Egypt: Alex Dev-01/Wadi al-Qamar
Pollution, community health and safety, labor issues, compliance with national legislation and IFC standards, EIA, consultation and information disclosure.
Titan Group, an IFC client, is seeking to expand its Egyptian operations, which consist of two entities: Beni Suef Cement Company (BSCC) and Alexandria Portland Cement Company (APCC). The plants have a combined production capacity of 3.5 million tons per annum (mtpa) and are engaged in an investment program to add a second integrated cement production line of 1.5 mtpa in BSCC and various debottlenecking investments in both plants.
According to IFC, the project with Titan Group for the expansion of their cement manufacturing in Egypt (#27022) was a EUR 80 million equity investment in Titan’s investment holding company Alexandria Development Limited (ADL.)
In April 2015, a complaint was lodged by Wadi al-Qamar community members who live in close proximity to APCC along with current or former employees of APCC through the Egyptian Initiative for Personal Rights (EIPR), a local NGO. The complaint raises issues regarding the proximity of the plant to residential areas and the effects plant pollution has on community health and safety. Other issues raised include compliance with national legislation, labor issues, and lack of information disclosure and community consultation, amongst others.
CAO found the complaint eligible for further assessment in April 2015 and an assessment trip was conducted in September 2015. During the assessment, there was a lack of consensus amongst the parties to engage in a CAO-facilitated dispute resolution process. In accordance with CAO’s Operational Guidelines, the case was referred to Compliance.
A compliance appraisal was completed in July 2016. The appraisal concludes that the complaint raises substantial issues related to IFC's appraisal and supervision of the environmental and social impacts of the project. CAO found that a compliance investigation is warranted, and the Terms of Reference for the compliance investigation were published on September 2, 2016. In January 2017, CAO released a communique outlining its investigation process, including a CAO site visit to Egypt which happened in the same month.
In July 2021, CAO finalized its compliance investigation in relation to the ADL-01 complaint. The investigation report was sent to IFC for a formal response.
CAO investigation report includes findings of noncompliance in relation to IFC’s performance in its investment in Titan Alex Dev. CAO found that at the pre-investment review stage, IFC’s review was not appropriate given the nature and scale of the project or commensurate with the level of E&S risks and impacts, as required by IFC's Sustainability Policy.
During supervision, CAO found that IFC has supported the client to gradually reduce its air emissions and take steps to address fugitive dust. However, current air quality monitoring is not sufficient to demonstrate compliance with WBG standards for stack emissions, fugitive dust, or noise pollution, and IFC has not ensured that the client’s disclosure, grievance handling, and community engagement practices meet PS1 requirements. In relation to labor, more focused attention on occupational health and safety and contract workers has led to improvements in personal protective equipment use and increased oversight of labor contracting companies during the period of IFC’s investment. However, CAO finds that IFC has not assured itself that the client’s current labor arrangements for contract workers meet Performance Standard 2 requirements or that the client has engaged with concerns raised by 2003 retirees or former contract workers.
On September 16, 2021, the Board of Directors cleared CAO's investigation and IFC’s official response, including a Management Action Plan.
Based on CAO Policy, CAO monitored the effective implementation of actions set out in IFC’s Management Action Plan. The first Management Progress Report on the Implementation of the Management Action Plan was published on October 26, 2022, and is available in Arabic and English.
On May 9, 2023, CAO decided to close its monitoring process in relation to IFC’s project-level and systemic-level actions. CAO's monitoring phase concluded that there is insufficient evidence to demonstrate that the actions substantially implemented by IFC have fully resolved the identified non-compliance findings. IFC communicated to CAO that it has continued to engage with ADL but has limited leverage to ensure that the company will take further actions beyond those outlined in the MAP. Accordingly, CAO has determined that there is no reasonable expectation of further action to address non-compliance findings, and the case is now closed.
An omnibus monitoring report is available in the “Case Document” section below, detailing more information about the project-level and systemic-level actions taken and IFC’s implementation performance rating.
Case closed after compliance monitoring.
Status as of May 25, 2023.