Environmental Assessment Report

Summary Environmental Impact Assessment Project Number: 39932-01 December 2006

Indonesia: Reconstruction of Cement Production Facility in Aceh Project

Prepared by PT Semen Andalas Indonesia for the Asian Development Bank (ADB).

The summary environmental impact assessment is a document of the borrower. The views expressed herein do not necessarily represent those of ADBs Board of Directors, Management, or staff, and may be preliminary in nature.

CURRENCY EQUIVALENTS (as of 6 October 2006) Currency Unit Rp1.00 $1.00 = = rupiah (Rp) $0.000109 Rp9,212.5

ABBREVIATIONS AND INDONESIAN TERMS ADB AMDAL ANDAL BOD CO CO2 COD EMP EPC HSE kabupaten kecamatan kelurahan NOx RKL RPL SAI SEIA SO2 TSP Asian Development Bank analisis mengenai dampak lingkungan (environmental impact assessment process) analisis dampak lingkungan (environmental impact study report) biochemical oxygen demand carbon monoxide carbon dioxide chemical oxygen demand environmental management plan engineering, procurement, and construction health, safety, and environment regency district subdistrict nitrogen oxides rencana pengelolaan lingkungan (environmental management plan) rencana pemantauan lingkungan (environmental monitoring plan) PT Semen Andalas Indonesia summary environmental impact assessment sulfur dioxide total suspended particulates WEIGHTS AND MEASURES g C dBA ha Kcal km l m m2 m3 mg mm MMTPA MW Nm3 pH t microgram degree Celsius decibel adjusted hectare kilocalories kilometer liter meter square meter cubic meter milligram millimeter million metric tons per annum megawatt normal cubic meter measure of acidity and/or alkalinity metric ton

GLOSSARY ambient biochemical oxygen demand cement Referring to existing or predominant conditions. The amount of dissolved oxygen that microorganisms need to decompose soluble organic matters in wastewater. A powdery product made from limestone and small amounts of other raw materials, heated to form clinker, which is then ground to a powder with small amounts of gypsum and other additives. The amount of oxygen needed to oxidize organic matter in wastewater under acidic conditions. A clean coal technology process that produces a mixture of coal and limestone in a liquid state by vertically moving air. The process effectively removes sulfur and nitrogen from coal, thus reducing sulfur dioxide and nitrogen oxide from coal-burning emissions. A hard substance produced in cement kilns, which is ground with gypsum and other additives to make cement. Any gas that contributes to the greenhouse effect, which is implicated in global warming. The major ones are carbon dioxide, methane, and sulfur dioxide. A naturally occurring mineral, hydrated calcium sulfate. An index of how easily a coal can be pulverized for use in power plants. A low HGI (< 50) is considered hard to pulverize. A naturally occurring rock, primarily composed of calcium carbonate, often containing trace amounts of other minerals. Oxides of nitrogen, the sum of nitric oxide (NO) plus nitrogen dioxide (NO2). Although other oxides of nitrogen occur, such as nitrous oxide (N2O), they are normally excluded from the definition of NOx. Shale is a fine-grained sedimentary rock whose original constituents were clay or mud. Siltstone is a geological term for a sedimentary rock whose composition is intermediate in grain size between the coarser sandstone and the finer mudstone. It contains mostly oxides of silicon, aluminum, iron, potassium, and calcium.

chemical oxygen demand circulating fluidized bed combustion

clinker greenhouse gas gypsum Hardgrove Grindability Index (HGI) limestone nitrogen oxide (NOx)

shale siltstone

NOTE (i) In this report, "$" refers to US dollars.

CONTENTS Page MAPS I. II. INTRODUCTION PROJECT DESCRIPTION A. Need for the Project B. Project Scope C. Resources Requirement D. Implementation Arrangements DESCRIPTION OF THE ENVIRONMENT B. Project Area C. Physical Environment D. Biological Environment E. Socioeconomic Environment G. Sociocultural Environment ALTERNATIVES A. Project Alternatives B. Alternative Water Sources C. Alternatives for Power Generation D. Alternatives for Fuels E. Alternatives for Process Technology and Major Equipment ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES A. Environmental Standards and Guidelines B. Environmental Impacts During Construction C. Environmental Impacts During Operations D. Health and Safety Aspects E. Land Resettlement F. Compatibility of the Project with Other Development Projects in the Area G. Induced Development H. Decommissioning ECONOMIC ASSESSMENT ENVIRONMENTAL MANAGEMENT PLAN A. Mitigation Measures B. Environmental Monitoring C. Environmental Policy D. Emergency Response Plan E. Implementation of the RKL and RPL PUBLIC CONSULTATION AND DISCLOSURE A. Public Consultation B. Enhancement of Public Communication CONCLUSIONS 1 2 2 2 3 4 4 5 5 9 10 10 10 10 10 11 11 11 12 12 12 14 20 21 21 21 22 22 23 23 23 23 23 24 24 24 26 27

III.

IV.

V.

VI. VII.

VIII.

IX.

Appendixes 1. Cement Production Process 2. Project Implementation Schedule 3. Project Implementation Team Organization 4. Operation and Maintenance Organization Chart 5. Calculation of SO2 Emission 6. Summary of Environmental Management Plan During Construction 7. Summary of Environmental Management Plan During Operations 8. Summary of Environmental Monitoring Plan 9. Lafarge Group Environmental Policy 39

28 32 33 34 35 36 37 38

Map 1
98 00'E
o

104 00'E

MYANMAR

INDONESIA

RECONSTRUCTION OF CEMENT PRODUCTION FACILITY IN ACEH

Andaman Sea

THAILAND
8 00'N
o

N
0 50 100 150 200 250 Kilometers

8 00'N

PROJECT SITE
Banda Aceh

Langkawi Island

Kuan

Pinang Island
Lhoknga Lhokseumawe

St

ra

South
it s of

China

Sea

NANGGROE ACEH DARUSSALAM

MALAYSIA
M al ac ca
KUALA LUMPUR

Belawan Medan

Simeulue Island

NORTH SUMATRA
Dumai Batam

SINGAPORE
Tanjung Pinang

Nias Island
Pekanbaru 0o

RIAU ISLANDS
0o

RIAU

Siberut Island

Padang

WEST SUMATRA
Jambi

INDONESIA
JAMBI
Pangkal Pinang

SUMATRA
Palembang

BANGKA-BELITUNG

National Capital Provincial Capital

4 00'S
o

Pagai Islands
Bengkulu

SOUTH SUMATRA

City/Town PT Semen Andalas Indonesia T erminal PT Semen Andalas Indonesia Cement Plant Lafarge Malayan Cement Berhad Terminal Lafarge Malayan Cement Berhad Cement Plant National Road Provincial Boundary International Boundary Boundaries are not necessarily authoritative.

4 00'S

BENGKULU LAMPUNG
Bandar Lampung

Jav a Sea

INDIAN
98 00'E
o

OCEAN
104 00'E 06-3740a HR
o

y2 to Quarr

INDONESIA

RECONSTRUCTION OF CEMENT PRODUCTION FACILITY IN ACEH

LHOKNGA CEMENT PLANT

to Quarry 1

Power Plant

Limestone Crusher

Ac e

Fe n

ce

Siltstone Crusher Main Substation Siltstone Preblending Bed Raw Materials Mixing Pre-heater and Calciner Packing Plant Main Office Mechanical Shop Water Pool Water Pump Ware New House Clinker Silo Cement Silo Limestone Preblending Bed

ula

bo

to

Me

o Jetty N .1
Jetty No. 2 Customer Office

to

Ba

nd a

Power Station for Cement Grinding Pre-grinding for Clinker

Composer Room

Kiln Weigh Bridge Existing Clinker Silo

06-3740b HR

Map 2

I.

INTRODUCTION

1. The tsunami that struck Banda Aceh in North Sumatra, Indonesia, on 26 December 2004 extensively damaged the cement plant of PT Semen Andalas Indonesia (SAI)1 in Mon Ikeun Village, Kacematan Lhoknga, Kabupaten Aceh Besar, Nanggroe Aceh Darussalam Province, about 17 kilometers (km) from Banda Aceh City (Map 1). SAI has ceased cement production, instead importing cement from a Lafarge-affiliated producer in Malaysia to maintain its market share, which was about 31% in its target markets in North Sumatra before the tsunami. After assessing prospective cement demand in the region, as well as the damage to its production facilities, SAI formulated a project to rehabilitate its cement plant and support facilities (the Project), and to increase production capacity to 1.6 million metric tons per annum (MMTPA) from the old plants 1.4 MMTPA. The rehabilitated cement plant will have more modern production and environmental control facilities. To implement the Project, SAI approached the Asian Development Bank (ADB), Deutsche Investitions- und Entwicklungsgesellschaft mbH, Nederlandse Financierings Maatschappij voor Ontwikkelingslanden N.V., and Socit de Promotion et de Participation pour la Coopration Economique about providing financial support. 2. To obtain environmental clearance for the Project from the Government of Indonesia and the provincial government, SAI engaged a team of consultants2 to conduct an environmental impact assessment (EIA) from March to June 2006. The EIA followed the requirements stipulated in the relevant national and provincial laws and regulations regarding the analisis mengenai dampak lingkungan (AMDAL) (environmental impact assessment process). In particular, the EIA was in accordance with the regulations promulgated by the state minister of environment, No. 308 of 2005, on environmental impact assessment for rehabilitation and reconstruction of Aceh after the earthquake and tsunami. Based on the AMDAL documents, the Ministry of Environment granted the Project environmental and social clearance on 16 August 2006. 3. This summary environmental impact assessment (SEIA) of the Project has been prepared for use by ADB in its internal review of environmental aspects of the Project.3 The SEIA captures essential information presented in the three AMDAL documents: (i) the analisis dampak lingkungan (ANDAL) (environmental impact study report), (ii) the rencana pengelolaan lingkungan (RKL) (environmental management plan), and (iii) the rencana pemantauan lingkungan (RPL) (environmental monitoring plan). It also incorporates the latest developments on project implementation and some additional analyses. The SEIA follows the structure outlined in ADBs Environmental Assessment Guidelines (2003).4 However, the SEIA also updates information on project implementation, rectifies the results of air pollutant predictions in the ANDAL, and provides the following additional information requested by ADB: (i) calculation of the amount of carbon dioxide (CO2), (ii) marine biological resources, (iii) environmental impact assessment of the captive power plant, (iv) economic assessment, and (v) assessment of the Projects complementarities with other development projects in the project area.

1 2 3 4

SAI is a subsidiary of the Lafarge Group, a world-leading producer of construction materials based in France with affiliated companies in several countries. CV. Cipta Puga ADB classified the Project for its environmental review as category A, i.e., a project with significant impacts if not adequately mitigated. ADB. 2003. Environmental Assessment Guidelines. Manila.

