Mini-Mill Development at JSC Pervouralsky Novotrubny Zavod

Environmental and Social Impact Assessment (ESIA)

JOB NUMBER: 5022047 DOCUMENT REF: PNTZ ESIA v1.doc

1 Issue for Consultation ESIA NB DM AGI 26th Feb Team 2007

Originated Checked Reviewed Authorised Date

Revision Purpose Description

CONTENTS

NON-TECHNICAL SUMMARY ERROR! BOOKMARK NOT DEFINED.

1. BACKGROUND VIII General Introduction 1-1 Project Background 1-1 Description And Need For The Development 1-2 Purpose Of The ESIA 1-3 Study Scope of Works 1-4 Findings Of The Scoping Report 1-5 Layout Of The Report 1-6

2. CONTEXT 2-1 Company and Site History 2-1 Current Site Activities 2-2 Site Development Programme 2-4 Alternatives Considered 2-5 Development Control and ESIA Framework and Requirements 2-5

3. DESCRIPTION OF THE PROJECT 3-1 Site Setting 3-1 Location and Layout 3-2 Land use and Settlement Patterns 3-4 Construction Phase Outline 3-6 Process Description 3-8 Ancillary Plant and Equipment 3-15 Main Technologies Adopted for the Control of Emissions 3-19 Materials selection and import/export balances 3-22 Waste Management 3-25 BAT Assessment for the Plant 3-25 Decommissioning 3-32

4. DESCRIPTION OF THE EXISTING ENVIRONMENT 4-1 Land Use and Settlement Patterns 4-1 Climate and Meteorology 4-2 Geology and Hydrogeology 4-5

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Soil and Groundwater Quality 4-6 Surface Water Quality and Hydrology 4-10 Air Quality 4-13 Ecology and Biotic Resources 4-16 Landscape and Visual Setting 4-18 Noise 4-19 Traffic and Transport 4-21 Socio-economic and Cultural Issues 4-21

5. IMPACTS ASSOCIATED WITH CONSTRUCTION 5-1 Introduction 5-1 Overview of the Construction of the development 5-1 Air Quality 5-3 Surface Waters and Effluent 5-4 Land Quality and Groundwater 5-6 Energy and Greenhouse Gas Balance 5-8 Materials Use and Waste Management 5-8 Ecology 5-9 Landscape and Visual 5-9 Traffic and Transport 5-10 Noise and Vibration 5-12 Socio-economic Aspects 5-13 Archaeology and Cultural Heritage 5-15 Risk Management 5-15 Summary of Impacts and Proposed Mitigation Measures 5-17 Mitigation Measures / Measures to Enhance Benefits 5-18

6. IMPACTS ASSOCIATED WITH OPERATION 6-1 Air Quality 6-1 Surface Waters and Effluent 6-23 Land Quality and Groundwater 6-39 Energy and Greenhouse Gas Balance 6-40 Materials Use and Waste Management 6-43 Ecology 6-53 Landscape and Visual 6-53 Traffic and Transport 6-54 Noise and Vibration 6-56 Socio-Economic Aspects 6-56 Archaeology and Cultural Heritage 6-58 Risk Management: Non-standard operating conditions and emergencies 6-58 Summary of Impacts and Proposed Mitigation Measures 6-59

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7. IMPACTS ASSOCIATED WITH CLOSURE AND DECOMMISSIONING 7-1 Introduction 7-1 Site Closure Plan 7-1 Air Quality 7-2 Surface Waters and Effluent 7-3 Land Quality and Groundwater 7-3 Materials Use, Waste and Effluent 7-3 Ecology 7-4 Landscape and Visual 7-4 Traffic and Transport 7-5 Noise and Vibration 7-5 Socio-Economic Aspects 7-5 Archaeology and Cultural Heritage 7-5 Risk Management: Non-standard operating conditions and emergencies 7-6 Summary of Impacts and Proposed Mitigation Measures 7-6

8. OUTLINE ENVIRONMENTAL MANAGEMENT PLAN & MONITORING PROGRAMME 8-1 Introduction 8-1

9. PUBLIC INFORMATION PROGRAMME 9-1 Stakeholders 9-1 consultation undertaken to date 9-11

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List of Tables Table 2.1 – Building Programme: Main Stages 2-4 Table 2.2 – Project Alternatives 2-5 Table 3.1 – Details of Casters 3-13 Table 3.2 – EU BAT Requirements 3-27 Table 4.1 - Relative Frequency Distribution of Wind Speed and Direction, % 4-3 Table 4.2 – Chemical Analysis of Groundwater in the Area of the Thermal Power Station 4-8 Table 4.3 - River Water quality Upstream of Discharge 4-11 Table 4.4 – Surface Water Quality in Chusoyaya after the Discharge Point (2006) 4-12 Table 4.5 - Air Quality Measurements at the Pervouralsk Environmental Authority’s Sites 4-14 Table 4.6 - Russian National Standards 4-14 Table 4.7 - Air Quality Measurements at PNTZ site 4-15 Table 4.8 - Nitrogen Dioxide 4-15 Table 4.9 - Sulphur Dioxide 4-16 Table 4.10 - Particulate Matter (PM10) 4-16 Table 4.11 - Carbon Monoxide 4-16 Table 4.12 - Noise Measurements Results 4-19 Table 5.1 – Water Consumption Planned. 5-5 Table 5.2 – List of Transportation Equipment Used on Site 5-11 Table 5.3 - Summary of Construction Impacts and Mitigation Measures 5-19 Table 6.1 – Surface Characteristics 6-3 Table 6.2 – Stack Characteristics 6-5 Table 6.3 - Modelled Increments to Pollutant Concentrations, µg/m3 6-7 Table 6.4 – Comparison of New Mini Mill Water Consumption and Current Consumption 6-24 Table 6.5 – Closed Cooling Water Cycles in the Mini Mill. 6-27 Table 6.6 – Closed Water Cycles Operating at the PNTZ Site 6-30 Table 6.7 - Characteristics of Wastewater Discharged to Pachotka River 6-31 Table 6.8 - Waste water discharges – Official PNTZ Report 6-32 Table 6.9 - Tchusovaya River Quality Above and Below Pachotka Inlet 2006 6-34 Table 6.10 – Water Management Improvement Tasks 6-36 Table 6.11 – Pollutant Concentration Estimates For Mini Mill Waste Water Discharges 6-38 Table 6.12 - PNTZ Mini-Mill Specific Energy Usage 6-41 Table 6.13 - PNTZ Mini-Mill Specific Carbon Dioxide Emissions 6-42 Table 6.14 - Waste Generation 01.01.06 to 31.12.06 6-45 Table 6.15 – Estimates of Solid Waste Types Generated In The New Mini Mill 6-50 Table 6.16 - Summary of Impacts and Mitigation Measures 6-63 Table 7.1 - Summary of Impacts and Mitigation Measures 7-9 Table 8.1 – Mitigation Measures / Enhancement Plans – Construction Phase 8-2

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Table 8.2 – Environmental Monitoring Plan – Construction Phase 8-5 Table 8.3 – Environmental Monitoring Plan – Operational Phase 8-7 Table 9.1 - Summary Stakeholder Analysis 9-7

List of Figures Figure 3.1 - The Ural region: Ekaterinburg and Pervouralsk 3-1 Figure 3.2 – Site Location 3-2 Figure 3.3 - Location of Planned Investment 3-3 Figure 3.4 - Existing and Planned Sanitary Zones 3-5 Figure 3.5 - Construction Phase Overview 3-7 Figure 3.6 – Overview of the Electric Arc Steel Making Process 3-8 Figure 3.7 – PNTZ Process Flow Diagram 3-9 Figure 3.8 – Process Material Balance 3-24 Figure 4.1 – Wind Rose Diagram for Ekaterinburg, 2002 to 2006 4-4 Figure 4.2 – Ambient Air Quality Monitoring Locations 4-13 Figure 6.1 – Emission Source and Plant Structures 6-6 Figure 6.2 - Maximum Annual Sulphur Dioxide Concentrations, µg/m3 6-9 Figure 6.3 - Maximum Daily Sulphur Dioxide Concentrations, µg/m3 6-10 Figure 6.4 - Maximum Hourly Sulphur Dioxide Concentrations, µg/m3 6-11 Figure 6.5 - Maximum Annual Oxides of Nitrogen Concentrations, µg/m3 6-14 Figure 6.6 - Maximum Daily Oxides of Nitrogen Concentrations, µg/m3 6-15 Figure 6.7 - Maximum Hourly Oxides of Nitrogen Concentrations, µg/m3 6-16 Figure 6.8 - Maximum Daily Carbon Monoxide Concentrations, µg/m3 6-18 Figure 6.9 - Maximum Eight-hourly Carbon Monoxide Concentrations, µg/m3 6-19 Figure 6.10 - Maximum Annual Particulates Concentrations, µg/m3 6-21 Figure 6.11 - Maximum Daily Particulates Concentrations, µg/m3 6-22

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ABBREVIATIONS

BAT Best Available Techniques BREF BAT Reference note CC Continuous caster ChTPZ Chelyabinsk Tube Rolling Plant CO Carbon monoxide

CO2 Carbon dioxide COD Chemical Oxygen Demand EAF Electric Arc Furnace EBRD The European Bank for Reconstruction and Development EIA Environmental Impact Assessment EMP Environmental Management Plan ES Environmental Statement ESIA Environmental and Social Impact Assessment EU European Union FSU Former Soviet Union ha Hectare HIV Human Immunodeficiency Virus IPPC Integrated Pollution Prevention and Control JI Joint Implementation km Kilometre(s) kV Kilovolt(s) LF Ladle furnace m Metre(s) m3 Cubic metre(s) mg/l Milligramme(s) per litre

Mg CO2/TJ Megagrammes of CO2 per terajoule m3/h Cubic metre(s) per hour MJ/m3 Megajoule(s) per cubic metre mm Millimetre(s) MPa Megapascal(s) MVA Mega volt-ampere(s) NGO Non-governmental Organization

NOx Oxides of nitrogen OCTG Oil Country Tubular Goods

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OVOS Russian EIA Process PCB Polychlorinated Biphenyl PCDD Polychlorinated Dibenzodioxin PCDF Polychlorinated Dibenzofuran PCDP Public Consultation and Disclosure Plan PNTZ Pervouralsk New Pipe Plant SME Small to medium sized enterprises t Tonne TU Trade Union UNFCCC United Nations Framework Convention on Climate Change VD Vacuum degasser VOC Volatile organic compound VOD Vacuum Oxygen Decarburisation

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NON-TECHNICAL SUMMARY

The Pervouralsk New Pipe Plant (PNTZ) is located in the city of Pervouralsk, . It is located on the Chusovaya River, 39 km west of Ekaterinburg. The company produces over 25,000 types of pipes, using around 250 steel grades. The plant is part of the ChTPZ Group, 's second largest pipe producer, which accounts for about 24% of Russia's overall pipe production, and employs more than 25,000 workers. The PNTZ site produced 743,000 tonnes of products in 2005. Around 15% of the produce was exported.

At present all of the steel used on the PNTZ site is imported from other steel mills. However, the company now proposes the development of a steel “mini-mill” which will produce 950,000 tonnes of steel from scrap metal. Around 600,000 tonnes per year of this steel will be used at PNTZ; the remaining 350,000 tonnes will be transported by rail to Chelyabinsk to be used at the sister plant, ChTPZ. The mini-mill will supply around 80% of the PNTZ site’s requirements for steel. The remaining 20% will still come from other steel mills because the mini-mill cannot produce all types of steel used by PNTZ.

The plant will be fed by scrap metal supplied by ChTPZ Meta, a sister company. The total input of scrap will be around 1 million tonnes per annum. This scrap will come from a wide area, predominantly from industrial sources. It will be transported to PNTZ mostly by rail, with a small amount (amounting to fewer that one vehicle per hour) transported by road.

The mini-mill investment is being supported by The European Bank for Reconstruction and Development (EBRD). The EBRD classifies the project as “Category A”, which means that it has the potential to have significant environmental and social impacts. The EBRD requires such projects to have a full independent assessment of all potential social and environmental impacts. Accordingly, this assessment (known as an “ESIA”) has been prepared by Atkins in support of the mini-mill project. The ESIA is completed in addition to the assessment required under Russian law (which is known as an OVOS).

This Environmental Statement (ES) documents the outcome of the Environmental and Social Impact Assessment (ESIA). Its primary purpose is to assist the Bank in its decision as to whether they should provide financial support for the construction of the proposed facility. The findings of the ESIA will also contribute to the OVOS being undertaken by PNTZ to support the local Russian legislative requirements for development permissions and operating permits.

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This summary explains the key elements of the Environmental Statement in non-technical terms. The impacts of the development have been considered in relation to the construction, operation and decommissioning phases of the mini-mill.

The Environmental Statement:

• provides a description of the proposed facility and the existing environmental conditions at the proposed development site;

• assesses the impact of the proposed development on the existing environment;

• recommends measures to limit these impacts (the mitigation measures); and

• describes the extent of the residual environmental impact following the implementation of the proposed mitigation measures.

Obtaining Copies of the Full Environmental Statement

The Non-technical summary will be placed on the EBRD website (www.ebrd.com), which will also contain information on where the full ESIA documents will be available and a link to the company’s website.

The full ESIA documentation and a non technical summary (NTS) will both be available in English and Russian at the PNTZ Environment office (1 Torgovaya Street, Pervouralsk, Sverdlovsk Region, Russia 623112, care of Viktor Kutnezov, Environmental Manager, Telephone 7 34392 7 43 82) and in the office of the newspaper “Uralsky trubnik”. The hard copies of the materials will also be available at the EBRD regional offices in Ekaterinburg (Karla Libknekhta, 22, Office 413) and Moscow (6 Gasheka Street; Dukat Place III, 123056 Moscow).

What is a mini-mill?

A mini-mill is an industrial plant that produces steel product from scrap metal. A mini-mill will have an electric arc furnace for scrap melting, a ladle furnace for processing the molten metal, a vacuum degasser for further treatment of the molten metal and casters for converting molten steel to a solid form which in this case will be in the form of round billets. Figure 1 shows a diagram illustrating the main processes of the mini-mill:

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Process Flow Diagram

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Why is the mini-mill needed?

The Project will ensure a guaranteed supply of high quality steel for around 80% of site operations at PNTZ without reliance on external sources. The mini-mill will enable the achievement of the long term development programme of the ChTPZ company at both the Pervouralsk and Chelyabinsk sites.

There is also a requirement to close the existing open heath furnaces at ChTPZ, as these furnaces are at the end of their useful life and are a source of significant air pollution. They are also very inefficient in terms of energy usage and do not produce the high quality steels that are required at PNTZ in the long term. It would be uneconomical to re-furbish them.

What alternatives have been considered?

There are several alternatives to the proposed development which are outlined in the table below. The location proposed by the company was chosen based on the availability of land and the final product requirements.

Project Alternatives

Option Description Location Comments

This would require the open-hearth furnaces to continue operation at ChTPZ for a longer period. 0 Do nothing -

Increase in the amount of imported steel as the site develops.

PNTZ – Alternative Potentially further from residents, but no 1 Mini-mill location site of adequate size identified.

Brownfield site of suitable size.

Easy access to infrastructure. 2 Mini-mill PNTZ – Final location The planned mini-mill protection zone will be within the existing site.

Reduced transport of steel product as majority of steel will be used at PNTZ.

Increased transport of steel products 3 Mini-mill Chelyabinsk compared to site at PNTZ as majority of output to be utilised at PNTZ.

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What will the new mini-mill facility include?

The mini mill project site will occupy an area of 26 hectares located inside the PNTZ site. There will be a single 45 m high main building which will house most of the plant and some auxiliary buildings, including a scrap storage yard facility, slag cooling areas, energy supplies and technical gas generation.

The mini-mill will consist of the following main elements:

• Scrap metal yard with scrap metal transfer equipment

• Scrap drying unit

• Electric arc furnace (120 tonne capacity)

• Ladle furnace

• Vacuum degassing plant

• Ladle handling and repair shop

• EAF shell handling and repair shop

• Material handling system

• Dedusting plant

• Ladle relining house

• Slag cooling area

• Carbon silo

• Two continuous casting machines and billet storage area

• Tundish maintenance & repair shop and Tundish relining house

• Mould and segment maintenance and repair shop

• Scale pit

Auxiliary plant and equipment will include:

• Fire fighting pump and water tank area

• Laboratory

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• Maintenance workshop

• Oil & lubrication and spare part storage

• 220/35kV Station

• Water treatment plant

• Air separation plant

• Steam generation plant

• Compressed air plant

• Lime preparation plant

Other associated buildings will include:

• Control building

• Administration building

• Office building

• Laboratory building

• Transformer building

The mini-mill de-dusting plant will collect off-gases from the plant. This facility will ensure that all gases released are cleaned of particulate matter before release to air. The process air will be discharged to atmosphere via a single 90 m high stack.

As part of the development, the PNTZ site will require a new connection to the electricity grid which will require the installation of a new power line. The installation work will be undertaken by RAO-UES. This aspect of the development is outside the scope of this ESIA.

What design standards will be used for the new mini-mill facility?

Form the outset, the new facility will be designed to meet international standards and will comply with the full requirements of local Russian regulations as well as European Union (EU) Directives. The most important EU Directive in relation to environmental control is the Integrated Pollution Prevention and Control (IPPC) Directive. IPPC is a regulatory system that uses an integrated approach to the control of environmental impacts from industrial sites.

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The IPPC Directive is not based upon fixed emissions limits but involves the determination of appropriate equipment design and operation to protect the environment through the application of “Best Available Techniques” (BAT). This means that emissions to air, water (including discharges to sewer) and land, plus a range of other environmental impacts must be considered together. Operators have to assess emissions to all environmental media in the design of the whole plant using ‘clean technology’ rather than relying on ‘end-of-pipe’ techniques.

To assist the designers and operators of such facilities the EU has produced a number of BAT Reference notes (known as the “BREF notes”) that describe BAT for each industry sector within IPPC. The Guidelines applicable to this development is the BREF note for the “Production of Iron and Steel”. Although the IPPC Directive does not apply in Russia, the guidance provided by the Production of Iron and Steel BREF has been used as a benchmark standard for undertaking the ESIA associated with the assessment of this development. The BREF note not only contains information about the basic design of the facility but also how it should be operated, suggested Emission Limit Values and how the facility emissions should be monitored. The BREF also includes guidance concerning the restoration of sites when industrial activities cease. These requirements have been taken into account in the consideration of the future closure of the PNTZ Mini-Mill Development. In addition to the BREF note the Draft Environmental Health and Safety Guidelines for Integrated Steel Mills produced by the International Finance Corporation (February 2007) have also been used to provide indicative design and operation requirements for the type of facility proposed.

The ESIA has concluded that the design of the proposed facility will comply with the general requirements of the EU BREF note and IFC guidelines. Where insufficient design information was available the EU BREF note has been used to establish the recommended mitigations and a future Environmental Monitoring Plan.

Where will the mini-mill facility be located?

The mini-mill will be located on the main PNTZ site in Pervouralsk City. The Ural region is rich in mineral resources and highly industrialized with a dense presence of such industries as ferrous and non-ferrous steel works, chemical plants and manufacturing industries.

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Site Location within the Region

The existing PNTZ site has a well developed infrastructure of roads, railway lines and services, and consists of a series or workshops and other buildings surrounded by open areas. The main workshops are located in the western and central area and the waste disposal areas are located in the south-eastern part of the site.

The proposed development is located in the south-eastern part of the PNTZ site at Pervouralsk. The area was formerly used for the storage of steel. The proposed site has been cleared in preparation for the development.

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Development Location within the PNTZ Site

What is the condition of the existing environment?

The PNTZ site has been used for the production of steel pipes for over 70 years. The site already has in place many buildings and other industrial structures of the same or similar appearance to the one proposed.

The nearest residential area is located 795 m to the south of the mini-mill development site. A 500 m sanitary protection zone (measured from primary emission sources) was established around the PNTZ site in 1991 as per the requirements of the sanitary rules 245- 71 on the design of industrial facilities. No residential properties are located within the current protection zone. The nearest houses at the Trudposelok residential area are located approximately 100 m outside the protection zone boundary.

There has been no detailed testing of the ground at the site, but there are likely to be areas of local contamination as a result of the activities that have been previously undertaken. Analysis of the groundwater indicates that there is some contamination with metals and oil products, although this is not significant.

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The site is located on the watershed between the rivers Elnichnaya and Talica, both tributaries of the Chusovaya River. The distance from the proposed mini-mill site to the Elnichnaya is 2.2-2.8 km and 1-1.4 km to the Talica. Analysis of water from the Chusovaya River indicates that concentrations of oils, nitrites, iron, chromium, copper and manganese are above the national maximum allowable concentrations. This pollution arises from a number of industrial sources in the area and is not related to conditions on the development site.

The nearest sites associated with sensitive ecological receptors are at an appreciable distance from the PNTZ site and the assessment found them to be unaffected by the development.

What will be the effects during construction?

The main contractor for new mini mill development is SMS-Demag from Germany. The main subcontractor for the civil engineering and construction works is Gama, based in Turkey. SMS-Demag is responsible for the plant design, based on a specification provided by PNTZ. Gama is responsible for most of the site activities.

The construction activities will include:

• Demolition and site clearance (already completed);

• Fill importing/exporting and site levelling;

• Utilities and services connections to site;

• Foundation piling/excavations and installation of concrete footings;

• Erection of building steel frames and cladding;

• Installation of equipment;

• Ancillary facilities erection;

• Services, gas and utilities connections;

• Building fitting-out; and

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• Commissioning (due for November 2008).

It is expected that approximately 1,500 workers will work on site at the peak time in March 2008. It is planned that they will live on-site in a specially constructed camp. The camp will be located adjacent to the construction site to the east within the PNTZ site and will have all relevant facilities, including recreational facilities. The construction camp will consist of several pre-fabricated buildings and necessary infrastructure.

Construction activities can generate dust that can cause a nuisance to local residents and cause a health risk to construction workers. As the nearest residential receptors are approximately 795m from the development site, the main risk is considered to be the exposure of workers on site. Dust control measures, together with the use of appropriate personal protective equipment will be used to mitigate this impact. The impact of emissions of vehicle exhaust gases on air quality is considered negligible.

Water on the construction site can become polluted by the mobilization of existing contamination present in the ground and/or as a result of escapes of materials used during construction. These risks will be reduced by removing any areas of gross contamination as they are found for appropriate disposal at suitably engineered off-site hazardous waste disposal sites. Potentially polluting materials will be carefully stored in suitable containment in order to reduce the risk of pollution incidents from spills and leaks.

Due to the nature of the surrounding industrial setting, the transitory visual impacts of construction works are expected to be negligible to minor from areas to the east of the site. The visual impact from other viewpoints is expected to be less as direct views of the site are interrupted and partially to completely obscured by other elements of the site and intervening buildings. Also, the visual impact is in keeping with the already developed nature of the area.

The effects of the traffic generated by the construction phase are likely to be negligible when considered within the context of the large volumes of traffic that enter and leave the site daily.

Due to the level of industrial activity on the site background noise levels are likely to be fairly high and any noise associated with construction activities such as piling are likely to have negligible impact. Measures to reduce construction noise levels will be included in the Environmental Management Plan and Monitoring Programme.

Overall, construction activities are transitory, and are considered likely to have a minor adverse impact on dust levels and visual impact.

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What changes will there be to the local air quality?

A detailed air dispersion modelling study was undertaken for the proposed mini-mill development at the PNTZ Works. The aim of the study was to assess the effects of the routine stack discharges during the operation of the plant in terms of ground level pollutant concentrations. These changes in local air quality were then considered in the context of the Russian national air quality standards, the EU limit values and international WHO guidelines.

The emissions to the atmosphere were modelled using the latest version of the US Environmental Protection Agency (EPA) atmospheric dispersion model AERMOD. This is internationally recognised as an advanced dispersion model and is widely used for regulatory purposes. The model was used with five years of local hourly weather information and it takes account of the influence on dispersion of the major plant structures and the local topography.

The operation of the electric arc furnace, ladle furnace and the vacuum de-gasser are batch processes with variations in pollutant emission rates throughout the process cycle. The manufacturer provided a range of emission rates derived from measurements at similar plant, and the air quality assessment used the upper bound of these ranges, an inherently conservative approach. The emissions of oxides of nitrogen, sulphur dioxide, carbon monoxide and particulates (dust) were modelled.

The existing air quality in the town is acknowledged to be poor. Consequently the environmental regulator requires that increments to pollutant concentrations in the town should not exceed ten percent of the relevant ambient air quality standards. The plant design therefore incorporates a relatively high 90 metre stack to promote dispersion of the discharge and to further mitigate the effects of the residual emissions from the de-dusting plant.

The maximum modelled hourly average concentrations of sulphur dioxide, nitrogen dioxide and particulate concentrations were found to be less than two percent of EU limit values. The maximum modelled daily average concentrations of all pollutants are less than 0.2 % of the Russian national standards (equivalent to 0.002 of the share of the standard) as are the maximum annual average sulphur dioxide concentrations. The maximum annual average concentrations of nitrogen dioxide and particulates (dust) are less than 0.1% (equivalent to 0.001 of the share of the standard) of the Russian national standards.

These very small effects on local air quality in the forest to the north and east of the plant are assessed as being insignificant. Potential exposures in residential areas will be lower still and are also regarded as being insignificant.

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What changes will there be to the emissions of greenhouse gases?

The mini mill project is being implemented as a new installation, not replacing any existing activities in PNTZ. It is planned to increase operating efficiency of the plant by on-site steel melting from scrap. As such it will increase greenhouse gas (GHG) emissions produced by the PNTZ.

However, the development of the mini-mill at PNTZ will allow the closure of the open hearth furnaces at Chelyabinsk. These furnaces are near the end of their useful life and are very inefficient. Therefore there will be significant greenhouse gas reductions associated with the closure of these furnaces and there will be a net reduction in overall GHG emission from ChTPZ as a whole.

An assessment of the proposed technologies to be implemented at the site indicates that the specific energy use of the PNTZ mini-mill compares favourably against international industry data, and is indeed below the best practice benchmark stipulated in guidance quoted in this assessment.

What other operational effects will there be?

Many of the environmental effects of the proposed facility are considered to be negligible when placed within the context of the site as whole. These other operational effects are summarised below:

• Noise (i) Noise levels at the nearest residential receptors as a result of the proposed operations have not been calculated as part of this assessment but are not expected to be significant issue during operation.

• Landscape and visual (i) The development will appear as a large profiled steel clad industrial building, with a 90m high stack and collection of smaller industrial buildings housing the ancillary plant and equipment. This is in keeping with the appearance of the other industrial plant at the site.

(ii) The most sensitive viewpoints of the site development will be from residential receptors located to the south of the site, specifically the highest floors of four storey blocks of flats.

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(iii) Since the area can be defined as hilly and some recreational areas (gardens) are located high on the hills (mainly to the north and east of the site) it can be expected that the installation will be viewed from high elevated sites.

(iv) However, due to the nature of the surrounding industrial setting, the visual impacts are expected to be negligible.

• Materials use and waste management (v) Most of the wastes generated by the operation of the mini mill are expected to be similar in type to the waste currently generated by the PNTZ metallurgical operations. However, the new plant will generate significant quantities of wastes which are new to the site.

(vi) The most significant change in PNTZ waste management will be associated with generation of large quantities of metallurgical slag (approximately 120,000 tonnes per year) and filter dust from de-dusting (approximately 26,000 tonnes per year), which may be hazardous to environment.

(vii) A strategy for managing these wastes has not yet been finalised; but PNTZ will develop a robust plan to ensure that these wastes are managed correctly and reused/recycled where possible. A monitoring and management programme for these wastes will be developed prior to commissioning of the plant.

• Traffic and Transport (i) The majority of raw materials (including scrap) will be transported to the site by rail. The small amount of materials moved by road equates to less than one lorry movement per hour, which represents an insignificant increase over current levels. (ii) There will be an increase in traffic associated with the additional workers for the plant. These will mostly use buses, so the increase will be insignificant (iii) All steel transported to Chelyabinsk will be by rail. • Ecology (viii) There are no sensitive ecological receptors in the vicinity of the site.

What will be the impacts during decommissioning?

No detailed assessment of environmental impacts associated with decommissioning can be made at present. The plant has an expected lifespan of over 25 years and so only general principles can be established at the present time.

In broad terms, the process of decommissioning is likely to give rise to impacts similar to those experienced in the construction phase. The methods and techniques selected are

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expected to be in accordance with national and international standards prevailing at the time of decommissioning. Decommissioning will require the:

• Removal of all surface equipment and units;

• Potential removal of hardstanding and surface cover;

• Abandonment of sub-surface utilities or filling and abandonment as appropriate;

• Reinstatement of the site and all project areas to pre-construction conditions.

PNTZ will develop a site closure plan during detailed project design and maintain the plan throughout the life of the development. The plan should include arrangements for decommissioning the plant in a manner which avoids any pollution and return the site to an acceptable state. In addition any decommissioning plan should take into account the social and economic impacts and include mitigation measures where necessary.

Overall, decommissioning activities are transitory, and are likely to be similar in magnitude to construction impacts.

What will be the impact of the facility on socio-economic issues?

As the proposed facility will be inside the existing PNTZ site the social impacts will be minimised. There will be no requirement for any re-settlement as the existing sanitation zone is adequate for the expansion. The main impacts associated with this development are as follows:

• Need for a construction camp of 1500 people, mainly from Turkey and neighbouring countries, over a 23 month period. The camp is to be located on site and is well equipped for residential purposes including dining and leisure activities.

• There will be benefits to the local economy due to the presence of a large number of contractor’s staff.

• Employment during operation of approximately 700 workers (mostly skilled) having a positive impact on the local and regional economy.

• The implementation of new technology in the area will enhance/develop the skills base, providing a more positive and modern image to an area which has previously employed traditional technologies to undertake industrial activities.

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Summary

In summary the main potential environmental effects resulting from the development are likely to be associated with the following:

• Emissions to water. The development will not have significant amounts of water discharges, but will provide an additional load to the existing system. This system already results in some discharge of pollutants to the Chusovaya River in excess of limits.

• Emissions to ground, specifically as a result of potential for leaks form lubrication and hydraulic systems containing oil and local ground contamination, and potential ground contamination by leakage or leachate from storage of hazardous substances, contaminated scrap metal or slag.

• Production of wastes including significant volumes of solid waste.

• Positive socio-economic impacts on the local and regional area.

A summary of these effects, the mitigation measures and the environmental monitoring plans are found in the tables below.

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Summary of Construction Phase Impacts

Impact Proposed Mitigation Residual Impact Residual Impact Rating Landscape and visual impact due None proposed due to industrial Not altered Negligible to the use of cranes and other surrounding obscuring the area of equipment construction activities Air quality - dust emissions during Development of procedures for : Dust propagation will be limited to Minor adverse construction and ground works construction area and will not - water spraying roads and dusty influence local community. materials stockpiles However workers should be - sheeting vehicles carrying supplied with dust masks especially dusty materials on leaving the in dry days. site to prevent materials being blown from the vehicles - speed limits on unmade surfaces on site to limit dust - dust emission monitoring in selected points Discharge of silty and contaminated - potentially polluting materials Ground contamination and storm Minor adverse storm water via PNTZ such as fuels and oils will be water contamination will be limited sedimentation ponds to the stored in dedicated storage on site by proper handling and Chusovaya river areas with spillage protection storage of materials and equipment. Storm water will be - procedures for handling any treated in PNTZ sedimentation finding contaminated material ponds, the impacts on overall encountered during quality of discharge waste water will excavations will be established be minor - covering and damping of excavated materials Ground contamination by leakages - All equipment will be subject to Risk of ground contamination by Minor adverse leakages from storage or machines

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Impact Proposed Mitigation Residual Impact Residual Impact Rating from machines periodic maintenance. will be minimised - machines and equipment will be located on hard surface Bunds and drip trays will be used where appropriate.. - all storm water will go via PNTZ sedimentation ponds and oil separation Removal of contaminated soils - appropriate storage and Risk of impact reduced. Minor adverse during the excavation disposal of contaminated material if found will be granted and appropriate procedures implemented Discharge of sanitary waste water Waste water will be discharge via Negligible from workers camp via PNTZ sewer PNTZ sewer to municipal networks to municipal collector None. and municipal waste water treatment plant. Increase of waste water amount <4% of total PNTZ sanitary waste water Solid waste generation - Separation of uncontaminated Solid waste will be passed to PNTZ Minor adverse soil for reuse service and disposed according to PNTZ permits. - introduction of waste storage and control procedures Ground will be dumped for reuse - segregation and recycling of waste Noise and emissions generated by - new gate to avoid Most of heavy traffic (like that Moderate adverse vehicles transportation via town centre carrying excavated material) will take place inside the PNTZ limits. - delivery hours scheduled to Other transportation, like deliveries, avoid peak traffic hours and will be directed through new gate

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Impact Proposed Mitigation Residual Impact Residual Impact Rating night-time close to the site. Gates located in the town centre will not be used. - traffic management plan Temporary problems may arise on - Use of rail traffic for bulk the road Pervouralsk-Ekaterinburg. transportation and abnormal loads Emergency situations during - Emergency procedures to be Procedures for prevention and Minor adverse construction works developed and implemented actions to be taken in emergency situations (including fire, spills etc) - PNTZ fire and emergency will be implemented. Proper training squads available on-site and equipment need to be - availability of PNTZ and delivered to the staff. contractors inspectors on site Construction workers - On site facilities for migrant Workers will be housed on site. Moderate beneficial workers They will be provided with all necessary facilities. There is - Employment opportunities for expected to be some interaction local workers with local population, but some - Education and training of economic benefits are expected for contractors local businesses. - Health and safety monitoring

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Summary of Operational Phase Impacts

Environmental Impact Proposed Mitigation Residual Impact Residual Impact Rating Excessive pollutants loads in waste - PNTZ has elaborated and Amount of waste water discharge water discharged from PNTZ to agreed the water management could be potentially decreased by Chusovaya river improvement programme, one 70-80% (depends on the share of of three tasks for main plant are water from natural precipitation and already finished successive implementation of the programme). Severe adverse - PNTZ programme implementation needs to be Quality of discharged waste water supervised with the investment is compliant with local legal to avoid problems with waste requirements. water evacuation Blow down water from closed water - possibilities for reuse of blow Amount of blow down water from loops are discharged into industrial- down water (especially from mini mill discharged to PNTZ’s storm water system of PNTZ “clean” circuits) should be industrial and storm water system is Minor adverse sought decreased significantly.

