and will established the needed measures to ensure they are not negative impacts to the nearby population as required by PS4.Exposure to diseasesMexicoIt is not expected that the projects in Mexico will cause any additional exposure to communicable diseases.PeruThe arrival of a large amount of workers to be hired during the construction phase could increase the risk of transmission of communicable diseases including sexually transmitted diseases. To monitor potential health impact on the local communities, Calidra will establish a health baseline for the surrounding communities prior to the inception of the construction phase to establish current health conditions of the nearby communities as indicated in the ESAP. As part of this effort Calidra will jointly, with the contractors, implement a communicable diseases awareness campaign in coordination with relevant stakeholders such as the women's union, youth union, health workers and representatives from affected communities as indicated in the ESAP.For the additional greenfield projects to be built, as part of the ESIAs to be developed, Calidra will evaluate the likelihood of induced influx and will established the needed measures to ensure they are not negative impacts to the nearby population as required by PS4.Security PersonnelCalidra contracts private security companies to safeguard its personnel and property. The Company will ensure that the private security personnel to be hired is properly trained in accordance to the Voluntary Principles towards employees and the neighboring communities. As appropriate, the Company will first conduct a security risk assessment and then develop a Security Management Plan as indicated in the ESAP that will include background checks, training of private forces, rules of engagement as well as monitoring and reporting plans.PS5: Land Acquisition and Involuntary ResettlementThe upgrade of the operations in Mexico will not require any land acquisition. However, the project anticipated buying land for the plantations that will produce the biomass and possibly for the new greenfield plants. Calidra will develop and submit to IFC a Land Acquisition Management Plan in accordance to PS 5. In addition, the land acquisition process for each land acquisition will be also submitted to IFC prior completing the land purchase as indicated in the ESAP.For the Calquipa project, Calidra bought an area of 4 ha on a willing-buyer willing-seller basis. The land acquisition did not require physical nor economical displacement. The 400 ha project associated quarry, Negro Africano, was concessioned to Calidra by the government of Peru. This land was owned by three parties who were dedicated to self subsistent agriculture, and bovines (llama, vicuna, etc.) rising.Even though Calidra anticipates that the transaction to acquire the land for the additional greenfield projects will also be on a willing-buyer willing-seller basis and does not anticipate buying land that may require physical or economical displacement; the Company will develop a Land Acquisition Framework to establish procedures for land acquisition as indicated in the ESAP. In addition, the land acquisition process for each land acquisition will be also submitted to IFC prior completing the land purchase also as indicated in the ESAP.PS6: Biodiversity Conservation and Sustainable Management of Living Natural ResourcesCalidra anticipates establishing several alternative sources to satisfy the biomass needs for its Calidra de Oriente and Calidra de Occidente plants. It will: (a) buy it; (b) rent accessible land to establish biomass plantations; and (c) establish joint ventures with existing land owners to grow the needed biomass. As indicated earlier, it has begun buying waste from wood processors for the Calidra de Oriente plant. As required by IFC, at least six month prior Calidra decides to source biomass from plantations, it will conduct the relevant environmental and social impacts assessments and mitigations demonstrating compliance with the IFC requirements and in particular with PS6 as indicated in the ESAP. In addition, Calidra will establish system and procedures to ensure its and its supplies operations comply with the IFC requirements.

ACCOUNTABILITY MECHANISM OF IFC The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org. You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org/