2 II. A. Need for the Project PROJECT DESCRIPTION

4. Based on a detailed study conducted by SAI, the Project is justified on the following grounds: (i) (ii) Producing cement in Aceh will be more economical than importing cement from Malaysia due to high transportation cost relative to the cement cost. Rehabilitation of the damaged facilities would be more cost-effective than constructing a new plant. While the project cost is estimated at $159 million, the cost of a new cement plant would be $190 million$200 million. The savings of about $30 million$40 million would be realized through repair and rehabilitation of some of the damaged equipment and structures of the existing complex.

B.

Project Scope

5. The Project will reconstruct the damaged cement production and support facilities to create a modern and integrated cement production complex with an annual production capacity of 1.6 MMTPA, or an average daily production of about 4,650 metric tons (t). The environmental performance of the reconstructed plant will be better than the old plant. 6. The project scope of physical development does not include the rehabilitation of the coastal road in front of the complex, as it is a public road that is being upgraded with assistance from US Agency for International Development. The scope of physical development is outlined in paras. 7-10. 1. Quarries

7. Before it ceased production, SAI operated its own quarries for limestone, and siltstone and shale. The limestone quarry covers 79.9 hectares (ha) adjoining the cement plant. The siltstone and shale quarry covers about 63.3 ha, about 3 km from the cement plant. The limestone quarry site has proven reserves of 41.5 million t, which is adequate for 32 years of production. The shale quarry site has proven reserves of 10.3 million t (130 years production), while the siltstone quarry site has 13.9 million t (43 years production). SAI will acquire the land use rights for an additional 50 ha of the limestone quarry to improve efficiency and safety of quarrying operations, and to enhance the limestone reserves by 31.4 million t (24 years of production). 2. Cement Plant

8. The Project will rehabilitate and modernize the damaged cement plant. The reconstruction works will entail refurbishing existing facilities and equipment, and installing the following new equipment and facilities: (i) (ii) (iii) (iv) conveyor systems within the cement plant, limestone crusher plant, raw mill system, preheater and horizontal rotary kiln,

3 (v) (vi) (vii) (viii) (ix) 3. packing plant,5 bag filters to replace the electrostatic precipitator and gravel bed filters, grate cooler, electrical system, and instrumentation and control system. Power Generation Plant

9. The Project will construct a new 32-megawatt (MW) coal-fired power plant to replace the damaged 31 MW power plant using diesel generators. Circulating fluidized bed technology, a clean coal technology that is being widely used, will be adopted. 4. Port

10. SAI has an exclusive port for its own shipping needs. The port covers 1.17 ha and has two jetties. The main jetty has a 200-meter (m) berth capable of handling ships up to 10,000 dead weight tons. The water depth at the port is about 14 m. SAI has rehabilitated the main jetty. The reconstruction of the other jetty will be covered under the Project. No dredging will be required during construction or operation. C. Resources Requirement

11. Table 1 summarizes the important information on the materials required for the operation of the cement plant. Table 1: Material Requirements for Cement Production
Material Limestone Siltstone Shale Pozzolan Iron sand Gypsum Coal Explosive Diesel oil Quantity (MMTPA) 1,430,000 372,000 118,000 280,000 21,000 64,000 378,538 250 8,000 Source Own quarry Own quarry Own quarry Supplier, Krueng Raya (Raya River) Supplier, Lamteuba Supplier, Thailand Supplier, Sumatra and Kalimantan Supplier, Tasikmalaya Supplier, Sigil

MMTPA = million metric tons per annum. Note: Coal consumption for kiln 196,320 tons per year and power station 182,218 tons per year. Source: PT Semen Andalas Indonesia.

12. The cement plant also requires about 1,200 cubic meters (m3) per day of water for domestic and process consumption. The raw water will be pumped from Kreung Sarah (Sarah River) in Kecamatan Leupung, about 10 km from the cement plant, and will be conveyed through a 6-inch pipe buried about 0.8 m below ground on the existing route. This raw water and pipeline route will be the same as those used in the past.6 Appendix 1 presents a simplified mass balance diagram of the cement production, including the power plant.

5 6

The construction of the packing plant and a conveyor system from the port to the plant in Lhoknga is nearly completed and not included in the Project. SAI obtained a permit from the local authority to lay the water pipe.

4 D. Implementation Arrangements 1. Schedule

13. The rehabilitation of the main jetty, which SAI began in May 2005, was completed in August 2006. The construction of the packing plant in Lhoknga is nearly completed. The remaining rehabilitation works to be carried out under the Project have begun, and will take about 22 months to complete. Commercial operation is scheduled in October 2008. A tentative project implementation schedule is in Appendix 2. 2. Contracts

14. The Project will be implemented through three major contracts. SAI has completed the international competitive bidding of the contracts with the assistance of Holtec, an Indian engineering company. The scope of each contract is outlined as follows: (i) (ii) Supply and installation of new equipment, and repair of existing equipment for the cement plant if it is more economical. SAI selected Hefei Cement Research and Design Institute as the supplier. The contract was signed in October 2006. Supply and installation of the power plant. The engineering, procurement, and construction (EPC) contract has been awarded to China Huadian Engineering Company for the duration of about 20 months. The contract was signed in September 2006. Construction of buildings and civil works structures, and removal of damaged equipment. The civil works contract is expected to be awarded by December 2006. Project Management

(iii)

3.

15. SAI will have overall responsibility for project management, with technical assistance from Lafarges Asian Technical Center in Kuala Lumpur, Malaysia. Lafarge will be responsible for planning, engineering, scheduling, and construction supervision in collaboration with the project team of SAI. The organization of the project implementation team is in Appendix 3. 4. Operations

16. After completion of the project facilities, SAI will be responsible for operating them. The operation of the new cement plant will require about 300 staff, including 24 managerial personnel, 46 engineers and technical specialists, 157 operators, and 73 workers. Training will be provided as appropriate to update the staff on the technologies adopted in the new production plant. The organizational structure is in Appendix 4. Operation and maintenance of the captive power plant might be contracted out. III. A. Data Collection DESCRIPTION OF THE ENVIRONMENT

17. Information and data used in establishing the baseline environmental conditions were obtained from secondary and primary sources. The data on physical characteristics and biological resources of the project area were collected from various secondary sources. The data on air and water quality were collected from primary sources during the EIA. For ambient

5 air quality, air samples were collected and analyzed using the equipment and methods shown in Table 2. Table 2: Method and Equipment Used in Collection of Data on Ambient Air Quality
No. 1 2 3 4 5 Parameter Noise Dust Sulfur Dioxide Nitrogen Oxide Carbon Monoxide Analysis Method On-Site Measuring Gravimetri Pararosanilin Saltzman Direct Reading Equipment Sound Level Meter High Volume Sampler Air Pollutant Sampler Air Pollutant Sampler Dradger Apparatus

Source: CV. Cipta Puga

B.

Project Area

18. The project area is about 172 ha, comprising the port (1.2 ha), limestone quarry (79.9 ha), siltstone and shale quarry (63.3 ha), cement plant site (17.0 ha), and housing area (10.6 ha).7 The cement plant site is in Mon Ikeun Village between the coastal road and the limestone quarry, a distance of about 900 m. The port is on the other side of the coastal road, opposite the cement plant. The limestone quarry is in Wue Raya Village adjacent to the cement plant. The siltstone and shale quarry site is in Naga Umbang Village, about 3 km from the cement plant. 19. The cement plant site is on the coastal road from Banda Aceh to Meulaboh. The shoreline in front of the cement plant site is rocky and blocked by a hill. The port is built on this rocky coast besides the hill. The adjacent beach is still undeveloped as a tourist area, although some local people occasionally use the beach for recreation. Several houses, which were built after the tsunami, are scattered in the area contiguous to the cement plant. C. Physical Environment 1. Land Use

20. The project site is within the administrative area of Kecamatan Lhoknga. Based on the latest available information (2003), the land is mixed-use with no known protected ecological or cultural sites. Of the total area of 9,893 ha, agricultural use accounted for about 56.5% (5,586 ha), human settlements about 2.54%, (252 ha), and others 41% (4,055 ha). With a population of 20,444 in 2004, the area had a gross population density of about 89 persons per square kilometer (km2). The population declined significantly after the tsunami. 2. Seismic Activities

21. Aceh Province is seismically active. In the past 170 years, seven major earthquakes have been recorded north and west of Aceh, and have triggered tsunamis. 3. Water Resources and Water Quality

22. The project area has only one main river, Krueng Raba. The river is short with weak flows, and water is brackish due to seawater intrusion. Consequently, SAI has to take water
7

The housing area was part of the project area, but was destroyed by the tsunami. SAI does not plan to construct new housing facilities in the project area.

6 from Krueng Sarah in Kecamatan Leupung, the same water source used by the old cement plant. 23. During the EIA, water samples were taken from Krueng Sarah, Krueng Raba, coastal waters near the port, and about 100 m from the coastal road. Samples also were taken from the groundwater well within the cement plant site. The following conclusions can be drawn from the water quality data (Table 3): (i) (ii) (iii) (iv) Krueng Sarah is still relatively clean, as indicated by its high dissolved oxygen and low biochemical oxygen demand (BOD58) values, and the absence of toxic pollutants. Krueng Raba is relatively polluted, as indicated by its high BOD5 and chemical oxygen demand (COD) value. Its conductivity is also high due to seawater intrusion. The water is not suitable for drinking and industrial use. Groundwater within the plant site and in the village is relatively clean. Seawater is still relatively clean, as indicated by its high dissolved oxygen and low BOD5 levels. Table 3: Water Quality in the Project Area
Parameter
Turbidity Suspended Solids Temperature Color Ph Conductivity

Unit
NTU mg/l C Pt Co standard micro mhos per cm mg/l

Krueng Sarah
6 10.0 28 5 7.8 430

Krueng Raba
12 23.0 29 12 8.0 1,900

Groundwater
32 2.3 28 4 7.7 800

Seawater
2 4.0 29 10 8.1 13,500

Lhoknga Well Water

10 6.8 29 4 7.6 700

Dissolved 6.0 4.8 3.5 5.9 3.5 Oxygen BOD5 mg/l 5.0 20 4.0 8.6 9.8 COD mg/l 11.2 31.6 16 22 20 Ammonia-N mg/l ND 0.05 0.5 0.02 0.02 Nitrite-N mg/l 0.02 0.05 0.05 0.01 0.01 Chloride mg/l 20 460 40 1,200 200 Sulfide mg/l ND ND 0.1 ND ND Oil and Grease mg/l ND ND ND ND ND Detergent mg/l ND ND ND ND ND Iron mg/l 0.1 0.1 0.2 0.1 0.1 Manganese mg/l ND ND 0.1 ND 0.05 Silver mg/l ND ND ND ND ND Copper mg/l ND 0.1 0.5 ND 0.05 Cadmium mg/l ND ND ND ND ND Chromium mg/l ND ND 0.1 ND ND Arsenic mg/l ND ND ND ND ND Zinc mg/l ND 0.8 ND 0.01 0.5 Lead mg/l ND ND ND ND ND Nickel mg/l ND ND ND ND ND BOD5 = biochemical oxygen demand, C = degree Celsius, COD = chemical oxygen demand, micro mhos per cm = units of conductivity, mg/l = milligram per liter, N = nitrogen, ND = not detectable, NTU = nephelometric turbidity unit, pH = measure of acidity, Pt Co standard = platinum cobalt standard (units of color). Source: PT Semen Andalas Indonesia.
8

The amount of biological oxygen demand (dissolved oxygen consumed by microorganisms in water) measured at 20 degree Celsius over a period of 5 days.

