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This Environmental Review Summary is prepared and distributed in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision.
Any documentation which is attached to this Environmental Review Summary has been prepared by the sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content.
Environmental Review Summary with attachments : Corrective Action Plan
Project number 10361
Project namePuertas Finas de Madera Montealban, S.A. de C.V.
CountryMexico
SectorSolid Wood Products (VAP)
DepartmentGbl Ind, Manufact, Agribus & Services
Company namePuertas Finas
Environmental categoryB
Date ERS disclosedOctober 12, 2001
StatusCompleted
Previous EventsInvested: August 6, 2002
Signed: February 19, 2002
Approved: December 17, 2001

Project description
Puertas Finas de Madera Montealban, S.A. de C.V. and its seven affiliates (collectively Puertas Finas, or the company) are a group of companies under common ownership dedicated to the manufacture and distribution of wooden doors in Mexico, with exports to the U.S. and Canada. Puertas Finas has its headquarters and most of its production plants in the state of Oaxaca, but also has operations in the states of Guerrero, Querétaro and Mexico.

Puertas Finas has presented to IFC a 4-year (1999-2002), US$26.3 million, modernization and expansion project which includes the following components:
(i) increasing the production capacity at the company's existing door plants;
(ii) constructing a new plant in Guerrero for plywood and veneer production;
(iii) constructing a new facility in the State of Mexico for wooden reels and truck flooring productions;
(v) opening 4 new retail stores in various cities;
(vi) upgrading the environmental aspects of the company's production facilities; and
(vii) restructuring bridge loans incurred for the project.

Environmental Category B disclosure requirements
IFC requires that this document is made available through the World Bank InfoShop and to the locally affected community no less than 30 days prior to project consideration by the IFC Board of Directors.

The Summary of Project Information (SPI) provides details of where the ERS has been made available to the locally affected community. The SPI must be sent to InfoShop no less than 30 days prior to project consideration by the IFC Board of Directors.

To view the Summary of Project Information(SPI) for this project, click here


Environmental and social issues
This is a Category B project, according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical, environmental, and social information submitted by the project sponsor and field visits by IFC staff. The following potential environmental, health and safety and social impacts of the project were analyzed:

· Alternatives for tropical hardwoods in veneer;

· Sustainability of forest management;
· Potential for improving forest management by indigenous and other communities;
· Air emissions;
· Ambient air quality;
· Solid waste disposal;
· Hazardous material handling and disposal;
· Wastewater treatment;
· Worker health and safety including training;
· Site location of plants; and
· Fire safety and emergency response.

Proposed mitigation for environmental and social issues
The sponsor has presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific measures agreed, comply with applicable host country laws and regulations and World Bank/IFC requirements. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. (Further information is provided in the attached documentation.)

Wood Sourcing and Local Communities

Puertas Finas uses primarily pine and oak sourced from approximately 60 communities in Oaxaca. The forests from which the wood is harvested are temperate and contain good biodiversity and ecological quality. The communities are required by federal law, which is administered at the state level, to develop and implement sustainable forest management plans. Puertas Finas only sources wood from those communities with accepted plans. For the whole of Oaxaca, approximately 55 percent of the sustainable forest yield is currently harvested. The sources from which Puertas Finas draws its wood fit within a broader sustainable forest management regime. Puertas Finas currently uses a small amount of tropical moist forest hardwoods for veneer (less than 5% of total veneer). Puertas Finas will find acceptable, plantation-grown substitutes by the time the proposed project begins.


The state of Oaxaca has a high percentage of indigenous people and many of the communities from which Puertas Finas sources its wood are indigenous. Puertas Finas has dealt with these communities for as long as 20 years. The relationship is market-based with Puertas Finas entering into 1-3 year contracts that may range from purchasing logs to harvesting. Puertas Finas provides services to communities in addition to carrying out contractual terms. These services include maintenance of roads unrelated to logging operations and assistance in finding and purchasing logging equipment. In all of its operations, Puertas Finas consults with community councils. As part of the project, Puertas Finas, in coordination with and with the support of PROCYMAF/OAXACA, will further develop and formalize its technical assistance programs to (1) help communities seek Forest Stewardship Council (FSC) certification, (2) improve the quality of forest management plans, and (3) provide technical advice on improved forestry practices. The World Bank finances the Conservation and Sustainable Management of Mexican Forest Resources Project (PROCYMAF), which is aimed at improving the forestry management of communities and ejidos throughout Mexico.


Mills and Plants

The company has 8 mills and plants. Environmental issues associated with individual plants, and how they will be addressed are detailed in the attached Environmental Action Plan.


The project will provide a new automated finishing line in the Puertas Finas plant in Oaxaca, which will also eliminate poor ambient air quality in that working environment. The project will also improve employee eating, training, recreational and health facilities.

The company has an experienced and well-qualified environmental specialist who will be responsible for operationalizing the EAP, ensuring compliance with country laws and World Bank/IFC requirements, and furthering the company's environment and social-related objectives.

Conclusion
Accordingly, IFC concludes that the proposed project will meet the applicable World Bank/IFC environmental and social policies and the environmental, health and safety guidelines upon successful implementation of the agreed mitigation measures.

Monitoring and compliance
IFC will evaluate the project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering: (i) the status of implementation of any measures contained in the Environmental Action Plans and (ii) ongoing performance of project-specific environmental, health and safety and social activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.


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Puertas Finas EAP.pdf