Additional amounts of storm water - Housekeeping and materials The loads of suspended solids and will be generated from roofs, storage measures will be oil are significantly reduced in hardened surfaces and roads implemented to minimise storm discharged storm water. This issue is also important because current Minor adverse - oil separators should be PNTZ treatment system is not installed in the areas for efficient. vehicles parking and maintenance Potential for leaks from lubrication - Oil handling systems need to No risk of leakage of oils to the and hydraulic systems containing be fully contained within the ground from the systems oil and local ground contamination. main mini mill structure, and Minor adverse the oil reservoirs need to have appropriate secondary containment.

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Environmental Impact Proposed Mitigation Residual Impact Residual Impact Rating - Pipework of lubrication, hydraulic, waste water systems need to be a subject to periodic leakage inspections. Potential ground contamination by - Oils, water treatment chemicals All hazardous substances, scrap leakage or leachate from storage of will be stored in roofed or metal, slag, filter dust are stored in hazardous substances, closed storage areas with isolation from the ground contaminated scrap metal or slag hardstanding, isolated from surface water drains or in paved areas. Chemicals will generally be held in either purpose built tanks or with drummed supplies where this is not required. - Scrap metal should be stored on hardstanding and roofed areas (scrap yard, scrap bay) isolated from the ground. Scrap can be potentially contaminated Minor adverse with oils and other chemical substances. - The slag and filter dust should be stored in isolation from the ground on hard surfaces. Water from slag cooling should be used in closed cycle and excess waste should be discharged to waste water system. Dust generated in the slag cooling process should be minimised by suitable handling to prevent secondary soil contamination.

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Environmental Impact Proposed Mitigation Residual Impact Residual Impact Rating Storage of solid waste (inert and - on-going monitoring and Landfills are controlled, proper non-hazardous on PNTZ landfills) inspection of on-site landfill actions are undertaken in case of sites necessity Minor adverse

Waste management - Arrangement (update) of all Waste management of the mini mill solid waste management is fully covered by internal licences and permits procedures, legal status is regulated - Establishment of slag processing techniques and Increased quantity of waste to be choice of contractor landfilled on site. - Establishment of filter dust Increase in recycling/reuse of waste handling procedures and generated. choice of the contractors Moderate adverse - Oily scale disposal techniques including the briquetting need to be decided - Review of waste minimisation and recycling options for all wastes generated by new mini mill Increased heavy vehicles traffic in - Planning scrap metal Traffic from the mini mill does not the neighbourhood of new gate for transportation by the means of cause congestion problems on local the mini mill rail transportation instead of roads and no complaints from local cars residents are reported. - Maximise the use of the rail Minor adverse network for bulk deliveries and abnormal loads. - Restricting delivery hours to reduce noise nuisance; avoid

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Environmental Impact Proposed Mitigation Residual Impact Residual Impact Rating heavy truck movements in the night hours - Considering whether deliveries should be scheduled to avoid peak times to reduce congestion; - Heavy construction traffic will be subject to a traffic management plan, as necessary; Emergency situations - New mini mill needs to be The mini mill is covered by all covered by PNTZ safety safety procedures and emergency procedures (update required) services (fire fighting, gas emergency service) from the first - Safety certificate needs to be day of operation Minor Beneficial updated - Training needs to be provided to mini mill staff as well as to PNTZ emergency services Social Impacts - Generation of long term skilled The mini-mill will provide economic jobs benefits to the area - Economic security for company Substantial benefit - Closure of polluting furnaces in Chelyabinsk resulting in loss of employment

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Summary of Decommissioning Phase Impacts

Environmental Impact Proposed Mitigation Residual Impact Residual Impact Rating Emission prevention - development of Site Closure Updated information on risks and Minor Beneficial Plan requirements is available at site closure Dust emissions during ground - water spraying roads Dust propagation will be limited to Minor adverse works demolition area and will not - sheeting vehicles carrying influence local community. dusty materials However, workers should be - speed limits on unmade supplied with dust masks especially surfaces in dry days - dust emission monitoring in selected points Discharge of silty and contaminated - potentially polluting materials Ground contamination and storm Minor adverse storm water via PNTZ will be stored in dedicated water contamination will be limited sedimentation ponds to the storage areas on site by proper handling and Chusovaya river storage of materials and - machines and equipment equipment. Storm water will be Ground contamination by leakages technical condition will be treated in PNTZ sedimentation from machines reviewed periodically ponds, the impacts on overall - machines and equipment will quality of discharge waste water will be sited on hard surfaces be minor - all storm water will go via PNTZ sedimentation ponds and oil separation - procedures for finding contaminated material during excavations will be established - covering and damping of

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Environmental Impact Proposed Mitigation Residual Impact Residual Impact Rating excavated materials - appropriate storage of contaminated material if found Solid waste generation - segregation and recycling of Solid waste will be passed to Minor adverse waste and proper storage in contractors sand disposed isolation from the ground according to their permits. Noise and emissions generated by - traffic management plant Local traffic congestions problems Moderate adverse vehicles avoided. - use of rail traffic for bulk transportation for abnormal loads Emergency situations - local fire and emergency Procedures for prevention of Minor adverse squads available on-site handling with emergency situations will be implemented. Proper training - availability of PNTZ and and equipment need to be contractors inspectors on site delivered to the staff. Social impacts - There will be job losses Plans to re-deploy workers will be Moderate adverse developed

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Construction Phase Environmental Monitoring Plan

Items Measures Responsibility Schedule Limits

Noise Boundary noise measurements to be GAMA • Suitable monitoring locations to be undertaken by competent person using established near receptors. standard methodologies with approved and calibrated equipment: • One-off survey prior to site works to To be obtain background. established in • Baseline study prior to construction consultation • Monthly day time boundary with the • Day-time measurements measurements. regulators

• Night-time measurements • Monthly night time boundary measurements.

Dust Dust monitoring and visual inspection of site GAMA • Weekly inspection during seasons roads and other external areas. Records to be where there is no snow. maintained of inspections

Communications Compile and maintain register of GAMA • Suitable preventive and corrective environmental communications including action to be taken if required. Actions complaints to be recorded in register.

Accidents and Compile and maintain register of GAMA • Suitable preventive and corrective Incidents environmental accidents and incidents action to be taken if required. Actions to be recorded in register.

Waste Visual inspection of waste storage, collection GAMA • Monthly inspections. Suitable

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Items Measures Responsibility Schedule Limits

and disposal areas. Records to be maintained preventive and corrective action to be of inspections. taken if required

Visual inspection of all materials (including • Monthly inspections. Suitable Storage areas fuel) storage areas. Records to be maintained GAMA preventive and corrective action to be of inspections. taken if required

Visual inspection of construction waste water • Monthly inspections. Suitable Water pollution drainage systems and reservoirs. Records to GAMA preventive and corrective action to be be maintained of inspections. taken if required

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Operational Environmental Monitoring Plan

Items Measures Responsibility Schedule Limits

1. Continuous monitoring will be provided for the following parameters: Particulates, NOx, CO and oxygen. • Frequency and methods will be determined before the beginning of 1. Sampling: Periodic sampling of the stack the work of the plant. Frequency and emissions during full load are to be undertaken methods will satisfy the requirements for PCDD/PCDF of Russian environmental legislation and EBRD/IFC/World Bank guidelines 2. Ambient monitoring: Periodic monitoring of on air quality. Emissions contaminant concentrations on the boundary To be agreed to air from of the sanitary protection zone. PNTZ • A report shall be made immediately in with regulators main stack case of deviation from legal or best 3. All equipment used for continuous monitoring practice limits. to be subject to routine maintenance and calibration according to the manufacturer’s instruction. • All monitoring data and a statement on compliance with this EMP shall be reported in the Annual Monitoring 4. All sampling and ambient monitoring to be Report to Lenders. undertaken using standard approved methods by accredited contractors or laboratories using suitably calibrated and maintained equipment.

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Items Measures Responsibility Schedule Limits

1. Monitoring of workplace particulates, CO, • Frequency and methods will be fume determined before the beginning of the work of the plant. Frequency and methods will satisfy the requirements of Russian environmental legislation and EBRD/IFC/World Bank guidelines on air quality.

• A report shall be made immediately in To be agreed PNTZ case of deviation from legal or best with regulators Fugitive air practice limits. emissions

• All monitoring data and a statement on compliance with this EMP shall be reported in the Annual Monitoring Report to Lenders.

1. For all waste streams (solid and liquid) data • Monitoring data and a statement on should be kept of: compliance with this EMP shall be reported in the Annual Monitoring Report to Lenders. To be agreed Waste • Waste quantities with regulators PNTZ • Physical form and containers used/packaging

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Items Measures Responsibility Schedule Limits

• Disposal/treatment route

• Final disposal point

• Recycled/reused quantities

2. All in house waste disposal/treatment facilities suitable monitoring/inspection in accordance with the relevant permit/licence and Russian legislation.

3. Any breaches of legal requirements, including permits must be reported immediately.

1. Evaluation of noise risk zones shall be • Monitoring data and a statement on undertaken by a programme of measurements compliance with this EMP shall be inside and outside of the development. The reported in the Annual Monitoring evaluation will result in a map of noise impacts Report to Lenders with designation of zones of increased noise and the designation of main sources of noise. To be agreed Noise PNTZ with regulators 2. Noise control and decrease of the noise level

• a noise decrease programme shall be developed on the basis of risk evaluation, including the availability of engineering decisions on the noise decrease on the

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Items Measures Responsibility Schedule Limits

main noise sources

• a condition on noise is included into all contracts for delivery of new equipment, i.e., the maximum noise level shall be 70 dB or less at 1m

3. A programme of worker protection against noise shall be implemented.

• personnel are trained in use of PPE and informed of the hazards

• PPE shall be given to all personnel for use in the workplace

• all visitors and contractors shall be notified of zones of increased noise, and protection means provided by the plant

Noise: 1. Personnel examination PNTZ To be agreed with regulators To be agreed Health and with regulators Safety • audiometry shall be included in medical examination during employment (including temporary employees)

• regular audiometry shall be performed for

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Items Measures Responsibility Schedule Limits

the employees submitted to action of the increased noise level

• data on the results of the audiometry programme statistical data shall be used to review the effectiveness of preventive measures in place.

2. All monitoring to be undertaken using standard approved methods by accredited contractors or laboratories using suitably calibrated and maintained equipment.

1. All wastewaters discharged from the plant • Frequency and methods will be shall be monitored to demonstrate compliance determined before the beginning of with legislation. the work of the plant. Frequency and methods will satisfy the requirements of Russian environmental legislation 2. Regular inspection of drainage will be included Waste and EBRD/IFC/World Bank guidelines To be agreed in the wastewater monitoring plan. PNTZ waters on air quality. with regulators

• Monitoring data and a statement on compliance with this EMP shall be reported in the Annual Monitoring Report to Lenders

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Items Measures Responsibility Schedule Limits

Regular internal energy inspections on the plant; PNTZ • Monitoring data and statement on testing and tuning of burners, boilers, metallurgical compliance with this EMP shall be furnaces and so on will be undertaken annually by reported in the Annual Monitoring competent experts with further setting: Report to Lenders

• Annual goals for continuous improvement of Energy energy use; N/A

• Purchasing preference to energy-efficient tools and equipment for use where available;

• Plans for the purchase of environmental friendly power equipment for use where available.

1. The Plant will develop a water management PNTZ • Monitoring data and statement on programme to ensure continuity and quality of compliance with this EMP shall be water supply. reported in the Annual Monitoring To be agreed Water Report to Lenders with regulators 2. Conduct an initial Water Usage Assessment and identify opportunities to utilize water resources more efficiently.

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1. BACKGROUND

GENERAL INTRODUCTION

1.1 This report presents the findings, conclusions and recommendations arising from an Environmental and Social Impact Assessment (ESIA) of the proposed steel mini-mill development (“the Project”) at JSC Pervouralsky Novotrubny Zavod (PNTZ). The Project involves the construction of a steel mini-mill and associated utilities at the existing PNTZ site. The mini-mill is designed to produce 950,000 tonnes per year of cast steel billet from steel scrap. The billet will be used entirely by PNTZ and its sister plant ChTPZ in Chelyabinsk in the manufacture of steel pipes.

1.2 The ESIA has been prepared by Atkins on behalf of PNTZ according to The European Bank for Reconstruction and Development (EBRD) Environmental Policy in support of a loan to finance the Project. It will also contribute to the OVOS which is being prepared by PNTZ to satisfy local Russian requirements for development permissions and operating permits. The ESIA is accompanied by a stand-alone Public Consultation and Disclosure Plan (PCDP) which is available on the PNTZ website.

PROJECT BACKGROUND

1.3 The ChTPZ Group was established in 2002 and is a leading industrial company in the Russian metallurgical sector; it’s the country's second largest producer of steel pipe. The group controls about 24% of Russia's overall pipe production and it has an annual turnover of over $1.5 billion. It employs more than 25,000 workers.

1.4 The ChTPZ group consists of two principal plants:

• Chelyabinsk Tube Rolling Plant (ChTPZ); and, • Pervouralsk New Pipe Plant (PNTZ).

1.5 ChTPZ is located in Chelyabinsk in the Southern Urals, some 1,400 km east of Moscow. It is the largest steel pipe plant in the former Soviet Union (FSU) with an annual pipe production capacity of 3.0 million tonnes; it produces nine out of 15 major types of pipes used in Russia. ChTPZ’s output has been growing steadily over

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the last years, and in 2005 production stood at 771,000 tonnes. Today seamless pipe is manufactured from steel produced in-house by an open-hearth process. All of the steel produced by this process is consumed internally.

1.6 PNTZ is located in the city of Pervouralsk, Sverdlovsk Oblast, in the at the border between Europe and Asia. It is located on the Chusovaya River (a tribute of the river ), 39 km west of Ekaterinburg and 1,622 km east of Moscow. PNTZ produces over 25,000 types of pipe using around 250 grades of steel. It has a specific niche in some types of OCTG pipes, such as tubing pipes, and has a leading position in hot rolled seamless pipes such as line pipes, boiler pipes, cold rolled pipes and gas cylinders. Its output has been rapidly increasing from 604,000 tonnes in 2002 to around 743,000 in 2005. Around 15% of the output is for export.

1.7 At present all of the steel used on the PNTZ site is imported from other steel mills. The company is therefore proposing to develop a mini-mill on the site which would enable it to produce enough cast steel billet to meet around 80% of its current demand. In order to proceed with the Project PNTZ is seeking funding from EBRD.

1.8 EBRD is considering the request to finance the construction of the new facility and, in line with its Environmental Policy and Procedures, has commissioned the preparation of an ESIA for the Project to investigate the environmental and social impacts of the Project. This report sets out the findings of that assessment. It should be noted that this ESIA relates to the mini-mill development only and does not address other developments on the PNTZ site.

DESCRIPTION AND NEED FOR THE DEVELOPMENT

1.9 The Project will involve the installation at the PNTZ site of a new steel mini-mill. The mill will be designed to produce 950,000 tonnes per year of cast steel billet from scrap supplied by a sister company ChTPZ Meta. The total input of scrap will be around one million tonnes per annum. The billet will be produced via two continuous casting machines. Caster 1 has a design capacity of 650,000 tonnes per year and will supply PNTZ; and Caster 2 has a capacity of 300,000 tonnes per year and will supply ChTPZ. The mini-mill will supply around 80% of the PNTZ site’s requirements for billets.

1.10 The major components of the Project will include:

• Electric Arc Furnace (EAF) of 120 t capacity; • 110-120 MVA Transformer; • Vacuum Oxygen Decarburisation (VOD);

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• Ladle furnace with transformer (20 MVA); • Continuous Casting Machine 1; • Continuous casting machine 2; • Slag processing plant; • Exhaust gas cleaning plant; • New heating plant serving the VOD (three gas boilers, two duty and one stand-by);

• 220/350 kV substation and two 6 kV substations; and, • Scrap storage area.

1.11 Auxiliary facilities will include a laboratory, a maintenance workshop, a water treatment plant, a compressor plant and a lime preparation plant. The project will also involve some improvements to a number of associated facilities on the PNTZ site, including to the transport system (rail and road), the oxygen plant, the water supply system, the gas purification station and the solid waste management system. A detailed description of all of these systems is provided in Chapter 3.

1.12 As part of the development, the PNTZ site will require a new connection to the electricity grid which will require the installation of a new power line. The installation work will be undertaken by RAO-UES. This aspect of the development is outside the scope of this ESIA.

1.13 The Project will ensure a guaranteed supply of high quality billets in compliance with relevant requirements (eg GOST, DIN, API, ASTM etc) without reliance on external sources. This will allow the long term development programme of the ChTPZ company to be achieved.

1.14 There is also the requirement to close the existing open hearth furnaces (at the ChTPZ site) as they will not comply with future environmental legislation. This plant is reaching the end of its operational life and does not meet best practice standards.

PURPOSE OF THE ESIA

1.15 The purpose of the ESIA was to:

• Determine the environmental and social changes, both positive and negative, that may result from the construction and operation of the new mini-mill and its associated facilities at PNTZ;

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• Identify relevant Russian environmental, health and safety laws and regulations and European Union (EU) environmental standards, and assess how these can be applied within the framework of the proposed investment programme;

• Identify suitable engineering, management, and institutional mitigation measures which could eliminate adverse environmental and social impacts, offset them, or reduce them to acceptable levels during implementation and operation of the Project; and,

• Develop an Environmental Management Plan (EMP) for the Project based upon the identified mitigation measures, appropriate monitoring proposals, and any local permit conditions.

STUDY SCOPE OF WORKS

1.16 This ESIA addresses, at a level of detail consistent with the availability of information, the following activities associated with the Project:

• Construction of the mini-mill and associated facilities at PNTZ; • Operation of the mini-mill; and, • Closure and decommissioning of the mini-mill at the end of its operational life.

1.17 The following aspects have been expressly excluded from the ESIA Scope of Works:

• Impacts associated with the installation by RAO-UES of the new power line at PNTZ;

• Other developments at the PNTZ site unrelated to the mini-mill.

1.18 This ESIA study has been based upon the following activities:

• Reviews of relevant HSE documentation from a variety of sources, including an Environmental, Health and Safety Due Diligence Assessment of ChTPZ Pipe undertaken by Atkins in September 2006

• Site visits to PNTZ undertaken between 15th January and 26th January 2007 • Discussions with relevant environmental authorities, PNTZ representatives and other stakeholders;

• A review of Project design data as supplied by PNTZ, SMS-Demag and Gama;

• An initial assessment of impacts (Scoping Study); and, • Further technical assessment.

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FINDINGS OF THE SCOPING REPORT

1.19 In line with EBRD environmental procedures a Scoping Study was undertaken for the ESIA. The purpose of the Scoping Study was to identify the key issues that should be addressed in detail during the assessment. In this way the balance of analysis within the ESIA would reflect the relative importance of each environmental issue. The Scoping Study included consultation with stakeholders, i.e. those persons with an interest in the development of the Project and/or that might be affected by its development.

1.20 It was concluded from the Scoping Study that the main issues to be addressed in the ESIA would be:

• Air pollution and local air quality; • Surface water and effluent; • Solid waste disposal and recycling; • Energy and greenhouse gas balance; • Noise impacts; • Social impacts; and, • Construction phase impacts.

1.21 Due to the importance of the air quality issues given the existing local air quality, an air dispersion modelling study to evaluate the operational effects of the development was considered to be essential.

1.22 The following impacts were identified as being potentially significant during the construction phase:

• Noise and vibration;

• Ground and groundwater contamination; • Traffic; • Socio-economic impacts; and,

• Materials use, handling and waste.

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LAYOUT OF THE REPORT

1.23 This document is set out as follows:

• Chapter 2 describes the context of the development, including relevant Russian environmental, health and safety laws, regulations and standards which currently apply to the Project, together with comparable standards promulgated by the EU;

• Chapter 3 contains a detailed description of the Project from construction through operation to ultimate decommissioning. The description includes estimates of gaseous pollutant releases, and liquid and solid wastes which will arise from the construction and subsequent operation of the Project;

• Chapter 4 provides a description of the existing PNTZ site and its immediate environs, including a description of the natural, physical and socio-economic conditions within the Project area, and wider afield;

• Chapter 5 provides an assessment of impacts associated with the construction of the Project;

• Chapter 6 provides an assessment of impacts associated with the operation of the Project;

• Chapter 7 provides an assessment of impacts associated with the closure and de-commissioning of the Project;

• Chapter 8 outlines the suggested Environmental Management Plan and Monitoring Programme for the Project; and,

• Chapter 9 summarises the public consultation programme.

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2. CONTEXT

COMPANY AND SITE HISTORY

2.1 PNTZ is one of the oldest mills in Russia, and dates back to the 18th century, to the times of the reign of Peter the Great. In 1732 an iron-foundry was founded by Vasily Demidov, a prominent Russian manufacturer, and given the name of Vassilyevo- Shaytansky. The first tube was produced in 1920.

2.2 The new pipe works (the site of the proposed development) was developed in 1934. At this time there were three rolling mills, two tube-drawing benches, a heat treatment, a tube-cutting and a cylinder-making mill. The postwar period was marked by the renovation of the original plant, together with significant developments in the technological processes in use and the use of new materials. In the late fifties PNTZ commenced the production of seamless stainless steel tubes in the new tube- drawing mill, one of the biggest of its kind.

2.3 In 1992 PNTZ was reorganized into a Joint-Stock Company. The new management gave priority to attracting home and foreign investment, ensuring a steady financial growth and improving the company’s management structure.

2.4 The ChTPZ Group was established in 2002 and is a leading industrial company in the Russian metallurgical industry and is Russia's second largest pipe producer. The group controls about 24% of Russia's overall pipe production and it has an annual turnover of over $1.5 billion. The group employs more than 25,000 workers. The Group was formed by the merger of PNTZ with ChTPZ and has its headquarters in Moscow.

2.5 The Group has two principal production plants:

• Chelyabinsk Tube Rolling Plant. ChTPZ, located in Chelyabinsk in the southern Urals, some 1,400km east of Moscow, is the largest steel pipe plant in the former Soviet Union ("FSU") with an annual capacity of 3 million tonnes per annum. It produces 9 out of 15 major types of pipes used in Russia. Seamless pipe production today is based on the in-house production of steel, solely for internal consumption, by an open-hearth route. ChTPZ’s output has been growing

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steadily over the last years and the 2005 production level of 771,000 tonnes, was close to a post Soviet record of 820,000 tonnes.

• Pervouralsk New Pipe Plant. PNTZ is located in the city of Pervouralsk, Serdlovsk Oblast, at the border between Europe and Asia in the Ural mountains. It is located on the Chusovaya River (a tribute of the river Kama), 39 km west of Ekaterinburg and 1,622km east of Moscow. PNTZ produces over 25,000 types of pipes and uses around 250 steel grades. It has a specific niche in some types of OCTG pipes, such as tubing pipes, and has a leading position in hot rolled seamless pipes such as line pipes, boiler pipes, in cold rolled pipes and gas cylinders. The PNTZ product range complements ChTPZ produce in the OCTG segment. Its output has been rapidly increasing from 604,000 tonnes in 2002 to some 743,000 in 2005. Around 15% of the output is for export.

CURRENT SITE ACTIVITIES

2.6 The proposed development is to be located on the PNTZ main site. The major operations on this site at present include:

• cold rolling of seamless pipes;

• production of welded pipes;

• winding pipes;

• calibration of pipes;

• threading;

• surface treatment;

• polyethylene coating;

• production of polymer pipes;

• production of steel cylinders (mainly for fire extinguishers).

2.7 At present all steel used on the site is imported from other steel mills; the proposed development will allow the site to have its own source of steel for the process.

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2.8 The site has a number of workshops, including:

• The main pipe production is located in shops no 1, 5, 8 and 9 • Several workshops on the site are no longer used, including Shop no 1 (formerly two hot rolling lines); and shop no 3.

• Shop no 4 serves for threading and quality control of high pressure pipes used in the oil industry

• Shop no 6 serves as a storage area. • Shop No 2 is used for cylinder production, including fire-extinguishers; • Shop No 7 is used for manufacturing stainless steel pipes; • Shop No 10 manufactures small diameter pipes

2.9 The pipe production workshops have a range of related activities including rolling, cutting, welding, pressing, pickling, furnaces, cleaning, coating, transportation, maintenance etc.

2.10 Auxiliary operations on the site include administration, vehicle repair and maintenance, waste disposal facilities, boiler house, welfare facilities, etc. Some areas of the site have been leased to other companies.

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SITE DEVELOPMENT PROGRAMME

2.11 The building programme for the Project includes the main stages detailed in Table 2.1.

Table 2.1 – Building Programme: Main Stages

Task Period (mm/yy) Duration (months) Site Preparation and Levelling 11/06 – 02/07 3 Handling over the construction site 24.02.2007 - Basic engineering 12/06 – 09/07 10 Detailed engineering incl. architecture and foundations 06/07 – 11/07 5 Procurement, manufacturing and shipment of 02/07 – 05/08 15 mechanical and electrical equipment Civil works, excavation and pilling 05/07 – 03/08 10 Structural steel construction 08/07 – 05/08 8 Erection of platforms, piping and mechanical equipment 01/08 – 08/08 8 Installation of cables, pipelines and other infrastructure 11/07 – 08/08 10 Tests and commissioning 06/08 – 04/09 11

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ALTERNATIVES CONSIDERED

2.12 The alternatives considered for the project and the advantages and disadvantages are described in Table 2.2.

Table 2.2 – Project Alternatives

Option Description Location Comments This would require the open-hearth furnaces to continue operation at ChTPZ 0 Do nothing - for a longer period. Increase in the amount of imported steel as the site develops. Potentially further from residents, but no 1 Mini-mill PNTZ – Alternative location site of adequate size identified. Brownfield site of suitable size. Easy access to infrastructure.

2 Mini-mill PNTZ – Final location No residents in existing sanitary zone and no extension to sanitary zone required Reduced transport of steel product as majority of steel will be used at PNTZ Increased transport of steel products 3 Mini-mill Chelyabinsk compared to site at PNTZ as majority of output to be utilised at PNTZ.

2.13 The final location was determined by PNTZ based on the availability of land and the final product requirements.

DEVELOPMENT CONTROL AND ESIA FRAMEWORK AND REQUIREMENTS

EU EIA Requirements

2.14 The European Union Council Directive 97/11/EC amends Directive 85/337/EEC on the Assessment of Certain Public and Private Projects requires competent authorities in member states to require an environmental impact assessment (EIA) to be carried out for projects that are likely to have a significant impact on the environment. The EIA is to be carried out before consent is granted, so that the decision on whether to grant consent can be made in full knowledge of the projects’ likely effect on the environment. The Directives provide a list of projects that will require an EIA in all cases (Annex 1) and a list of projects that may require an EIA (Annex 2), depending

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on an assessment of their likely impacts, or threshold criteria set by individual member states. The current proposal is considered likely to be an Annex 2 project.

2.15 The Directives requires that “the EIA shall identify, describe and assess in an appropriate manner….the direct and indirect effects of a project on the following factors”:

• human beings, flora and fauna; • soil, water, climate and the landscape; • material assets and cultural heritage; and • the interaction between the above factors.

2.16 Further information to be contained in an EIA is listed in Annex IV of Directive 97/11/EC. This includes:

• a description of the project; • an outline of the main alternatives considered; • a description of the aspects of the environment likely to be significantly affected by the project, including population, fauna, flora, soil, water, air, climatic factors, material assets, landscape and the interrelationship between the above;

• a description of the likely significant effects of the project arising from the existence of the project, the use of natural resources, the emission of pollutants, creation of nuisances and the elimination of wastes;

• a description of the measures envisaged to prevent, reduce and where possible off-set and significant adverse effects on the environment; and

• a non-technical summary of the information provided.

2.17 Directive 97/11/EC (as amended by Directive 2003/35/EC following the signature by the Community on 25 June 1998 of the Aarhus Convention on public participation in decision-making and access to justice in environmental matters) also provides for public consultation on the proposal, environmental information gathered, in order to give the public concerned an opportunity to express an opinion before the development consent is decided. The level of consultation required by the Directive is reflected in EBRD Guidance.

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Russian EIA Legislation

2.18 The requirement to undertake an Environmental Impact Assessment (abbreviated to “OVOS” in Russian) of a planned development that may result in direct or indirect environmental effects is stipulated by the Russian framework law on Environmental Protection No 7 of 10 January 2002. The OVOS assessment is carried out during the development of preliminary/draft documentation, including pre-investment one, and final project documentation. The more detailed requirements for the process are spelt out in the Regulation on the Environmental Impact Assessment of the Proposed Development in the Russian Federation (RF) approved by the State Environmental Committee of RF Order No 372 on 16 May 2002.

2.19 The OVOS is the process that should inform environmental decision-making through the identification of potential environmental effects and related social, economic and other effects; assessment of environmental effects, incorporation of public opinion and development of mitigation measures. The OVOS should assess alternative scenarios for achieving the project development objective, including business-as- usual case. The OVOS also includes the monitoring and control plan for all project stages.

2.20 The OVOS process steps are detailed in the chapter III of the Regulations. The process consists of the three main stages:

• Notification of the proposed development; preliminary assessment and setting terms of references (ToR) for the OVOS. The Company takes into account requirements of environmental regulators and comments of other process participants whilst setting ToR.

• Undertaking the EIA and drafting the OVOS report, including a non-technical summary.

• Finalisation of the OVOS report.

2.21 The level of detail of the OVOS study depends on the type and scale of the proposed development and regional characteristics.

Public participation in the OVOS process

2.22 According to Chapter 3 of the framework law on Environmental Protection everyone has the right for sound environment conditions and damage compensation. Each

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individual and non-governmental organisations (NGOs) also have the right for access to information and participation in environmental decision-making. Specifically citizens have the rights to:

• participate in meetings, demonstrations and picketing, collection of signatures under petitions, referendums on environmental issues and other actions consistent with the legislation of the Russian Federation;

• put forward proposals for the Public Environmental Review (PER) and participate in it;

• submit to the government and local authorities complaints and comments regarding environmental protection, adverse environmental impacts and receive timely and explanatory responses; and

• appeal to the court for compensation.

• NGOs, in addition to the above listed rights, have the following rights:

• organize public hearings to discuss the planned development;

• conduct the PER;

• recommend their representatives for the participation in the State Environmental review (SER);

• submit to the government and local authorities petitions to cancel, put restrictions or temporary freeze decisions regarding the planned development that may result in negative environmental impacts.

2.23 The OVOS consultation process is regulated by chapter IV of the OVOS Regulations. Disclosure information to the public and public involvement should take place throughout the OVOS process. The Developer has to make sure that public involvement is an integral part of the OVOS process. The arrangements for this have to be made by local authorities or relevant government bodies with the assistance provided by the Developer.

2.24 The minimum public consultation requirements stipulated by the law include:

• Publication of Statement of Intention of Project Implementation in the local authorities’ or relevant government bodies newspaper. Apart from the a short project description this should include details of those responsible for public consultation, suggested form of public consultation (opinion polls, public

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hearings, etc), the way for communicating public’s feedback; place and timing of ToR disclosure.

• Disclosure of the preliminary assessment and ToR for OVOS in public places, e.g. libraries, schools, town halls and post offices, for 30 days for public comments from the moment of the newspaper article release. Identification of interested public; collection and registration of public comments. The ToR includes a public consultation plan.

• Notification about the place and timing of the draft OVOS study disclosure, time and place of organising public hearings or other forms of public engagement in mass media. This should be done 30 days before the end of the consultation process as a minimum. The Developer also sends this information to affected and interested public who might not have access to the used mass media.

• Disclosure of the draft OVOS study in public places, e.g. libraries, schools, town halls and post offices, for public comments. This should include an updated public consultation plan, which considers whether the organisation of public hearings is useful.

• Notification about the public hearings (if deemed necessary) time and place in mass media. The public hearings procedure is determined by the local authorities with coordination with the Developer and interested public. They are organised by the Developer, who is also preparing the public hearings minutes, signed by all participants.

• The Developer collects and registers public comments during a 30 day period following the public hearings and up to the decision-making regarding the proposed development.

• The Developer disclosures the final OVOS report from the day of its approval until the decision regarding the project implementation is made.