7 4. Climate

24. The project area has distinct rainy and dry seasons. Based on the climate data from 1995 to 2004, collected at a weather station in the project area, the conditions can be summarized as follows: (i) (ii) (iii) (iv) Ambient air temperature is fairly uniform throughout the year, varying from 20 and 31 degrees Celsius (C). The rainy season covers 6 months from October to March. The 10-year average annual rainfall was about 1,500 millimeters (mm), ranging from 1,084 to 1,907 mm. The air is humid, with relative humidity varying from 75% to 94%. Wind directions and speeds are as follows: (a) The west-to-east direction is dominant at 47.5% occurrence (i.e., from the sea to the hill at the back of the cement plant), with wind speeds of 716 knots (3.618.23 m per second); (b) The north-to-south direction occurs about 22% (i.e., from the cement plant to Leupung village, about 10 km away), with wind speeds of 713 knots. (c) The east-to-west direction occurs about 5% (i.e., from the plant to the sea), with wind speeds of 813 knots. (d) The south-to-north direction occurs about 9.2% (i.e., from Lhoknga village, 5 km north of plant, to the plant), with wind speeds of 717 knots.

25. The wind data indicate that the two villages would not be affected by gaseous emissions from the cement plant due to the significant distance and the wind directions. 5. Air Quality

26. Ambient air quality was measured during the EIA at five locations: (i) on the side of the coastal road, about 400 m in front of the cement plant; (ii) an area about 500 m north of the cement plant; (iii) Naga Umbang Village, about 4 km from the cement plant; (iv) Lhoknga school, about 1.5 km from the cement plant; and (v) a location in Banda Aceh city, about 17 km from the cement plant. Air samples were collected continually over 24 hours. The air quality parameters measured were nitrogen oxides (NOx), sulfur dioxide (SO2), carbon monoxide (CO), and total suspended particles. Table 4 presents the results of air quality measures. Based on the national air quality standards and World Banks Guidelines, ambient air at the five sampling stations was relatively clean. The Banda Aceh station had a relatively higher level of CO as the area had more traffic.

8 Table 4: Ambient Air Quality (g/m3)

Parameter SO2 NOx CO TSP Station (i) 20 25 100 90 Station (ii) 10 ND 40 60 Station (iii) 10 ND 40 30 Station (iv) 10 ND 20 40 Station (v) 20 35 1,371 147 National Standarda 356 150 10,000 230 World Bank Guidelinesb 24 Hours 150 150 230

= not available, g/m3 = microgram per cubic meter, CO = carbon monoxide, ND = not detectable, NOx = nitrogen
oxide, SO2 = sulfur dioxide, TSP = total suspended particulates. a National standards are 24-hour standards, as stipulated in Government Publication No. 41 of 1999. b World Banks guidelines are from World Bank. 1998. Pollution Prevention and Abatement Handbook. Washington, DC. Source: PT Semen Andalas Indonesia.

6.

Noise

27. Noise levels also were measured during the EIA at the same five locations selected for the air quality measurements. The measurement at each station was done in one day at 8 a.m., 1 p.m., 3 p.m., and 7 p.m. During each measurement, the noise level was read five times at 10minute intervals. The readings then were averaged to give the representative noise level of that measurement. Table 5 presents the results of the noise measurements. The figures indicated that the noise levels at the first four stations were acceptable when compared with the 24-hour national standards of 70 decibel adjusted (dBA) for an industrial area and 55 dBA for residential areas. The noise levels at the Banda Aceh station mostly did not meet the national standards due to heavy traffic and other urban noise-generating activities. Table 5: Results of Noise Measurements (dBA) Measurement 1 2 3 4 5 Average Station (i) 62 78 70 65 75 70 Station (ii) 54 56 53 57 56 55 Station (iii) 49 54 55 50 54 52 Station (iv) 55 43 50 57 45 50 Station (v) 56 78 84 60 80 72

dBA = decibel adjusted. Source: PT Semen Andalas Indonesia.

7.

Sea Characteristics

28. Physical characteristics of the coastal waters where the SAI port is located can be summarized as follows: (i) (ii) (iii) (iv) Average water depth at the SAI port: about 9 m. Tidal type: mixed tides, semidiurnal type predominant, influenced by tidal conditions in the Strait of Malacca. Tidal range: maximum 0.40 m. Wave height: average 1.26 m.

9 (v) Sedimentation and erosion patterns in the vicinity of the SAI port: Similar during high tide and low tide, with small differences in the magnitude of sedimentation and erosion. These patterns suggest that the sedimentation transport in the vicinity of the port tends to be related to long-term erosion due to the small magnitude of erosion process. Fishing activities in the vicinity of the port: none. Marine Aquatic Resources

(vi) 8.

29. The project site is on the coastal stretch from Lhoknga to Ujung Ritieng. Limited information on marine aquatic resources in this part of the coastal waters is available in the Aceh Nearshore Atlas and Draft Zonation Plan, which the Governments Department of Fisheries and Small Islands prepared in March 2006. The salient findings from this document and discussions with an expert, who conducted environmental studies in the project area, are: (i) The coastline is white sandy beach fronted by nearshore fringing reefs. The reefs are essentially devoid of any conspicuous macro benthos, and live coral cover was 0.5%. The substratum is made up of boulders, sand, pavement, and rubble. (ii) Coarse sands with some hard substratum, such as pavement and rubble, dominate the seabed habitats that are mapped along the coast out to 3 km offshore. (iii) Fish populations in the area are not well known.9 However, given the poor ecological condition of the seabed and the lack of commercial subsistence fishing, aquatic diversity is probably very low with no rare or endangered species. 9. Characteristics of the Quarry Sites a. Limestone Quarry

30. The limestone quarry covers 79.9 ha, about 500 m behind the cement plant. The quarry area is dominated by a 240 m hill, which has some small caves that are not inhabited by any bats or birds. The limestone formation, which is massive and solid, is covered with a thin layer of soil. The extraction of limestone is limited to about 20 m above mean sea level. 31. The limestone formation under the quarry area does not serve as an aquifer recharge due to its compactness. No water seepage has been observed from the hill during the rainy season. b. Siltstone and Shale Quarry

32. The siltstone and shale quarry covers 63.3 ha, and is about 3 km from cement plant. The area is uninhabited. The quarrying operation will be limited to 5 m above mean sea level. D. Biological Environment

33. The project area has no known endangered flora and fauna species. During the EIA, flora and fauna surveys were carried out in (i) areas in front of the cement plant, (ii) areas around office and houses, (iii) limestone quarry, (iv) siltstone quarry, and (v) some villages.
9

According to the Aceh Nearshore Atlas, fish density in the general area of the Project is 2,420 individuals per ha (about 14.56 kg per ha). Snappers are expected to be common (700 individuals per ha), with butterfly fish at 40 individuals per ha.

10 Flora and fauna species found are common to the region. Flora species found included those agricultural plants and naturally grown species, e.g., Eugenia aromatica, Cocos nucifera, and Areca catechu. Fauna species found include small common mammals, reptiles, and amphibians. The largest mammals are wild boars and monkeys. Examples of dominant fauna species are Canis familiaris (dog), Bos taurus (cow), Macaca fascicularis (monkey), Capra hircus (goat), Felis catus (cat), Collocalia sp (punai bird), Callosciurus notatus (squirrel), Anas sp (goose), Gallus gallus (red junglefowl), and Ardeola speciosa (Javan pond heron). E. Socioeconomic Environment

34. In early 2004, Kecamatan Lhoknga had a population of 20,444. After the tsunami in December 2004, the population declined to 13,577. Of the decreased population, the majority of whom were victims of the tsunami. The others presumably moved out after the disaster. 35. Most of the working age people have a low level of education, with only 0.8% receiving a secondary education or higher. 36. The economy of Lhoknga is based on agriculture and fishery, which provides a livelihood for nearly three quarters (73%) of the population. SAI is the only major industry in the area, employing about 400 people before the tsunami. Data on average household income was not available. A rough estimate, based on local knowledge, places the average household income at about Rp1.5 million per month. G. Sociocultural Environment

37. No indigenous people live in the project area. Ethnically, almost all local people are Acehnese. The project area does not have any sites of cultural or historic value. IV. A. Project Alternatives ALTERNATIVES

38. In the without Project scenario, SAI would continue to import cement from Malaysia to meet the demand in Banda Aceh and other places in North Sumatra. The cost of imported cement would be higher than the locally produced cement under the Project. In addition, transportation cost of locally produced cement would be lower, thereby resulting in lower reconstruction costs of infrastructure. The Project, therefore, is justified by its contribution to the balance of cement supply and demand in the region. 39. The two project alternatives were considered: (i) construction of new production facilities at a new site, and (ii) construction of new production facilities at the existing site. The first alternative was ruled out due to the time required to find an appropriate new site and the costs. The second alternative also was ruled out, as it would be more expensive than the rehabilitation of the existing facilities. The Project, as designed, was found to be the most cost-effective alternative. B. Alternative Water Sources

40. Krueng Sarah is the only alternative source of freshwater for the Project. The project site and the nearby areas have no reliable groundwater sources. The Project will continue to take water from Krueng Sarah. The river discharge during the low flow season is estimated at more

11 than 30 m3 per second, or about 2,592,000 m3 per day. The Project will abstract only 1,200 m3 per day, an insignificant portion of the total discharge. Therefore, the Project will not compete with water use for agriculture. C. Alternatives for Power Generation

41. The damaged 31 MW power plant used five diesel generator sets that consumed about 90 tons of diesel oil per day. The diesel oil was stored in three tanks, each with a capacity of 1,000 m3. 42. The Project opts for a coal-fired power plant using circulating fluidized bed technology. This clean coal technology is more economical, and emits less air pollutants than diesel power plants and conventional coal-fired power plants. Using a coal-fired power plant also will eliminate the need for diesel oil storage, thus reducing the risk of an oil spill. D. Alternatives for Fuels

43. Cement production is energy intensive, and the production cost is sensitive to energy cost. Coal, which was used in the old cement plant, will continue to be used in the Project as natural gas is not available in the project area. The Project will use low-sufur coal from Sumatra. Table 6 presents typical characteristics of coal to be used in the Project. Table 6: Characteristics of Coal to Be Used in the Project Property Moisture as received, % Moisture on dried basis, % Ash as received, % Volatile matter as dried free of ash basis, % Low heating value, kilocalories per kg Carbon, % Hydrogen, % Oxygen, % Nitrogen, % Sulfur, % Size (050 mm) Hardgrove Grindability Index
kg = kilogram, mm = millimeter. Source: PT Semen Andalas Indonesia.

Value 20.38 10.82 10.14 28.79 5,5005,804 50.07 4.35 11.15 1.02 0.49 90.16 49

E.

Alternatives for Process Technology and Major Equipment

44. The Project will continue to use the dry process with preheaters and pre-calciners, as this is the most economical process for large-scale production of cement due to its high energy efficiency. 45. However, the Project has insufficient space to replace the existing ball mill with a vertical clinker mill, which is more energy efficient. In addition, the foundation limits the Project to use of a four-stage cyclone preheating system instead of the more efficient five-stage cyclone

12 preheating system. Because a five-stage cyclone preheating system is taller, it might not be able to withstand lateral ground movements during a major earthquake. V. A. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES Environmental Standards and Guidelines

46. The major pollution issue of the cement industry is air pollution. The EIA assessed environmental impacts of the Project, and prescribed appropriate mitigation measures to ensure that its environmental performance will meet the national and international standards and guidelines for the cement industry. The applicable standards and guidelines for air pollution control are presented in Tables 7 and 8. Table 7: Emission Standards (mg/Nm3) Cement Industry Pollutant NOx SO2 Particulate
a

Power Plant National 850 750 150 World Banka 850 2000 100

National 1,000 800 80

World Bank 600 400 50

mg/Nm3 = milligram per normal cubic meter, NOx = nitrogen oxide, SO2 = sulfur dioxide. The World Banks guidelines in Pollution Prevention and Abatement Handbook (1998) cover all fossil fuel-based thermal power plants with capacity of 50 megawatts (MW) or more. For plants smaller than 50 MW, particulate emissions may be as much as 100 mg/Nm3. If justified by the Executing Agency, particulate emissions up to 150 mg/Nm3 may be acceptable in special circumstances. The maximum emissions levels for NOx remain the same 3 as for plants larger than 50 MW, while the maximum emissions level for SO2 is 2000 mg/Nm . Sources: PT Semen Andalas Indonesia and World Bank. 1998. Pollution Prevention and Abatement Handbook. Washington, DC.

Table 8: Ambient Air Quality Standards (g/m3) Averaging Period 1 hour 24-hour average 1 year SO2 1 hour 24-hour average 1 year CO 1 hour 24-hour average Total Suspended 24-hour average Solids 1 year Pollutant NOx National Standards 400 150 100 900 365 60 30,000 10,000 230 90 World Bank Guidelines

150 100

150 80

= not available, g/m3 = microgram per cubic meter, CO = carbon monoxide,

NOx = nitrogen oxide, SO2 = sulfur dioxide. Source: PT Semen Andalas Indonesia.

230 80

B.

Environmental Impacts During Construction

47. The Project will involve civil works construction and installation of process equipment. Construction will be confined within the cement plant proper and the quarry sites. Damaged

13 equipment and structurealmost all are steel or other metalswill be dismantled and removed to a storage site for eventual sale as scrap. 48. Environmental impacts during construction will be caused by gaseous emissions, as well as noise from heavy equipment used in the construction and trucks used in transport of materials and equipment. These impacts will be transient and insignificant due to small emission loads, and will be confined within the construction site. 1. Impact on Ambient Air Quality

49. The EIA predicted the impacts of gaseous emissions on ground-level air quality using the standard emission factors for heavy equipment,10 as well as the following data: (i) minimum wind speed of 2 m per second,11 (ii) dispersion at about 2 m above ground; and (iii) local wind directions as observed (para. 24). Based on the Gaussian model12 for the prediction, the use of heavy equipment would result in negligible incremental increases in various air pollutants in the ambient air quality compared with the national standards (Table 9). Table 9: Predicted Emissions from Heavy Construction Equipment (g/m3) Parameter CO NOx SO2 Particulates
3

Distance, 200 m 0.67 0.51 0.53 30.45

National Standard, 24-hour 10,000 150 365 230

Source: PT Semen Andalas Indonesia.

g/m = microgram per cubic meter, CO = carbon monoxide, NOx = nitrogen oxide, SO2 = sulfur dioxide.

50. Water spraying and routine cleaning by road sweepers will control fugitive dust generated by construction. These basic practices will be prescribed in the construction contracts. 2. Noise

51. The noise intensities at various distances from the construction site were calculated, and the results are in Table 10. The sensitive area is the office building, which is about 100 m from the construction site. The results indicate that, if all heavy equipment is operating during construction, the noise level at the office would be about 86.693.0 dBA without noise attenuation and about 76.683.0 dBA with noise attenuation equipment. SAI will use noise measuring equipment to monitor the noise level. Noise reduction measures, such as noise absorption walls, will be installed if necessary to reduce noise levels inside the office building.

10 11

Rau, J.G., and D.C. Woolen. 1980. Environmental Impact Analysis. New York: McGraw Hill. Minimum wind speed occasionally observed in Banda Aceh. 12 The Gaussian plume model is the most accepted computational approach to calculating the concentration of a pollutant at a certain point. This model describes the transport and mixing of the pollutants. It assumes dispersion in the horizontal and vertical direction will take the form of a normal Gaussian curve with the maximum concentration at the center of the plume.

14 Table 10: Noise Intensities at Various Distances from the Construction Site
Distance (m) 15 50 100 150 200 400 500 Without Attenuation (dBA) 103.1109.5 92.699.0 86.693.0 83.189.5 80.687.0 74.681.0 71.678.0 With Attenuation (dBA) 93.199.5 82.689.0 76.683.0 73.179.5 70.677.0 63.671.0 60.668.0

dBA = decibel adjusted, m = meter. Source: PT Semen Andalas Indonesia.

3.

Other Issues

52. Construction will involve about 500 workers on average, about half of whom will be locally hired. The remaining will come from other areas, possibly with their families. The workers will find accommodations for themselves in nearby villages. 53. Construction will create debris, including damaged equipment that will have to be removed. Some debris could be sold as scrap. The contractors will need to propose appropriate methods of disposal of construction wastes. In addition, the contractors will be required to take care of treatment and disposal of wastes generated by construction workers, such as sewage and solid wastes. For 500 workers, the sewage volume would not be more than 25 m3 per day, assuming per capita water use of 50 liters per day. Solid wastes would not be more than 500 liters per day, assuming per capita solid waste volume of 1 liter per day. Sewage would be treated and disposed of using septic tanks. Municipal services will dispose of solid wastes. C. Environmental Impacts During Operations 1. Quarrying Operations a. Noise and Vibration from Blasting

54. In quarrying operations, limestone is extracted by blasting using explosives. SAI will change from electrical detonator to non-electrical detonator to minimize noise, vibration, and flying rocks. The blasting will be conducted daily at noon. b. Noise from Vehicles and Heavy Equipment

55. The quarrying operations will use about 25 heavy vehicles and equipment (Table 11). As the quarries are remote from communities, and the vehicles and equipment will be scattered around the site, the noise level at the communities will be below the standards. However, quarry workers will have to use appropriate noise muffling equipment.

15 Table 11: Heavy Equipment to Be Used in the Quarry

No. 1 2 3 4 5 6 7 8 9 Heavy Equipment Hydraulic Shovel Quarry Truck Bulldozer Road Grader Rock Drill Excavator Service Truck Front-End Loader Supervisor Vehicles Total Noise Intensity (dBA) 84 82 85 85 86 87 82 85 63 Number 1 9 2 1 3 2 3 2 2 25

dBA = decibel adjusted. Source: PT Semen Andalas Indonesia.

c.

Drainage and Soil Erosion

56. Storm runoff from the limestone quarry will drain into the sea via a natural drainage channel beside the cement plant. The siltstone quarry has a drainage system to divert the storm runoff into the sea via Krueng Raba. As the surface of the quarry sites is hard rock, soil erosion is not a problem. 2. Cement Plant Operations

57. The major environmental issue of the cement industry is air pollution caused by dust and gaseous emissions. NOx and SO2 are two major air pollutants. Pollutants such as CO, volatile organic compounds, polychlorinated dibenzodioxins and dibenzofurans, metals and their compounds, and hydrofluoric acid and hydrogen chloride are of much less concern and normally not a problem. Hence, the EIA focused on dust, NOx, and SO2. a. Dust

58. The Project will control dust emissions from various unit operations by adopting preventive measures such as: (i) (ii) (iii) (iv) (v) (vi) (vii) appropriate process design, e.g., using the exhaust gas from the preheater as a drying medium in the raw mill, and using the hot gas from the grate cooler in the kiln and calciner; using low dust-generation equipment if possible; using enclosed material transport systems; using dust absorption hoods and air draft deducting devices; adopting best management practices to minimize material dropping in the process; using closed circular silos for storing dusty materials; and installing water spraying devices in dust generating areas, such as roads and stockpiles of raw materials.

59. The Project will install 42 sets of bag filters as integral process equipment to remove dust in the exhaust gases before discharging into the atmosphere (Table 12). The emissions are expected to be lower than 30 milligrams per normal cubic meter (mg/Nm3), below the World Banks guidelines of less than 50 mg/Nm3.

16 Table 12: Dust Control Equipment Emission Source

Limestone Crusher Shale Stone Crusher Siltstone Crusher Raw Meal Blending Silo Kiln Feed system Preheater Exhaust Cooler Bag Clinker Silo Clinker Silo Discharge Gypsum Storage Pozzolan Storage Pozzolan Dryer Pozzolan Dryer storage Coal Mill Cement Mill Cement Silo Jetty Cement packer Power Plant

Control Equipment
Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter Bag Filter

Capacity (m3/hr)
46,000 22,000 22,000 26,000 33,000 520,000 480,000 13,390 18,000 11,500 11,500 57,000 4500-6000 114,000 13,390 8,030 11,500 14,328 146,000

Inlet (mg/Nm3)

Outlet (mg/Nm3)
< 30 < 30 < 30 < 30 < 30 < 30 < 30 < 30 < 30 < 30 < 30 < 30 < 30 < 30 < 30 < 30 < 30 < 30 < 30

< 80 mg/Nm3

m3/hr = cubic meter per hour, mg/Nm3 = milligram per normal cubic meter. Source: PT Semen Andalas Indonesia.

60. The particulate concentrations in the ambient air at various distances from the cement plant were calculated using the minimum wind speed of 2 m per second (Table 13). This shows that the Project will not create a problem of particulates in the ambient air in the project area. The net ambient concentrations of particulates will meet the national standards and the World Banks guidelines of below 230 micrograms per cubic meter (g/m3). Table 13: Predicted Particulate Concentrations in Ambient Air (g/m3)
Predicted Incremental Increase in TSP Caused by the Operations of the Cement Plant and Power Plant Wind Speed (2 m/sec) 8.28 8.28 1.45d 0.13 Net Ambient Concentrationsa Wind Speed (2 m/sec) 98.28 68.28 41.45 30.13

Distance From the Plant (kilometers) 0.5b 0.5c 1.5 5.0

Baseline Ambient Concentrations 90 60 40 30

g/m3 = microgram per cubic meter, km = kilometer, m/sec = meter per second, TSP = total suspended particulates. a The 24-hour average national standard for TSP is 230 g/m3 and the World Banks guideline is 230 g/m3. b From first sampling point, which is the coastal road in front of the cement plant. c From second sampling point, which is an area north of cement plant. d Determined from the interpolation of the predicted incremental increase in TSP in case of 1 km and 2 km from the cement plant. Source: PT Semen Andalas Indonesia.