2.25 Apart from the minimum requirements the Regulations also suggest a number of additional actions for more effective public involvement. This includes a wider information disclosure, e.g. on the TV, radio, mass media, the Internet, etc.

2.26 Public involvement in environmental decision-decision making in Russia is especially important in light of the country’s preparation to the World Trade Organisation (WTO) membership. WTO recognises the Aarhus Convention as a key international instrument for public information and participation in decision-making and risk communication. The failure to comply with the public involvement and transparency

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of information requirements may result in appropriate actions such as judicial penalties.

State Environmental Review

2.27 The final OVOS study, including materials documenting public consultation process, e.g. how the information was communicated to the public, minutes of the public hearing, comments received (justification for taking them into account/not taking), etc., is submitted to the State Environmental Review (SER).

2.28 SER is carried under the framework Law on Environmental Protection (2002) and the Law on Environmental Expertise (1995). It aims to identify whether the proposed development is compliant with the environmental requirements in order to prevent possible negative environment and related social, economic and other effects. The SER is conducted either on the federal or regional level depending on the project scope and nature as detailed in the chapters 11 and 12 of the Law on Environmental Expertise. For instance, the proposed development with over 500,000$ of foreign investment is subject to the federal level SER. The recent changes in the Law that came into force on 01.01.2007 delegate environmental regulating responsibilities to the smallest relevant competent authority, e.g. regional or local authorities.

2.29 The SER starts not later than a month after all the necessary materials are submitted and the payment done by the Developer (chapter 14, paragraph 1 and 2). The duration of the SER depends on the project complexity but should not exceed six months. The SER is conducted by the Expert Commission consisting of independent experts and staff of federal or regional level environmental authorities, who possess scientific or practical relevant expertise.

2.30 The conclusion of the Expert Commission needs to be approved by the federal/regional environmental authority to become the conclusion of the SER. The positive conclusion is one of the necessary conditions for the project permitting. The project cannot be implemented upon the negative SER conclusion. The Developer has the right to resubmit the project materials for another SER after addressing all the comments listed in the previous SER negative conclusion. The SER conclusion can be contested in the court.

2.31 The Public Environmental Review is carried out either before the SER or in parallel if such is initiated by interested public or local authorities upon public request. The PER conclusions are sent out to the federal/regional body responsible for the SER, the project Developer, local authorities and other interested parties.

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Russian Legislation

2.32 The main environmental law is the Federal Law No 7 on Environmental Protection of 10.01.2002. This is a framework law defining the legal basis of the state’s environmental policy. The overall array of environmental legislation is complex and consists of ’horizontal’ (medium-, sector-specific, etc) and ‘vertical’ (set at federal, regional and local levels) structures. The environmental regulating responsibilities are shared between Federal Agency on Environmental, Technological and Nuclear Supervision (FAETNS) and Ministry of Natural Resources and authorities within their jurisdiction.

2.33 The FAETNS (also known as ROSTECHNADZOR) was established in 2004. The Agency has amongst other responsibilities control over environmental impacts of industrial facilities. It functions as an environmental inspectorate, and controls compliance with environmental law, issues permits on air emissions, wastewater discharges, licenses on hazardous materials handling, and sets up and collects environmental fee for the use of natural resources and environmental pollution; and fine for exceeding limits for maximum allowable concentrations of pollutants in all environmental media. The Agency has a department responsible for the assessment and approval of the state environmental impact assessment (OVOS) for major projects.

Air

2.34 The Federal Law No 96 on Air Protection of 04.05.1999 and Federal Law No 52 on sanitary-epidemiological citizens’ wellbeing of 30.03.1999 are the framework law in the air protection field. The Ministry of Natural Resources is the federal executive body empowered with the air quality protection responsibilities. It carries out its activities in cooperation with the Ministry of Health and Social Development, the Federal Authority on Hydrometeorology and Environmental Monitoring and other federal executive bodies within their competencies. Emission permits are issued by the FAETNS.

2.35 The limits for air pollutant concentrations are set up in the sanitary and hygienic norms on the basis of the Law No 52 and the Regulation No 554 on the state sanitary-epidemiological norms setting of 24.07.2000. The main documents are the following:

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• Hygienic Norms 2.1.6.1338-03 Maximum allowable concentrations of pollutants for ambient air quality of 31.05.03. These are described in the baseline air quality section;

• Hygienic Norms 2.1.6.1339-03 Indicative safe limits of pollutants for ambient air quality of 21.05.03;

• Hygienic Norms 2.2.5.1314-03 Indicative safe limits of pollutants for occupational exposure of 27.04.03;

• Hygienic Norms 2.2.5.1313-03 Maximum allowable concentrations of pollutants for occupational exposure of 27.04.03.

2.36 On the basis of ambient air quality and occupational exposure limits, the norms for allowable emissions are set for each industrial facility. These are specified in the facility air emissions permit.

Protection Zone

2.37 The establishment of the protection zone is regulated by the sanitary-epidemiological rules 2.2.1/2.1.1.1200-03 on the design, construction, reconstruction and operation of industries and urban planning approved by the Health Protection Ministry Order on 15/06/2003. It sets out five classes of industries with protection zones of 1000, 500, 300, 100 and 50 metres. A site-specific protection zone reduction or increase as compared to the recommended norm can be approved by the main state sanitary doctor or its deputy/federal representatives. More detailed discussion on the establishment of the protection zone relevant to PNTZ is presented in the section on land use below.

Water (groundwater sources and surface water bodies)

2.38 The Water Code No 167 of RF of 16.10.95 establishes the legal basis for the use and protection of water resources.

2.39 The limits for water pollutant concentrations are set up in the sanitary and hygienic norms on the basis of the Law No 52 and the Regulation No 554 on the state sanitary-epidemiological norms setting of 24.07.2000. The main documents are the following:

• Hygienic Norms 2.1.5.1315-03 Maximum allowable concentrations of chemical substances in water sources used for potable water supply and domestic use of 27.04.03;

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• Hygienic Norms 2.2.5.1316-03 Indicative safe limits of chemical substances in water sources used for potable water supply and domestic use.

2.40 Site-specific water use conditions (e.g. water intake and discharge) are set up in water use licenses issues by state authorities within the jurisdiction of the Ministry of Natural Resources. Licenses can be short-term (up to three years) or long term (3- 25 years) and are renewed by the Inspectorate as necessary. The norms for the amount of allowable wastewater discharges are specified in the facility water permit.

Soil

2.41 Land ownership rights, land use and land protection requirements are set out in the Land Code of RF No 136 (25.10.2001).

2.42 The limits for pollutant concentrations in soil are set up in the sanitary and hygienic norms on the basis of the Law No 52 and the Regulation No 554 on the state sanitary-epidemiological norms setting of 24.07.2000. The main documents are the following:

• Hygienic Norms 2.1.7.2042-06 Indicative safe limits of chemical substances in soil 19.01.2006.

• Hygienic Norms 2.1.7.2041-06 Maximum allowable concentrations of chemical substances in soil of 19.01.2006.

2.43 Compliance with land protection legislation is controlled by state authorities within the jurisdiction of the Government of RF. Soil quality is assessed by local authorities according to the RF government resolution No 846 on the state monitoring of soils of 28.11.2002.

Wastes

2.44 The law No 89 on Production and Consumption Waste of 24.06.1998 is the framework law that sets out the responsibilities of firms, enterprises and organizations for waste management. Site-specific waste permits are developed, issued and renewed according to the methodology “On the development of the norms for waste generation and limits for their disposal” approved by the Ministry of Natural Resources Order No 115 (11.03.2002). The handling of hazardous waste is regulated by the government resolution No 524 of 26.08.2006.

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Health and Safety

2.45 The Ministry of Health and Social Development of Russia is responsible for the development of the state labour policy and regulations, and setting out the procedures for the certification of the workplace conditions. Federal Agency for Labour and Employment is federal executive authority, which reports to the Ministry of Health and Social Development of Russia. The Agency performs the state control of the compliance with labour legislation and sets out the investigation process for work related accidents. It has its regional/local level bodies to control and inspect the compliance with labour and occupational health and safety (OHS) legislation.

2.46 The Labour Code is the framework OHS law. It sets up workplace requirements to protect employees’ health and life and stipulates the investigation of work-related accidents and the way these should be dealt with. It also lays down the requirements for OHS management and control of the compliance with the national OHS norms.

2.47 All industrial facilities are subject to the state OHS review - the assessment of the facility compliance with the state OHS norms.

2.48 The key legislation (acts and by-laws) are given below.

• Federal Law No 116 on industrial safety of dangerous processes and facilities of 21.07.1997

• Federal Law No 125 on mandatory social insurance to cover work-related accidents and professional diseases of 24.07.1998

• Cross-sector OHS rules for work with chemical compounds. Ministry of Labour Resolution No 44 of 17.09.1997

• Cross-sector OHS rules for thermal processing of metals. Ministry of Labour Resolution No 48 of 29.09.1997

• Cross-sector OHS rules for cold processing of metals. Ministry of Labour Resolution No 55 of 27.10.1997

• Cross-sector OHS rules for work at height. Ministry of Labour Resolution No 68 of 04.10.2000

• Cross-sector OHS rules for the operation of industrial transport (conveyor, pipe and other continuous modes). Ministry of Labour Resolution No 36 of 17.06.2003

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• General safety rules for metallurgical industries. ПБ 11-493-02

• Safety rules for hydro-technical constructions for liquid industrial waste storage. ПБ 03-438-02

• Safety rules for the operation of industrial ducts and stacks. ПБ 03-445-02

• Safety rules for aboveground storages of liquid ammonia. ПБ 09-579-03

• Safety rules for the preparation of scrap and ferrous and non-ferrous waste for melting. 11-546-03

• Safety rules for casting processes. 11-551-03

• Safety rules for pipes production processes. 11-562-03

Construction and Permits

2.49 The FAETNS is the main responsible body for the state environmental review of new industrial facilities. Part of their responsibilities is delegated to their territory executive bodies in the regions. Before submitting the project documentation to the state review, the developer must obtain the OHS permit (in the case of the mini-mill this is to be issued by the department of workplace conditions in Sverdlovsk Oblast) and to demonstrate the compliance with the industrial safety rules. The latter permit is issued by the FAETNS representative.

2.50 The Key legislation (acts and by-laws) are given below:

• Federal law No 116 on industrial safety of dangerous industrial facilities of 21.07.1997;

• Federal law No 184 on technical regulation of 27.12.2002;

• Regulation on conducting industrial safety review for dangerous metallurgical and coke-chemical facilities approved on 05.06.2003.

2.51 The industrial safety report for the mini-mill development was approved by the Ural region representative of the FAETNS on 28.12.2006. This Authority reviewed the industrial safety report documentation prepared by expert centre 'Standard' for PNTZ and confirmed that the project design is complaint with the industrial safety norms. It states that the recommendations set out in paragraph 8.1 of the report conclusions should be taken into account during the development of detailed design for each facility of the mini-mill complex.

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2.52 The fire safety aspect of the mini-mill documentation was approved by the Emergency and Civil Defence State Committee in Sverdlovsk Oblast on 17.01.2007.

2.53 Other permits received by PNTZ for the mini-mill construction at the time of the Atkins site visit in January:

• Consent on land intake for the mini-mill construction issued by the Nizsne- Obskoe Water Catchments Authority on 27.11.2006;

• Hydro-geological permit No 2301/06 issued for the construction of the mini- mill by the Ural Regional Agency on Resource Use on 21.11.2006;

• Conclusion on the absence of valuable mineral resources on the proposed site issued by the Ural Regional Agency on Resource Use on 27.11.2006.

Site Legislative Requirements

2.54 The following legislative requirements have been identified for the site:

Valid Legislation / Permit Requirement Permit Level of Compliance Regulation Required Held ROSTECHNADZOR Acceptance of “Limits for air This document is a basis Act of Acceptance No emissions documentations” No 01.09.2009 for issuance of new permit 15/03-07-8797 dated for the current year 03.11.2006 ROSTECHNADZOR Emission of pollutants to New permit under Permit No 2306 dated atmosphere development, 26.10.06 Yes 01.09.2007 supplementary documentation was delivered to the authority ROSTECHNADZOR Discharge of industrial waste Permit No 414 dated water and storm water through Yes 21.06.2007 Exceedances noticed. 21.06.06 outlet no 1 to Tchusovaya river Discharge of industrial waste ROSTECHNADZOR water and storm water through Permit No 415 dated Yes 21.06.2007 Exceedances noticed. outlet no 2 to Bolshaya Shaitanka 21.06.06 river Ministry of Natural Generation of hazardous waste Resources permit no Occasional exceedances 133 dated 23.06.2004, Yes 23.07.2009 of allowed amounts of licence number generated waste. 66M/04/0079L ROSTECHNADZOR Limits for solid waste generation Development of “waste Permit (prolongation) Yes 01.03.2007 passports” required by no 15/03-05-6570 recent inspections. dated 24.08.2006 Sverdlovsk Oblast Licence for processing of ferrous Authority licence no 87 metals scrap Yes 24.05.2010 -- dated 24.05.2005

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Design Requirements against the Best Available Techniques

2.55 The company is required by the investment banks to design the facility in line with the requirements of the Best Available Techniques as described in the European BREF note. The European BREF notes are a series of guidance notes produced by the European Union in order to standardise the best techniques that can be employed in the industrial process in order to prevent or mitigate pollution of the local and global environment.

2.56 The BREF notes are produced for each industry sector that is regulated under the EU Directive Integrated Pollution Prevention and Control (96/61/EC). The directive and corresponding notes categorise industrial sectors and the techniques of production involved in each sector, for each industrial process a series of environmental benchmarks for emissions to the environment has been adopted, together with the best techniques available to achieve these benchmark limits. While installations that are presently in operation are required to comply with the BAT over a predetermined timetable, new installations must fully comply with the BAT at the design stage.

2.57 A detailed BAT assessment against the proposed design is undertaken in Chapter 3 of this report.

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3. DESCRIPTION OF THE PROJECT

SITE SETTING

3.1 The PNTZ site is located in Pervouralsk City, Sverdlovsk Oblast, at the border between Europe and Asia in the Ural Mountains. Pervouralsk is located on the Chusovaya River (a tribute of the river Kama), 39 km west of Ekaterinburg (the Oblast capital city) and 1,622km east of Moscow. It is a large town with a population of approximately 132,700. The Ural region is rich in mineral resources and highly industrialized with a dense presence of such industries as ferrous and non-ferrous metal works, chemical plants and machineries.

Figure 3.1 - The Ural region: Ekaterinburg and Pervouralsk

PERVOURALSK

EKATERINBURG

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3.2 The company occupies two sites in the city; the main site (where the development will be located) and a subsidiary site. The main site is to the south-east of the city centre, between the Trudposielok and Talica districts. The subsidiary site is located to the west of the city centre.

3.3 The area east of the main plant is taiga-type or boreal forest and wasteland. To the north of the site is located the residential areas of Trudposelok, Samstroy and Elnichny. To the east of the site is located an industrial area and then the residential quarter of Techgorod. Further to the east is the city centre. The southern border is adjacent to a number of industrial enterprises including chromium salts excavation and processing and two residential areas, Chrompik and Talica.

3.4 Several water ponds are constructed around the plant and the city on the small tributaries of the Chusovaya River and Elpichnaya river. The site is located within the Chusovaya drainage area.

LOCATION AND LAYOUT

3.5 The site of the proposed mini-mill development (at co-ordinates 56.90° N, 60.00° E) is located in the south eastern part of the site in an area formerly occupied by a workshop and storage areas. The area is almost flat and the groundwater level is 1.5 - 6 m below ground level. The location of the site is illustrated in the figure below.

Figure 3.2 – Site Location

3.6 The proposed development area for the Plant is located within the existing PNTZ site in the south-eastern part. Surrounding the development area (within the existing site)

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are a railway siding and industrial landfill to the south; stainless mill workshop no 10 to the north; and storage and infrastructure facilities to the east and west. The western border of the investment site is close to the plant’s boundary.

Figure 3.3 - Location of Planned Investment

3.7 The site adjoins several existing facilities of PNTZ. Workshop No 10, which produces small diameter pipes, is located to the north. Workshop No 17, which is the shaped parts foundry, is located to the west. A railway siding adjoins the site to the south. The solid waste landfill is located beyond the railway siding.

3.8 Both the siding and the landfill are elevated about 8-10 metres above the level of the investment plot, which is at 61.5m above sea level. The area to the east of the main site will be used for the constructors’ camp development. This adjoins the plant boundary. The main access gate and road to the site will be located in this area.

3.9 The mini mill project site will occupy an area of 26 hectares, which will allow the installation of the scrap yard facility, the electric arc furnace and ladle furnace building, the continuous casting units, the materials handling area and several auxiliary units including slag cooling, energy supply and technical gases generation.

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The exact layout of the proposed units on the site had not been finalised at the time of the ESIA. However, the most probable layout is presented in Appendix 1.

LAND USE AND SETTLEMENT PATTERNS

3.10 A 500m protection zone (measured from primary emission sources) was established around the PNTZ site in 1991 as per the requirements of the sanitary rules 245-71 on the design of industrial facilities. The extent of the protection zone, which is effectively the site territory, was approved by the Pervouralsk Sanitary- Epidemiological Authority. The sanitary rules 245-71 are currently superseded by the sanitary-epidemiological rules 2.2.1/2.1.1.1200-03 on the design, construction, reconstruction and operation of industries and urban planning approved by the Health Protection Ministry Order on 15/06/2003. The new rules require the revision of the established zone to comply with the new zone classification.

3.11 No residential properties are located within the current protection zone. The nearest houses at Trudposelok residential area are located approximately in 100m from the protection zone boundary.

3.12 The new protection zone documentation is currently being developed by the Ural Organisation on Certification of Environmental Requirements for PNTZ. There are two possible options considered. If the proposed mini mill is registered as an independent organisation, its protection zone would have to be 500m from the site boundary. This is according to the 2.2.1/2.1.1.1200-03 sanitary-epidemiological rules, paragraph 4.1.2 (an electric arc furnace, producing less than 1 million tonne of steel billets per year, falls under the Category 2, which requires the establishment of a 500m protection zone). Under this scenario the new protection zone around the PNTZ site would have to be 300m. The classification in the new rules is not clear for pipe production but it appears that 300 m zone was assumed as for foundry activities (which is part of the plant) or other relevant activities on the list. The new mini mill protection zone would therefore be enclosed within the PNTZ protection zone.

3.13 If the proposed mini mill becomes part of PNTZ, this would require the establishment of one protection zone around the whole PNTZ site. In this case the size of the new protection zone would have to be 500m from the PNTZ site boundary, as for a complex industrial site, which includes metallurgical facility. The PNTZ site border and potential protection zones are shown in the figure below.

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Figure 3.4 - Existing and Planned Sanitary Zones

3.14 The distance to the nearest houses in Talica residential area from the new mini mill plant will be approximately 795m to the south and to Trudposelok residential area approximately 1060m to the north.

3.15 Under the first discussed scenario the protection zone would cover the residential area with population of 750-800 people. Under the second option the protection zone would cover a school, nursery school and the residential area with population of 1700 people.

3.16 According to the sanitary rules, paragraphs 2.25 and 2.30 no education establishments, nurseries and residential properties should be located within the protection zone. The design documentation for the construction of new facilities or

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reconstruction of old ones should include the measures and cost for the improvement of protection zones and people relocation if required (para 2.11).

3.17 In some cases the reduction of the protection zone is possible under the new rules, para 2.19. This includes the decrease of production capacity, production processes change towards less polluting processes and the ability to demonstrate the compliance with the sanitary norms at the protection zone border and outside it. This should be done on the basis of at least one year air quality measurements and any other analysis (e.g., noise) as needed. The change of the protection zone size needs to be approved by the main state sanitary doctor of the Russian Federation or its deputy/federal representative.

3.18 In case of PNTZ the first option for the new protection zone development would enable the exclusion of the residential properties on the basis of annual or longer air quality measurements. Therefore, it would take about 15-18 months to prepare the protection zone documentation, the cost of which is estimated as 3 million roubles. In comparison, the documentation under the second option could be developed within 6 months and its cost is estimated as 300,000 roubles. However, this option would also entails the cost of residents relocation, which is about 700-800 million roubles.

3.19 To our understanding the PNTZ new protection zone will be developed under the first option with width of 300m and it is planned to demonstrate the possibility of the zone reduction so residential properties can be excluded from it.

3.20 It is important that PNTZ develops proper protection zone documentation and performs all necessary measurements to assess the effects of the operating installation and to demonstrate the compliance with the sanitary norms.

CONSTRUCTION PHASE OUTLINE

3.21 At the time of writing this assessment the site has been cleared, rail sidings have been rearranged and the demolition of structures in the western part of the construction site is almost finished. The site levelling is furthest advanced in the eastern part of the site. Connections are declared as ready or almost ready. The site for the construction workers camp has been cleared and the connections to utilities, such as water and domestic sewerage disposal, have been prepared. Photographs of the site are included in Appendix 2.

3.22 An overview of the construction phase is illustrated in Figure 3.5

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Figure 3.5 - Construction Phase Overview

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3.23 The impacts associated with the construction phase are described in Chapter 4.

PROCESS DESCRIPTION

Process Overview

3.24 Four routes are currently used for the production of steel: the classic blast furnace/basic-oxygen furnace route, direct melting of scrap (electric arc furnace), smelting reduction and direct reduction

3.25 The new mini mill will use direct melting of scrap route with an electric arc furnace (EAF). This is a leading technology for melting of iron-containing materials, such as scrap metal, which play an important and increasing role in modern steel works concepts, especially in the recycling of ferrous materials recovered by the scrap metal industry.

3.26 A generalized overview of the electric steel making process is given in figure below.

Figure 3.6 – Overview of the Electric Arc Steel Making Process

3.27 The PNTZ process will involve the four main stages:

• Use of an electric arc furnace used for scrap metal melting • Ladle furnace used for processing of melted metal to obtain required steel quality. • Vacuum de-gasser used for removal of unwanted gases from liquid steel

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• Continuous caster used to create final products – steel billets.

3.28 The figure below illustrates the plant used in these four main stages of the process:

Figure 3.7 – PNTZ Process Flow Diagram

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3.29 At the PNTZ site, the following main stages and major components used to facilitate this process will include:

• Scrap metal yard with scrap metal transfer equipment • Scrap drying unit • Electric arc furnace (120 tonne capacity) and electrode nippling stand • Ladle furnace and electrode nippling stand • Vacuum degassing plant • Ladle handling and repair shop • EAF shell handling and repair shop • Material handling system • Dedusting plant • Ladle relining house • Slag cooling area • Carbon silo • Two continuous casting machines and billet storage area • Tundish maintenance & repair shop and Tundish relining house • Mould and segment maintenance and repair shop • Scale pit

3.30 Auxiliary plant and equipment will include:

• Fire fighting pump and water tank area • Laboratory • Maintenance workshop

• Oil & lubrication and spare part storage • 220/35kV Station • Water treatment plant

• Air separation plant • Steam generation plant • Compressed air plant • Lime preparation plant

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3.31 Other associated buildings will include:

• Control building • Administration building • Office building • Laboratory building • Transformer building

Detailed Description Process Stages

3.32 The major feed stock for the EAF is usually ferrous scrap, which may comprise of scrap from inside the steelworks (e.g. off-cuts), off-cuts from steel product manufacturers (e.g. vehicle plants) and capital or post-consumer scrap (e.g. end of life products). Direct-reduced iron (DRI) is also increasingly being used as a feedstock

3.33 Scrap metal is transported to the mini-mill, hereafter described as the Plant, by rail and received in the scrap yard. There are no facilities for processing of the scrap at the scrap yard and the covered storage facility has a capacity for 7 days. The metal is loaded into the scrap transfer system and charged into the furnace using two buckets. There is provision for scrap drying, should this be necessary during the winter months.

3.34 The furnace is primarily used as a melting unit. Slag is separated by pouring into the slag pit; it is then taken to the slag yard by a wheeled loader, from where it is removed by railway wagon. From the furnace the molten metal is tapped into the ladle. After tapping the ladle transfer car takes the molten metal to the ladle furnace. Once homogenised in the ladle furnace, the molten metal can be taken to the vacuum degasser for further treatment or to the continuous casting machines where it is cast into the required billet size. Once cast, the billets are stored in the billet storage area from where they are transported by rail to their final destination. Air from the process is extracted at various stages and treated by the dedusting plant prior to release to the atmosphere.

Electric arc furnace

3.35 The annual production rate of the Electric Arc Furnace (EAF) is 1.15 million tonnes of liquid steel per year, with a planned operation of 320 days per year. The EAF has been specified as:

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• AC EAF with eccentric bottom taphole, sized for a nominal tap weight of 120 tonnes liquid steel.

• Transformer capacity of 120 MVA • Designed for operation with 100% scrap or as an alternative 70% scrap and 30% pig iron as charge materials.

• Scrap charging into the EAF is by two scrap buckets per heating cycle, with scrap density of at least 0.7 tonnes/m3.

3.36 An EAF shell handling and repair shop is present for the setting down and demolishing of the refractory lining of the lower furnace shell. A mixer brick saw is provided for precise cutting of the refractory materials and is equipped with a fan to exhaust the dust to be collected in the filter bag system.

Ladle furnace: Secondary Metallurgy

3.37 The ladle furnace reheats the molten metal and raises it to the exact temperature needed for the subsequent process steps. Within the furnace the chemical composition of the liquid steel is set (including desulphurisation and alloy trimming). The molten metal is homogenised with respect to temperature and chemical composition. Non-metallic material and impurities are separated from the molten metal.

3.38 The actual ladle treatment depends on the quantity of alloys and slag reformers require, the scope of the metallurgical work and the superheat temperature for vacuum treatment. This may take between 30 to 60 minutes depending on the steel grade and necessary treatment steps. If lower gas contents are required (hydrogen, oxygen and nitrogen) then the ladle is taken to the vacuum degasser.

3.39 The ladle furnace also functions as a time buffer between the melting process and the continuous casting process.

3.40 There is a ladle service area and repair shop which includes vertical and horizontal ladle dryers, platform for the ladle slide gate, platform for ladle demolishing, platform for ladle relining, oxygen cutting lance and a transport car for ladle and tundish.

Vacuum degassing plant

3.41 The vacuum degassing plant has two tanks and one steam ejector vacuum pump for degassing, desulphurisation and homogenisation of liquid steel. This system primarily consists of the degasser vessels, the movable vessel cover with central hydraulic unit, vacuum pump and equipment for control and monitoring of the process.

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3.42 The ladle is inserted into the vacuum vessel by crane. After closing the vessel the vacuum pump is started and the pressure inside the vessel reduced in stages in a controlled manner to approximately 1 mbar. After this pressure is reached low- vacuum treatment commences in order to reduce the gas content levels. Alloying and removal of oxidised materials prior to trimming are undertaken via a vacuum alloying hopper system. Upon completion of the process the vessel is flooded with air and samples taken, if no further processing is required the ladle is taken to the caster. The vacuum degasser is operated and monitored from the central control room.

3.43 In the case of ladle break-out, the lower parts of the vessels have an aluminium plug (burn-through protection) which would open and the liquid steel would run out of the vessel into a steel collection pit.

Continuous casting machines and billet storage area

3.44 In order to achieve the annual production rate of 950,000 tonnes of round billets (with diameters between 150 and 550 mm) with the specified number of ladles per casting sequence, the production has been split between two continuous casting machines. For the small section sizes of 150 and 220 mm diameter there is a 5 strand continuous caster; and for 220, 460 and 550 mm diameter there is a 3 strand continuous caster. Both continuous casters are sized for a net casting time of approximately 49 minutes. See Table 3.1 for details of casters.

Table 3.1 – Details of Casters

Billet Dimensions Annual Production Capacity Designation (diameter, mm) (Tonnes) 150 660,000 Round billets from caster number 1 220 220 440,000 Round billets from caster number 2 460

550

3.45 The casting crane inserts the ladle from the ladle furnace into the ladle turret, which swings to the casting position above the tundish. The tundish cars are mounted on rails and move the tundish from the heating to the casting position. Inside the mould the liquid steel forms the required shape. The strand guide system supports and guides the cast strand between the mould and withdrawal straightener. Cooling of the strands in the cooling chamber is carried out in spray zones. The secondary

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cooling system can be set according to the various metallurgical conditions and casting speeds. An intermediate roller table takes the hot strand from the withdrawal straightener to the automatic torch cutter. The cut billets run off the delivery roller table to the skid transfer area where they are all marked by the stamping machine. The billets are then moved to the temporary storage yard or into the pits for controlled cooling.

Dedusting plant

3.46 Off-gases are collected from the EAF, ladle furnace and raw material bin system. The hot flue gasses collected at the furnace roof go through a water-cooled system, which reduces the temperature to approximately 600ºC. The flue gases then mix with the gases from the canopy hood in the mixing tower and the off-gases then reach the required inlet temperature for cleaning in the fabric filter. A temperature monitoring system prevents the bags from being damaged by gas temperatures above 130ºC.

3.47 The fabric filters are designed as suction filters with the fans on the downstream side of the filter, on the clean gas side. The filter consists of several chambers arranged in four rows. The individual filter chambers can be shut off in order to enable bag changing or maintenance work to be performed during operation. Each filter chamber is equipped with two dust collecting hoppers with manual shut off valves. The fabric filters, or filter bags, are cleaned by means of compressed air pulses. The fans push the cleaned off-gases into the atmosphere via the clean gas stack.

3.48 The clean gas dust content is guaranteed to be less than or equal to 10 mg/ m3, but the normal operational figure is likely to be less than 5 mg/ m3.

3.49 The dust captured in the dust hoppers is discharged via chain conveyors and conveyed into a dust silo by a steep-belt conveyor. The dust is removed from the silo and fed into a container by means of a rotary vane feeder.

Slag cooling area

3.50 There are two areas, one close to the casting machine and the other close to the EAF shell handling area reserved for the cooling of slag. Once cooled the slag is moved from the Plant and will be stored prior to disposal. The issue of slag disposal is further discussed under the section on BAT Assessment.

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Carbon silo

3.51 The carbon silo feeds into the pressurised feeder vessel with a weighing system and then to the furnace. The dosing of carbon is controlled by an electronic control system. The carbon silo has a capacity of 50 m3 and is filled from self-emptying silo trucks with pneumatic handling up to the hopper. Carbon is carried by compressed air or nitrogen gas, which is used to provide an inert atmosphere.

Mould and segment maintenance and repair shop

3.52 The mould and other equipment can be maintained and repaired in the repair shop, which is part of the Plant.

Scale pit

3.53 The scale pit collects the scale removed by the water from the casting process and also removes the oil. From here a proportion of the water is recycled and reused in the process. The oily scale is then taken for disposal; the issue of disposal is further discussed under the section on BAT Assessment.

ANCILLARY PLANT AND EQUIPMENT

Scrap Facility

3.54 The scrap handling area is a closed bay with a total storage area of 5,500m2. This equates to a storage capacity of 38,000m3, 27,000 tonnes or 7 days storage. There are two railway tracks, two scrap bucket trucks and two scrap bucket transfer cars with weighing units. There are 4 scrap cranes, each with two magnets. Each crane has a capacity of 30 tonnes. There is one hydraulic scrap shear.

Gas supply

3.55 Natural gas is used for heating and flame cutting. Gas is supplied from the existing PNTZ supply at a pressure of 1.2mPa, with a calorific value of 39,600 kJ/m3.

Water supply

3.56 The water treatment plant consists of 8 systems with a total water flow rate of 15,237m3/h. The eight systems are as follows:

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• Electric arc furnace, ladle furnace and vacuum degassing cooling (a closed system with side stream filtration using demineralised water as make up water with dosing stations for corrosion inhibitors and biocides)

• Electric arc furnace water cooled duct (a closed system with side stream filtration using demineralised water as make up water with dosing stations for corrosion inhibitors and biocides)

• Vacuum degasser condenser cooling (an open system transferring dust loaded water to the cooling tower cleaned with part stream filtration with gravel filters using industrial water as make up water with dosing stations for corrosion inhibitors and biocides)

• Re-cooling system (two open systems cleaned with gravel filters using industrial water as make up water with dosing stations for corrosion inhibitors and biocides)

• Mould cooling for both the casting machines (two closed systems with a bypass filter for each system using demineralised water as make up water with dosing stations for corrosion inhibitors and biocides)

• Machine cooling for both the casting machines (a semi-closed system via a cooling tower)

• Spray cooling for both the casting machines (an open system for both casting machines with gravel filters using industrial water as make up water with dosing stations for corrosion inhibitors and biocides)

• Water treatment (make up water for systems 3,4 and 7 will be achieved using demineralised water) the sludge will be collected, concentrated and removed for disposal)

3.57 The water supply, including that to the water treatment plant, the potable water supply and the fire fighting water supply will be supplied by an extension to existing PNTZ systems. Hot water for heating is provided by the existing PNTZ system.

3.58 Water treatment chemicals will be used in the cooling circuits to avoid biological growth and formation of films.

Electricity Supply

3.59 The electricity supply is to be provided via a 220/35kV station. It will be necessary to provide a new connection to the electricity grid which will require the installation of a new power line. The installation work associated with this line will be undertaken by RAO-UES. The details of the route of the new line have yet to be determined. This aspect of the development is outside the scope of this ESIA, and will be addressed separately.

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Materials Handling

3.60 The process will require a number of additives and other raw materials to be used apart from scrap metal. The material handling system has 12 raw material bins for the EAF, scrap bucket and ladle and 8 bins for the ladle furnace. These bins contain materials such as lime, dolomite, iron silicide (FeSi), ferromaganese (FeMn), synthetic slag, carbon lump, ferrochromium (FeCr), silicomanganese (SiMn) and aluminium and carbon fines. The bins discharge into weighing hoppers. The reversible collecting belt conveyor system is arranged directly below the weigh hopper.

3.61 A steep gradient belt conveyor takes materials from the reversible collecting belt conveyor under the weight hoppers horizontally, then vertically and feeds the material horizontally into a vibro feeder in the EAF area. This vibro feeder sends material into a slewable vibro feeder, which in turn feeds a second slewable vibro feeder. This second feeder distributes to the alloy hopper bin for the ladle, the vibro feeder for the 5th roof hole in the EAF or the belt conveyor, which goes to the scrap bucket bin.

3.62 The holding bin for fluxes and alloys is split at the centre into two compartments. A forked pipe is arranged above the holding bin, directing material to either the compartment for fluxes or that for alloys. Clam shell gates close the holding bin compartments and operate by a pneumatic cylinder. A drop chute is installed under the clam shell gates and feeds material into the scrap bucket. The slewable drop chute supplies the ladle with material during tapping.

3.63 A steep gradient belt conveyor takes material from the reversible collecting belt conveyor under the weight hoppers horizontally, then vertically and feeds the material horizontally into a forked pipe in the ladle furnace area. This forked pipe delivers material to the ladle furnace or to the belt conveyor, which delivers material to the vacuum degasser.

3.64 The dedusting arrangements for the materials handling system are integrated in the main dedusting system.

3.65 There is a separate materials handling system for the vacuum degassing plant. A monorail trolley uses buckets to fill the bin group. The bins discharge into weight hoppers and then to reversible collecting belt conveyors. From there the material is conveyed by steep gradient belt conveyor to a reversible collecting belt conveyor in the vacuum degasser area. The materials are sent to the pressurised bin for the vacuum degasser by a slewable drop chute. Again the dedusting arrangements for this system are integrated into the main dedusting system.

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3.66 All materials handling is carried out within an enclosed building. The emissions from this building are all routed via the dedusting unit prior to release to the atmosphere.

Other Infrastructure Improvements

3.67 The air separation plant generates nitrogen, oxygen and argon, which are necessary for the operation of the steel plant and casting machines. Buffer tanks, which will serve the short-term peak consumption of nitrogen, oxygen and argon, will be part of the air separation plant. Nitrogen is provided for ladle purging and for safety purposes. Oxygen is provided for scarfing, heating, flame cutting and service drops. Argon is provided for purging and shielding.

3.68 The steam generation plant will provide the amount of steam necessary to operate the vacuum degassing plant.

3.69 The compressed air plant supplies various compressed air circuits via a distributor. . All circuits can be shut off via valves arranged on the centralised distributor. The distributor is supplied with compressed air from the existing compressed air network of PNTZ. Compressed air is used for valve drives, shielding and cleaning of the dedusting plant. The following items are operated by compressed air:

• Eccentric bottom taphole slide gate closure mechanism • Alloying hopper (air curtain) • Cooling water valve for closing of electric circuits of the furnace shell and roof circuits

• Cleaning of electrode spray cooling system

3.70 The laboratory allows for a rapid analysis of the more important elements in the liquid steel of the EAF or ladle furnace.

Other plant & equipment

3.71 There are a number of other associated plant and equipment, including:

• Fire fighting pump and tank area;

• Maintenance workshop;

• Oil & lubrication and spare part storage; and

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• Lime preparation plant: Provides the lime required at the charging stage for use as flux in the formation of slag in order to remove the impurities from the steel.

MAIN TECHNOLOGIES ADOPTED FOR THE CONTROL OF EMISSIONS

Scrap control

3.72 A number of potential pollutants can arise from impurities in the raw materials (scrap metals). Contaminants such as oils, greases, PCBs, paints, radioactive materials, electronic equipment etc can result in release of pollutants from the process. Careful selection and screening of materials by the scrap supplier will minimise such impacts.

3.73 The scrap supplier is ChTPZ-Meta. Material will be collected from a number of regions in Russia, including Sverdlovsk, Chelyabinsk, Tyumen, Hanty-Mansiysk, , Tatarstan, Samara and Ulyanovsk

3.74 All indirect suppliers are licensed and tested. The control systems for the scrap include visual control, radioactivity and explosive assessments and a specially trained expert checks each delivery. The source of the scrap is mainly from industry, heavy machinery, and agricultural equipment and will not include any household equipment. The possibility of collecting equipment which contains PCBs is excluded as this is collected by other specialised companies. Scrap processing will take place outside the Project site and will consist of the use of oxy-acetylene torches, press- sheers and a small amount will be broken up mechanically and compacted. After processing, the majority of the scrap will then be delivered to the mini-mill by rail. Road deliveries will account for less than 5% of scrap volume.

Air emissions

3.75 The potential for releases to air as a result of material handling processes have been minimised as operations are carried out in an enclosed building. Air containing any particulate matter from the building is routed to the de-dusting plant, which uses fabric filters. The various raw material bins and hoppers are filled in a controlled manner which minimises fugitive releases.

3.76 The linear layout of the material handling operations will reduce the need for multiple transfer point and reduce fugitive emissions of particulate matter. The use of enclosed silos to store bulk powder will further reduce fugitive emissions.

3.77 The BREF guidance notes, “At low clean gas temperatures (below 75ºC) PCDD/F will stay below 1 ng I-TEQ/ N m3, and will increasingly be adsorbed into the filter

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dust”. PCDD/Fs are thought to form from chlorine ions in the scrap and recombination of charged coal and fuel gas. The major abatement methods are monitoring of the scrap (as described above), the use of oxygen injection to ensure complete combustion and the rapid cooling of exhaust gas to avoid the recombination of the products of incomplete combustion. Each of these methods has been adopted in the design of this Plant. Water-cooling which is applied to the duct extracting the fourth hole exhaust gas and an efficient bag filter is, in practical terms, best practice to control PCDD/F air emissions and also controls gaseous metal emissions.

3.78 There is the option of priming the bag filters with absorbents in order to further capture volatile impurities. This measure has not been formally adopted by the operator, but could be considered.

3.79 Sulphur dioxide emissions will be low as the energy for the process is provided by electricity and low sulphur natural gas with be used as a fuel. It is planned to include

converters (i.e. re-burning facilities) for CO to CO2 conversion for the fourth hole off gas. The converters will also serve to oxidize any volatile organic compounds (VOCs) present.

3.80 The emissions of oxides of nitrogen have been minimised through the design of the

process, the use of low NOX burners and by the control and management of the combustion process.

Water emissions

3.81 The amount of wastewater produced from the Plant is minimal as the majority of water circuits are closed. Wastewater will consist mainly of blow-down water. The wastewater will not be treated within the Plant, but sent to the treatment plant that serves the PNTZ site as a whole

3.82 It has been recognised that the new Plant does add to the burden of the site water treatment works. For this reason measures to improve the operation of the site water treatment works have been included in the overall added to the improvement plan, but this is seen as an issue for future management and does not dramatically effect this current development.

3.83 The scrap handling area is a paved area so possible leaching of oil or other chemicals associated with the scrap is minimised. Run-off water from the scrap facility is routed via the drainage system and then to the treatment plant which will remove possible contamination prior to discharge.

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3.84 The releases of scale and oil from the recirculating cooling and treatment plant of the secondary spray cooling circuits of the continuous casting are collected in the scale pit prior to disposal. The disposal options are discussed in the BAT Assessment section of this report.

Emissions to land

3.85 The scrap handling area is a paved area so possible emissions of oil or other chemicals associated with the scrap are minimised.

3.86 Run-off water from the site is routed via the storm water drainage system, removing the potential risk of contamination of the land by the deposition of dust or leachate.

3.87 The main solid wastes produced by the EAF are slag and dust. There are also waste refractory linings generated when ladles and the furnace are relined. The disposal routes for these waste materials are fully discussed in the BAT Assessment section.

Odour

3.88 Odour is not considered to be a problem at the plant due to the nature of the EAF process taking place within an enclosed building, together with the controls that are in place for the scrap metal.

Noise

3.89 Noise will be generated by the operation of the Plant. The main sources of noise are likely to be:

• Scrap metal handling • Scrap melting in the EAF • Refining, tapping, charging and preparation of the EAF

• Relining of the ladle furnace • Vacuum degassing pump • Belt conveyors

• Fans and motors of filter plant; and • Numerous smaller sources.

3.90 Sources of noise from the scrap metal handling will be mitigated as this takes place inside an enclosed building. Trains will provide the large majority of transport, which reduces noise outside the site and the impact on the local road network.

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3.91 Housing the processes in an enclosed building reduces the noise to the receptors. There are a number of other noise mitigation measures that will be implemented as part of the design process. This will include selection of auxiliary equipment with low noise emission levels and noise attenuation by the structure of the building.

3.92 The sanitary zone around the plant and thermal insulation of the houses should secure noise level below appropriate limits of 55dBA (daytime) and 45dBA (night time) out of the zone.

3.93 Occupational exposure to noise will be an issue for workers especially around the EAF. However, most workers will be inside sound insulated control rooms. Noise assessments will be undertaken to determine suitable working practices for the workers (including use of ear defenders where appropriate). Workers will be subject to regular health monitoring (including audiometry) to assess the effectiveness of the working practices.

MATERIALS SELECTION AND IMPORT/EXPORT BALANCES

3.94 The main raw material for the production is scrap metal. It will be supplied by ChTPZ Meta, a subsidiary company of ChTPZ. ChTPZ Meta operates in many regions of Russia including: Sverdlovsk, Chelyabinsk, Tyumen, Hanty-Mansiysk, Bashkortostan, Tatarstan, Samara, Ulyanovsk and a further increase is in operations planned to meet the demand of the new plant. The company has 65 facilities for scrap collection and processing and about 10-12 new facilities are planned. These will be opened in Siberia and European part of Russia, possibly Novy Orenburg. There are already 5 facilities in the Sverdlovsk region. The biggest facilities are located in the capitals of the regions and more than 50% of the scrap is collected from these areas.

3.95 Apart from collecting scrap by themselves, ChTPZ Meta also provide scrap delivery services from other scrap companies. In 2006 ChTPZ Meta collected 550,000 tonnes of scrap themselves and processes a total of 1.2 million tonnes (including indirect scrap supply). In 2007 it is planned to increase the amount of scrap collected to 1 million tonnes (guaranteed), with a total processed of 2 million tonnes, including indirect sourcing.

3.96 All tests required by law will be performed before the scrap is delivered to the Plant.

3.97 The main sources of the scrap will be industries, heavy machinery and agricultural equipment. Household equipment is not accepted.

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3.98 Most of the scrap will be delivered to PNTZ by rail; minor road deliveries are possible but this will not exceed 5% of the total. This equates to around 900 tonnes per week if the plant is operating at full capacity.

3.99 Other raw materials will be supplied directly from producers and this includes: fluxes, additives, electrodes, lime etc.

3.100 Electricity will be supplied from the local supplier. To supply the new plant’s demands, an additional supply line will be constructed by RAO-UES. This line will potentially have some environmental impacts, and will be subject to legal approval; the impacts are not considered in this ESIA.

3.101 Natural gas will be supplied from local networks. No significant additional infrastructure will be required.

3.102 Industrial water will be supplied from the Tchusovaya River via the PNTZ water intake. Potable water will be supplied by Vodokanal, the local water distributor.

3.103 The general process material balance as prepared by SMS-Demag is illustrated in the diagram below.

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Figure 3.8 – Process Material Balance

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WASTE MANAGEMENT

3.104 Waste management will be provided by existing PNTZ services. All waste generated in the mini mill will be handled according to PNTZ waste management procedures. Some of the waste will be transferred to external contractors for reuse or recycling, part (inert and non hazardous waste) will be disposed at PNTZ landfills.

3.105 PNTZ plans to construct a waste disposal centre serving the mini mill. Waste such as slag, filter dust, scale, refractory bricks, limestone etc will be processed to produce materials for construction purposes. Full details regarding waste management is to be found in the BAT assessment section below.

BAT ASSESSMENT FOR THE PLANT

3.106 The features and performance of the proposed Plant have been compared to Best Available Techniques (BAT) as set out in the EU Reference Document on Best Available Techniques for the Production of Iron and Steel, December 2001 and in the current IPPC guidance for the Production of Coke, Iron and Steel (IPPC S2.01) produced by the Environment Agency for England and Wales. The Draft Environmental Health and Safety Guidelines for Integrated Steel Mills produced by the International Finance Corporation, February 2007, was also considered in the assessment of BAT.

3.107 The BAT assessment is based on data supplied by SMS-Demag, the “Environmental overview of the electro-steel plant complex for pipe plant TEO” developed by contractors “Uralgidromez” and information obtained during meetings with representatives from PNTZ, Gama and ChTPZ-Meta. Other information was obtained by Atkins during site visits.

3.108 It is recognized that BAT is a site specific standard and that there may be limitations due to the local situation and economic reasons. The technology and techniques against which BAT was measured are those applicable to new developments in Europe. There is a difference between the measuring of BAT against technology and against techniques. Technology relates to the design of the Plant, against which BAT has been measured.

3.109 Techniques are of a more peripheral nature, which can be argued to fall outside of BAT. In Russia there is not the same infrastructure to allow for the same range of techniques to be utilized. There are constraints that exist, both situational and economic, and these may prevent certain techniques being used. It is not that these techniques cannot apply in Russia, rather than they cannot currently be applied. These techniques should be worked towards by PNTZ who are to be encouraged to develop their environmental management plan and monitoring scheme. There then

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develops a continual process of improvement where both environmental and social impacts are reduced over time.

3.110 The key EU BAT requirements for the Plant are given in Table 3.2 below with a summary of how the plant meets the requirements.

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Table 3.2 – EU BAT Requirements

BAT requirements Mini-mill project Comments

1. Dust collection efficiency Total building evacuation, advanced de-dusting and dust Combination of direct off gas extraction (4th or 2nd hole) arrestment systems are in the design. and hood systems or – dog-house and hood systems or – Meets BAT total building evacuation. Dust collection efficiency is of the order of 99.5%, with a 98% and more collection efficiency of primary and reduction of 2g to more than 10 μg (calculated over an 8 secondary emissions from EAF are achievable. hour average).

3 2. Waste gas de-dusting Fabric filter in design with guaranteed <10 mg/N m . This should ensure daily value of less 5 mg/N m3. This is Particulate emissions Application of well-designed fabric filter achieving less than considered BAT for both primary and secondary fume 3 meet BAT 5 mg dust/N m determined as daily mean values cleaning, as is the total enclosure of the of the melting shop. The minimisation of the dust content correlates with the minimisation of heavy metal emissions except for heavy Confirm data on heavy No data on heavy metals concentrations. metals present in the gas phase like mercury. metal emissions

3. Minimising of organochlorine compounds, especially Post combustion and rapid cooling in design. Design meets BAT PCDD/F and PCB emissions

Appropriate post-combustion within the off gas duct system or in a separate post combustion chamber with subsequent rapid quenching in order to avoid de novo synthesis and/or injection of lignite powder into the duct before fabric filters. Confirm air emission data No direct data on PCDD/F concentrations available (either for PCDD/F Emission concentrations of PCDD/F 0.1 - 0.5ng I-TEQ/N 3 guaranteed or predicted levels). m are achievable.

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BAT requirements Mini-mill project Comments

4. Scrap preheating Scrap preheating has not been included in the design for the mini-mill. In combination with item 3 to recover heat from primary off gas Preheating has not been include in the design because this may result in higher emissions of aromatic organohalogen With scrap preheating of part of the scrap about 60 kWh/t compounds such as polychlorinated dibenzo-p-dioxins and can be saved, in case of preheating the total scrap amount furans (PCDD/Fs), chlorobenzenes, polychlorinated Meets BAT up to 100 kWh/t liquid steel can be saved. biphenyls (PCBs) as well as polycyclic aromatic hydrocarbons (PAHs) and other partial combustion The applicability of scrap preheating depends on the local products from scrap contaminated with paints, plastics, circumstances and has to be proved on a plant by plant lubricants or other organic compounds. In order to treat basis. When applying scrap preheating it has to be taken these compounds a considerable quantity of energy would care of possibly increased emissions of organic pollutants. be required.

5. Minimising solid waste/by-products Design of area for storage of filter dust. Meets BAT For solid wastes, the following techniques are considered but improvements should BAT in descending order of priority: General waste disposal / recycling arrangements be sought when economic Minimisation of waste generation. confirmed under PNTZ procedures. climate allows Waste minimisation by recycling of EAF slags and filter dusts; depending on local circumstances filter dust can be recycled to the electric arc furnace in order to achieve a zinc enrichment up to 30%. Filter dust with zinc contents of more than 20% can be used in the non-ferrous metal industry. Develop recycling system for filter dust. Meets BAT Filter dusts from the production of high alloyed steels can No detailed data on filter dust processing/disposal. but improvements should be treated to recover alloying metals. be sought when economic climate allows For solid wastes, which can not be avoided or recycled, the generated quantity should be minimised. If all

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BAT requirements Mini-mill project Comments

minimisation/reuse is hampered, controlled disposal is the Develop slag recycling only option. strategy. . Meets BAT but Very poor local market for slag utilization. EAF slag to be improvements should be processed in a separate facility. sought when economic climate allows

6. Emissions to water Close loop water cooling Closed cycles applied in design systems meets BAT Closed loop water cooling system for the cooling of furnace devices.

Wastewater from continuous casting: Wastewater is collected and routed to the scale pit, suspended solids are removed in the gravel filter and oil is Oily scale separation Recycling of cooling water as much as possible removed in the lamella separator, there is a final facilities confirmed as Precipitation/sedimentation of suspended solids separation in a chamber filter press prior to disposal of the required by BAT sludge. Removal of oil in shimming tanks or any other effective device. The lack of continuous No provision is made for continuous monitoring in first monitoring for particulates design, but will be included as part of PNTZ system. and CO is not BAT.

Other issues Presence of adequate Security of energy supply electricity supply Provision of continuous monitoring for particulates and CO confirmed, meets BAT Presence of adequate Security of water supply water supply confirmed, meets BAT

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Heavy metal and organochlorine emissions

3.111 Heavy metal and organochlorine (PCDD/Fs and PCBs) emissions from the Project are dependant on the quality of the scrap used in the process. It is estimated that 10-20% of the quantity of scrap required will be made up from waste material produced at the site. The remainder will be gathered primarily from industrial sources, as described under Process Controls, in the section on main technologies adopted for the control of emissions.

3.112 According to the IPPC guidance, heavy metals are not considered to be among the most significant potential releases from an EAF plant. The BREF guidance states, “most of the heavy metals are mainly associated with particulate matter and are removed from the off-gas with the separated dust”. Therefore, most heavy metals will be removed in the de-dusting plant.

3.113 Scrap from domestic sources, such as washing machines, hairdryers and fluorescent lamps, would represent the main PCB input in an EAF. This source has been excluded from the scrap that will be used in this furnace so PCB emissions are not considered to be an issue.

Waste disposal / recycling arrangements for waste

3.114 All waste will be dealt with under the PNTZ internal system. This includes programmes for waste minimisation, recycling and disposal.

3.115 Oily scale is currently disposed of to landfill, but PNTZ is considering use of a patented methodology for making briquettes using oily scale and other waste materials. The briquettes can then be used as a raw material in the furnace. It may also be possible to reuse some of the filter dust by this method. The guidance notes that scale may be recycled to the EAF or sold to other outlets such as cement manufacturers. This disposal route is not possible due to the lack of suitable local cement manufacturers.

3.116 The reuse or recycling of scale is a technique which may be applicable in the future. For this reason, PNTZ will continue to investigate new techniques in the disposal or reuse of the scale and possible collaborations in order to turn this waste into a useful by-product.

Slag recycling strategy

3.117 There is currently no fully developed slag recycling strategy. In order to deal with the slag, PNTZ proposes to find a contractor to undertake the recycling. The success of

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this scheme is dependent on financial rather than technical considerations as a market for any product would have to be established.

3.118 Several possible areas are being considered for the storage of the slag, including the vacated construction camp area and several other large areas on site. PNTZ has not finalised the location for the slag storage at present.

3.119 The slag from the EAF could contain high concentrations of lime. BAT for these slags is for the material to be weathered in the open air for sufficient time (at least a few months) to hydrate the free lime before use as a construction material. Caution should be exercised when adopting this approach to ensure that any possible contamination of the land is minimised by proper preparation of the area in which the slag is stored.

3.120 Possible uses for the slag are as aggregate in road and rail construction, sewage bed filtration medium, backfill material, cement component in concrete (slag granulation) or product for fire-resistant wall panels, insulating bricks, structural infill (slag pelletisation). Both slag granulation and pelletisation are wet processes; a number of dry or semi-dry processing techniques are under development, but not yet commercially proven. When considering the wet processes, thought must be given to the added burden this will place on the site water treatment plant.

3.121 Due to the current local market situation the technique for the reuse or recycling of slag is not currently possible. Due to the large volumes of slag that will be produced the operator will seek to find an environmentally beneficial option for disposal of the slag and to further investigate the possible commercial value of the material as an aggregate, roadstone or additive for the cement industry.

Filter dust

3.122 The area for storage of the dust has not yet been finalised, but the operator is considering several options.

3.123 The direct recycling of precipitated dusts in the furnace has been considered, but is not a beneficial option as this will reduce the furnace efficiency and increase the consumption of electrical energy of an already energy intensive operation. The operator is currently investigating two options, first, the possibility of making briquettes, as noted under the section dealing with oily scale; second, the possibility of finding a contractor for dust disposal with zinc recovery and removal of heavy metals from the dust. The guidance notes that, in principle, the feasibility of EAF dust recycling depends on many factors that may be dissimilar for different plants..

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The operator will continue to consider options for the reuse or recycling of the scale, slag, dust and waste refractory materials.

Continuous monitoring of particulates and CO

3.124 Currently there is no allowance in the design for the continuous monitoring of either particulates or carbon monoxide (CO). This is a key measure required by the BREF guidance to ensure that there is the necessary monitoring of the emissions to air and checks on the operation.

3.125 PNTZ is currently developing a monitoring strategy for the whole site. Any continuous monitoring system (CEMS) for the mini-mill emissions will be incorporated into this new system. Due to the size of the stack, the particulate monitoring will be undertaken using a back scatter cross duct device. This will be supported by a gas

monitoring device to measure NOx, CO and O2.

3.126 At the time of writing, no details are available concerning the exact specification of the monitoring equipment to be employed.

DECOMMISSIONING

3.127 Given that the site is within a larger industrial complex the potential decommissioning works will be similar to the demolition stage prior to construction of the plant.

3.128 Elements of the installation will be either sold for use off-site and disposed as scrap metal or placed on the solid waste disposal site, in accordance with required permits. All contaminated soil or installations from the demolition phase will be gathered, classified and properly disposed of.

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4. DESCRIPTION OF THE EXISTING ENVIRONMENT

LAND USE AND SETTLEMENT PATTERNS

4.1 The location of Pervouralsk town and the PNTZ site and the mini-mill site are shown in Figures 3.1 and 3.2.

4.2 A 500m protection zone (measured from primary emission sources) was established around the PNTZ site in 1991 as per the requirements of the sanitary rules 245-71 on the design of industrial facilities. The extent of the protection zone, which is effectively the site territory, was approved by the Pervouralsk Sanitary- Epidemiological Authority. The sanitary rules 245-71 are currently superseded by the sanitary-epidemiological rules 2.2.1/2.1.1.1200-03 on the design, construction, reconstruction and operation of industries and urban planning approved by the Health Protection Ministry Order on 15/06/2003. The new rules require the revision of the established zone to comply with the new zone classification as discussed above.

4.3 No residential properties are located within the current protection zone. The nearest houses at Trudposelok residential area are located approximately in 100m from the protection zone boundary.

4.4 The distance to the nearest houses in Talica residential area from the new mini mill plant will be approximately 795m to the south and to Trudposelok residential area approximately 1060m to the north.

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CLIMATE AND METEOROLOGY

4.5 Pervouralsk is located within a continental climate zone, with distinct differences between seasons. The winter lasts for about 5 months - from November until the middle of April and the temperature may fall to minus 40 degrees. The summer on the Urals is short and lasts an average of 65-70 days with an average temperature of 20 degrees Celsius.

4.6 Key climatic data for the area is:

• The average annual temperature is +0.3˚C with a maximum of +35-37˚C and a minimum of -44˚C. • The maximum depth of soil frost penetration is 1-1.5 m. • Wind directions vary but are dominated by winds from the west. Average wind speed is about 3 m/s. • Average annual precipitation is 526 mm, the majority of which (376 mm) falls as rain in the warm season. Snow melting starts in the middle of March and lasts for about 15-20 days. The average speed of this process is 6-9mm/day. 4.7 The following description is based upon hourly sequential data from the meteorological station at Ekaterinburg 56.78º N, 60.80º E) for the period January 2002 to December 2006. This station is approximately 50 kilometres to the east south east of Pervouralsk and was found to be the nearest meteorological station with adequate records. This data has been used in the dispersion modelling study (see Chapter 6). Meteorological conditions are expected to be similar at Ekaterinburg and Pervouralsk as there are no major topographical features in the area.

4.8 The above data was used to generate a five-year frequency distribution of wind speed and direction. This is shown in the table and wind rose diagram below.

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Table 4.1 - Relative Frequency Distribution of Wind Speed and Direction, %

Direction Speed m/s

Bearing Degrees ≤1.54 1.54 to 3.09 to 5.14 to 8.23 to >10.8 Total % 3.09 5.14 8.23 10.8

N 0.0 0.933 1.018 2.273 0.285 0.007 0.000 4.516

NNE 22.5 0.381 0.470 1.276 0.217 0.011 0.005 2.359

NE 45.0 0.529 0.447 0.908 0.110 0.002 0.000 1.997

ENE 67.5 0.915 0.685 0.974 0.139 0.009 0.000 2.722

E 90.0 1.104 1.114 1.262 0.103 0.007 0.002 3.592

ESE 112.5 1.045 1.289 1.796 0.162 0.009 0.000 4.301

SE 135.0 1.262 1.800 2.681 0.463 0.039 0.000 6.245

SSE 157.5 1.419 1.974 3.001 0.413 0.021 0.000 6.827

S 180.0 1.392 1.805 2.175 0.148 0.007 0.000 5.527

SSW 202.5 0.881 1.034 1.880 0.240 0.005 0.002 4.041

SW 225.0 0.803 1.166 2.553 0.901 0.078 0.002 5.504

WSW 247.5 0.671 1.088 3.827 2.017 0.370 0.011 7.984

W 270.0 0.897 1.440 5.864 3.254 0.545 0.027 12.028

WNW 292.5 0.872 1.344 4.824 2.031 0.274 0.011 9.356

NW 315.0 0.997 1.479 4.386 1.253 0.075 0.005 8.194

NNW 337.5 1.066 1.314 2.944 0.586 0.018 0.000 5.928

Total % 15.167 19.467 42.623 12.322 1.476 0.066 91.121

Calms 8.760

Missing 0.119

Total % 100.000

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Figure 4.1 – Wind Rose Diagram for Ekaterinburg, 2002 to 2006

4.9 It is evident from the data for these years that there is a marked prevailing wind from the west. Calms account for nearly nine percent of the hourly records. Were winds to be evenly distributed, each of the sixteen sectors would have a frequency of 5.7%. Westerly winds are over twice as frequent, occurring for 12% of the time.

4.10 Winds from the adjoining sectors are also relatively frequent. Winds from the four sectors from the west south west to the north west occur for over 37% of the time. The prevalence of high wind speeds also follows a similar distribution.

4.11 There is a secondary prevailing wind from the south east and the south south east. Winds from these two sectors occur for 13% of the time.

4.12 Winds from all other sectors are relatively infrequent; those from the seven sectors centred on the north east occur for only 25% of the time. Winds from the south south west are also relatively infrequent, occurring just 4.4% of the time.

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GEOLOGY AND HYDROGEOLOGY

4.13 The Urals are among the world's oldest extant mountain ranges. For its age of 300 until 250 million years, the mountains are yet unusually high (the highest peak is 1895 m). They were formed in the late Carboniferous period. The regional geology is characterised by Palaeozoic volcanic rocks. The PNTZ site geology is represented by schist (a metamorphic rock with limited primary permeability) of Silurian age.

4.14 The strata beneath the site and the range of thicknesses are as follows:

• Paleozoic sediments – with depths of approximately 4-30m or more; • Clay loam - loose textured soil of Mesozoic formation with an average depth of 1m;

• Alluvial, eluvial, and delluvial deposits of loamy soil (tertiary age) and made ground overlay the Paleozoic and Mesozoic deposits; depth ranges between 3.5 m and 7.5 m.

4.15 In terms of hydrogeology, the site belongs to the Medium and Lower Palaeozoic formations of the eastern slope of the Ural mountains. The main groundwater layer is present in the fractured Silurian schist at a depth of approximately 2.5-5.5 m. The temporary seasonal shallow water layer at the depth of 0.5 m is formed in the top made ground during an intensive snow cover thawing. The two groundwater layers are hydraulically connected. The permeability of alluvial and delluvial clay is 0.002 m/day, elluvial loam is 0.009-0.016 m/day, and the rocks permeability is 0.91-0.2 m/day. The aquifer is recharged by precipitation and also possibly from water infrastructure systems leakages/losses.

4.16 The chemical composition of ground water is hydrocarbon-sulphate-calcium with mineralization of 619-867 mg/l and pH of 7.2-8.2.

4.17 Soils on site can be assessed as having intermediate leaching potential. The geological conditions of the site allow for limited migration of any contaminants. However, as the natural relief was changed by anthropogenic activities, the integrity of the impermeable layer (aquiclude) is likely to have been compromised. Also the limited overlying soil depth cannot fully prevent the movement of non-adsorbed diffuse source pollutants and liquid discharges into the underlying strata or groundwater. Given the long industrial history of the site there appears to be some contamination in existence. Therefore, the site sensitivity can be assessed as medium.

4.18 The site .is located on the watershed between the rivers Elnichnaya and Talica, the Chusovaya tributaries. The direction of groundwater movement is from the north-

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west towards the wastewater settlement lagoon and south-east unloading into the Pakhotka river valley. This is demonstrated by groundwater coming to the surface as springs in the Pakhotka river valley. Given the direction of groundwater flow and the fact, that several industrial facilities are located along the Pakhotka river-bed, the soil and groundwater contamination is localised in south-western direction towards the rivers Pakhotka and Chusovaya.

4.19 Groundwater is currently not utilised in the Pervouralsk municipality and this is not planned in the future according to the hydro-geological permit No 2301/06 issued for the construction of the mini-mill by the Ural Regional Agency on Resource Use on 21.11.2006.

4.20 Potable water to the PNTZ and Pervouralsk is supplied from:

• Verkhne-Shatansky pond - water intake of 1,600 m3/hour. The pond is connected with the river Chusovaya via its tributary river Bolshya Shaytanka. There is no possibility of any discharges from PNTZ reaching the pond it is located upstream from the confluence of the Bolshya Shaytanka with the Chusovaya.

• A borehole near the river Serga - water intake of 1,050 m3/hour. This river runs near the city of Nizsni Sergi southwards. The contamination of the Serga with PNTZ wastewater is excluded, as the Chusovaya and Serga belong to the different water catchments.

• Revdinskoe water reservoir - water intake of 400-600 m3/hour. The reservoir is located on the river Revda, which confluences with the river Chusovaya downstream. Therefore, the possibility of any discharges from the PNTZ reaching this reservoir is excluded.

SOIL AND GROUNDWATER QUALITY

4.21 The Sverdlovsk regional environmental report 2005 states that soils in Pervouralsk are highly contaminated with heavy metals such as lead, mercury and cadmium.

4.22 PNTZ does not undertake a regular soil sampling and analysis programme. The only available data were in the report on the establishment of the network of the wells in the area of the oil storage facility. This report showed that the thickness of oil emulsion layer in some wells was 0.5-1 metre. The wells were established to test the possibility of migration of the groundwater which causes flooding of the cellar level in oil storage room. The water pumped from the wells was described as water/oil (gasoline) emulsion, which tends to create foam. Installation of oil separators was found to be necessary. The COD of the water was found in the range of 22-30mg/l.

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4.23 Laboratory data for other areas of the site are not available except from a testing borehole located in the vicinity of landfill and the thermal power station (external company).

4.24 Chemical analysis of groundwater in the area of the thermal power station is presented below. No details concerning the detailed location, depth and geological data were made available. According to information from PNTZ, these wells were only for testing of water quality and were destroyed after sampling.