17 b. NOx

61. NOx emitted from the kiln inlet is mainly produced by high temperature combustion inside the kiln. Emissions increase with the operating temperature, the amount of oxygen used in the combustion or the volume of air used in the combustion, and the reaction time. 62. The Project will have low NOx emission as the pre-calcining kiln will reduce fuel consumption. Moreover, 60% of the fuel used in the calciner will be burned below 1000Cthe temperature level above which NOx will be generated. The process is designed to keep NOx emissions below the Lafarges and national guideline of 800mg/Nm3. SAI estimates that the emissions of NOx will be less than the World Banks guideline of 600mg/Nm3. If the World Banks guideline is not met, an additional investment will be made in the pre-calciner to ensure that the NOx emissions will be below that guideline. 63. The NOx concentrations in the ambient air at various distances from the cement plant were calculated using wind speeds of 2 m per second and 5 m per second (Table 14). This shows that the Project will not create a problem of NOx in the ambient air in the project area. The NOx concentrations will meet the national standards and the World Banks guideline of below 150 g/m3. Table 14: Predicted NOx Concentrations (g/m3)
Predicted Incremental Increase in NOx Caused by the Operations of the Cement Plant and Power Plant Wind Speed (2 m/sec) 37 37 127d 48 Wind Speed (5 m/sec) 15 15 51d 19

Distance From the Plant (kilometers) 0.5b 0.5c 1.5 5.0

Baseline Ambient Concentrations 25 0 0 0

Net Ambient Concentrationsa Wind Speed (2 m/sec) 62 37 127 48 Wind Speed (5 m/sec) 40 15 51 19

g/m3 = microgram per cubic meter, m/sec = meter per second, NOx = nitrogen oxide. a The 24-hour average national standard for NOx is 150 g/m3 and the World Banks guideline is 150 g/m3. b From first sampling point, which is the coastal road in front of the cement plant. c From second sampling point, which is an area north of cement plant. d Determined from the interpolation of the predicted incremental increase in NOx in case of 1 km and 2 km from the cement plant. Source: PT Semen Andalas Indonesia.

c.

SO2

64. SO2 in cement production is generated in coal combustion, as coal used as fuel in the kiln contains sulfur. However, SO2 emissions are normally low as a large portion is absorbed by lime and forms calcium sulfate, which is discharged with clinker and kiln dust. In the circulating fluidized bed power plant, limestone is injected with coal dust to absorb SO2. Based on experience, as much as 95% of the SO2 generated can be absorbed, resulting in SO2 emissions below the limit of 400 mg/Nm3. The calculation of SO2 in Appendix 5. 65. The SO2 concentrations in the ambient air at various distances from the cement plant were calculated using the minimum wind speeds of 2 m per second and 5 m per second (Table

18 15). This shows that the Project will not create a problem of SO2 in the ambient air in the project area. The SO2 concentrations will meet the World Banks guideline of below 150 g/m3 and the national standard of below 365 g/m3. Table 15: Predicted SO2 Concentrations (g/m3)
Predicted Incremental Increase in SO2 Caused by the Operations of the Cement Plant and Power Plant Wind Speed Wind Speed (2 m/sec) (5 m/sec) 9 9 38d 19 4 4 15d 8

Distance From the Plant (kilometers) 0.5b 0.5c 1.5 5.0

Baseline Ambient Concentrations 20 10 10 10

Net Ambient Concentrationsa Wind Speed Wind Speed (2 m/sec) (5 m/sec) 29 19 48 29 24 14 25 18

g/m3 = microgram per cubic meter, m/sec = meter per second, SO2 = sulfur dioxide. a The 24-hour average national standard for SO2 is 365 g/m3 and the World Banks guideline is 150 g/m3. b From first sampling point, which is the coastal road in front of the cement plant. c From second sampling point, which is an area north of cement plant. d Determined from the interpolation of the predicted incremental increase in SO2 in case of 1 km and 2 km from the cement plant. Source: PT Semen Andalas Indonesia.

d.

Carbon Dioxide

66. The combustion of coal and the calcination of raw materials, especially limestone, will generate CO2, one of the major greenhouse gases. Based on the carbon content of the coal and the raw materials, the amount of CO2 was calculated to be about 1.27 MMTPA for the production of 1.6 MMTPA of cement. The CO2 produced will be released to the atmosphere, because an economical CO2 capture technology is not commercially available. e. Noise

67. A cement plant unavoidably generates noise, especially in grinding operations and blasting in quarrying operations. The Project will not have significant noise impacts on the communities, as the nearest community is about 3 km away. Plant operators will be provided with ear plugs to reduce the noise impacts. In addition, SAI will conduct routine maintenance of the engine muffler and grow plants in and around the project site. f. Domestic Wastewater

68. The Project will employ about 300 people during operations. SAI does not intend to rehabilitate the staff housing area near the cement plant site, which was destroyed by the tsunami. SAI staff currently reside in Banda Aceh city with housing allowances provided by the company. The development of staff housing is not planned. The staff would generate wastewater estimated at not more than 30 m3 per day. Later, a canteen will be built, which would increase the wastewater volume to not more than 50 m3 per day. The wastewater will be treated using a septic tank and leaching field system. If staff housing is developed, it would be in a new area and SAI would construct a separate wastewater treatment facility in the staff

19 housing area to treat additional volume of wastewater, estimated at not more than 200 m3 per day. g. Other Types of Wastewater

69. A closed-circuit cooling water system will be used in the cement production. However, a small volume of cooling water will need to be discharged from the system to maintain the solid content of the cooling water. This spent cooling water will be combined with water filter backwash from the water treatment plant and a small volume of wastewater from the power plant, including backwash water from the demineralization plant for boiler water treatment and boiler blowdown13. This wastewater has a high concentration of dissolved solids, which are not economical to treat. The combined wastewater will be discharged into the sea. As the sea is already high in dissolved solids and the wastewater volume is small, the wastewater is unlikely to change the seawater quality significantly. 3. Power Plant Operations

70. Under the Minister of Environments Decree No. 17, 2001, all power plant projects with capacities less than 100 MW are exempted from the AMDAL process. SAI obtained permits for construction and use of power plant for the cement production. 71. The 32 MW captive power plant will use circulating fluidized bed technology, which emits fewer pollutants than conventional coal-fired power plants. Crushed coal (612 mm diameter) and limestone are injected into the furnace, and are kept suspended by a stream of upwardly flowing air. This achieves more complete combustion compared with other technologies. SAI will use bag filters to control dust. About 5 t per day of limestone will be used to absorb SO2. The combustion takes place at 840900C, which is below the level at which NOx is formed. Solid separators remove particles from the flue gas, which are circulated back into the furnace. Emissions from this type of power plants reportedly are lower than the World Banks emission guidelines.14 72. The power plant will use a once-through seawater cooling system. About 8,000 m3 per hour of seawater will be pumped into the steam condenser system, and the spent cooling water will be discharged back to the sea through a 500 m natural drain. The design of the cooling water system is based on a maximum inlet water temperature of about 29C, while the spent cooling water will be about 8C higher than the inlet temperature. By the time the spent cooling water enters the drain, its temperature is expected to drop by about 12C. An additional drop of about 3C would be achieved while it flows through the natural drain. Thus, the temperature of the spent cooling water when it flows into the sea would be about 34C higher than the ambient seawater. 73. The EIA did not conduct a complex prediction of the thermal plume that would be formed by the discharge of the warm spent cooling water on the sea surface, mainly because the discharged water is expected to be only about 3C higher than the ambient seawater. World
9

The amount of water that has to be occasionally drained out from a boiler in order to maintain the amount of dissolved solids in the boiler tubes at a desired level 14 The circulating fluidized bed boiler emissions compared to the World Banks emission guidelines: (i) SO2 < 200 parts per million (ppm), World Bank 730 ppm; (ii) NOx < 100 ppm, World Bank 365 ppm; and (iii) particulate matter 50 mg/Nm3, World Bank 50 mg/Nm3. (Source: Kavidass, S. et al. 2000. Why Build a Circulating Fluidized Bed Boiler to Generate Steam and Electric Power. Presented to POWER-GEN Asia 2000. 2022 September. Bangkok, Thailand.)

20 Banks guidelines note that "the effluent should result in a temperature increase of no more than 3C at the edge of the zone where initial mixing and dilution take place. Where the zone is not defined, use 100 meters from the point of discharge when there are no sensitive aquatic ecosystems within this distance."15 Since the temperature of the spent cooling water would be only about 3C higher than the ambient seawater temperature, the water temperature at 100 m from the point of discharge will definitely be less than 3C. 74. However, an initial assessment could be made using results of the thermal plume prediction for the Masinloc coal-fired thermal power plant project in the Philippines financed by ADB. The 600 MW power plant under this project was to discharge 104,000 m3 per hour of spent cooling water on the sea surface through an open canal extended 650 m from the shore. The spent cooling water is about 8C higher than the ambient seawater temperature. The predicted areas influenced by discharged water with temperatures greater or equal to 3C (World Bank's guidelines) are less than 50 ha on average and do not exceed 50 ha. The areas influenced by discharged water with temperatures greater or equal to 1C are 90 ha (average) and 190 ha (maximum). 75. Based on the prediction results of the Masinloc project, even if the temperature of the spent cooling water under this project is about 37C (i.e., no temperature drop in the drain), the discharge of 8,000 m3 per hour under this Projectabout 13 times less water than the volume discharged by the Masinloc projectwill affect much smaller areas than the Masinloc project. Though the affected area would not be 13 times smaller than the affected area of the Masinloc project, a reduction of 9 times would be credible, according to one coastal engineering expert. Therefore, the power plant under the Project would have a thermal impact on the coastal waters in an area not more than 5.5 ha. As the coastal water in front of the Project site is not rich in marine resources, the disposal of the cooling water would not have significant ecological impacts. 76. In addition to the spent cooling water, the power plant would generate a small volume of wastewater from the boiler water treatment plant and occasional boiler blowdown. This wastewater contains no harmful pollutants, and would be discharged directly back into the sea.16 The wastewater will meet national standards and the World Banks guidelines for wastewater. 77. The power plant will generate an estimated 55 t per day of ash. This furnace ash will be recycled back as an additive in cement production. 4. Port Operations

78. Port operations will have no significant impacts as dredging will not be required. Dust that might be generated by the unloading of coal and cement will be minimized by using a covered conveyor systems. In addition, prevailing wind will carry the dust to the sea. Ships will not be allowed to dispose of wastes during berthing at the port. D. Health and Safety Aspects

79. During the construction phase, accidents are the major health and safety concern. SAIs contracts require contractors to implement all standard safety measures required for
15 16

World Bank. 1998. Pollution Prevention and Abatement Handbook. Washington, DC. No fishing occurs near the project site. A special port for fishing boats is located about 15 km from the project site. Fisherfolk usually go far offshore.