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Table 4.2 – Chemical Analysis of Groundwater in the Area of the Thermal Power Station Dry Ions concentration, mg/l Sampling F Oil рН residue, mg/ products Point Na K NH Ca Mg Fe Cl SO NO NO CO mg/l 3 4 3 2 3 l mg/l Bore-hole 1 7.9 738 6.4 0.4 0.1 125.9 47.2 - 70.9 219.4 44.6 0.025 18.0 - 0.051

Bore-hole 2 7.7 1890 79.0 0.9 0.15 327.6 99.4 - 780.0 208.3 9.5 0.035 - - 0.4

Bore-hole 3 7.85 820 30.4 0.5 - 143.9 45.8 - 180.8 159.3 8.7 0.03 - - 0.42

Bore-hole 4 7.9 588 11.9 0.5 0.2 122.5 34.2 - 78.0 139.9 7.1 0.03 12.0 - 0.54

Bore-hole 1 7.35 652 7.1 0.2 0.5 109.3 42.4 0.6 67.5 195.9 25.1 0.4 - 0.1 0.22

Bore-hole 2 6.63 1944 102.9 0.7 - 394.8 101.8 1.0 852.0 219.8 12.6 0.03 - 0.07 0.16

Bore-hole 3 6.75 972 22.4 0.3 - 14.3 41.11 0.5 127.8 160.5 8.5 0.04 - 0.08 0.20

Bore-hole 4 6.90 642 8.7 0.2 - 114.9 27.1 0.9 71.0 137.9 7.6 0.02 - 0.08 0.21

Bore-hole 5 7.60 330 6.7 0.2 3.1 50.3 13.0 1.7 53.3 71.6 2.2 0.7 - 0.15 2.06

Ditch 7.5 468 29.4 2.4 0.1 88.9 19.5 0.85 32.0 145.7 2.5 0.025 - 1.06 0.72

Bore-hole 1 7.10 536 7.3 0.4 - 98.0 39.4 1.2 58.5 156.4 2.1 - - 0.09 3.42

Bore-hole 2 6.90 1962 105.1 0.9 2.5 396.0 108.1 5.5 850.9 209.5 9.1 - - 0.07 0.74

Bore-hole 3 6.7 772 20.4 0.5 - 153.1 41.5 0.7 118.8 158.5 9.1 0.025 - 0.07 0.16

Bore-hole 4 7.25 482 6.8 0.5 - 107.4 19.5 3.34 70.9 148.2 2.1 0.1 - 0.07 0.59

Bore-hole 5 7.75 284 8.8 0.5 3.5 51.1 13.2 1.4 63.8 60.5 50.0 - - 0.14 0.89

Ditch 7.22 976 79.4 3.8 0.2 160.2 38.8 0.5 86.8 315.7 27.5 - - - 0.3

Bore-hole 1 6.8 630 6.5 0.3 - 107.2 42.8 0.8 60.3 175.3 10.7 0.06 - - 0.69

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Dry Ions concentration, mg/l Sampling F Oil рН residue, mg/ products Point Na K NH Ca Mg Fe Cl SO NO NO CO mg/l 3 4 3 2 3 l mg/l Bore-hole 2 6.45 1900 104.3 0.9 - 403.8 99.0 1.9 815.4 191.4 10.7 0.04 - - 0.55

Bore-hole 3 6.58 700 19.3 0.5 - 149.8 39.6 1.3 102.8 156.8 6.7 0.13 - - 0.15

Bore-hole 4 6.73 530 8.0 0.4 - 115.7 25.4 2.6 63.8 130.9 1.8 0.04 - - 0.20

Bore-hole 7.55 290 9.7 0.5 8.5 44.2 11.0 1.8 78.0 48.2 1.8 0.02 - - 0.89

Ditch 6.94 1644 126.5 4.6 0.08 293.2 64.5 0.6 144.8 711.2 12.6 0.08 - - 1.28

Russian water 0.3 or 0.7- 200 - 1.5 - 50 - 500 45 3.3 - 0.3 quality limits 1.0 1.5

Dutch list intervention(i)/ 100t 0.5i 0.6i target (t)values

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4.25 The results were compared with the Russian limits for potable water and water used for recreational purposes (Hygienic norms 2.1.5.1315-03 of 15.06.03) and the Dutch intervention values where possible. These values are used in the UK as initial conservative screening values to assess whether groundwater contamination requires further assessment. The results indicate that the groundwater is contaminated to some extent with metals and oil products.

4.26 The proposed mini-mill site has been used for industrial purposes since 1930’s. In the past the area was used mainly for unloading and storage of different materials supplied mainly by rail with numerous rail sidings and warehouses. There were also some workshops (in the western part) and chloride unloading area (north-eastern part).

4.27 For this reason it is thought not likely that the site is seriously contaminated although there is no data available to confirm this. According to the verbal advice of ground works supervisors, no contamination was found during the works already carried out. The works included levelling and a layer of ground was already removed from part of the site. The ground consists mainly of clays and sandy clays.

4.28 The PNTZ environmental monitoring programme, which is now undergoing the review by the local Pervouralsk Sanitary Authority (Rospotrebnadzor), includes continuous soil and groundwater monitoring. One control borehole is to be installed at the top of the main settlement to monitor the baseline conditions. Two other boreholes are planned to be installed at the bottom of smaller settlement ponds for oil wastewater treatment, as these are located at the far end of the PNTZ site and should indicate the total soil and groundwater contamination caused by the plant. It is planned to monitor the following pollutants: iron, nickel, chromium, copper, sulphates, chlorides, fluorides, as well as water hardness and pH level. During the first year of monitoring it is planned to undertake monthly measurements. Afterwards the monitoring will be quarterly and certain pollutants may be excluded from further tests if shown not to be present.

SURFACE WATER QUALITY AND HYDROLOGY

4.29 The site is located on the watershed between the rivers Elnichnaya (length 11km) and Talica (length 12km), the Chusovaya tributaries. The distance from the proposed mini-mill site to the Elnichnaya is 2.2-2.8 km and 1-1.4 km to Talica.

4.30 The Chusovaya river runs north-west and it is a tributary of a major river Kama with a confluence at the Kamskoe water reservoir. The length of the Chusovaya is 592km. It is a major river of the middle Ural region.

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4.31 Water protection zones of 300m and 50m are established around the rivers Chusovaya and Talica respectively as per the Regulation on water protection zones No 1404 of 23.11.1996. As the proposed mini-mill site is located outside these zones, the Nizsne-Obskoe Water Catchments Authority granted their consent for the mini-mill construction on 27.11.2006. This is subject to the implementation of water protection measures as required by law.

4.32 The site waste water is discharged to the Pakhotka River, a tributary of the Chusovaya. The Pakhotka is a very small river of only 3.5km in length. The surface water course serves as a receptor for waste waters from both PNTZ and the chromium salts excavation enterprise ‘Russkiy Chrom’. Without these discharges the watercourse has very low flows and therefore the Chusovaya can be regarded as a receptor of PNTZ waste waters.

4.33 The water quality in Chusovaya River is presented in tables below. PNTZ undertakes regular monthly measurements of the river water quality upstream and downstream of the PNTZ discharge point.

Table 4.3 - Chusovaya River Water quality Upstream of Discharge

Parameter Unit Concentration Russian MAC EU Drinking Water Limit Values pH - 7.75 6.5-8.5 Suspended matter mg/l 9.44 Dissolved Solids mg/l 235.5 1000 Oils products mg/l 0.16 0.02 Chlorides mg/l 17.35 300 250 Sulphates mg/l 69.79 100 250 Nitrates mg/l 1.65 40 50 Nitrites mg/l 0..24 0.08 0.5 Fluorides mg/l 0.237 0.75 Anionic Surfactants mg/l 0.012 0.5 COD mgO2/l 22.04 30 Iron Fe mg/l 0.48 0.1 0.2 Chromium Cr total mg/l 0.029 0.07 Chromium Cr VI mg/l 0.023 0.02 0.05 Copper Cu mg/l 0.045 0.001 2.0 Nickel Ni mg/l 0 0.01

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Parameter Unit Concentration Russian MAC EU Drinking Water Limit Values Manganese Mn mg/l 0.275 0.01 0.05

4.34 The presented results show that concentrations of oils, nitrites, iron, chromium, copper and manganese are elevated as compared to the national maximum allowable concentrations. The EU drinking water standards are given for indication only.

Table 4.4 – Surface Water Quality in Chusoyaya after the Discharge Point (2006)

Parameter Unit Concentration Russian MAC EU Drinking Water Limit Values pH - 8.18 6.5-8.5 Suspended matter mg/l 31.18 Dissolved Solids mg/l 490.23 1000 Oils products mg/l 0.25 0.02 Chlorides mg/l 47.41 300 250 Sulphates mg/l 189.23 100 250 Nitrates mg/l 2.61 40 50 Nitrites mg/l 0.092 0.08 0.5 Fluorides mg/l 0.662 0.75 Anionic Surfactants mg/l 0.033 0.5 COD mgO2/l 32.91 30 Iron Fe mg/l 1.17 0.1 0.2 Chromium Cr total mg/l 1.201 0.07 Chromium Cr VI mg/l 0.828 0.02 0.05 Copper Cu mg/l 0.048 0.001 2.0 Nickel Ni mg/l 0.0068 0.01 Manganese Mn mg/l 0.276 0.01 0.05

4.35 The results show the water quality in the Chusovaya significantly decreases after the Pakhotka confluences it, bringing wastewater from PNTZ, ‘Russkiy Chrom’ and the city thermal power station. Exceedences of the national concentration limits for oils, sulphates, nitrites, COD, iron, chromium, copper, nickel and manganese are observed.

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4.36 According the Sverdlovsk region environmental report 2005 the river Chusovaya is significantly polluted along its whole length. Its classification according the national complex indicator varies from “polluted” to “very polluted” and “extremely polluted” downstream of Pervouralsk. Its contamination with chromium VI has a chronic nature due to the poorly treated wastewater discharges from ‘Russkiy Chrom’; and this pollutant can be traced for a considerable distance downstream in the Kama and rivers. The result of several years measurements show regular exceedences of the limits for iron, copper, zinc, manganese, chromium VI, COD and oils. Exceedences of nitrogen ammonia and fluorides have more episodic character. The occurrence of limits exceedences for sulphates increased over 2001-2005 and became typical. The nickel pollution decreased over the same period.

AIR QUALITY

4.37 According the Sverdlovsk region environmental report of 2005, the ambient air quality in Pervouralsk was poor. Various pollutants were found to exceed the limits. The main sources of air pollution are industrial facilities and transport.

4.38 Air quality monitoring is undertaken by the city environmental authorities as well as by PNTZ. The locations of the monitoring sites are shown in Figure 4.2.

Figure 4.2 – Ambient Air Quality Monitoring Locations

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4.39 There are two sites for the ambient air quality monitoring undertaken by the city environmental authorities. Air quality samples are taken four times per day on Komsomolskaya Street and three times per day on Emlina Street. The averaged monitoring results for both sites for 2005 and 2006 are shown in the table below.

Table 4.5 - Air Quality Measurements at the Pervouralsk Environmental Authority’s Sites

Annual average of daily Maximum daily 3 3 Location Substance concentrations, (µg/m ) concentrations, (µg/m ) 2005 2006 2005 2006 Dust 300 330 540 850

Komsomolskaya NO2 140 120 150 144 and Emlina Streets SO2 24 18 45 85 CO 3400 2000 4200 5500

Table 4.6 - Russian National Standards

Annual average of daily Maximum daily 3 Substance concentrations, (µg/m ) concentrations, (µg/m3)

Dust 150 500

NO2 40 200

SO2 50 500 CO 3000 5000

4.40 The results show that the standards for the annual average of daily concentrations were exceeded in both years for dust approximately by a factor of two, for nitrogen dioxide by a factor of three. Carbon monoxide concentrations slightly exceeded the standards in 2005. The maximum daily concentrations were compliant with the limits for nitrogen dioxide and sulphur dioxide in both years. The maximum daily concentrations for dust and carbon monoxide were exceeded in 2006.

4.41 PNTZ undertakes regular air quality measurements at one site on its northern boundary as shown in the figure above. These measurements cover various pollutants. The results of relevance to this study are presented in Table 4.7

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Table 4.7 - Air Quality Measurements at PNTZ site

Maximum daily National concentrations, limits Location Substance (µg/m3) (µg/m3) 2005 2006 Dust* 614 50 300

NO2 200 34 200

PNTZ border H2SO2 323 50 300

SO2 N/A 125 500 CO N/A 2100 5000

*Dust containing 10-70% of SiO2 4.42 These results show the maximum daily concentrations for the respective year at the site boundary. On the basis of the values reported it appears that pollutant concentrations were much higher in 2005. However, it was noted that these higher pollutant concentrations occurred under specific meteorological conditions and were thought not to be related to the PNTZ operations.

4.43 The reporting of maximum results from a range of data presents some difficulty in interpretation as individual results may outliers in the data set and thus do not give an impression of general air quality throughout the year.

4.44 For reference purposes the relevant EU limit and WHO guidelines values are presented in the tables below, as the results of the assessment refer to these values.

Table 4.8 - Nitrogen Dioxide

Value Description Criteria Target Date (µg/m3)

EC Directive limit th 98 percentile of hourly means 200 present day value

EC Directive guide th 98 percentile of hourly means 135 present day value

EC Directive guide th 50 percentile of hourly means 50 present day value 1 hour mean (not to be EU Daughter Directive exceeded more than 18 times 200 1 January 2010 limit value a year) EU Daughter Directive Annual mean 40 1 January 2010 limit value

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Table 4.9 - Sulphur Dioxide

Value Description Criteria Target Date (µg/m3) 1 hour mean not to be EU Daughter Directive 1 January exceeded more than 24 times 350 Limit Value 2005 per year (99.7th percentile) 24 hour mean not to be EU Daughter Directive 1 January exceeded more than 3 times 125 Limit Value 2005 per year (99.2th percentile) WHO Guideline 24 hour mean 125 - WHO Guideline Annual mean 50 -

Table 4.10 - Particulate Matter (PM10)

Value Description Criteria Target Date (µg/m3) 24 hour mean (not to be EU Daughter Directive 1 January exceeded more than 35 times 50 limit value1 2005 a year) EU Daughter Directive 1 January Annual mean 40 limit value1 2005

Indicative Stage 2: EU 24 hour mean (not to be 1 January Daughter Directive limit exceeded more than 7 times a 50 2010 value1,2 year) Indicative Stage 2: EU 1 January Daughter Directive Limit Annual mean 20 2010 Value 1,2

Table 4.11 - Carbon Monoxide

Value Description Criteria Target Date (µg/m3) EU Daughter Directive 8 hour mean 10 1 January 2005 limit value

ECOLOGY AND BIOTIC RESOURCES

4.45 About 70% of the Pervouralsk municipality territory is covered by forest. The local flora and fauna are of predominantly forest character. Flora is represented by a mix of Siberian and European species. Pine is the most common species with birch, lime-tree and larch. The common shrubs are cowberry and bilberry-bush. Other trees and shrubs include fir-tree, silver-fir, dog-rose and broom. Along river valleys

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willow, alder-tree, bird cherry tree and hop are found. The ground flora is varied. Meadows are covered with cereals and motley grass. The acid mountain rocks are grown with various species of moss and lichen. In the clefts and the rock edges, where there is a thin soil layer with accumulated moisture, fern and flowering plants occur. There is a number of marshes on the municipality territory with typical marshy flora species, e.g. sedge, ledum, crutch, etc.

4.46 Main part of the fauna species belongs to the Siberian species, although there are some representatives of deciduous forests fauna of the European part of Russia. Hoofed species include elk, wild boar and few protected roe. Amongst predators there are brown bear, wolf, lynx, fox, mink and marten. Rodents are represented by squirrel, hare and chipmunk. Forest rivers create habitats for beavers and musk-rat. Insectivorous species include mole, hedgehog and shrew. Bats are also commonly found in tree-trunk hollows and in gorge caves. Ornithological fauna is quite rich and include capercaillie, hazel-grouse, black-grouse, woodpecker and many others.

4.47 There are about thirty sites of geo-morphological, geological, hydrological, botanical, landscape and historical interest, which are called ‘nature monuments’ in the Pervouralsk municipality territory. According to the federal law on ‘Specially Protected Nature Sites’ ‘nature monuments’ are unique and irretrievable natural or manmade sites, which are valuable in ecological, scientific, cultural and aesthetic terms.

4.48 The nearest to the PNTZ site ‘nature monuments’ are the following:

• Bilimbay forest-park – semi-natural woodland adjacent to the small town of Bilimbay located approximately 10km to north-west from the PNTZ site and about 12km from the development site.

• The river Chusovaya cliffs – a number of sites of geo-morphological, geological and botanical interest with the nearest one located about 20km from the PNTZ site to the north-west near the train station Bojcy and about 22.5km from the development site. These are Chusovaya gorges with heights of up to 30m.

• Grove Mogilica – a XIX century pine plantation located on the hill in the western part of the town of Bilimbay located approximately 13km north-west of the PNTZ site and about 15.5km from the development site.

4.49 The Natural Park ‘River Chusovaya’ of regional interest was designated as a protected site in 2001. The designation of the Park aims to preserve this valuable site, control industrial and other types of activities affecting the river and its tributaries, undertake archaeological research, recreate historical and cultural monuments and develop tourism in a sustainable fashion. The Park starts near the village of Treka and stretches for 74 km along the river Chuvaya valley and its

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tributaries until the Sverdlovsk Oblast border with Perm Oblast. Treka is located about 36 km to the north-west of the PNTZ site. It is planned to extend the Park boundaries both down and upstream. With the extended site borders upstream to the village of Sloboda the distance to the PNTZ will be about 28km.

4.50 Other nature conservation sites located further away from the PNTZ site and Pervouralsk include:

• Oleni Ruchi – the Natural Park with the area of 12 thousand hectares located at the border of the western Ural low mountain boreal forest and forest-steppe, approximately 52 km south-west of the PNTZ site. The Park includes the River Serga valley and part of the western slope of the Bardymskiy ridge stretching from the town of Nizsnie Sergi to the town of Mikhaylovsk. The Park has geo- morphological, geological significance and it hosts rich flora and fauna. The Park is accessible for recreational activities.

• Visimskiy state biosphere reserve – located approximately 55km to the north of the PNTZ site. It was designated as a protected site in 1971 to preserve natural conditions of and to study the Middle Urals mountain boreal forest habitat. Its area is 13,056 hectares. Its buffer zone area is 66,100 hectares – five times bigger than the area of the site.

• Pripeshminskie Bory, coniferous forest, – was designated as the National Park in 1993 to protect the woodland ecosystems. The Park comprising two sites is located in Talickiy and Tugulymskiy regions of Svedlovsk oblast. Pripeshminskie Bory is located more than 220 km to the east of Pervouralsk.

LANDSCAPE AND VISUAL SETTING

4.51 The main site is almost flat with exclusion of the sedimentation lagoon which is several metres above site level; the elevation is still increasing due to accumulation of the sedimented deposit.

4.52 The project site is located within the context of a large industrial site, and is surrounded by tall industrial installations including:

• production departments of 10-20 m height and stacks of up to 90 m height (from the north and west)

• railway siding and solid waste landfill elevated about 8 meters above mini mill level (from the south)

• woods and butane-propane storage area (from the east)

4.53 The industrial complex of PNTZ is characterised by large scale and multiple tall stacks and vertical structures which form a distinct landscape element.

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NOISE

4.54 The 2006 report on the assessment of noise levels in Pervouralsk prepared by the local environmental regulators states that the main source of noise nuisance is road transport. This is caused by rapidly increasing car ownership and not satisfactory state of road surfaces, causing an increased noise level during vehicles movement. Transit vehicle movement on the route Ekaterinburg – Shalya through the city residential area (Talica, Lenina and Ordzsonekidze Streets) also exacerbates citizen’s noise exposure levels. Elevated levels of noise are experienced by people living on the streets facing main roads and railway lines. Lack of proper green lining along the roads does not provide sufficient noise screening.

4.55 The results of the noise measurements undertaken at the nearest residential properties to the PNTZ site in January 2006 are presented in Table 4.5.

Table 4.12 - Noise Measurements Results

Receptor Octave band centre frequencies, Hz Sound level, 63 125 250 500 1000 2000 4000 8000 dB(A) Sound pressure levels, dB

Day time 1 11 Tokarey St 69 63 53 48 45 41 37 38 49 2 7 Mebelschikov St 78 73 67 55 49 44 37 38 56 3 2 Uralskaya St 76 72 66 56 52 49 46 39 61 4 12 Moskovskaya St 71 65 57 53 52 51 46 43 56 5 3 Druzsby St 73 66 59 54 50 44 37 38 52 6 3, 18 let Oktyabrya St 63 55 49 47 46 45 41 39 55 7 Corner of Vaynera- 69 61 52 47 50 47 42 39 55 Bankovskiy St 8 Vostokmetallurgmontazs 76 70 62 51 46 44 40 39 58 gatekeeper`s office 9 5, Vaynera St 71 64 55 54 55 51 47 42 62 10 1, Korabelny Proezd 60 52 47 47 48 50 43 39 56 11 Corner of Karbysheva- 56 54 56 54 50 45 37 38 55 Urickogo 12 PNTZ administrative 67 59 53 51 50 48 42 39 59 offices

National permitted 75 66 59 54 50 47 45 44 55 levels of noise

World Health 50-55

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Receptor Octave band centre frequencies, Hz Sound level, 63 125 250 500 1000 2000 4000 8000 dB(A) Sound pressure levels, dB Organisation guideline values Night time 1 11 Tokarey St 42 48 42 38 35 21 15 15 36 2 7 Mebelschikov St 46 40 41 38 26 20 15 15 33 3 2 Uralskaya St 61 58 60 55 49 37 20 18 47 4 12 Moskovskaya St 62 58 51 48 43 28 15 15 47 5 3 Druzsby St 46 39 40 37 26 20 14 14 31 6 3, 18 let Oktyabrya St 45 40 40 38 25 20 15 15 32 7 Corner of Vaynera- 23 29 33 35 40 36 32 20 43 Bankovskiy St 8 Vostokmetallurgmontazs 47 42 40 38 27 20 15 15 39 gatekeeper`s office 9 5, Vaynera St 23 30 32 36 39 37 31 20 43 10 1, Korabelny Proezd 49 43 42 39 30 26 22 20 38 11 Corner of Karbysheva- 60 55 44 39 34 34 28 19 45 Urickogo 12 PNTZ administrative 61 61 56 52 46 37 27 18 52 offices

National permitted 67 57 49 44 40 37 35 33 45 levels of noise World Health 40-50 Organisation guideline values

4.56 The results show that the permitted levels of noise are exceeded in several locations. Day time noise levels are breaching the norms at the following residential receptors: 7 Mebelschikov, 2 Uralskaya, 12 Moskovskaya, 5, Vaynera, 1, Korabelny Proezd Streets and at the Vostokmetallurgmontazs gatekeeper’s office and PNTZ administrative offices. Night time levels of noise are exceeded at two residential receptors - 2 Uralskaya and 12 Moskovskaya Streets and near PNTZ administrative offices. Day time noise assessment includes the road transport noise at all receptors and railway noise at the receptors 10 and 11.

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TRAFFIC AND TRANSPORT

4.57 The main route for transport of raw materials, products to and within the site is rail. The site has a well developed rail infrastructure. Road is used for transport of workers, contractors and materials unsuitable for rail transport. The site has a well developed road infrastructure.

4.58 The roads surrounding the site include the main Pervouralsk to Ekaterinburg highway, which shows some congestion particularly during peak hours. The point where this highway crosses the Trans-Siberian railway presents a particular bottleneck. There are no traffic data available for the route or other surrounding roads.

SOCIO-ECONOMIC AND CULTURAL ISSUES

Population and Economic Activity

4.59 Pervouralsk is an industrial city of 132,227 people (2002 census). Pervouralsk is the fourth largest town and second fastest-developing city in Sverdlovsk Oblast after Ekaterinburg (2005 Ural Information Bureau). The annual growth rate of industrial output remains steadily at 25-30%; the retail turnover increases 20% a year (2005 Ural Information Bureau).

• There is a low official unemployment rate of 1.16 % in the town and vacancies exceed job seekers.

• The main employers in the city are: • PNTZ is the main employer in Pervouralsk employing 12,500 people • JSC Pervouralsk Plant of the Tubular Building Constructions (PZTSK) producing and installing metal constructing, wall and roofing panels.

• Pervouralsk Plant of Complete Metallic Construction • Pervouralsk City Dairy Plant LLC employing 165 people.

• JSC Pervouralsk Silica Plant (JSC Dinur), one of the biggest refractory plant, manufacturing shaped and monolithic refractories and only producer of silica bricks in Russia. It has employees is 3,000.

4.60 Approximately 22,000 people commute to work in Ekaterinburg.

4.61 Small to medium enterprises (SMEs) account for approximately 10% of the Sverdlovsk Oblast output. In the Urals in 2004, SME’s output increased by 40%, 4 times more than other sectors. The growth of SMEs and the migration of the young into SMEs (particularly in services/retailing) and the need to provide more high skilled

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jobs to attract a younger workforce was mentioned as an issue by various representatives at PNTZ.

4.62 The average monthly salary in 2005 was about $300 (€ 232), which is a little bit lower than the average in the region, which is $350 (€270, Local Information Centre). The local council report that the current average monthly salary is Rub 11,000 or € 320. The average salary in PNTZ is Rub 13,500 (€ 393). The national minimum wage is Rub 11,000 (€ 32, reviewed in 2006, ILO data base) and unskilled workers in PNTZ earn Rub 2,500 (€ 72). Salaries increase by 20-30% / year. Inflation in 2006 was 10%.

Organisational Context

4.63 There is a regional Legislative Assembly of Sverdlovsk Oblast, consisting of two chambers: Regional Duma (28 deputies for the term of 4 years, half of the number are re-elected every 2 years) and House of Representatives (21 deputies for the term of 2 years). The regional organisations establish regional policies covering for example polices and initiatives for regional development, investment, training etc. Pervouralsk is represented by 4 deputies at the regional Duma. They represent and communicate on a regular basis with residents, workers, trade unions, parties, and movements.

4.64 The local authority or City council deal with local provision of services and regulation (e.g. education, health, planning and environmental regulation etc). In relation to the mini mill development they are responsible for the initial review of the OVOS and for organisational and facilitation aspects of the OVOS public meeting(s) and further consultation. They are also responsible for the provision of the construction permit(s) and its regulation.

4.65 There is a community organisation (Community Foundation) supported by the main local businesses who provide funding and support and by grants and programme funds from international NGOs and funding organisations. Projects to encourage civic engagement around issues related to health and ecology protection (e.g. water quality). Other community organisations provide support for example to those with mental health, HIV or drug abuse problems.

4.66 Key religious organisations in the city include the Russian Orthodox Church and the Local Mosque (40% of the population is Muslim).

4.67 In addition to these organisations, residents have street representatives and they can discuss and raise issues of concern with the Duma deputies or local council.

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Education and Health

4.68 The town has approximately 16,000 secondary school students who are catered for by 32 schools. There are 48 nursery and infant schools which cater for approximately 9,000 children.

4.69 The town has a number of medical centres and hospitals and can provide 1300 hospital bed spaces.

4.70 Drugs and HIV are a problem for the town (although the incidence of drug use in young people is less than in England). NGO organisations such as “Pervouralsk without drugs” undertake preventative work.

4.71 In addition to the town facilities PNTZ has its own medical centre recently re- equipped and re-located to new purpose built buildings. This serves current and retired employees.

4.72 The main industrial health issues seen by the PNTZ health centre are related to vibration, respiratory disease and reduced hearing. Sickness figures provided by PNTZ show that in 2005 there were 111 cases of sickness / 100 employees and 1,122 working days lost /100 employees. Employees with health problems can retire 10 years earlier than the standard age (from 45 for a woman and 50 for a man).

PNTZ and the municipality

4.73 PNTZ employs approximately 12,500 people and approximately the same number again are retired workers i.e. pensioners of PNTZ. At its peak PNTZ employed 28,000 people.

4.74 Company tax payments provide funding for the local council (approximately 50% of the local budget) and Federal government budgets. In addition to this PNTZ contribute to a number of social projects for the town including support to the swimming pool, health and mental health centres and children’s hospitals, sports clubs, the community foundation and other NGO programmes. PNTZ spends in the order of €4 million on such community support projects.

Worker Organisations and Labour Policy

4.75 Each factory has its own Trade Union (TU) Organisation. PNTZ TU has 9000 members (75% of employees). There are 35 union sections, based around the workshop. With the new mini mill a new section will be developed. Each section has between150 to 800 members. Each section sends a representative to the TU

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committee which have weekly (open) meetings with Work shop heads and management. The organisation is managed by an elected executive committee. The Union is organised in line with the Ural Mining TU charter.

4.76 A similar structure is found in ChTPZ Meta.

4.77 Collective bargaining agreements are in operation and agreed at the executive level. The main elements covered by collective bargaining agreements include:

• Employment terms • Wage determination • Work /leisure hours • Occupational health and medical provision • Social provision.

4.78 The union has improved conditions gaining better and wider access to health centres, nursery education and mother and child health checks. These benefits are for TU members.

4.79 The trade union is very supportive of the mini mill plant. They like other representatives of PNTZ emphasise the opportunities that the new jobs will provide terms not only of more new jobs, but jobs with a high skill and opportunity to use new technology. This is seen as an importance means of encouraging young people back to the traditional industries and helping to change the image of the traditional industries.

4.80 Labour policy in the works follows and meets national labour law. Standard working conditions apply. These include equal wages for the same work for men and women; women though may get additional rest time. Wage rises in line with inflation and productivity, retirement at 55 for women and 60 for men and up to 10 years earlier if employees have health problems.

4.81 Training has a high profile in the plant. The Quality assurance system requires that each worker has an average of 72 hours training a year. Approximately 2000 people a year undergo short courses and 4000 undertake professional training.

4.82 Employment effects for both at PNTZ and ChTPZ Meta are discussed in Section 6.

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5. IMPACTS ASSOCIATED WITH CONSTRUCTION

INTRODUCTION

5.1 This chapter identifies the environmental impacts that may be caused by the construction phase of the project, and, where possible, assesses the likely severity of these impacts based on current information. Measures to reduce the severity of the impacts identified are also proposed (termed “mitigation measures”).

OVERVIEW OF THE CONSTRUCTION OF THE DEVELOPMENT

5.2 The investor has already chosen the main contractor for new mini mill development. This is SMS-Demag from Germany. The main subcontractor for the civil engineering and construction works is Gama, based in Turkey. SMS-Demag is responsible for the plant design, based on a specification provided by PNTZ. Gama is responsible for most of the site activities.

5.3 A building programme has already been established and the construction logistics and organisational issues have been produced. However, full details of the process of construction such as the details of the main equipment enclosures, methods of construction (e.g. the balance of onsite and off-site fabrication) could not be established at the time of the assessment. Moreover, Gama is responsible for general layout and architecture, which was not finalised at the time of the ESIA preparation.

5.4 PNTZ has already started preparation works for construction activities in January 2007 including:

• Demolition of existing structures: warehouses, buildings, railway sidings.

• Site levelling. • Construction of infrastructure connections (water, waste water, steam, hot water, energy etc.) to agreed connection points required for the construction.

• Construction of new railway sidings. • Preparation to construction of access roads.

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5.5 Much of the main operational equipment is highly specialised (e.g. the compressors and transformers) and will be supplied as a vendor packages that have been manufactured off-site and delivered to site by rail or road.

5.6 Construction activities will include:

• Demolition and site clearance; • Fill importing/exporting and site levelling; • Utilities and services connections to site; • Foundation piling/excavations and concrete footings pours; • Erection of building steel frames and cladding; • Installation of equipment; • Ancillary facilities erection; • Services, gas and utilities connections; • Building fitting-out; and • Commissioning.

5.7 Due to the size and nature of many of the major plant items it will be necessary to provide relatively substantial foundations and piling but the buildings themselves are likely to be of light steel construction.

5.8 There will be 3 areas of operation where temporary activities will take place:

• Area no 1 – administrative and storage area with warehouses and storage areas for equipment and materials.

• Area 2 – workers camp • Area 3 – operational area with concrete batching and storage areas.

5.9 It is expected that approximately 1,500 workers will work on site (at the peak time). It is planned that they will live on-site in a specially constructed camp. The camp will be located adjacent to the construction site to the east within the PNTZ site. The construction camp will consist of several pre-fabricated buildings and necessary infrastructure. This will include:

• Engineers’ dormitory (40 persons) • Administration and Technical staff dormitory (40 persons)

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• Foreman dormitory (72 persons) • 7 labourers’ dormitories (192 persons each) • Kitchen and restaurant • Laundry • Recreation and sports halls • Guardhouse.

5.10 The camp will be equipped in all necessary utilities including heat, water, waste water and electricity supplied by PNTZ. Most of the piping is already in place (January 2007).

5.11 The period of peak construction activity is expected to be between January and July 2008, with peak activity in March 2008.

5.12 Details on construction materials (e.g. cladding and building finishes) and construction methods (e.g. how much of the structures can be pre-fabricated and transported to site) are not available. It has been assumed that all plant items will be enclosed in steel-framed buildings clad in insulated profiled steel buildings, constructed on concrete footings. A concrete mixing plant will be provided by Gama for the period of construction works.

AIR QUALITY

5.13 Construction activities have the potential to affect air quality mainly due to the dust created by activities during demolition, completion of groundworks, and construction. In addition, construction plant and vehicles can affect air quality as a result of exhaust emissions.

5.14 Re-suspension of dust through activities on the site or the wind can cause a nuisance and affect human health and vegetation. Favourable conditions for dust generation are dry weather combined with high winds. Continual or severe concerns are most likely near to dust sources (usually within 100 m). The point at which a complaint is made is highly variable between people and is subjective.

5.15 There has been no monitoring of deposited dust levels near the proposed site, but as background ambient particulate levels are high, it is likely that deposited particulate levels are high in the construction area. It should be noted that apart from industrial installations there are several other sources of fugitive dust emissions in the direct vicinity of the construction area such as:

• Internal PNTZ railway sidings and internal roads;

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• PNTZ solid waste landfill; and • Public roads: the Pervouralsk-Ekaterinburg highway with heavy traffic and a viaduct over the trans-Siberian railway track.

5.16 All these are situated between the site and nearest residential area which is located about 500m south from the construction site. Moreover, both the internal railway siding and the landfill are elevated above the construction site, creating a barrier.

5.17 There are a wide range of dust control measures that are commonly used on construction sites. However, these measures are often designed for small sites directly accessed from public roads, with sensitive receptors bordering the site.

5.18 Many of these techniques are not practicable nor are they required for a site within a wider industrial setting, such as the mini mill development. Therefore those measures considered applicable, given the mini mill site’s location and surroundings will be employed at the construction site to minimise dust emissions. These measures will be incorporated in the Environmental Management Plan (EMP) which will be developed to control construction activities. Measures that may be employed include:

• water-spraying of roads, surfaces prior to being worked, and material stockpiles to minimise dust raising, as required;

• sheeting vehicles carrying dusty materials to prevent materials being blown from the vehicles whilst travelling;

• enforcing speed limits for vehicles on unmade surfaces to minimise dust entrainment and dispersion;

5.19 No information on the likely levels of construction traffic is available; therefore no specific assessment of the effects on air quality can be made. It is, however, considered unlikely that construction traffic will have a significant effect on ambient air quality given the existing background air quality and number of substantial emission sources on the PNTZ site.

5.20 Dust emissions from construction activities will be mitigated using measures identified in the detailed EMP. Any emissions will be of a temporary nature and their origin should be over 100m from the nearest off-site industrial receptors, thus minimising any potential for a nuisance to occur.

SURFACE WATERS AND EFFLUENT

5.21 Construction activities have the potential to pollute surface waters from the escape of:

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• silty and contaminated water from de-watering of excavations; • silty and contaminated water from exposed ground, earth stockpiles, and muddy roads;

• silty water from vehicle/plant washing areas; • leakage or accidental spillage of fuels, oils, chemicals etc, especially on the construction lay-down area

• washing down concrete mixing equipment; and • sanitary waste water from the workers camp.

5.22 Water supply and waste water drainage will be provided by PNTZ. Water will be provided from PNTZ potable water network (pumping station) and waste water will be discharged into industrial-storm water system.

5.23 The water consumption planned was provided by the contractor and is illustrated in the table below.

Table 5.1 – Water Consumption Planned.

Waste water Cold Water consumption Site drainage Notes m3/h m3/day m3/h Storage area 8 62 <8 - Water supplied from PNTZ Workers potable water system. 36 164 24 Camp Waste water discharged to PNTZ sanitary system. Construction site incl. 9 30 <9 - concrete plant

5.24 Potable water supply is guaranteed by the municipal water enterprise “Vodokanal” at up to 2,930,000m3/year. Current consumption is at the level of 2,000,000m3/year, an average of 5,480 m3/day. The increase in demand for the potable water consumption during construction will be about 4%, which will, therefore, be met by the supply agreement. There is also a formal agreement in place for discharge of sanitary waste water into the PNTZ sewer system.

5.25 The above water supply will guarantee about 110 l/day per worker in the peak time, and this is sufficient. Standard consumption of water for domestic purposes is in the range of 90-130l/day depending on local conditions. It is also possible that technical water from the internal PNTZ system will be used on site for technical purposes.

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5.26 Steam and hot water supplied from the existing PNTZ systm will be used for heating purposes.

5.27 Waste water from the sanitary systems will be discharged to the PNTZ sanitary waste water system and then to Vodokanal sewerage. Outflows from the construction area, storm water and water from dewatering of excavation works will be discharged to PNTZ’s combined industrial and storm water system. This water, after sedimentation in the ponds, is discharged to the Pachotka / Tchusovaya Rivers. This issue is discussed in detail in the chapter on operational impacts.

5.28 Areas of ground become exposed and disturbed during construction. This increases the potential for soil erosion and could potentially result in an increase in the sediment load of waters leaving the construction site. However, as the mini mill site is level, the potential for water flowing across the site to cause significant soil erosion is low.

5.29 Waters flowing across or percolating through the site also have the potential to entrain contaminants that may already be present in the soil. Due to the previous industrial land use at the mini mill site, there is the potential for the ground to be contaminated. However the risk should be assessed as low as no hazardous activities were reported there in the past. Should any areas of gross contamination be discovered during construction, they will be removed and disposed of in an appropriately licensed off-site hazardous waste disposal site.

5.30 In addition, surface waters can also become polluted from leaks or spills of materials used at construction sites. Measures will be employed at the construction site to reduce this risk. Potentially polluting materials, such as oils, fuels and chemicals will be stored in dedicated storage areas, complete with spillage protection and working procedures will ensure that these materials are handled correctly. Hazardous materials will be stored in closed pre-fabricated stores with hard-standing floors that will be located to the north from the main site (area no 1). Open storage areas will be provided with concrete plates or blocks.

5.31 The measures outlined above will be incorporated into the Environmental Management Plan (EMP) see Chapter

LAND QUALITY AND GROUNDWATER

5.32 The project site has been used for industrial purposes since the 1930’s. In the past the area was used mainly for unloading and storage of different materials supplied mainly by rail with numerous rail sidings and warehouses. There were also some workshops (in the western part) and a chloride unloading area (north-eastern part).

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5.33 For this reason it is thought not likely that the site is seriously contaminated although there are no data available to confirm this. According to the verbal opinion of ground works supervisors no contamination was found during the preliminary works. These works included levelling and a layer of ground has already been removed from part of the site. The ground consists mainly of clays and sandy clays.

5.34 The main risk of ground and groundwater contamination is during site preparation and excavations when the site surface is disturbed and accumulated contamination may be exposed, which may result in its mobilisation. The risk of such occurrence is rather low because of known history of the site and the low permeability of ground.

5.35 Geotechnical investigations were performed on site in October-November 2005 by Scientific Institute of Architecture and Construction “UralNIIAS” from Ekaterinburg. The general description of ground structure is:

• Anthropogenic made ground – thickness 0.9 – 4.0 m • Brown aluvial-deluvial clay – thickness of the layer 1.4-5.4 m • Peat present locally – thickness 0.5-0.7 m • Sandy clay alluvial, green-grey with clay ingredients in the central part of the site, seems to be the remains of the water stream

• Sandy clay yellow with gravel intrusions – thickness 2.6-23.4 m • Gravel and stones • Rock – chlorite-sericite schist

5.36 Ground water is present in the upper man made stratum at depths of 0.5-5.8 metres.

5.37 Suitable control techniques will be put in place to mitigate any potential impacts on the ground and groundwater. These may include:

• any areas of gross contamination discovered will be removed and disposed of appropriately.

• covering or damping the excavated materials to minimise the potential for dust generation;

• provision of appropriate storage for any contaminated water removed during dewatering with appropriate disposal.

5.38 There is also the risk that leaks and spills of oils, fuels and chemicals used in construction can cause ground and groundwater contamination. The control methods outlined in the section above will be adopted to address this risk.

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5.39 According to the contractor, open areas of materials, machines storage or parking of vehicles will be on hardstanding of concrete plates or blocks. Hazardous materials will be stored in closed pre-fabricated stores with impermeable floors.

ENERGY AND GREENHOUSE GAS BALANCE

5.40 The operation of equipment (like concrete mixing facility) and transport will use energy. Energy use will be reduced by good site practice; ensuring that vehicle trips and deliveries are planned to prevent unnecessary movements, and ensuring that equipment is turned off when it is not in use (this measure is also required to reduce noise and vibration).

5.41 Energy use in construction is not considered a potentially significant issue.

MATERIALS USE AND WASTE MANAGEMENT

5.42 The majority of the waste generated during the construction phase arises from the demolition of existing structures (above ground and sub-surface), site levelling and excavations. This will include concrete debris, scrap metal, wood, plastics, soil, glass etc. Some of these wastes may be contaminated by hazardous substances like oils (for example the waste from demolition of the workshops). Soil from site levelling is stored at the area located to the north-east of the construction site. As construction progresses, some additional areas may be needed, however according to PNTZ this will be arranged by PNTZ within the site. Soil storage areas will not be specially constructed with any ground protection measures.

5.43 Further waste generation will arise from earth moving and construction activities. Construction waste generated will include inert fill and waste building materials, steel, metals, wood, cardboard, paper, oils, hazardous wastes and general wastes. There is no available information on amount of waste likely to be produced.

5.44 Soil from site levelling and excavations will be reused for final landscaping in the final phase of construction works.

5.45 Waste produced when operating or maintaining the equipment and vehicles will be segregated, stored in designated places and passed to PNTZ services.

5.46 All other types of waste will be passed to PNTZ and disposed within the PNTZ waste management system and according to their permit.

5.47 There are several measures that can be recommended to minimise waste handling problems:

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• Topsoil should be stored separately and covered to enable its reuse for landscaping;

• waste storage and control procedures should be introduced to ensure that wastes are identified and stored correctly, in order to prevent the escape of polluting materials;

• Wastes generated should be segregated and recycled, as far as possible, making use of the site-wide recycling programmes.

ECOLOGY

5.48 The project site is an industrial site, surrounded by other industrial installations, railway sidings and the solid waste landfill. The site has been identified as having no ecological features, and there are no designated ecological sites in the close vicinity. The construction phase of the development will not affect any identified ecological interests either on or around the site.

LANDSCAPE AND VISUAL

5.49 The project site is located within the context of a large industrial site, and is surrounded by tall industrial installations including:

• production departments of 10-20 m height and stacks of up to 90 m height (to the north and west);

• railway siding and solid waste landfill elevated about 8 metres above the mini mill level (to the south); and

• woods and butane-propane storage area (to the east)

5.50 The industrial complex of PNTZ is characterised by large scale and multiple tall stacks and vertical structures which form a distinct landscape element.

5.51 The construction activities will involve use of lay down areas, stockpiles, vehicle and plant movements, large fixed and mobile cranes and the erection of industrial structures. These activities are expected to have a ‘nil’ to ‘negligible’ impact on the industrial landscape character of the PNTZ site.

5.52 The visual impact of construction activities is reduced due to the large scale of the existing industrial buildings and the fact that the skyline is already characterised by a series of stacks and structures rising from various plant on site. The cranes used in construction will be an additional element to the views into the site and across the site, but their effect is likely to be reduced because of the other existing elements that appear on the skyline.

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5.53 It is likely that the most sensitive viewpoints will be from residential receptors located to the south of the site, but this will concern only the highest floors of 4 storey blocks of flats. The construction area is obscured by railway sidings, solid waste landfills and trees. It is not visible from nearest residential buildings (to the south from the plant) except from the highest floors. As the area can be defined as hilly and some recreational areas (gardens) are located high on the hills (mainly to the north and east of the site) it can be expected that construction works can be viewed from high elevated sites but also in the context of surrounding industrial buildings. Due to the nature of the surrounding industrial setting, the visual impacts of construction works are expected to be ‘nil / negligible’ to ‘minor adverse’ and temporary. The visual impact of the construction phase from other viewpoints is expected to be less as direct views of the site are interrupted and partially to completely obscured by other elements of the PNTZ plant and intervening buildings.

5.54 Due to the expected low levels on visual impact expected from the construction phase, coupled with its transitory nature, no mitigation is proposed.

TRAFFIC AND TRANSPORT

5.55 During the construction period of the proposed development, site traffic will be generated by construction personnel entering and exiting the worksite and by road and rail transport of plant, materials and waste.

5.56 The overall construction traffic levels will be determined by a number of factors; how much additional fill/cut material is required; the quantities of raw materials for the construction of hard standing and building; site operating hours; and the use made of the railway system.

5.57 The transportation service will be provided by the internal PNTZ transportation department. Current estimates of additional vehicles necessary for construction works and provided by the Transportation Department include: 7 heavy self-dumping trucks (Belaz, MAZ, UAZ); 2 excavators; 1 fuel bowser; 3 bulldozers; 3 graders; and 2 lorries. However some of the vehicles already operating on site may be also used during construction works.

5.58 The number of cranes and specialized equipment is not yet estimated. This equipment will be provided directly by the contractor.

5.59 The number of vehicles operating on the site will cause an increase of less than 5%. Below is the list of transportation equipment used on site and estimates for construction period.

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Table 5.2 – List of Transportation Equipment Used on Site

Type of vehicle Currently used Additional required for mini mill construction and operation. Road transportation Heavy transportation 193 4 Light transportation 73 - Buses 31 - Special equipment 49 7 Road construction machines 43 6 and tractors Railway transportation Locomotives 19 3 Wagons 396 25

5.60 The transportation means presented above will be also partly used after start-up of the Plant.

5.61 The increased traffic is expected in the south-eastern part of the plant. To avoid heavy trucks movement inside the PNTZ site and also in the centre of the town (via the main gates), a new gate will be built. It will be located at the south-eastern border of the site and will provide access to a local road with direct connection to the main Pervouralsk-Ekaterinburg highway.

5.62 The traffic generated by the construction phase will not have significant impact on current volumes of traffic that enter and leave the PNTZ plant daily via the main gates. It should be also noted that most of heavy transportation connected with ground works will not leave the plant, as excavation material will be stored within PNTZ limits. Most of construction waste like debris, scrap metal will be stored and utilised inside the PNTZ plant.

5.63 The new gate will generate a new stream of vehicles that will join the traffic on Pervouralsk-Ekaterinburg road. This traffic includes workers transport, contractors’ vehicles and deliveries and collections of materials and wastes. The cars will be cutting into stream of vehicles on the main road nearby the viaduct over the trans- Siberian railway. This may result in a “bottle-neck” and especially in peak hours when the traffic is already heavy, it may create additional congestion problems. This will be mitigated by limiting heavy transportation entering and leaving the construction site in peak hours. Heavy transportation will be avoided at night

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because of the generated noise that may influence the residential areas located near the viaduct and the Pervouralsk-Ekaterinburg highway.

5.64 Rail transportation should not increase substantially during construction phase. It will be more prevalent in the operational phase.

5.65 The following mitigation measures will be considered:

• Restricting delivery hours to reduce noise nuisance and congestion; • Heavy construction traffic will be subject to the traffic management plan; and • Maximise the use of the rail network for bulk deliveries and abnormal loads.

5.66 Mitigation measures will be incorporated in to the Environmental Management Plan once transport requirements and suitable options have been established.

NOISE AND VIBRATION

5.67 Until more details are known about the types of equipment to be used in the construction phase, and the specific processes and programme, detailed calculations of the noise and vibration impact cannot be undertaken. Generally, those activities likely to be most noise-intrusive include piling. There are no significant demolition activities to be undertaken.

5.68 Mitigation measures will be used during construction works and will be incorporated into the Environmental Management Plan once construction details are known. Measures likely to be adopted include:

• Switching off plant and equipment when it is not in use for longer periods of time; • establishment of agreed site working hours for normal construction activities; • programming works such that the requirement for working outside of normal working hours is minimised;

• ensuring that all staff and operatives are briefed on the requirement to minimise nuisance from site activities;

• use of temporary noise screens or partial enclosures around particularly noisy activities, for example pneumatic breakers used in close proximity to dwellings;

5.69 Construction activities are likely to require high numbers of heavy goods vehicles to deliver plant and materials to the site, and to remove excess material. The noise impacts would be assessed once quantities of materials and the traffic generated have been identified.

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5.70 Commissioning activities will generate noise; noise levels are expected to be similar to those generated in the operational phase.

SOCIO-ECONOMIC ASPECTS

5.71 Socio –economic impacts related to construction include construction labour jobs and employment terms and conditions and covers the construction camp and possible impacts on the local community.

5.72 The new mill buildings will be constructed and equipment installed by Gama Company, a Turkish firm. The construction will take 23 months and will require at its peak 1500 construction workers. The workers will come from Turkey and also from other regions in Russia; but it is expected the majority of the latter will come from neighbouring countries (members of the former Soviet Union). It is expected that the majority of these people will speak Russian. The ratio of Turkish: Russian workers is not yet defined.

5.73 Engineers, technical and administrative staff and foremen will be employed and accommodated at the work camp. The work force is composed of 1,350 workers, 40 engineers, 80 technical and administrative staff and 64 foremen.

5.74 The construction work force will be employed through Russian subcontractors. Construction workers are not normally part of a Trade Union.

5.75 PNTZ is responsible for the periodic inspection of health and safety norms on the site.

5.76 PNTZ has undertaken preparatory work to install and provide the site with basic utilities (electric power, sewage connections and drinking water). The City Council Construction Department, having reviewed the plans, has granted a construction permit. No additional requirements were identified.

5.77 Up to 1,500 workers and Gama Company staff will be accommodated in a temporary construction camp of prefabricated buildings located adjacent to the construction site. PNTZ has provided the camp with connections to the mains sewer, electric power and water. Workers will live 6-people / room, foremen and technicians will live 2 people / room and engineers in single rooms. A kitchen and dining room and a laundry unit are also included in the camp area. Catering services are to be provided from a local (Turkish) subcontractor. A number of plans of the camp facilities are available in Appendix 4.

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5.78 Other camp facilities include: Recreation facilities including an enclosed sports hall are to be available for site workers, foremen and engineers.

5.79 The camp will include a clinic responsible for the health care of the people working on the project. This will be staffed by a doctor and nurse.

5.80 The construction camp is potentially significant due to its duration (23 months) and the numbers of foreign workers. The camp and its facilities are fully equipped and should minimise the need for daily worker interaction with the local community.

5.81 Local services that foreign workers may wish to may include: services and facilities of the mosque, many workers are expected to come from countries that are predominantly Muslim. There may also be a demand for transport during worker time off e.g. bus journeys to Ekaterinburg.

5.82 Given the large number of temporary migrant workers it is expected that there will be an increase in demand for the services of sex workers. Given that there is an identified issue of HIV and AIDS in the town, it would be important to ensure that construction workers are informed about potential health risks and provided with preventative measures (e.g. condoms).

5.83 The following details concerning company policy on worker payment, hours, health and safety, and guarantees on worker return to country of origin have so far been obtained:

• As per the company policies, all salaries and wages are in the range of Company salary scale and always in compliance with the related Countries' working rules and regulations.

• Normal hours of work and overtime will be according to standard conditions in Russia. Normal working hours will be 8 hours a day, 5 days a week (40 hours per a week). Workers will be paid at a rate of 50 % overtime over their basic rate up to 2 hours over their normal hours. Workers will get 100% overtime over their basic rate if they worker 2 hours and over their normal daily hours.

• Leisure time is regulated according to the working rules and regulations in Russia. Workers will get holidays according to the laws and regulations in Russia, with full pay. Should the workers decide to work through their weekends or legal holidays they will get 100% pay.

• Worker health and safety standards will be according to Russian and Turkish requirements. Gama Endüstri has OHSAS 18001 (Occupational Health and Safety Association Series) certified by BVQI. All workers’ (both Russian and Turkish) healthy and safety will be controlled through this system.

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• Worker recruitment is undertaken by the home office Project Management team with the contribution of Home Office Human Resources Management.

• As per the Russian rules and regulations, Gama Endüstri does not keep the passports of the workers during employment.

• Gama Endüstri arranges the visas and work permits of all the foreign workers. Upon completion of the project all foreign workers work permits and visa validation period will end and the company guarantees their return to their country of origin.

• Workers will be both from Turkey and SNG Countries and in order to ensure that there is appropriate communication, there will be translators available.

• The camp will be located at the site, not adjacent to any private residences. Workers transportation, in particular mass transportation at weekends will be arrange by the site facilities. For the avoidance of potential problems Gama will arrange site security and control systems.

• Gama's personnel are in the majority Muslim. A praying area (small mosque) will be available at site, in order that there will not be any pressure on local religious places.

• Gama will supply recreational areas including a canteen, TV saloons, sports centre for the activities of billiards, dotards etc. Workers will use also use the city facilities in Pervouralsk during their legal holiday time.

ARCHAEOLOGY AND CULTURAL HERITAGE

5.84 There are no archaeological or cultural heritage features identified on the site, and the assessment has not identified any sites that are likely to be affected by the development.

RISK MANAGEMENT

5.85 Abnormal and emergency conditions in construction phase may be divided into the following categories:

Emergencies

• fire in plant, equipment, installations, buildings (including the workers’ camp, administration building etc.)

• fire in adjacent industrial installations • spills of hazardous substances such as oils

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Abnormal situations

• breakdown of energy or heat supply • failure of water supply system or waste water collection system • ground stability problems • non-standard weather conditions; strong winds, heavy rain or snow; • Unexpected findings during excavations • Encountering contaminated areas or waste during earth works • Encountering archaeological items • Encountering unexploded ordnance (unlikely as this area was not bombed during WWII)

• Encountering unidentified structures or services (e.g. pipelines, foundations)

5.86 All the above will have specific procedures describing actions to be taken to mitigate environmental impacts.

5.87 Fire and spill risks will be covered by emergency procedures describing proper evacuation, communication, availability and use of fire fighting or spill removal procedure. It is understood that all fire issues will be supervised and executed by internal fire service of the PNTZ plant. There will be two representatives of PNTZ supervising the works and proper fire safety and OHS conditions. Moreover there will be a person representing contractor with inspection rights to supervise fire safety and OHS issues.

5.88 PNTZ Internal fire procedures will be also communicated to contractor workers to ensure proper behaviour in case of emergency as in other parts of the PNTZ plant.

5.89 Procedures will be also developed for situations regarding lack of power, heat or water supply. This will involve the use of secondary reserve sources, proper handling of machines and equipment (stop procedure). Specific procedures will apply to the Workers Camp. This will include prevention of any environmental damage or risk to the local community. Similar documents will also cover also unfavourable weather conditions when it may be necessary to stop works, switch-off the energy supply etc.

5.90 The procedure for handling of any abnormal conditions or finds during the excavation will allow for immediate halting of the works. The situation will be assessed (including risks), sampling undertaken if necessary and communication established with specialised services (eg archaeology, fire brigade, chemical emergency, army).

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Proper handling of the situation may include isolation of the area or removal of hazardous materials.

5.91 Mitigation measures will be incorporated into the Environmental Management Plan once transport requirements and suitable options have been established.

SUMMARY OF IMPACTS AND PROPOSED MITIGATION MEASURES

Impacts

5.92 The mini-mill site was almost entirely cleared and site levelling works took place at the time of the assessment. Basic information on the construction process was provided by the Contractor. The following comments are based on presented information but also on Atkins’ experience of the development of similar facilities in western and central Europe.

5.93 Construction activities can generate dust that can cause a nuisance to local residents and cause a health risk to construction workers. As the nearest residential receptors are over 795 m away, the main risk is considered to be the exposure of workers on site. Dust control measures, together with the use of appropriate personal protective equipment, where necessary, will be used to mitigate this impact. It should also be noted that the mini-mill development will take place against a background of a range of dusty processes carried out across the PNTZ site.

5.94 The effect on local air quality vehicle exhaust emissions from on-site construction operations is considered to be negligible.

5.95 Water on the construction site can become polluted as a result of existing contamination present in the ground (however this is a low probability) being mobilised and/or as a result of escapes of materials used during construction. These risks will be reduced by removing any areas of gross contamination as they are found for appropriate disposal at suitably engineered off-site hazardous waste disposal sites. Potentially polluting materials will be carefully stored in suitable containment in order to reduce the risk of pollution incidents from spills and leaks. As the site is level, the risk of surface run-off causing significant soil erosion, or transporting contaminated soils, is considered low and no specific control measures are proposed.

5.96 Wastes will be generated from construction activities. Measures will be employed to minimise waste production, ensure wastes are handled correctly and wastes will be recycled as far as practicable. Most of waste will be passed to PNTZ services and managed according to PNTZ procedures.

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5.97 Due to the nature of the surrounding industrial setting, the transitory visual impacts of construction works are expected to be negligible to minor adverse from areas to the south of the site of the site, where the nearest residential area are located. The visual impact from other viewpoints is expected to be less as direct views of the site PNTZ plant and intervening buildings.

5.98 The effects of the traffic generated by the construction phase should be put in the context of the large volumes of traffic that enter and leave the PNTZ plant daily. Current assumption are that number of vehicles during the construction works will not increase more than 5% comparing to normal PNTZ operation. Most of the cars will be used inside the PNTZ limits (ground transport etc.). The new gate will be build to eliminate increase traffic through main gates and town centre. However, construction operations will cause increased traffic on the road Pervouralsk-Ekaterinburg and especially on the viaduct over railways located in Talica settlement. There may be some effects on local inhabitants in terms of noise and air quality.

5.99 Overall, construction activities are transitory, and are considered likely to have a minor adverse impact on dust levels and visual impact. Measures will be employed to reduce the risk of water or ground pollution. The site will generate some wastes; these will be recycled as far as practicable and can be viewed as part of the cycle of industrial development and redevelopment.

MITIGATION MEASURES / MEASURES TO ENHANCE BENEFITS

5.100 Proposed mitigation measures are presented in the Table below:

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Table 5.3 - Summary of Construction Impacts and Mitigation Measures

Impact Proposed Mitigation Residual Impact Residual Impact Rating Impact Proposed Mitigation Residual Impact Residual Impact Rating Landscape and visual impact due None proposed due to industrial Not altered Negligible to the use of cranes and other surrounding obscuring the area of equipment construction activities Air quality - dust emissions during Development of procedures for : Dust propagation will be limited to Minor adverse construction and ground works construction area and will not - water spraying roads and dusty influence local community. materials stockpiles However workers should be - sheeting vehicles carrying supplied with dust masks especially dusty materials on leaving the in dry days. site to prevent materials being blown from the vehicles - speed limits on unmade surfaces on site to limit dust - dust emission monitoring in selected points Discharge of silty and contaminated - potentially polluting materials Ground contamination and storm Minor adverse storm water via PNTZ such as fuels and oils will be water contamination will be limited sedimentation ponds to the stored in dedicated storage on site by proper handling and Tchusovaya river areas with spillage protection storage of materials and equipment. Storm water will be - procedures for handling any treated in PNTZ sedimentation finding contaminated material ponds, the impacts on overall encountered during quality of discharge waste water will

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Impact Proposed Mitigation Residual Impact Residual Impact Rating excavations will be established be minor - covering and damping of excavated materials Ground contamination by leakages - All equipment will be subject to Risk of ground contamination by Minor adverse from machines periodic maintenance. leakages from storage or machines will be minimised - machines and equipment will be located on hard surface Bunds and drip trays will be used where appropriate.. - all storm water will go via PNTZ sedimentation ponds and oil separation Removal of contaminated soils - appropriate storage and Risk of impact reduced. Minor adverse during the excavation disposal of contaminated material if found will be granted and appropriate procedures implemented Discharge of sanitary waste water Waste water will be discharge via Negligible from workers camp via PNTZ sewer PNTZ sewer to municipal networks to municipal collector None. and municipal waste water treatment plant. Increase of waste water amount <4% of total PNTZ sanitary waste water Solid waste generation - Separation of uncontaminated Solid waste will be passed to PNTZ Minor adverse soil for reuse service and disposed according to PNTZ permits. - introduction of waste storage and control procedures Ground will be dumped for reuse

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Impact Proposed Mitigation Residual Impact Residual Impact Rating - segregation and recycling of waste Noise and emissions generated by - new gate to avoid Most of heavy traffic (like that Moderate adverse vehicles transportation via town centre carrying excavated material) will take place inside the PNTZ limits. - delivery hours scheduled to Other transportation, like deliveries, avoid peak traffic hours and will be directed through new gate night-time close to the site. Gates located in - traffic management plan the town centre will not be used. Temporary problems may arise on - Use of rail traffic for bulk the road Pervouralsk-Ekaterinburg. transportation and abnormal loads Emergency situations during - Emergency procedures to be Procedures for prevention and Minor adverse construction works developed and implemented actions to be taken in emergency situations (including fire, spills etc) - PNTZ fire and emergency will be implemented. Proper training squads available on-site and equipment need to be - availability of PNTZ and delivered to the staff. contractors inspectors on site

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Impact Rating Scale – Definition Very severe adverse Severe adverse Moderate Adverse Minor Adverse Negligible / Nil Minor Beneficial Moderate Beneficial Substantial Beneficial

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6. IMPACTS ASSOCIATED WITH OPERATION

AIR QUALITY

Introduction

6.1 This section presents the results of the detailed air dispersion modelling study undertaken for the proposed mini-mill development at PNTZ. The aim of the study is to determine increases to ground level concentrations of pollutants resulting from the routine stack emissions during the operation of the plant. The environmental regulator requires that increases to pollutant concentrations in the town will not exceed ten percent of the relevant ambient air quality standards.

6.2 The emissions to the atmosphere were modelled using the US Environmental Protection Agency (EPA) atmospheric dispersion model AERMOD PRIME. The plant discharge characteristics were taken from correspondence with the manufacturer, SMS Demag AG.

6.3 This AERMOD study includes direction specific building downwash effects for the main site buildings that are greater than 40% of the stack height and therefore may cause plume downwash effects. Digital terrain data were used in the modelling to take account of local topography. Five years of hourly sequential meteorological data measured at Ekaterinburg were used in the study. The joint frequency distribution of wind speed and direction is presented graphically as a wind rose in the baseline conditions chapter.

6.4 In the following sections are described:

• the air dispersion methodology, together with the various meteorological and geographical/topography data inputs used; • the emissions to air from the plant; • the results of the air dispersion modelling including concentrations at a nearby ecological site; and • a discussion of the model results at residential properties in the context of the air quality criteria.

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Methodology

Dispersion Modelling

6.5 The dispersion modelling was carried out using the US EPA model AERMOD PRIME version 07026. This model is the result of many years development by the US EPA and the American Meteorological Society. It has been developed as a regulatory model that incorporates the current understanding of atmospheric physical processes. This model is used by regulatory agencies, consultants and industry worldwide to assess the impact of air emissions from point, area, line and flare volume sources.

6.6 AERMOD simulates essential atmospheric physical processes and provides refined concentration estimates over a wide range of meteorological conditions and modelling scenarios. The modelling system1 includes:

• an advanced meteorological pre-processor to compute site-specific planetary boundary layer (PBL) parameters; • highly developed dispersion formulations that incorporate current PBL understanding and variables for both convective and stable boundary inversions; • enhanced treatment of plume rise and plume penetration for elevated inversions allowing for effects of strong updrafts and downdrafts that occur in unstable conditions; • improved computation of vertical profiles of wind, turbulence and temperature; • a “dividing streamline” approach for computations in complex terrain.

6.7 AERMOD includes two data pre-processors for streamlining data input: AERMET, the meteorological pre-processor discussed earlier, and AERMAP, a terrain pre- processor, which simplifies the computation of receptor elevations and effective height scales for digital data formats, including the DEM format elevation data purchased from Trinity Consultants Inc. for use in this project.

6.8 AERMOD PRIME also addresses and building downwash effects. The building downwash algorithms in AERMOD PRIME, using parameters calculated by the Building Parameter Input Program (BPIP), distinguish this model from earlier versions of AERMOD, which used simpler procedures to address downwash. The model provides reasonable estimates over a wide range of meteorological conditions and modelling scenarios.

1 AERMOD software provided by Trinity Consultants, http://www.breeze-software.com/

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Meteorological data

6.9 The hourly sequential data for Ekaterinburg for the years 2002 to 2006 were processed using the meteorological pre-processor AERMET. This software processes the meteorological data and estimates the necessary boundary layer2 parameters for the site-specific dispersion calculations in AERMOD. The data were processed to take account of the location and surroundings of the meteorological station and of the modelled facility (56.895ºN, 60.000ºE) using the surface parameters specified below. The parameters calculated by AERMET, together with observed near-surface wind and temperature data, are used to model how pollutants disperse in the atmosphere.

6.10 Surface characteristics were specified to reflect the nature of the surroundings within three kilometres of the steel works. Two zones were designated to reflect the rural characteristics to the east of the site and the urban character of the town. The pre- processor was used with default annual average parameters for surface roughness3, albedo4 and Bowen ratio5 respectively for these surfaces. The values used are presented in Table 6.1.

Table 6.1 – Surface Characteristics

Sector Type Albedo Bowen Surface ratio roughness (degrees) (m) 40 – 140 Rural 0.215 0.875 0.90 140 - 40 Urban 0.2075 1.625 1.00

2 The atmospheric boundary layer is that region between the earth’s surface and the overlying, free flowing atmosphere. The fluxes of heat and momentum drive the growth and structure of this boundary layer. The depth of this layer and the dispersion of pollutants within it are influenced on a local scale by surface characteristics, such as the roughness of the underlying surface, the reflectivity of the surface (albedo) and the amount of moisture available at the surface. From these inputs AERMET calculates several boundary layer parameters, which in turn influence pollutant dispersion, including surface friction velocity, sensible heat flux, Monin-Obukhov length, daytime mixing layer height and nocturnal surface layer height, and the convective velocity scale.

3 Surface roughness length is a measure of the height of obstacles to wind flow. It is not equal to the physical dimensions of obstacles, but is generally proportional to them.

4 Noon-time albedo is the fraction of incoming solar radiation reflected from the ground when the sun is directly overhead. Adjustments are made in AERMET to incorporate the variation in the albedo with solar elevation angle.