21 construction, as well as institutionalize a safety management system acceptable to SAI. Further, SAI will appoint a health and safety officer to oversee the contractors compliance with health and safety clauses in the contracts. The health and safety officer and an assistant will monitor closely safety-related incidents, and take necessary corrective actions to minimize the number of incidents. 80. During operations of the cement plant and its supported facilities, health and safety issues could include (i) exposure to noise, dust, and high temperatures in the cement plant and the power plant; (ii) contact with allergic substances; and (iii) accidents related to quarrying operations and cement production. 81. The modernization of the new production facilities will minimize these health and safety risks significantly. Individual protective equipment, such as earmuffs for workers in the milling room, will be mandatory. In addition to these physical measures, institutional measures will be implemented, including (i) raising the level of health and safety awareness among staff; (ii) establishing an effective health and safety management system; and (iii) implementing safety management measures, including compliance auditing, as an integral element of the health and safety management system. E. Land Resettlement

82. The limestone quarry operated by SAI covers 79.9 ha of Government land. SAI plans to acquire the rights to use 50 ha of additional land to ensure safety operations of its mining activities, and to increase its limestone reserves. Although the land is not inhabited, 18 persons have claimed compensation. SAI noted that these occupants are squatters on public land, who might have some plots for small crops.17 Only one of these people has a land title certificate. The squatters do not include any indigenous peoples. SAI has been coordinating with local government officials18 to negotiate and finalize a compensation package for the occupants. F. Compatibility of the Project with Other Development Projects in the Area

83. In general, the Project will support the reconstruction of Banda Aceh by providing cement for construction. As it is funded entirely by the private sector, the Project does not compete for limited government funds. The US Agency for International Development is rehabilitating the coastal road in front of the project site, regardless of the Project. The Project will use its own electricity and water resources, thus not competing for the citys limited electricity and water supply. As the adjacent beach is not a tourist attraction, the Project will not harm local tourism. G. Induced Development

84. At the peak of construction, about 1,000 workers would be needed. Most of these workers will be recruited from the nearby areas. Temporary quarters, however, will be erected within the plant site for about 100 foreign workers. This will minimize the chance of induced development, which could cause adverse environmental and social consequences. Other workers will be from nearby villages, and will use local transportation to commute between their residences and the project site.
17

ADB social safeguard and resettlement consultant is currently fielded to assess resettlement impact and prepare necessary report in accordance with ADBs social safeguard requirements. 18 Including mayor of Aceh Besar, officers from the Land Office and Lhoknga District, and head of village

22 85. During operations, about 300 employees will work in the cement plant and support facilities. Based on the experience from the tsunami, which had devastating effects on lives and housing facilities, SAI does not plan to construct staff housing in the project site. If SAI decides to provide any staff housing, the location will be away from the project site. H. Decommissioning

86. The raw materials reserves are adequate for 50 years of cement production. The cement plant would operate over this period, subject to its commercial viability. During this period, the plant would need to be upgraded periodically to benefit from technological developments. 87. Preparation of a definite plan for decommissioning would not be practical during the EIA. The decommissioning of the cement plant is not environmentally sensitive, as no hazardous materials are stored or produced. The hilly quarries could be flattened, though planting vegetation would be difficult due to the thin soil layer. The cement plant site could be converted to other uses, depending on economic opportunities in the future. The harbor might be used commercially. VI. ECONOMIC ASSESSMENT

88. The project costs include the costs of the following environmental protection equipment and facilities: (i) bag filters; (ii) low-dust absorption hoods and enclosed silos for storing raw materials; (iii) wastewater treatment plant and air pollution control facilities; (iv) water spraying system on exposed areas to suppress dust; (v) safety equipment; and (vi) mobile vacuum cleaner, road sweeper, and water tanker truck. During operations, SAI will allocate an annual budget of about Rp5.4 billion for environmental monitoring with the Badan Pengendalian Dampak Lingkungan Daerah (Region Environment Monitoring Body); and for maintenance of environmental mitigation measures, such as bag filter maintenance, plant housekeeping, and drainage cleaning. 89. The Project has two types of economic benefits: quantifiable and nonquantifiable. Quantifiable economic benefits are resource cost savings from domestic production of cement, replacing imported cement. In addition, the Project will yield nonquantifiable economic benefits in terms of employment, and will contribute to natural resource-based and construction industries. 90. Environmental costs will be related to the residual amounts of dust, NOx, SO2, and other pollutants. However, as SAI will implement environmental mitigation measures to ensure compliance with the legal requirements, the residual amounts of pollutants will be small and will not create significant environmental costs. Quantifying the economic costs of the residual amounts of pollutants is not possible. 91. The economic analysis confirms the economic robustness of the Project. The Projects economic internal rate of return is estimated at about 20%.

23 VII. ENVIRONMENTAL MANAGEMENT PLAN

92. A comprehensive RKL and RPL were prepared as part of the EIA, as required under the AMDAL regulations. The RKL and RPL also cover social aspects. The context relevant to environment is summarized as follows. A. Mitigation Measures 1. Construction Phase

93. Appendix 6 summarizes major potential environmental impacts during the construction phase, as well as mitigation measures to be implemented by the contractors and their subcontractors. The environmental management requirements are incorporated in the contracts. 2. Operations Phase

94. Appendix 7 summarizes major potential impacts during the operations phase, as well as mitigation measures to be implemented by SAI as part of the operation of the production facilities. B. Environmental Monitoring

95. Environmental monitoring under the RPL will include emission and ambient environmental quality monitoring. The monitoring requirements are summarized in Appendix 8. SAI will have to submit semiannual environmental monitoring reports to the provincial environmental management agency. C. Environmental Policy

96. SAI will manage the environmental aspects of the Project in line with the Environmental Policy of the Lafarge Group. The Environmental Policy, last updated in 2003 (Appendix 9), encourages the reduction of greenhouse gas emissions per ton of cement produced. D. Emergency Response Plan

97. To ensure safety of personnel working in the cement plant and associated facilities, SAI has prepared a tsunami emergency response plan and evacuation procedures, which includes: (i) Forming a tsunami response team consisting of (a) tsunami response officer and tsunami coordinator, who will have overall responsibility for tsunami evacuation arrangements and training; and (b) refuge coordinators, who will take control of each refuge point in the event of tsunami alarm. Educating employees about tsunami warnings, including official, automatic, and natural warnings. Identifying areas of safe refuge and posting clear signs to indicate refuge paths and refuge points. SAI selected a vertical evacuation method to evacuate people to higher ground (e.g., rock hills) or high floors in buildings and/or structures (e.g., packing plant, preheater buildings, and siltstone crusher areas). Installing tsunami alarm. Training and educating the staff about actions to be taken in case of tsunami and after tsunami.

(ii) (iii)

(iv) (v)

24 E. Implementation of the RKL and RPL 1. During the Construction Phase

98. SAI will require all contractors to prepare and submit an appropriate environmental management plan (EMP) tailored to the health, safety, and environmental context of each contract. The contractors will have to comply with Lafarges environmental requirements. Each contractor will have to appoint a health, safety, and environmental (HSE) officer to supervise the implementation of HSE measures stipulated in the EMP. SAI also will appoint an HSE officer to supervise the contractors, and to monitor and evaluate their performance. The contractors will include in their monthly progress reports a section on the results of implementing HSE measures. 2. During the Operations Phase

99. During the operations phase, HSE management will be an integral element of production management. The tentative organizational structure for the operation of the cement plant and support facilities is in Appendix 3. Environmental management will be under the Technical and Environment Unit, while health and safety aspects will be under the Safety and Health Unit. The Technical and Environment Unit will be led by a manager, who will have two staff. The unit will be responsible for monitoring and evaluating the environmental performance of the cement plant, power plant, quarries, and port. The plant operators will be responsible for routine operations of the pollution control equipment. Tentatively, SAI will allocate an annual budget of about Rp5.4 billion for environmental monitoring. VIII. A. PUBLIC CONSULTATION AND DISCLOSURE

Public Consultation

100. SAI conducted two public consultations in April 2006. The first was held on 12 April 2006 and the second on 25 April 2006. In addition, SAI visited two local government offices in Leupung on 26 April 2006. As SAI has been operating in the area since 1983, it was able to expedite the public consultations in the context of this Project.19 A summary of each public consultation and the meeting is as follows. 1. Public Consultation on 12 April 2006 a. 101. Place

The first consultation was held at a small mosque in Lhoknga village. b. Number of Participants and Key Participants

102. About 100 participants from Lhoknga attended the consultation. Key participants included district head of Lhoknga (Camat), head of the district police, subdistrict head, village heads, three SAI representatives, a group of university students at Lhoknga, Lhoknga youth group, religious head, religious youth group, Lhokngas people solidarity and awareness group,
19

To accelerate the recovery in Aceh and Nias, the Government issued a regulation to simplify the EIA process. Before the preparation of the EIA, a technical team from the Ministry of Environment visited the Project and provided guidance on the preparation of the EIA together with the terms of reference of the consultant. Subsequently, the consultant prepared a draft EIA that was circulated in the first public consultation.

25 community leaders, as well as government officials from the Badan Pengendalian Dampak Lingkungan Daerah and Agency of the Rehabilitation and Reconstruction for the Region and Community of Aceh and Nias. c. Topics Discussed

103. SAI presented the Project for rehabilitation of cement production facilities, and gave a draft EIA to the participants. The participants expressed their aspiration to rebuild their lives after the tsunami. They expressed no objection to the reconstruction of SAI cement plant, and asked SAI to consider: (i) (ii) (iii) (iv) (v) (vi) 104. enhancing communication with local people in providing community development assistance, increasing assistance for local education and development of human resources. giving preference to local people in employment directly with SAI or with its contractors, remaining committed to community development activities with more focused target beneficiaries, protecting the environment, and keeping the local communities informed about its reconstruction effort.

Two participants raised two environmental issues based on their perception: (i) (ii) beach erosion thought to be caused by SAIs port, and damage to the karst ecosystem done by SAIs limestone quarrying operations.

105. For the beach erosion issue, SAI clarified that no data or evidence was available to confirm the existence of beach erosion, and that the government agencies concerned had never raised this issue. SAI also informed the meeting that beach erosion occurred naturally in several coastal areas in the country during the monsoon season. 106. For the ecological issue, SAI noted that Governments mining department approved the limestone quarry site, which received environmental clearance based on the AMDAL carried out in 1997. SAI also confirmed that its mining operations strictly complied with all regulations. SAI said it would appreciate receiving accurate information on this ecological issue. 2. Public Consultation on 25 April 2006 a. 107. Place

The second consultation was held at Banda Seafood restaurant in Banda Aceh. b. Number of Participants and Key Participant

108.