5 The Bowen ratio is a measure of the amount of moisture at the earth’s surface. This influences other parameters which in turn affect atmospheric turbulence.

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6.11 AERMOD was run with a single five-year meteorological data file. The model reports the maximum hourly, daily and annual average concentration found using these meteorological data. This provides a robust estimate of the result at each receptor.

Building downwash

6.12 The BPIP programme can be used to calculate for each wind sector the direction specific building downwash parameters to be used by AERMOD PRIME in the dispersion calculations. The buildings close to sources that are more than 40% of the stack height may potentially cause downwash effects. Only two building tiers are of relevance; the western section of the EAF building is 42m high and the eastern section is 50m high. These structures are 33 m wide and of 100 m and 115 m in length respectively. The BPIP programme was used to determine appropriate direction specific downwash parameters for the stack and incorporate them in the AERMOD input file.

Receptors

6.13 The AERMOD software uses the UTM co-ordinate system for receptors and all model objects. This is necessary as receptor heights are read from the DEM format terrain data file which is also based on UTM co-ordinates. Ground level concentrations were modelled using several Cartesian receptor grids. A regional grid of 7.0 by 7.5 kilometre of 240 receptors spaced at 500 metre intervals was centred on the facility. Two finer 125 metre grids were placed to capture maximum concentrations to the east of the site and over the areas of elevated terrain to the north east. The site boundary was also delineated by boundary receptors at all corners and with a maximum spacing of 100 metres.

6.14 There are two designated ecological sites near Bilimbay approximately 14 kilometres to the north west of PNTZ, the Grove Mogilica and Bilimbay forest. These were treated as discrete receptors. The model used in total over 1650 receptors.

Atmospheric Emissions

6.15 This study addresses the emissions from the stack associated with the de-dusting plant. This plant treats air extracted from the EAF casting bay to remove particulates prior to discharge via the stack. The process is not continuous; it is a batch process with a cycle time of less than one hour.

6.16 The furnace charging takes six minutes, the melting stage approximately 40 minutes and tapping take four minutes. The volumetric flow rates associated with these

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stages are 653, 594 and 558 am3/s respectively. Discharge temperatures are 65, 115 and 60 °C respectively.

6.17 There are variations in pollutant emission rates throughout the process. However, the manufacturer has a range of emission rates derived from measurements at similar plant. The measurements are typically taken over periods of 60 to 90 minutes so are not unduly influenced by specific stages of the process cycle. Typical ranges are as follows:

• Sulphur dioxide 1.5 to 4.0 g/s; • Oxides of nitrogen 4.0 to 8.0 g/s; • Carbon monoxide 20 to 40 g/s; • Particulates less than 4.1 g/s.

6.18 The manufacturer advised that an average temperature of 90 °C and a volumetric flow rate of 594 am3/s is an appropriate basis for the dispersion modelling study. The upper bounds of the above pollutant emission rate ranges were used. The stack characteristics are shown in Table 6.2.

Table 6.2 – Stack Characteristics

UTM Stack Stack Exit Exit Actual coordinates height diameter temp velocity volumetric flow rate Easting Northing m m °C m/s m3/s 317411.8 6307844.5 90 6.8 90 16.36 564

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6.19 The above stack and the plant structures included in the dispersion modelling are shown in Figure 6.1, as is the site boundary. The view is from the south east. The figure also shows the local topography as the areas of higher terrain elevations are brown. There are areas of elevated terrain to the east and to the south of the site. The mini-mill stack is at an elevation of 315 m. The highest ground is at an elevation of over 450 m at a distance of 4.5 kilometres to the north northeast. It is evident that areas of the town are at a slightly lower elevation than the PNTZ works.

Figure 6.1 – Emission Source and Plant Structures

Discussion of Results

6.20 The maximum modelled short-term and long-term increments to ground level pollutant concentrations are presented in this section. These results are shown graphically in the form of contour plots that demonstrate the pattern of ground level concentrations around the site. The plots also clearly show the boundaries of the overall PNTZ site and that of the mini-mill development.

6.21 The results are also summarised in Table 6.3. The relevant Russian national standard and EC/WHO criteria are also reiterated in the tables for ease of reference. Note that the modelled oxides of nitrogen concentrations are reported in the table whereas the ambient air quality criteria relate to nitrogen dioxide. The potential degree of conversion of oxides of nitrogen in the discharged plumes to nitrogen dioxide at ground level is limited and this is discussed in the relevant section below.

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Table 6.3 - Modelled Increments to Pollutant Concentrations, µg/m3

Pollutant and Modelled Proportion of Limit Value Sources of Averaging Period Increment Criterion Criteria µg/m3 % µg/m3

Sulphur Dioxide

Maximum 1-hour 5.89 1.68 350 EC 0.71 125 EC/WHO Maximum 24-hour 0.88 0.18 500 Russia

Annual average 0.09 0.18 50 WHO/Russia

Oxides of Nitrogen

Maximum 1-hour 11.8 1.18† 200* EC 0.18† Maximum 24-hour 1.77 200* Russia

Annual average 0.18 0.09† 40* EC/ Russia

Carbon Monoxide

Maximum 8-hour 13.4 0.13 10,000 EC

Maximum 24-hour 8.8 0.18 5,000 Russia

Particulates

1.81 50 EC Maximum 24-hour 0.91 0.18 500 Russia 0.23 40 EC Annual average 0.09 0.06 150 Russia

† * Limit value is for nitrogen dioxide. Assumes 20% conversion of NOx to NO2. 6.22 The following sub-sections discuss the detailed results for each pollutant and illustrate the local effects on ambient air quality by means of contour plots.

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Sulphur Dioxide

6.23 The increments to annual average sulphur dioxide concentrations are shown in Figure 6.2. The concentration shown at each receptor location in the figure is the highest annual average found from the five years meteorological data used in the dispersion modelling study. The maximum annual average concentration of 0.09 µg/m3 is found 1200 metres to the east of the mini-mill stack at UTM grid reference 318625, 6307750. The highest modelled increments to annual average sulphur dioxide concentrations in a residential area are below 0.04 µg/m3 to the south east of the plant. In most of the town to the west of the site the increments are below 0.02 µg/m3. These increments to ground level concentrations are negligible in comparison with the Russian criterion and the WHO guideline of 50 µg/m3.

6.24 The modelled annual average sulphur dioxide concentrations at the ecological sites near Bilimbay are less than 0.01 µg/m3. These concentrations are considered to be of negligible effect on even the most sensitive ecosystems.

6.25 The daily average concentrations are shown in Figure 6.3. These results show the maximum daily result for each receptor in 1,825 days modelled. The highest increment to daily average concentrations of 0.88 µg/m3 occurs at 318250, 6307625, almost 1000 metres to the east of the mini-mill stack. The figure shows that in the majority of the surrounding area, and at all but a small number of residential properties, the maximum increments to daily average concentrations are less than 0.6 μg/m3. These increments are considered to be negligible in comparison with the Russian limit of 500 μg/m3and the EU limit value of 125 µg/m3.

6.26 The maximum hourly average concentrations are shown in Figure 6.4. The contours shown with tick marks indicate areas of lower concentrations. These are the highest concentrations at each receptor in over 43,800 hours modelled. The maximum concentration is 5.9 µg/m3 at 318750, 311375 on the wooded hill to the north north- east of the plant where the ground elevation is 460 m. Concentrations also exceed 4.5 µg/m3 at a distance of 2300 m to the north-east of the plant; this is also an area of forest. There are a small number of residential properties where concentrations exceed 1.5 µg/m3. These increments are considered to be negligible in comparison with the EC limit value of 350 µg/m3.

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Figure 6.2 - Maximum Annual Sulphur Dioxide Concentrations, µg/m3

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Figure 6.3 - Maximum Daily Sulphur Dioxide Concentrations, µg/m3

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Figure 6.4 - Maximum Hourly Sulphur Dioxide Concentrations, µg/m3

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Oxides of Nitrogen

6.27 The increments to annual average oxides of nitrogen concentrations are shown in Figure 6.5. The absolute maximum annual result of 0.18 µg/m3 is again found to the east of the stack where the ground rises to an elevation of 340 m. In most of the town to the west of the site the increments are below 0.04 µg/m3. It likely that approximately 20% of the modelled increments to oxides of nitrogen concentrations react in the atmosphere to form nitrogen dioxide at the ground level receptor locations reported. It is clear that the modelled increments would be extremely low in the context of the 40 µg/m3 EU criterion for nitrogen dioxide. As shown in Table 6.3, if it is assumed that 20% of the oxides of nitrogen convert to nitrogen dioxide the resultant increment is less than 0.2% of the criterion, a clearly negligible effect.

6.28 The modelled annual average oxides of nitrogen concentrations at the ecological sites near Bilimbay are less than 0.02 µg/m3. Such concentrations are considered to be of negligible effect on even the most sensitive ecosystems.

6.29 The increments to maximum daily average oxides of nitrogen concentrations are shown in

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Figure 6.6. The absolute maximum result of 1.76 µg/m3 is in the forest to the east of the site. On the basis of 20% conversion to nitrogen dioxide, the modelled increments would be less than 0.2% of the 200 µg/m3 Russian national criterion for nitrogen dioxide. The figure shows that a small number of residential properties to the south of the site may be subject to oxides of nitrogen concentrations of 1.2 µg/m3. In terms of nitrogen dioxide, this is equivalent to 0.12% of the 200 µg/m3 national criterion, again a negligible effect.

6.30 The increments to maximum hourly average oxides of nitrogen concentrations are shown in Figure 6.7. The absolute maximum result of 11.7 µg/m3 is on the wooded hill to the north north-east of the plant. Concentrations exceed 8 µg/m3 in a small area of forest to the north-east of the plant. In the residential areas the maximum increment to oxides of nitrogen concentrations does not exceed 4 µg/m3. On the basis of 20% conversion, these results represent 0.4% of the 200 µg/m3 hourly average European criterion for nitrogen dioxide. These increments are therefore considered to be negligible effects.

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Figure 6.5 - Maximum Annual Oxides of Nitrogen Concentrations, µg/m3

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Figure 6.6 - Maximum Daily Oxides of Nitrogen Concentrations, µg/m3

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Figure 6.7 - Maximum Hourly Oxides of Nitrogen Concentrations, µg/m3

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Carbon Monoxide

6.31 The daily average concentrations are shown in Figure 6.8. The highest increment to daily average concentrations of 8.8 µg/m3 occurs in the forest to the east of the site. The figure shows that at residential properties the maximum increments to daily average concentrations are less than 6 μg/m3. These results are considered to be negligible in terms of the Russian national standard of 5,000 µg/m3.

6.32 The maximum eight-hourly average concentrations are shown in Figure 6.9. These are the highest concentrations at each receptor for the three daily block averages over the five year period modelled. The maximum concentration is 13.4 µg/m3 found on the site boundary at 317964, 6308609, to the north north-east of the plant. The highest result at residential properties in the surrounding area are less than 9 µg/m3. All of these results are considered to be negligible in the context of the EC limit value of 10,000 µg/m3.

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Figure 6.8 - Maximum Daily Carbon Monoxide Concentrations, µg/m3

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Figure 6.9 - Maximum Eight-hourly Carbon Monoxide Concentrations, µg/m3

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Particulates

6.33 The increments to annual average particulate concentrations are shown in Figure 6.10. The maximum annual average concentration of 0.09 µg/m3 is found 1200 metres to the east of the mini-mill stack in the forest. The highest modelled increments to annual average particulate concentrations in a residential area are below 0.04 µg/m3 to the south east of the plant. In most of the town to the west of the site the increments are below 0.02 µg/m3. These increments to ground level concentrations are negligible in comparison with the European criterion of 40 µg/m3 and the Russian standard of 150 µg/m3.

6.34 The daily average concentrations are shown in Figure 6.11. The highest increment to daily average concentrations of 0.91 µg/m3 occurs at 318250, 6307625, almost 1000 metres to the east of the mini-mill stack. The figure shows that in the majority of the surrounding area, and at all but a small number of residential properties, the maximum increments to daily average concentrations are less than 0.6 μg/m3. These increments are considered to be negligible in comparison with the Russian standard of 500 μg/m3and the EU limit value of 50 µg/m3.

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Figure 6.10 - Maximum Annual Particulates Concentrations, µg/m3

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Figure 6.11 - Maximum Daily Particulates Concentrations, µg/m3

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SURFACE WATERS AND EFFLUENT

Water Intake

6.35 The mini mill project will use the existing water supply infrastructure at the PNTZ site.

6.36 Water for technological processes is abstracted from the Tchusovaya River. This intake belongs to the company. Water is supplied by three pipelines to the site and this also feeds the adjacent Combined Heat and Power plant (TEC). Water consumption from Tchusovaya river in 2005 was 6,904,900 m3/year (including 2,797,000 m3 passed to TEC). In 2006 water consumption was 6,080,000 m3/year (including 3,285,000 m3/year). According to the PNTZ the decrease of water consumption is the result of implementation of treated industrial-storm water recycling system. Recycled water is used for supply of Department No 8 and pumping stations no 4, 5, 7 which supply make-up water for closed clean water cycle.

6.37 The company has one more water intake on the Nizhnyj Shaitanskij water reservoir. In 2005 the water consumption from this source was 205,838 m3. In 2006 no water was used.

6.38 Surface water from Tchusovaya river (fresh water) is used for make-up of existing “clean” water cycles, for cooling purposes, in pickling plants and in the sanitary rooms of industrial buildings. The water intake and the dam are located about 3 km from the plant on Tchusovaya river.

6.39 Potable water is supplied from municipal networks operated by PPMUP Vodokanal. Potable water consumption in 2005 was 2,029,300 m3 and 1,844,000 m3 in 2006.

6.40 The general water demand for new mini mill is:

• Fresh technical water: maximum 390m3/h; average 255 m3/h and pressure 0.15- 0.2 MPa. The water will be supplied directly from pump station ZOC.

• Fire fighting water: maximum 150m3/h, pressure 0.15-0.2 MPa. Water will be supplied from fire water ring located south from Department 10

• Potable water: maximum 25 m3/h, average 5 m3/h and pressure 0.15-0.2 MPa. Water will be supplied from municipal network via new pipeline of 220 mm diameter.

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6.41 Comparison of new mini mill water consumption with current consumption of the PNTZ is presented in the table below.

Table 6.4 – Comparison of New Mini Mill Water Consumption and Current Consumption

Mini mill PNTZ maximum and PNTZ Limit for consumption Water average consumption PNTZ 3 2006 average consumption 2006 m /y 3 m3/h m /y m3/h 2,437,000

Fresh technical 3 (3,285,000 was water 390 m h passed to other 278 11,041,000 (Tchusovaya 255 m3/h users and 178000 river) are losses in the supply system)

3 Potable water 25 m /h 1,809,000 206 2,930,000 (Vodokanal) 5 m3/h

6.42 Technical water consumption will increase by approximately 90-100%. Potable water consumption will increase by no more than 12%. Current water abstraction limits will not be exceeded. The estimated yearly water consumption (technical) after start-up of new mini mill will be at the level of 4,500,000 m3 per year compared to the limit of 11,041,000 m3. Therefore, the increase of water consumption will be significant.

6.43 The increase of industrial (river) water consumption will be to some extent balanced by optimisation of water use. The water management programme is discussed later in this chapter. In the period 2005-2006 the PNTZ managed to reduce water consumption by 1,200,000m3/y by implementing a water reuse system.

6.44 The new mini mill will use significant amounts of water mainly for cooling purposes. This will include Electric Arc Furnace (EAF), Ladle Furnace (LF), Continuous Caster (CC), Vacuum Degasser (VD) and Dust Collecting Plant. Water will be used also for general servicing operations (industrial) and for sanitary/social needs (potable).

6.45 In the Electric Arc Furnace, cooling water will be used for:

• upper furnace shell consisting of water cooled segments and panels • roof with fumes nozzle consisting of spider frame and water cooled roof panels

• heat exchanger on hydraulic unit • heat exchanger on transformer

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• electrodes including water cooled electrode arms, electrode holder, electrode direct spray cooling, water-cooled electric cables connecting electrodes and transformer

6.46 In the Ladle Furnace, cooling water will used for

• ladle hood • electrode arms and holder, water-cooled electric cables

6.47 In the Vacuum Degasser, cooling water will be used for:

• steam condensation in condensers,

6.48 In the Dust Collection Plant, cooling water will be used for:

• direct exhaustion system from EAF including: swivelling elbow, combustion chamber, hot-gas line.

6.49 In the Continuous Casters, cooling water will be used for:

• closed mould cooling system • secondary cooling • strands – in cooling chamber with sprays • machine cooling system

6.50 The cooling water supply system includes water treatment plant and consists of 8 sub-systems. The total water fIow rate is 15,237 m3/h; make-up water fIow rate is - 215 m3/h (industrial water); and approximately 14.8 m3/h for demineralized water. A total water input of around 230 m3/hour is required to make up for evaporative losses from the cooling towers, and is input to the cooling tower basins. This includes the demand of the steam generation plant.

6.51 Water for cooling purposes will be supplied from the internal PNTZ technical (fresh) water system. Part of this water will be de-mineralized at the water treatment plant which is part of the new project. The average blow-down water fIow rate is 74 m3/h. This will be discharged to the internal PNTZ industrial-storm water system.

6.52 The cooling water system can be divided into:

• indirect cooling (clean) – Systems: 1, 2, 4, 5, 6 • direct cooling (dirty – where water is in contact with the hot material) - systems: 3 and 7.

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6.53 The description of closed cooling water cycles in the mini mill is presented in Table 6.5 below.

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Table 6.5 – Closed Cooling Water Cycles in the Mini Mill.

Water quality System Water demand Short description requirements Water flow rate to be 3 Water from EAF, LF, VD will be cooled in closed water circuit via plate System 1 – EAF- cooled: 2735 m /h heat exchangers. Plate heat exchangers will be cooled by re-cooling Demineralised water LF-VD-Cooling Avg. make-up water flow system no 4. Recirculating water will be kept clean by side stream rate: 1.4 m3/h filtration. Dosing stations for corrosion inhibitors and biocides will be used.

Water flow rate to be 3 Water from EAF will be cooled in closed water circuit via plate heat System 2 - EAF cooled: 1800 m /h exchangers. Plate heat exchangers will be cooled by re-cooling system no Demineralised water Watercooled Duct Avg. make-up water flow 4. Recirculating water will be kept clean by side stream filtration. Dosing rate: 0.9 m3/h stations for corrosion inhibitors and biocides will be used.

Water flow rate to be cooled: 632 m3/h VD condenser cooling water will be cleaned and re-cooled in an open System 3 - VD- Avg. make-up water flow Industrial water cooling circuit. Water will be transferred to cooling tower. A part stream Condenser rate: 14 m3/h d\filtration with gravel filters will be applied to clean the water. Dosing Cooling stations for corrosion inhibitors and biocides will be used. Avg. blow-down water flow rate: 3 m3/h Water flow rate to be 3 cooled: 7847 m /h Two subsystems. 4a – for cooling plate heat exchangers of systems 1,2,5. 4b for cooling air conditioning systems air compressor station and air System 4 - Re- Avg. make-up water flow Industrial water separation plant. Water will be cooled in cooling tower. Gravel filters will Cooling rate: 147 m3/h be applied to clean the water. Dosing stations for corrosion inhibitors and Avg. blow-down water biocides will be used. flow rate: 49 m3/h

System 5 – Water flow rate to be Water from mould will be cooled in two independent closed water circuits Demineralised water Mould Cooling 3 cooled: 1930 m3/h via plate heat exchangers. Plate heat exchangers will be cooled by re- & 5-Strand cooling system no 4. Recirculating water will be kept clean by side stream

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Water quality System Water demand Short description requirements Casting Machine Avg. make-up water flow filtration. Dosing stations for corrosion inhibitors and biocides will be rate: 1.0 m3/h applied.

Water flow rate to be cooled: 930 m3/h System 6 - Machine Cooling Avg. make-up water flow Industrial water Machine cooling water will be cooled in one semi-closed circuit via a 3 3 & 5-Strand rate: 19 m /h cooling tower. Casting Machine Avg. blow-down water fIow rate: 9 m3/h Water flow rate to be cooled: 630 m3/h Polluted water from spray machine cooling will be cooled and cleaned in System 7 – Spray open circuit. Heated and scale loaded water will flow down to the scale pit Cooling 3 + 5- Avg. make-up water flow Industrial water for pre-cleaning. Scale water pumps will supply the water as flume 3 Strand Casting rate: 40 m /h flushing back to the casting machines and via gravel filters to the cooling Machine tower. The filter backwash water of all systems will be collected in a basin Avg. blow-down water and then pumped to system 8. flow rate: 13 m3/h Detailed assortment and arrangement of the equipment for technology of System 8 - Water Avg. Filter Backwash 3 - water treatment and filter back-wash water will done during project Treatment Water Flow Rate: 55 m /h execution. Sludges will be dewatered on filter presses.

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6.54 The introduction of closed water allows for significant reduction of water consumption that will be at the level of 1.5% of total water use in the closed systems.

6.55 The cooling cycle will require chemical dosing of biocides and flocculants for water quality and microbial control. The details of dosage equipment are not yet decided.

Water discharge

6.56 The mini mill will, in general, discharge wastewaters to combined industrial-storm water system of PNTZ. PNTZ has several waste water systems including:

• storm and industrial system that carries waste and storm water via sedimentation reservoirs to the Pachotka and then Tchusovaya rivers

• acidic waste water system that carries effluents from pickling stations to neutralisation plants (2 no) and then to a sludge reservoir (shlamonakapitel); overflow from the sludge reservoir joins with the storm water outlet and goes to the Pachotka and then Tchusovaya rivers

• sanitary waste water system which takes the water to themunicipal sewerage system and then to municipal waste water treatment plant .

6.57 In 2005, 4,235,000 m3 of waste water was discharged via the main outlet to the Pachotka river, a tributary of Tchusovaya and in 2006 4,748,000 m3. This includes 1,244,000 m3 of storm and drainage water.

6.58 The company has a permit issued in 2006 allowing for discharge of 7,456,000 m3 per year.

6.59 The company operates two types of water cycles: “clean” and “dirty”. The “dirty” water cycle consists of two parts with independent pumping stations. The water is used mainly for cooling of equipment in production departments 1, 2, 5, 16 and 8. Returned water is treated in radial sedimentation tanks or 12-section sedimentation tanks. Excess water is discharged to storm and industrial system.

6.60 The “clean” water cycle consists of four main components with independent pump stations and cooling towers. The clean water is used for cooling of compressors, nitrogen-oxygen plant, ammonia plant and other equipment requiring high quality water. Excess water is used as make-up of “dirty” cycles or discharged to waste water system.

6.61 The closed water cycles operating at the PNTZ site are illustrated in the table below.

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Table 6.6 – Closed Water Cycles Operating at the PNTZ Site

Closed water system Departments served Water flow [m3/year] “Clean” water cycle of “closed” 6, 8 693,110 system (ChOC ZOC) “Clean” water cycle of “closed” 1, 2, 5, 6, 8, 16 6,909,250 system (GOC ZOC) “Clean” water cycle no 4 5, 7 4,641,850 “Clean” water cycle no 5 8, 14, 17, 28 14,702,750 “Clean” water cycle no 6 33, 7 16,644,000 “Clean” water cycle no 7 9, 10, 34 and neutralisation 5,845,420 plant

6.62 Acidic waste waters from pickling installations on the main PNTZ plant are neutralised in two neutralisation plants. The acidic waste water may contain different

acids like HCl, H2SO4, HF, HNO3, H3PO4 and FeSO4. Waste water is discharged in batches to the neutralisation plants after contacting them. The neutralisation process involves lime. Lime is supplied as limestone and crushed on site. Neutralised waste water is then discharged to the sludge reservoir. Part of the water from the pond (about 30m3/h) is returned to production in Department no 9. Excess water from the ponds is discharged via outlet no 1.

6.63 Storm and industrial waste water (apart from storm water from roofs and roads) also collects some waste water from departments: 1, 2, 5, 17, 18, 21 (rail) and overflows from the dirty and clean closed water cycles.

6.64 The main PNTZ site has two permits for the waste water discharge points, valid to 21.06.2007. The permit for outlet no 1 to the Pachotka river allows for a discharge of 7,456,000 m3/year and sets 18 limits in two categories: allowable concentrations (PDK) and temporary acceptable concentrations (WSS).

6.65 The results of waste water measurements are presented in the Table 6.7 below. The figures in the table are coloured. Figures in red indicate exceedance of temporary, short term stringent limits. Figures in blue indicate exceedance of standard, long term, less stringent limits.

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Table 6.7 - Characteristics of Wastewater Discharged to Pachotka River

Suspended Sulphates Dry Nitrites Nitrates Oil Month pH Chlorides Fe Cu Ni Cr+6 Cr+3 Mn F COD Surfactants solids SO4 residue NO2 NO3 products

2006 mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l

January 29.65 9 345.1 196.4 1062.5 0.01 3.03 0.65 0.03 0 0.024 0 0.06 2.1 47 0.4 0.039

February 24.37 8.83 278.57 154.57 842 0.023 3.51 1.98 0.02 0.03 0 0 0.06 1.41 61 1.49 0.03

March 17.05 8.35 260.3 144.8 816.25 0.014 2.5 0.4 0.02 0 0.015 0.01 0.05 1.51 51 0.21 0.04

April 16.43 8.13 196.77 101.53 647.17 0.015 1.04 0.78 0.02 0 0.02 0.01 0.06 1.52 38 0.43 0.05

May 11.9 8.4 302.5 107.46 836.3 0.015 1.35 0.78 0.027 0.09 0.02 0.01 0.16 2.4 63.5 0.26 0.056

June 20.2 8.3 184.2 65 593.3 0.45 3.09 1.8 0.019 0 0.08 0.05 0.13 1.98 46.5 0.59 0.06

July 31.65 8.2 150.76 55.52 573 0.23 4.2 1.6 0.024 0.018 0.049 0.019 0.12 2.047 47.8 1.1 0.067

August 37.7 7.9 262.1 81.9 761.5 0.4 3.16 2.8 0.06 0 0.03 0.01 0.13 2.8 50 1.15 0.066

September 18.9 7.8 265 95.4 750.83 0.3 5.1 1.18 0.013 0 0.028 0.02 0.028 2.6 20 0.39 0.047

October 14.85 7.8 147 70.9 523.5 0.03 1.9 0.46 0.012 0 0.01 0.01 0.151 1.78 50 0.65 0.036

November 12.6 7.8 218.6 114.3 701.5 0.05 3.65 1.3 0.025 0 0.02 0 0.09 2.3 39.5 0.9 0.054

December 16.7 7.8 157.57 135.33 746.7 0.02 1.65 0.627 0.012 0 0.01 0.007 0.12 1.73 27.3 0.54 0.02

Average (based 21 8.193 230.706 110.259 737.879 0.130 2.848 1.196 0.024 0.012 0.026 0.012 0.097 2.015 45.133 1.100 0.046 on month results)

PDS - permissible 6.38 - 100 92.94 729.27 0.02 22.1 0.71 0.041 0.01 0.02 0.006 0.21 0.75 30 0.05 0.04 concentrations

WSS - 20 - 219.54 92.94 729.27 0.05 22.1 0.71 0.041 0.01 0.02 0.006-0.21 1.5 30- 0.3 0.04 temporary limit

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Table 6.8 - Waste water discharges – Official PNTZ Report

Suspen Oil Dry Nitirit Fluorid Surfacta Substance ded product Chlorides Sulphates Nitrates COD Fe Cr+6 Cr+3 Cu Ni Mn residue es es nts solids s

2005

Discharge in 2005 (tonnes) 65.077 2545.38 4.454 371.73 814.197 78.526 3.993 8.311 0.120 136.82 3.084.20 0.018 0.034 0.061 0.253 0.123

Concentration in 2005 mg/l) 15.367 601.034 1.052 87;777 192.254 18.542 0.943 1.962 0.029 32.307 0.728 0.004 0.008 0.015 0.06 0.029

Discharge volume 4748 4748 4748 4748 4748 4748 4748 4748 4748 4748 4748 4748 4748 4748 4748 4748 thousands m3

2006

Discharge in 2006 (tonnes) 66.148 2563.50 2.566 447.857 794.395 104.240 4.665 8.531 0.188 0.133 3.679 0.046 0.0416 0.023 0.032. 0

Concentration in 2006 mg/l) 13.932 539.912 0.540 94.325 167.312 21.955 0.982 1.797 0.040 27.936 0.775 0.010 0.009 0.005 0.007 0.0

Exceeding of kg/year 1.02 1.01 0.58 1.20 0.98 1.33 1.17 1.03 1.56 0.97 1.19 2.58 1.21 0.38 0.13 0

2005 level mg/l 0.91 0.90 0.51 1.07 0.87 1.18 1.04 0.92 1.36 0.86 1.06 2.43 1.09 0.32 0.11 0

Exceeding kg/year 1.39 0.47 6.88 0.65 1.07 0.63 31.31 1.53 0.63 0.64 0.69 0.31 0.55 0.08 0.43 0

of PDS mg/l 2.18 0.74 10.81 1.01 1.67 0.99 49.12 2.40 0.99 0.93 1.09 0.49 0.88 0.12 0.68 0

Exceeding kg/year 0.44 0.47 1.15 0.65 0.49 0.63 12.51 0.76 0.63 0.64 0.69 0.31 0.55 0.08 0.43 0

of the limit mg/l 0.70 0.74 1.80 1.01 0.76 0.99 19.65 1.20 0.99 0.93 1.09 0.49 0.88 0.12 0.68 0

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Suspen Oil Dry Nitirit Fluorid Surfacta Substance ded product Chlorides Sulphates Nitrates COD Fe Cr+6 Cr+3 Cu Ni Mn residue es es nts solids s

Limits

kg/ye 5437.43 PDS 47.569 0.373 692.961 745.6 164778 149 5592 298 207 5294 149 75 298 75 1566 ar 7

permissible mg/l 6.38 729.27 0.05 92.94 100 22.1 0.02 0.75 0.04 30 0.71 0.02 0.01 0.04 0.01 0.21 discharge

kg/ye 5437.43 WSS 149.12 2.237 692.961 1636.89 164778 373 11184 298 207 5294 149 75 298 75 1566 ar 7

temporary limit mg/l 20 729.27 0.3 92.94 219.54 22.1 0.05 1.5 0.04 30 0.71 0.02 0.01 0.04 0.01 0.21

Note: discharge parameters for the report are calculated with subtraction of the load of pollutants obtained in river water. This is the reason for differences in the data in two tables presented above.

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Table 6.9 - Tchusovaya River Quality Above and Below Pachotka Inlet 2006

Suspended Sulphates Dry Nitrites Nitrates Cr Oil Chlorides Fe Cu Ni Cr+6 Mn F COD Surfactants solids SO4 residue NO2 NO3 total products Category pH mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l mg/l

Tchusovaya river at the Sajinskyi bridge (above the outlet of Pachotka)

Average concentrations 9,44 7,75 69,79 17,35 235,5 0,24 1,65 0,48 0,045 0 0,029 0,023 0,275 0,237 22,04 0,16 0,012 (year)

Permissible level - 6,5-8,5 100 300 1000 0,08 40 0,1 0,001 0,01 0,07 0,02 0,01 0,75 30 0,02 0,5

Tchusovaya river – below the outlet of Pachotka tributary

Average concentrations 31,18 8,18 189,23 47,41 490,23 0,092 2,61 1,17 0,048 0,0068 1,201 0,828 0,276 0,662 32,91 0,25 0,033 (year)

Permissible level - 6,5-8,5 100 300 1000 0,08 40 0,1 0,001 0,01 0,07 0,02 0,01 0,75 30 0,02 0,5

Note: The Pachotka river is a stream taking significant quantities of waste water from local companies including PNTZ. However the major impact on water quality is associated with the “Chrompik” company who discharge waste water containing hexavalent chromium. Reportedly there is also significant impact of chromium containing leachate from the “Chrompik” sludge lagoons and landfills.

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6.66 The decrease in water quality in the Tchusovaya below the inlet of the Pachotka is significant. According to the municipal programme, actions are planned to decrease the releases of chromium leachates to the Pachotka.

6.67 Exceedances of the temporary limits in 2006 as presented in Table 6.8 were observed for oils, nitrites, fluorides, sulphates, suspended solids. Additionally the breaches of permissible levels were observed for chlorides, dry residue, Ni, Cr+6, Cr+3, Fe, Cu and surfactants. It is evident from these results that the problems with achieving compliance for waste water discharges are related to the improper neutralisation of acidic effluents from pickling operations and insufficient removal of oils. However, in order to fully assess any requirements, further monitoring may be required.

6.68 Detailed figures showing discharge concentrations in mg/l and in tonnes per year are available in the official PNTZ report and presented in the Table6.8 The permit sets limits using a tonnes per year and milligrams per litre figures. A review of the measured discharge parameters against the Permit limits shows that several parameters exceed the limits. It should be underlined here that results from the official report are calculated not as a simple average of single measurements but also taking into account the loads of contaminants in water abstracted from the river. This explains why the results in two tables are different. Discharge concentrations are generally high: exceedances were noted for suspended solids, oils, chlorides, sulphates, nitrites, fluorides, and iron.

6.69 The problems with waste water quality parameters brought the company to prepare a “Waste water management programme”. This programme was developed in 2006 with the aim to achieve permissible values (PDC) established in water permit. The PNTZ programme has been included into the municipal programme “Environmental protection and citizens health priority activities for 2007-2009” which was approved by a decision of the municipal board on 05.12.2006.