The consultation involved 11 leaders from villages in Kecamatan Lhoknga and Leupung. c. Topics Discussed

109. Before the second public consultation, SAI and its environmental consultant incorporated comments received during the first consultation in the revised draft EIA, which was circulated in the second public consultation. This public consultation involved only village leaders, including

26 those from Kecamatan Leupung. SAI made a presentation, including environmental aspects of the Project and its community development activities before and after the tsunami, which consisted of vocational training, clinic, and education. After the presentation, SAI was: (i) (ii) (iii) (iv) (v) (vi) 110. advised to verify the boundaries of its land to ensure no encroachment. advised to pay attention to the encroachment by several small shops and houses on its land formerly used for staff housing; and to handle this problem appropriately and quickly to prevent conflicts when SAI wants to use the land. assured that new settlers along its road to the siltstone quarry would not complain when SAI again operates the quarry, as the new houses are far from the roadsides. asked about the possibility of SAI assistance in providing clean water to villages in Leupung from its water pumping facilities. asked to give preference to employing local people. asked to extend its assistance to more remote villages.

No objections were raised on the rehabilitation of cement plant. 3. Visits to Local Government Offices in Leupung on 26 April 2006

111. Two SAI officials visited Office of Kecamatan Leupung to meet with the district head and the district police head at two separate meetings. At the meetings, the local officials: (i) (ii) (iii) welcomed SAIs reconstruction of its cement plant, asked SAI to provide assistance to rehabilitate Leupung since SAI abstracted water from Leupung, and asked SAI to give preference to employing local people.

112. The public consultations and the meetings summarized in paras. 100-111 demonstrate that the public does not oppose the Project. The local communities wanted SAI to consider providing more community development assistance, enhancing public communication, and giving preference to employing local people. 113. To assure the public of its environmental concern, SAI will investigate the reports of beach erosion and karst ecosystem damage in coordination with the provincial environmental management agency. B. Enhancement of Public Communication

114. To comply with ADBs Public Communications Policy,20 SAI will make environmental monitoring reports available to affected people, and submit such reports to ADB.21 SAI has distributed copies of the EIA to village leaders. In addition, SAI has maintained good relationships with the communities through community development programs, such as (i) construction of new houses and a mosque, (ii) provision of a mobile clinic, and (iii) vocational training. SAI staff and executives will visit communities to seek their views and suggestions in designing and implementing community development programs.

20 21

ADB. 2005. Public Communications Policy. Manila. ADB will make environmental monitoring reports that have been disclosed locally to affected people publicly available upon submission to ADB.

27 IX. CONCLUSIONS

115. The Project is the most cost-effective alternative to rehabilitate SAIs cement production facilities in Banda Aceh. To meet the rising cement demand in North Sumatra, the rehabilitated cement production complex will have a capacity of 1.6 MMTPA, compared with 1.4 MMTPA for the old cement facility. The Project will refurbish some facilities and replace severely damaged equipment. 116. The Project will have no major ecological impacts as it will continue to use the existing cement plant site, as well as the existing quarries for limestone and siltstone and shale. During construction, dust and noise will be normal environmental disturbances. The Project requires the contractors to adopt best environmental management practices during construction to minimize these environmental impacts. Since the project site has no surrounding communities, the residual dust and noise generated by construction will not disturb any communities. The contractors will provide appropriate training to their workers in HSE aspects of construction, and will provide necessary protective measures to the workers to minimize safety risks. 117. The Project will adopt the best process technology and designs, as well as effective pollution control equipment, to minimize emissions during operations. The emissions will meet national standards and World Banks emission guidelines for the cement industry. Impacts on ambient air quality have been found to be insignificant. 118. To ensure effective environmental control in line with its corporate environmental policy, SAI will establish an appropriate organization and information system for effective management of the environmental, occupational health, and safety aspects during construction and operations. The Project has formulated an effective EMP, including a monitoring program, which the contractors will implement during construction under the supervision of SAI. Further, SAI personnel will implement the EMP during operations as part of the routine and integral activities of cement production. The Project will comply fully with relevant national laws and regulations on environment, health, and safety. 119. The Project has no significant land resettlement issue, and will not affect any indigenous people. SAI is finalizing land resettlement, which will be based on transparency and fair compensation. The public has been consulted appropriately on the Project. In addition to providing local employment, SAI will continue and enhance the community development assistance it provides to the nearby communities. 120. The Project will not create any environmental benefits. It will consume nonrenewable resources in the area, including limestone (1.43 MMTPA), siltstone (0.37 MMTPA), and shale (0.12 MMTPA). However, these nonrenewable resources are abundant and are not in the protected areas. Therefore, the economic benefits from the Project will outweigh the loss of nonrenewable resources.

28

Appendix 1

CEMENT PRODUCTION PROCESS A. Production Process

1. Cement has four elementscalcium, silica, aluminum, and ironall of which are commonly found in limestone, clay, and sand. To make portland cement, these raw materials go through four processing stages: (i) (ii) (iii) (iv) crushing at the quarry and then proportioning, blending, and grinding at the facility; preheating before entering the facilitys rotary cement kiln, a long, firebrick-lined, steel furnace; heating, or pyroprocessing, in the kiln, which makes the raw materials become partially molten and form an intermediate product called clinker; and cooling the clinker before grinding it with a small quantity of gypsum to create portland cement.

2. Figure A1.1 shows a general process flowchart for dry process cement production. The production process is described briefly as follows. 1. Limestone Crushing

3. Limestone is the basic raw material required for the cement production. For each ton of clinker production, about 1.6 tons of raw material is required. Limestone received from the quarry is crushed in the crushing plant using hammer crushers to reduce the size of limestone to 70 to 80 millimeters. The crushed limestone is transported by belt conveyor and stacked in piles. The limestone stockpile is scraped at the end face of pile, and the mixed limestone scraped out is conveyed to a hopper. Like the limestone, other additivesgypsum, shale and siltstone, and iron sandare stacked into piles, conveyed, and kept in different transit hoppers. 2. Raw Material Grinding

4. The crushed limestone, which is pre-blended with other additives, is pulverized into fines with a vertical roller mill system. During the process of grinding the fine materials, the dust-laden gas coming out of the system is separated using bag filters or electrostatic precipitators. The ground raw material collected is conveyed and stored in a blending silo. The stored raw meal then is fine blended using a compressed air aeration system in the blending silo. 3. Coal Grinding

5. Coal is ground in the coal mill by using a vertical roller mill with stringent control measures. Coal mill grinding system is attached with bag filters or electrostatic precipitators to control the particulate emission. 4. Clinkerization

6. Clinkerization1 is central to main process, called pyroprocessing. It is done by dry process technology, which includes a four-stage cyclone preheater, rotary kiln, and grate cooler.
1

Clinkerization involves heating a mix of calcium oxide, silicon oxide, aluminum oxide, and ferric oxide at temperatures over 1,400 degrees Celsius (C) to produce clinker, the main ingredient of cement.

Appendix 1

29

7. The raw meal is preheated in a sequential arrangement of low pressure drop cyclones interconnected by a gas duct. During preheating, various chemical reactions take place, and at about 7,000C8,000C calcination takes place. 8. The pre-calcined and preheated raw meal is heated further in the rotary kiln by the coal fuel to a temperature of 14,000C14,500C. At this stage, the raw materials become molten products called clinker. 5. Grate Cooler

9. The clinker discharged from the rotary kiln is cooled to a temperature of 1,000C by static pre-grate cooler. The cooled clinker is discharged from cooler, and conveyed and stored in silos. 6. Cement Grinding

10. The clinker and gypsum (additive) are ground in a ball mill. The cement product is stored in silos. 7. Packing

11. The stored cement is extracted from cement silos and packed into bags using electronic rotary packers. The mechanical loading facility is available for trucks, as well as for wagons. Each activity in the process is performed in a controlled manner. B. Resources Requirement

12. Raw materials for cement production consist of 74% limestone, 19% siltstone, 6% shale, and 1% iron sand. The crushing of 5,700 tons of raw materials per day will release 3% vapor, with the remaining 97% coming out as dry raw meal (5,500 tons). The raw meal is processed by preheater before entering the rotary kiln, which uses coal for heating. The outputs are 3,450 tons of clinker; remaining gases of carbon dioxide, carbon monoxide, sulfur dioxide, nitrogen oxides; and 5% dust. A significant portion of this dust will be captured by bag filters, and will be cycled back to the raw meal. The clinker then is added with 200 tons of gypsum and 1,000 tons of Pozzolan, which will produce 4,650 tons of cement per day. A 32-megawatt captive coal-fired power plant will supply electricity for the production process. Figure A1.2 contains a flowchart that shows the resources requirements for cement production and power generation.

Appendix 1

29

30
Appendix 1

Source: European Commission. 2000. Integrated Pollution Prevention and Control (IPPC): Reference Document on Best Available Techniques in the Cement and Lime Manufacturing Industries. Spain.

Figure A1.2: Simplified Mass Balance Diagram

Cement Production

Stack Gas 52,000 Nm3/hour

Water Vapor 200 tons Siltstone-1,100 tons Limestone-4,200 tons Raw Milling Shale-340 tons Iron Sand-55 tons Raw Meal (5,500 tons) Preheater and Precalcining Coal-550 tons

Pozzolan-1,000 tons

Clinker (3,450 tons)

Cement-4,650tons Cement Milling

Gypsum-200 tons

Power Generation-32 MW

Stack gas

Seawater 1,000 m3/hour

Coal-435 tons Limestone-5 tons

CFB Boiler

Steam Turbine Generators

Electricity

Appendix 1

Spent cooling water to sea Ash about 55 tons = sent to cement milling
CFB = circulating fluidized bed, m3/hour = cubic meter per hour; MW = megawatt. Note: The diagram exhibits resources used and outputs from cement production and associated power generation in 1 day. Source: PT Semen Andalas Indonesia.

31

32

PROJECT IMPLEMENTATION SCHEDULE

2006 LHOKNGA Reconstruction Project Appropriation Permits and EIA Cleared Reserves Proven - Land Purchase Power Plant Contracting Power Plant Contract Award Power Plant Basic Design Power Plant Implementation Power Plant Commissioning Power Plant IPT 1
Load Bank operational

2007

2008

May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08

Appendix 2

Power Plant IPT 2 Plant Equipment Contracting Plant Equipment Contract Award Cement Plant Basic Design Cement Plant Detailed Design Equipment Manufacturing and Delivery Civil Works Contract Negotiation Civil Works Contract Award Civil Works Cement Plant Erection Contract Negotiation Cement Plant Erection Contract Award Cement Plant Erection No Load Tests Raw mill and Kiln Load Tests First Clinker Cement mills and Load Tests ITP Clinker ITP Cement
ITP Clinker ITP Cement First Clinker

EIA = environmental impact assessment, IPT = in plant testing, ITP = industrial performance test. Source: PT Semen Andalas Indonesia.

PROJECT IMPLEMENTATION TEAM ORGANIZATION

.

Project Leader

ATC Experts

Technical Project Manager

Project Admin. Planner Scheduler Cost Control Admin Expeditor Secretary

Site Management Site Manager Design Engineer Admin and Local Relay Secretary

Safety Officer

BU Services Legal Purchasing Finance and Tax Customs Local community

POWER PLANT Supervision Team Civil Supervisor Mecha. Supervisor Elec. Supervisor

CEMENT PLANT Supervision Team Senior Civil Supervisor Senior Mecha. Supervisor Mecha. Supervisor Senior Elec. Supervisor Elec Supervisor

Supervised Areas Power Plant Crushers and Stock Piles Raw Mill & Cement Mill Coal Mill and Storage Preheater Kiln and Cooler Clinker Storage and Transport Pozzolan Dryer, Roller Press Pozzolan, Gypsum Storage and Handling Jetty

Plant Operation Team OPG

Appendix 3

Suppliers for implementation Safety Officer

Suppliers for implementation

Safety Officer

33

Admin. = Administration, ATC = Asian Technical Center, BU = Business Unit, Elec. = Electrical, Mecha. = Mechanical, OPG = operational preparation guide. Source: PT Semen Andalas Indonesia.

34
Appendix 4

OPERATION AND MAINTENANCE ORGANIZATION CHART

SVP Manufacturing

Deputy Plant Manager

Electrical Manager

Mechanical Manager

Quarry Manager

Production Manager

Technical & Environment Manager

Power Plant Manager

Safety and Health Manager

Lhoknga Terminal Manager

SVP = senior vice president. Source: PT Semen Andalas Indonesia.

Appendix 5

35

CALCULATION OF SO2 EMISSION

Amount of coal Sulfur content Total amount of sulfur Total amount of SO2 generated Absorbtion SO2 emission Stack gas volume Emission per Nm3 Emission standard

196,320 t/yr 0.49 % 961.97 t/yr 1,923.94 t/yr 5.5 t/d 229.04 kg/hr 80 % 45.81 kg/hr 287,500 Nm3/hr 159 mg/Nm3 400 mg/Nm3

SO2 = sulfur dioxide, kg/hr = kilogram per hour, t/yr = ton per year, mg/Nm3 = milligram per normal 3 cubic meter, Nm /hr = normal cubic meter per hour. Sources: PT Semen Andalas Indonesia and Asian Development Bank estimates.

36

SUMMARY OF ENVIRONMENTAL MANAGEMENT PLAN DURING CONSTRUCTION

Significance of Residual Impacts After Control Minor, due to light traffic load on the coastal road and some equipment can be unloaded at SAI port. Minor as indicated by the results of ambient noise and and ambient air quality predictions

Activities Transportation of construction materials

Potental Issues Impacts Traffic congestion on the Public inconveniences coastal road

Mitigation Measures Traffic management and transport scheduling

Implemented by Local police in coordination with contractor and SAI Contractors

Appendix 6

Site clearing and construction of civil works and installation of equipment

Noise and emissions of heavy construction equipment

Noise and air pollution at the construction site

Mitigation measures will be stipulated in the construction contract, including noise protection equipment to be provided to workers, use of lownoise equipment, etc.

Disposal of construction wastes

If inappropriately disposed of, construction wastes could have adverse environmental impacts.

Minor, most wastes will be construction debris, no toxic and hazardous wastes apart from oil.

Contractors must propose Contractors for SAI's approval methods and places for disposal of construction debris and, spent oil or chemicals,if any. Toilet wastes to be disposed of in septic tanks, refuse will be collected by the municipality, food sanitation and hygiene will be maintained. Contractors

Sanitation of worker quarters

Human wastes need to be disposed off properly to ensure hygienic conditions of worker quarters and minimum environmental impacts.

Minor, the problems are managable as most of the construction workers would stay off the construction site.

SAI = PT Semen Andalas Indonesia. Source: PT Semen Andalas Indonesia.

SUMMARY ENVIRONMENTAL MANAGEMENT PLAN DURING OPERATIONS

Activities Quarrying operations Potental Issues Noise from blasting Impacts Public disturbance Significance of Residual Impacts After Control Minor, blasting will be done about one time per day, and no schools and houses are within 1 km of the quarries. Minor, amount of fugitive coal dust will be small and confined to within the site. Mitigation Measures to Be implemented by SAI Use non-electric detonator to reduce noise and vibration so that the distance of fly rock will be less than 50 meters.

Coal handling and storage

Fugitive dust

Ambient air quality and public disturbances

Coal unloading from ships and transport to the storage site will be done using an enclosed conveyor system. The storage yard will be covered and will be frequently sprayed with water to suppress dust. Bag filters to be installed at each dust generating unit process. Workers will wear protective equipment and receive training in safety and occupational health. Operation manuals will be prepared. Conduct Lafarge computerized control system to stablilize production and as a result reduce NOx. SO2 will be reduced using scrubbing method.

Cement production and power generation

Dust and noise in plant

Health impacts on workers

Minimum health risks to workers

Emission of dust, NOx, and SO2 to the atmosphere

Deterioration of ambient air quality with negative effects on health and properties Localized marine pollution

Minor, ambient air quality will meet the national standards and World Bank's guidelines. Minor, water temperature will be reduced before disposal. Minor, wastewater will be treated before disposal. Minor, ship wastes will not be disposed of at the port.

Cooling water bleed off or spent cooling water

The water temperature will be reduced by cascading aeration before disposal into the sea or use in landscape gardening in the site. The wastewater will be treated using septic tanks and leaching field. Ships will not be allowed to dispose ballast water and spent oil while berthing at SAI port.

Wastewater from office

Localized marine pollution

Port operations

Disposal of ship wastes

Localized marine pollution

km = kilometer, m = meter, NOx = nitrogen oxide, SAI = PT Semen Andalas Indonesia, SO2 = sulfur dioxide. Source: PT Semen Andalas Indonesia. Appendix 7

37

38

SUMMARY OF ENVIRONMENTAL MONITORING PLAN Parameters or Matters to be Monitored Particulates and noise

Appendix 8

Monitoring Subject A. During Construction 1. Ambient air quality

Monitoring Sites Few sampling sites within the construction sites The designated disposal site(s) Areas around worker quarters

Frequency Once or twice daily

2. Disposal of construction wastes 3. Disposal of worker wastes

Compliance with the disposal requirements Presence of solid wastes and sewage

Weekly Daily observation

B. During Operations-Quarries 1. Ambient air quality

Houses nearest the quarries Quarry sites

Blasting noise at the limestone quarry Noise of heavy equipment

To verify the noise levels during the first few days of quarrying operations Monitoring will not be necessary if the noise level is verified to be within the prescribed limits.

C. During Operations-Cement Plant 1. Ambient air quality

Within the cement plant proper Villages of Lhoknga and Naga Umbang

Particulates, SO2, NOx, and noise Same as above except noise Particulates Particulates, SO2, NOx

Monthly, 24-hour continuous sampling, and during plant shutdown and restart Weekly, 24-hour continuous sampling Monthly, 24 hour continuous sampling and during plant shutdown and restart Monthly, grab sampling

2. In-plant air quality 3. Emission of air pollutants

At dust generation activities Stack gas

4. Sea water quality

At SAI port

COD, oil and grease

COD = chemical oxygen demand, NOx = nitrogen oxide, SAI = PT Semen Andalas Indonesia, SO2 = sulfur dioxide. Source: PT Semen Andalas Indonesia.

Appendix 9

39

LAFARGE GROUP ENVIRONMENTAL POLICY A. Commitments 1. Operations (i) operate our facilities in a manner that meets local laws, standards and regulations, and state-of-the-art environmental management systems requirements; minimize the exposure of our employees and the communities around our sites to environmental, health, and safety risks by employing safe technologies and operating procedures; minimize the use of nonrenewable resources and, where feasible and safe, replace them with substitute raw materials, alternative fuels, or biomass; minimize the generation of hazardous and other wastes, reuse and recycle materials where feasible, and dispose of wastes using safe and responsible methods; implement programs to prevent accidental releases; have emergency response action programs in place at all sites; conduct environmental audits for all facilities on a routine schedule and in connection with all acquisitions and divestments; and develop a rehabilitation plan for all quarry sites that takes into account the needs and expectations of our stakeholders and, where feasible, fosters wildlife habitat creation and contributes to the conservation of endangered species.

(ii)

(iii)

(iv)

(v) (vi) (vii)

2.

Greenfield Site Development and Major Modification Projects (i) carry out an environmental impacts study when selecting greenfield sites for development or developing major modification projects, and meet the requirements resulting from being in proximity to protected areas or habitats; design and build our facilities in a manner that meets local laws, standards and regulations, as well as Lafarges worldwide environmental standards; and facilitate the conservation of historic remains discovered during site development and quarry operations.

(ii)

(iii)

3.

Resources, Training, Research (i) provide adequate financial and human resources, employee training, and awareness raising to facilitate continuous improvement in environmental performance; and take the necessary steps, including sponsoring research, to improve our knowledge of the environmental impacts of our processes and products.

(ii)

4.

Procurement (i) evaluate the environmental values and policies of subcontractor and supplier candidates as part of the selection process; and

40

Appendix 9

(ii)

require our subcontractors and suppliers to respect our environmental, health, and safety values, and to comply with our policies and procedures when present on our premises.

5.

Product Stewardship (i) implement sustainability and product stewardship practices in the design, manufacturing, distribution, and application of our products to enhance their contribution to sustainable construction, minimize their impact on human health and the environment, and limit the amount of wastes generated and disposed of.

6.

Stakeholder Relations (i) Provide our stakeholders routinely with environmental information about our operations and products in an open manner. We will solicit their feedback and encourage a candid dialogue. We will hold ourselves accountable to our stakeholders for our actions. Cooperate proactively with legislators and regulators to evaluate the feasibility, impact, and cost and benefit of proposed laws, regulations, and standards.

(ii)

B.

Environmental Objective

1. In 2001, the Group set forth company-wide environmental objectives, published in Building a Sustainable World, our first sustainability report. This initial list of eight environmental objectives was slightly revised in 2003 as follows: (i) (ii) (iii) have 100% of our sites audited within the last 4 years by 2004; have 80% of our quarries implementing a Lafarge-approved rehabilitation plan by 2004; achieve a maximum level of stack dust emissions of 50 milligrams per normal cubic meter at all our cement plants in 2010 and report on our performance in the next report; improve data collection on water usage by 2002 and beyond; reduce Lafarges global carbon dioxide (CO2) emissions by 20% per ton of cement over the period 19902010, including a 15% reduction in total CO2 tons emitted for industrialized countries; extend the measure of energy consumption to all divisions in 2003 where it is significant and track improvement into the future; achieve recycled materials use target by 2005: (a) 10% for the Cement Division, (b) 45% for the Gypsum Division, and (c) 2% for the Roofing Division; and reduce production waste going to disposal by 2005 to: (a) 1% for the Cement Division, (b) 1.5% for the Gypsum Division, and (c) 1.5% for the Roofing Division.

(iv) (v)

(vi) (vii) (viii)

2. With approval from the divisions, the Group may update or add to the above environmental objectives over time. Where applicable, divisions, countries, and operations are to monitor the above indicators and track their operations performance on the above environmental objectives. Each division will submit their consolidated results and progress reports to the corporate office by 30 March of the following year. This information will be published in the next editions of our sustainability report.