6.70 The programme includes three water management improvement tasks for the main site and one for the subsidiary site. The municipal programme also includes the development of a monitoring system for the main site. See Table 6.10 below for more details.

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Table 6.10 – Water Management Improvement Tasks

Task Description Implementation Cost Current status period (January 2007) Main site Retention tank, sorptive Construction of filter, clean water tanks, Planning, no pickling waste 10.4 mln sludge dewatering. 2006-2010 actions water treatment rubles Decrease of waste water undertaken facilities. 3 amount by 3000 m /d. Modernization of existing closed water loops and Water intake at waste Construction of construction of water outlet, pump station, 12 mln treated waste industrial-storm radial sedimentation tank. 2006-2007 roubles water recycling water recycling Decrease of waste water finished. into the discharge by 2640 m3/d. production process Construction of Flocculation and treatment plant sedimentation tanks, Planning, 80 mln for “dirty” waste sludge dewatering. 2006-2008 designing started roubles water cycle Decrease of waste water in 2006 excess water discharge by 2880 m3/d. Development of environmental Construction of Planning, measurements system for 16 mln local monitoring 2007-2009 designing to be production processes and roubles system started in 2007 sanitary zone, purchase of equipment Subsidiary Reconstruction of Reagents plant, filters. 2007-2008 10 mln Planning treatment plant Decrease of waste water roubles for industrial- discharge by 3000 m3/d. storm water in the subsidary site

6.71 The new mini mill will use significant amounts of water; however most of it will be used for make-up of closed water cycles. The expected blow down water amount will be approximately 74m3/h (average value). An additional 55m3/h will be generated by the water treatment plant. Approximately 20m3 of blow down water will be also generated by the steam generation plant servicing the installations.

6.72 Some additional uses of water such as general housekeeping, watering of landscaped areas have been identified, but details are not assessable at the present time.

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6.73 Total estimated amount of process waste water is 149m3/h. This equates to 3,576m3 per day and 1,145,000 m3 per year (assuming 320 operational days).

6.74 The increase in storm water discharged associated with the construction of new hardened surfaces and roofs will not be significant; the area of the mini mill is only about 2% of the overall area of the PNTZ site. The increase of storm water should not exceed 24,000m3/year compared to 4,700,000 m3 of waste water discharged in 2006.

6.75 The figures represent a 25% increase compared to 2006 data (for both industrial and storm water). However, the total amount of waste water discharges will not exceed 6,000,000m3 per year when the permit allows for 7,456,000 m3.

6.76 The most important sources of pollutants in storm water will be:

• scrap yard for mineral and oil pollutants, however it will be constructed as a closed bay with all storage area and equipment placed on hard standing surfaces under the roof

• lime plant fugitive emissions • fugitive emissions from main process – EAF operation, ladle furnace – however these will be contained in main production building

• parking and operation of heavy vehicles • dry and loose materials handling – majority inside production building • slag cooling and transportation

6.77 The amount of sanitary waste water discharge is estimated to be 5m3/h as average, 120 m3/day and 43,800 m3/year compared to 1,800,000m3 of current discharge. The increase will not exceed 2.4% and it is not significant increase which will be accepted by Vodokanal, the waste water receiver (as declared in the official statement).

6.78 The quality of most of the produced blow-down waste water should allow its use for internal purposes of the PNTZ site. This waste water should contain relatively small amounts of suspended solids but increased levels of salts. Some of the water (like from continuous caster billets cooling) may be contaminated with oils and scale from direct contact with red-hot steel. These streams will require treatment before discharge to the general waste water system. The main pollutants are suspended solids and oil/grease: these are to be separated in the scale pit and the residues drummed and removed for disposal off site. The treatment of the water in the scale pit will include oil separation on lamella and gravel filters, which will ensure a suitable water quality.

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6.79 At this stage blow down waters (clean and dirty) are planned to be discharged to the storm-industrial waste water system. No information on suspended solids, heavy metals and hydrocarbon contents in discharge water is available, but with involvement of above described system it should not exceed the good practice standard. Discharges from water treatment (softening/demineralization) have enhanced salt contents. Estimates for mini mill discharges are presented in the Table 6.8 below.

Table 6.11 – Pollutant Concentration Estimates For Mini Mill Waste Water Discharges

Pollutant Concentration [mg/l] Russian MAC Ca 45.5 180 Mg 6.89 28.8 Sulphates 39.4 100 Cl 86.4 72

6.80 Industrial waste water from the mini mill will be discharged to Pachotka and then Tchusovaya River via sedimentation reservoirs located south from investment site in the area of the solid waste landfill. The reservoirs are equipped with oil separation equipment.

6.81 The streams from the plant and from sludge reservoir (shlamonakapitel) join before the monitoring station and then go to the Pachotka River and then to the Tchusovaya River. The distance between the outlet from the plant and outlet to the Tchusovaya River is about 3.2 km. It should be added the Pachotka River also receives waste water from other enterprises including “Chrompik”, a chromium salts producer. At the outlet to Tchusovaya River it is heavily contaminated with a strong yellow-green colour (as observed in January 2007). The Tchusovaya River quality was presented in Table 6.8.

6.82 Proposed mitigation measures for waste waters are:

• PNTZ has elaborated and agreed the water management improvement programme, one of the three tasks for main plant are already finished

• PNTZ programme implementation needs to be supervised with the investment to avoid problems with waste water evacuation

• possibilities for reuse of blow down water (especially from “clean” circuits) should be investigated

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• the possibilities of “at source” reduction of storm water contamination should be sought

• sand traps should be installed on storm water outlets in areas of increased dust emission like the lime plant

• oil separators should be installed in areas for vehicle parking and maintenance

LAND QUALITY AND GROUNDWATER

6.83 The mini mill development contains the following features and mitigation measures with respect to potential contaminative impacts:

• A centralised lubrication system will be installed serving the electric arc furnace. The system is lubricating guide rollers from the electrode masts and gantry roller bearings via a motor powered pump on the furnace gantry. Several other points will be lubricated via a manually operated lubrication pump. A similar system will also serve the continuous caster. The plant will also contain a hydraulic system, running on mineral oil under operating pressure of 180 bars. These oil handling systems will be fully contained within the main mini mill structure, and the oil reservoirs will have appropriate secondary containment.

• Wastewater pipes and wastewater sumps will be newly constructed. The wastewater pits will be of concrete construction, and will not be handling any wastewater of a particularly corrosive nature. Pipework will be subject to periodic leakage inspections.

• Oils and water treatment chemicals will be stored in roofed or closed storage areas with hardstanding, isolated from surface water drains or in paved areas. Chemicals will generally be held in either purpose built tanks or with drummed supplies where this is not required.

• Scrap metal will be stored on hardstanding areas isolated from the ground in the roofed bay. Scrap can be potentially contaminated with oils and other chemical substances. Drainage to storm water system will be equipped in oil separator

• The slag and filter dust will be stored in isolation from the ground on hardened surfaces. Water from slag cooling will be used in closed cycle and excess waste will be discharged to the waste water system. Dust generated in slag cooling process will be minimised to prevent secondary soil contamination.

6.84 The new mini mill plant presents an inherently low potential for soil or groundwater contamination during operation and the measures proposed for oil, chemical, wastewater, slag and solid waste handling are considered to be appropriate.

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ENERGY AND GREENHOUSE GAS BALANCE

6.85 This section presents the findings of an assessment of the change in greenhouse gas (GHG) emissions resulting from the implementation of the mini mill project at PNTZ. It also includes an evaluation of whether the Project is likely to benefit from the Joint Implementation (JI) of the Kyoto Protocol.

Greenhouse Gas Assessment

6.86 The mini mill project is being implemented as a new installation not replacing any existing activities in the PNTZ. It is planned to increase operating efficiency of the plant by on-site steel melting from scrap. As such it will cause an increase GHG emissions produced by PNTZ.

6.87 Steel melting operations are a significant source of greenhouse gases, especially

CO2. As a new installation the new mini mill will add about 26% to the current CO2 emission level of approximately 372,000 tonnes per year. Several indirect sources of GHG emissions may be connected with new investment including: additional heat demand from natural gas-fired boiler plant, emissions from electricity production that will be needed for the new investment (if generated from fossil fuels) and emissions from additional transportation required to serve the investment.

6.88 The operation of the mini-mill will result in the generation of greenhouse gases (CO2) principally from the generation of the imported electricity used in the EAF and ladle furnace, and the firing of natural gas in the VOD boilers to raise steam. Carbon dioxide emissions will also arise from the decomposition of the electrodes used within the electric arc and ladle furnaces, and the carbon added to the EAF. These energy and material input streams are illustrated in Section 2.

6.89 An estimate of energy use and CO2 emissions for the mini-mill has been developed from the available data and the results are presented in Tables 6.12 and 6.13 below. The various assumptions and conversion factors used in the development of the estimate are provided as footnotes to the tables.

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Table 6.12 - PNTZ Mini-Mill Specific Energy Usage

Annual Primary Annual Energy Stream Energy Usage Note Usage (GJ/annum)

EAF Electricity consumption 434 GWh 4,734,545 (1) EAF Fuel Gas 7,380,770 Nm3 292,278 (2) Ladle Furnace Electricity 34 GWh 370,909 (1) consumption VOD Steam consumption 33,847 Nm3 338,605 (3) Total 5,736,337

Steel billet production (t) 1,115,979 Energy use (GJ/t) 5.14

Notes 1. Assumes an electricity generation efficiency of 33%. 2. Assumes fuel gas calorific value of 39,600 kJ/m3. 3. Assumes superheated steam at 5 bar and 200°C, and boiler efficiency of 85%.

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Table 6.13 - PNTZ Mini-Mill Specific Carbon Dioxide Emissions

Annual Primary Annual Energy Stream Energy Usage Note Usage (GJ/annum)

EAF Electricity consumption 434 GWh 186,620 (1) EAF Electrode consumption 1,970 t 7,223 (2) EAF Carbon consumption 20,308 t 74,463 (3) EAF Fuel Gas 7,380,770 Nm3 15,426 (4) Ladle Furnace Electricity 34 GWh 14,620 (1) consumption Ladle Furnace Electrode 338 t 1,239 (2) consumption VOD Steam consumption 33,847 Nm3 17,870 (5) Total 317,461 Steel billet production (t) 1,115,979

CO2 emissions (t/t) 0.28 Notes 1. Based on delivered grid electricity factor of 0.43 kg CO2/kWh (taken from Annex A of UKETS(01)05 – Guidelines for the measurement and reporting of emissions in the UK Emissions Trading Scheme).

2. Assumes electrodes are 100% carbon and are 100% converted to CO2 in furnace.

3. Assumes carbon is converted to 100% CO2 in EAF.

3 4. Based on CO2 emissions factor of 2.09 kg CO2/m .

3 5. Assumes fuel gas calorific value of 39,600 kJ/m , and CO2 emissions factor of 2.09 3 kg CO2/m .

6.90 The specific energy use of the PNTZ mini-mill compares favourably against international industry data. The Best Practice Weighting Factor for EAF primary energy consumption in the US iron and steel sector is 5.4 GJ/te [Energy Efficiency and Carbon Dioxide Emissions Reduction Opportunities in the U.S. Iron and Steel Sector. Ernest Orlando Lawrence Berkeley National Laboratory. July 1999]. By comparison, that in China is reported to be between 4.0 and 6.5 GJ/te [Energy use and carbon dioxide emissions from steel production in China. Ernest Orlando Lawrence Berkeley National Laboratory. April 2005].

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Joint Implementation Assessment

6.91 Following the ratification in November by Russia’s Duma the Kyoto Protocol came into force in Russia on February 16, 2005. Under the Protocol’s terms, industrial country parties will be obligated by the 2008-2012 time frame to limit their greenhouse gas emissions, in most cases reducing them below 1990 levels. Since 1990 the economies of most countries in the former Soviet Union have collapsed, as have their greenhouse gas emissions. Because of this, Russia should have no problem meeting its commitments under Kyoto, as its current emission levels are substantially below its targets.

6.92 Russia as Annex 1 country can act as a host country for Joint Implementation (JI) projects under the remit of the United Nations Framework Convention on Climate Change (UNFCCC). The JI mechanism is an additional investment tool for projects that aim to reduce GHG emissions and to improve energy efficiency. This tool can enable companies such as ChTPZ to obtain Emission Reduction Units (ERUs) for the CO2 emissions reduction arising as a consequence of a capital project and trade them within the EU Emission Trading Scheme (EU ETS), thus improving the economic viability of a project.

6.93 Past JI project implementation experience shows that ERUs from these projects have

been acquired in the range of € 3-9 per tonne CO2, providing a significant discount to the market price of allowances under the EU ETS

6.94 The mini-mill project at PNTZ will enable the company to produce its own cast billet using an energy-efficient secondary steelmaking process, and will reduce the amount of billet imported from off-site sources by approximately 80%. However, it is not known presently whether the Project will result in the closure of the off-site steel making processes, nor is it know by which processes the imported billet are manufactured. In short, it cannot currently be demonstrated that the mini-mill project

will generate CO2 emissions reductions, which is an essential pre-condition of every JI project. In these circumstances it is unlikely to qualify as a JI project.

MATERIALS USE AND WASTE MANAGEMENT

6.95 The new mini mill will be a source of significant amount of waste including types not previously produced in significant amounts on the site, such as metallurgical slags and filter dust. All wastes produced by the mini mill will be handled by PNTZ according to internal PNTZ procedures. The company has procedures for solid

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waste handling that includes segregation and disposal issues for waste generated on site. However it will need to be updated before the start – up of the mini mill.

6.96 The PNTZ has a valid licence for hazardous waste to 2009 and a permit for waste generation valid to 2007. The licence allows PNTZ to generate, collect and dispose of specified quantities of wastes. The permits need to be renewed each year to agree the amounts of generated waste in a flexible manner. The current permit does not cover the proposed demolition and site preparation phases; it is anticipated that future permits will be granted to cover waste generated during construction and operational phases.

6.97 The permit for 2006 includes 39 types of waste and the most important, taking into account the quantity, are:

• pickling sludges – 1,689 tonnes/year • oiled scale – 1,801 tonnes/year • general waste from process areas – 4,037 tonnes/year • scrap metal – 150,000 tonnes/year • scale – 16,451 tonnes/year • waste refractory bricks from furnaces – 4,291 tonnes/year • municipal type waste – 3,212 tonnes/year • metallurgical slags and dusts – 299 tonnes/year

6.98 Full list of solid waste produced in 2006 is presented in Table 6.14 below.

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Table 6.14 - Waste Generation 01.01.06 to 31.12.06

Total Total Class Obtained Used at Passed to landfilled Code acc. to landfilled at Waste of from other the other Landfilled at the end No Russian list of Name the end of generated hazar companies company companies waste (T) of current waste previous year (T) d (T) (T) (T) year (T) (T)

1 3533010013011 Fluorescent lamps 1 0.594 7.034 0 0 5.739 1.889 1.889 5100000000000 Sludge from 2 3 407075.6 1224 0 0 0 1224 408197.8 (51706) pickling operations 3 5410020502033 Used industrial oils 3 0 383.7 0 383.7 0 0 0 4 5410020102033 Used engine oils 3 0 502.5 0 502.5 0 0 0 Used lubricating 5 5410020602033 3 0 2.7 0 2.7 0 0 0 oils Used compressor 6 5410021102033 3 0 80 0 80 0 0 0 oils 8 9211010213013 Lead batteries 3 6.000 1.25 0 0 1.295 1.25 5.955 9 5490270101033 Oiled textiles 3 2.350 2.26 1.726 5.626 0 0.676 0.676 Parts of machines 10 1870000000000 3 0.230 0.116 0 0.000 0 0.116 0.346 (used oil filters) 11 5440020106034 Oil emulsions 4 0 750 0 750 0 0 0 3120000000000 Metallurgical slags, 12 4 530.000 250.000 0 0 0 250.000 780.00 (35305) sludges and dust 3120000000000 Steel melting slags, 13 4 0 10.5 0 0 0 10.5 10.5 (35317) sludges and dusts

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Total Total Class Obtained Used at Passed to landfilled Code acc. to landfilled at Waste of from other the other Landfilled at the end No Russian list of Name the end of generated hazar companies company companies waste (T) of current waste previous year (T) d (T) (T) (T) year (T) (T)

Municipal type 14 9120000000000 4 5407.60 120 0 0 0 120 5527.,76 waste Other mineral 15 5460000000000 waste (sludge from 4 200 12 0 0 0 12 212 car washing) Oiled scale <15% 16 5490300104034 4 159959 0 0 0 200 0 159959 of oil Oiled scale >15% 17 5490300104034 4 1509.550 1600 0 0 200 1400 2909.550 of oil Used tyres with 18 5750020413004 4 80 40 0 0 0 40 120 metal cord Used tyres with 19 5750020313004 4 58.130 3.5 0 0 0 3.5 61.63 textile cord Sludges from 9430000000000 20 mechanical and 4 5 2.5 0 0 0 2.5 7.5 (94501) biological treatment 21 3140430411004 Abrasive materials 4 0 6 0 0 6 0 0 Not segregated 22 9120040001004 4 8044 3996.9 10.1 0 0 4007 12051 waste from offices 23 1713020101034 Oiled wood swarf 4 1 0.5 2.3 3.8 0 0 0 24 5810110001000 Used textiles 5 0.500 0.375 0.000 0.75 0 0.125 0.125

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Total Total Class Obtained Used at Passed to landfilled Code acc. to landfilled at Waste of from other the other Landfilled at the end No Russian list of Name the end of generated hazar companies company companies waste (T) of current waste previous year (T) d (T) (T) (T) year (T) (T)

25 1711020001005 Waste wood 5 0 0.5 5.2 0 1.5 4.2 4.2 26 1711060201005 Wood swarf 5 4 4 1.5 0 9.5 4 0 27 1711050213005 Wooden packaging 5 0.4 200 0 0 200 0.4 0.4 28 1871030001005 Used office papar 5 0.325 0.328 0 0 0 0.328 0.653 29 5750010113005 Used rubber 5 33.876 15 0 0 0 15 48.876 30 3140230101995 Used sand 5 200 200 0 0 0 200 400 Unsorted ferrous 31 3513010001995 5 60 97181.011 0 0 97186.011 55 55 scrap metal 32 3515040001000 Scale 5 50 15258.83 0 0 15258.83 50 50 Used working 33 3515050001995 5 0 0 0 0 0 0 0 shoes 34 3140080201995 Waste glass 5 4.164 0.5 0 0 0.5 0 4.164 35 3140140301995 Waste bricks 5 231182.210 5478.79 0 0 72.5 5406.29 236588.5 Reinforced 36 3140270201995 5 36 42.57 0 0 19.992 42.57 58.578 concrete waste 9120000000000 Other municipal 37 5 17683.210 3100 0 0 0 3100 20783.21 (91205) type waste Used abrasive 38 3140430201995 5 218 70 0 0 0 70 288 circles

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Total Total Class Obtained Used at Passed to landfilled Code acc. to landfilled at Waste of from other the other Landfilled at the end No Russian list of Name the end of generated hazar companies company companies waste (T) of current waste previous year (T) d (T) (T) (T) year (T) (T)

9710000000000 39 Medical waste 5 1.100 0.514 0 0 0 0.514 1.614 (97002) 40 3541010201995 Copper scrap 5 10 14.297 0 0 9.993 4.304 14.304 Chamotte bricks 41 3140140101995 5 206.326 100.5 0 0 67 100.500 239.826 waste Asbesto-cement 42 3140120201014 4 59.730 1.5 8 0 0 9.5 69.23 waste Construction and 43 9120060101004 4 146 0 4 0 0 4 150 demolition waste 3140130001000 44 Lime waste 4 5 0 5 0 0 5 10 (31205) 9410000000000 Sludges from water 45 5 820.472 6.427 597.47 0 0 601.47 1423.897 (94102) treatment 3140000000000 Mineral waste 46 5 23.22 0 30 0 0 30 52.220 (31110) (stones)

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6.99 The company operates 4 waste landfill areas.

6.100 The “old” non-toxic solid waste landfill was constructed in 1954 and was reported to be closed in 1965.

6.101 The non-toxic solid waste landfill still in operation has an area of 5ha and 670,000 tonnes is already landfilled there. There are no data about any ground contamination prevention measures. It is not clear when operations started there but most probably after closure of the “old” landfill in the 1960s. According to the “characterisation card” the following waste is stored there:

• metallurgical slags and dusts • asbestos-cement elements • municipal waste • tyres • textiles • glass • bricks • abrasive elements • medical waste • resin-based products.

6.102 Access to the landfill is controlled and all waste input is logged appropriately. Waste is segregated wherever practicable and certain waste streams are sold for recycling. There were some stockpiles of waste on the site awaiting sorting. Housekeeping around the landfill was adequate. Working areas of the site were well compacted and wastes were covered with inert materials to minimise litter.

6.103 Oily scale storage is located on a site of 0.7 ha, which is constructed of concrete and reinforced concrete plates. It was constructed in 1991 and about 160,000 tonnes is already stored there.

6.104 Waste water for the pickling plants is discharged to the sludge pond. This was constructed in 1974 on an area of 19.5ha. The pond is equipped with a clay lining (of unknown thickness) and bunds. Its capacity is 1,300,000 tonnes and currently 400,000 tonnes is already landfilled there. About 170,000 tonnes/year are disposed there. After sedimentation, water from the pond discharges to the local river. The following types of waste can be disposed there;

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• galvanic sludges • pickling sludges • phosphating sludges • water treatment sludges • waste water mechanical and biological treatment sludges.

6.105 The solid waste types generated in the new mini mill are illustrated in the Table 6.15 below.

Table 6.15 – Estimates of Solid Waste Types Generated In The New Mini Mill

Solid Waste Type Tonnes per year Steelmaking slag (EAF) 110,000 Steelmaking slag (ladle furnace) 12,000 Dust entrapped by gas cleaners 26,000 Scrap (to be recycled) 10 000 Broken refractory brick 5,000 Graphite electrodes’ waste 110 Oily scale from continuous casting process Scrap metal handling waste (non metallic remains Non-ferrous metal waste Water treatment facilities sludges

Limestone waste fractions Lime dust entrapped by- gas treatment facilities of lime production No data Lubricant, oils waste

Maintenance wastes – including wood, scrap metals, plastics, construction and demolition wastes; General non-hazardous waste- including paper, cardboard plastics, glass and metals General hazardous wastes – waste oils, batteries, solvents, paints, fluorescent tubes.

6.106 General waste (municipal-type wastes) are taken off-site for disposal in the Waste generated at the mini mill site is likely to follow current PNTZ waste treatment routes. Most inert wastes are likely to be disposed of in existing PNTZ landfills tips, which have sufficient capacity to accept waste for some considerable time. General municipal-type wastes are likely to continue be disposed of to municipal landfill, and

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hazardous wastes will be disposed of in appropriate off-site waste management sites. Due to this, impacts associated with the movement and disposal of waste are not expected to alter except of oily scale, slag and filter dust.

6.107 Oily scale is a specific waste from continuous casting process. Scale will be gathered in scale pits which should secure oil separation better that 95%. Reportedly some additives (including surfactants) will be applied to improve oil/grease separation. The company develops the technology for briquetting of oily scale. The installation is already build and used. It allows the operator to obtain briquettes of high iron content. This material can be used directly in the EAF furnace or sold to other industries (like abrasive materials producers).

6.108 Slag from EAF and ladle processing is another specific product of the industrial process and will be produced in large amounts (>100,000 tonnes per year). This waste needs to be cooled and then it can be easily processed to obtain construction materials. Basic operations usually include: metal segregation (this can be directly recycled to the process), grinding and screening. Different fractions of material can be obtained in this way. The quality of slag needs to be controlled, specially water extract and radioactivity. In most cases it is approved for use in construction works. In Ural area where deficiency of sand is reported, this material can be good product. The process needs: space for temporary storage and time for seasoning of material. Marketing activities are also important as an average the amount of produced material cannot exceed the amount of material sold.

6.109 There are several issues associated with slag processing in new mini mill:

• Permits for generation of waste need to be updated, • Slag processing facility needs to be established – internal or external - this is or decided at the moment – however PNTZ declares the construction of central waste management facility for slag, filter dust, refractory bricks and scale; waste will be treated (by crushing, screening, briquetting and other technics) to obtain usable materials.

• Place for storage and processing of slag needs to be granted; according to PNTZ such place is available at the area of workers camp and current excavation ground storage, other places may be indicated around the PNTZ site; however it should be kept in mind that the area for storage and processing of the slag needs to be levelled, hardened (basic isolation from ground is recommended), prepared for heavy trucks traffic, access and transportation roads for heavy trucks need to be routed from EAF to the storage area.

6.110 Dust collected from the dedusting systems is another issue of concern. At the moment there are few options to handle with this potentially hazardous waste:

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• Recycling of the dust into the furnace after granulation – the amount of waste to be recycled depends on its chemical composition and this depends of scrap quality, the excess dust needs to disposed

• Briquetting of oily scale (patented methodology) with other materials is already implemented technology, an option is to add the filter dust to the briquettes, this issue need further testing, it is not clear what amount of dust can be utilized in this way, excess dust needs to be disposed.

• Finding contractor for dust disposal (like zinc plants) but this depends on final composition of the dust - and the composition depends on quality of scrap metal – ChTPZ META main scrap supplier that the waste will be supplied mainly from other industries and no household scrap will be included

• Landfilling - this option needs to be avoided as filter dust may contain hazardous substances – ground protection measures need to be applied at landfill site.

6.111 PNTZ has introduced recycling initiatives across the site, and developed internal procedures for improvement of waste minimization, re-use, recycling and waste management. These need to be updated taking into account new challenge associated with amounts of slag, filter dust and oily scale.

6.112 As part of the introduction of PNTZ’s waste management system, operational wastes from the mini mill need to be reviewed to identify opportunities for waste minimisation. Waste segregation will be improved and it is likely that the portion of wastes that are recycled will increase as recycling initiatives become fully implemented. PNTZ already monitor waste production closely; the waste permit requires PNTZ to maintain routes.

6.113 Proposed mitigation measures:

• A substantial proportion of the wastes generated by the development are likely to be disposed of on PNTZ disposal sites; it is therefore important to ensure that the landfill sites are properly constructed to prevent pollution of the underlying ground and groundwaters. Proposals for on-going monitoring and inspection of on-site landfill sites are included in the EMP.

• PNTZ developed a waste management system to improve control of the whole waste cycle and minimize waste generation at source. Review if waste minimisation and recycling options for new mini mill is included in the EMP.

• Slag handling is an important issue because of quantities of waste. Establishment of slag processing techniques is included in the EMP.

• Filter dust disposal is also an important issue because of possible large quantities and potential hazardous properties. Establishment of filter dust handling procedures is included in the EMP.

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• Oily scale disposal techniques including the briquetting need to be decided. This issue is included into the EMP.

• Review of waste minimisation and recycling options within PNTZ waste management procedure, update of the procedure and permits is included into the EMP.

ECOLOGY

6.114 There are no protected areas in the direct vicinity of PNTZ. The designated sites in the area were described in detail in the baseline chapter. The closest identified sites are as follows:

• Bilimbay forest-park – located approximately 12km from the development site; • The river Chusovaya cliffs - located about 22.5km from the development site; • Grove Mogilica – located approximately 15.5km from the development site; • The Natural Park ‘River Chusovaya’ - located approximately 28km from the development site;

• The Natural Park ‘Oleni Ruchi’ – located approximately 52 km south-west of the PNTZ site;

• Visimskiy state biosphere reserve – located approximately 55km to the north of the PNTZ site.

6.115 The potential effects of atmospheric discharges on the nearest sites at Bilimbay are assessed in the air quality section and were found to be insignificant

6.116 The Chusovaya river cliffs and River Chusovaya Natural Park are located downstream of PNTZ outlets (Pakhotka river). Both are located in significant distance but discharges from the industrial facilities located in Pervouralsk can influence the quality of water environment of these sites. However, with the implementation of the PNTZ water management programme the impact of PNTZ and the new mini mill should not be significant. This aspect enhances the importance of waste water quality improvement at PNTZ.

LANDSCAPE AND VISUAL

6.117 The mini mill development will appear as a complex of industrial buildings covered with profiled steel clad with 90m high stacks and a collection of smaller industrial buildings housing the ancillary facilities and equipment and scrap metal handling area. In the later time also slag storage and handling area may be visible.

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6.118 The mini mill area is surrounded by high industrial buildings with high stacks from the north and elevated rail sidings and landfill from the south. The landfill is additionally separated from the nearest residential buildings located to the south by the trees. It is unlikely that the whole industrial area will be visible from this direction even from highest floors of 4 storey buildings. The upper parts of main building and stack will be visible as buildings located behind it but it will not change the perception (industrial buildings and stacks.

6.119 The mini mill stacks will form discrete visual elements, which will join the existing stacks and other vertical elements that form the PNTZ plant skyline.

6.120 View from the north and east, from the hills will not change significantly. Buildings and stack will be visible but will join the existing buildings which will partly obscure them. Taking into account the distance of potential viewer this impact is minor.

6.121 Overall the visual impact of the development, from viewpoints to the south, is considered likely to be rated as negligible to minor adverse impact.

6.122 Views from other viewpoints are rated minor adverse to negligible impact.

TRAFFIC AND TRANSPORT

6.123 The general increase of vehicles required for plant operation is presented in the “construction” chapter.

6.124 During the operation the following additional transportation streams will be present:

• Heavy trucks transporting slag between EAF building, cooling area and slag storage – transportation will take place inside the PNTZ site in an area isolated from nearest buildings. It is assumed that about 100,000 tonnes of slag needs to be transported

• Supply of scrap metal and other raw materials to the site: It is assumed that about 1,100,000 tons of scrap will be melted each year. Over 95% of incoming material will be transported by rail: Assuming that one wagon can carry 100 tonnes of scrap metal and 40 wagons are in a standard set. This gives about 275 railway transports per year (less then one per day). This depends however on a type and load of wagons and trains and may vary from 200-400 per year. The residual 5% (equivalent to 55,000t) will be transported by road. Assuming a standard load of a truck as 25 tonnes it corresponds to 2,200 trucks per year; this is around 7 per day or fewer than one per hour.

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• Evacuation of solid waste – trucks, a large proportion of waste will not be transported off site, but will disposed of at sites within the PNTZ site

• Transportation of workers; buses will be the predominant form of transport. • Transportation of produced steel to Chelyabinsk; will be undertaken by rail.

6.125 During operation transport generation will be high, and is expected to change the traffic patterns in the town especially in the area of Kolica settlement and Pervouralsk-Ekaterinburg road, where the new entrance gate for steel plant will be built.

6.126 The new gate will generate the new stream of vehicles that will join the stream of traffic on the Pervouralsk-Ekaterinburg road. This traffic includes workers transport, scrap metal transportation, slag evacuation, deliveries and collections of materials and wastes. The vehicles will be cutting into the stream traffic on the main road near to the viaduct over the trans-Siberian railway. This may be a bottle-neck especially in peak hours when the traffic is already heavy, and it may create additional congestion problems. This is the reason to try to limit heavy transportation entering and leaving the construction site in peak hours. On the other hand heavy transportation should be avoided also in the night-time because of generated noise that may influence the residential areas located nearby the viaduct and the road Pervouralsk-Ekaterinburg.

6.127 Rail transportation will probably not increase substantially as generation of 1-5 transports per day cannot be viewed as significant. .

6.128 The following mitigation measures will be considered:

• Planning scrap metal transportation by the means of rail transportation instead of road

• Maximise the use of the rail network for bulk deliveries and abnormal loads. • Restricting delivery hours to reduce noise nuisance; avoid heavy trucks movement in the night hours

• Considering whether deliveries should be scheduled to avoid peak times to reduce congestion;

• Heavy construction traffic will be subject to a traffic management plan, as necessary.

6.129 Mitigation measures will be incorporated in to the Environmental Management Plan once transport requirements and suitable options have been established.

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NOISE AND VIBRATION

6.130 The plant will generate a certain amount of noise. A noise assessment has not been undertaken as the final plant design, in particular the specification for auxiliary plant and building structure has not been defined.

6.131 Recommended absolute noise limits for residential areas have been defined by the World Health Organisation in Guidelines for Community Noise (2000). These are set

at 30dB LAeq and 45dB LAmax within bedrooms during the night, and at 35dB LAeq within living rooms during the day.

6.132 Assuming that residents would have their windows open during the summer period

this corresponds to external noise levels of approximately 45dB LAeq and 60dB LAmax

at night and 50dB LAeq during the day.

6.133 The nearest noise sensitive receptors are some 795 m from the proposed location. The plant is to be located within an area of existing heavy industry, including many processes which run continuously. It is understood that there are no records of complaints about noise from the existing processes.

6.134 There will be a number of measures in place to mitigate noise generation:

• Selection of all auxiliary plant and equipment will include consideration of noise emissions. Only plant and equipment compliant with relevant standards will be used;

• The building fabric will act as noise attenuation. Internal and external walls will be designed to include insulation to significantly reduce

6.135 There will be significant noise levels inside the plant which presents a potential hazard to workers. Mitigation measures will be adopted to ensure that risks are not presented to workers. These will include establishment of noise control zones, wearing of suitable protective equipment and health monitoring.

SOCIO-ECONOMIC ASPECTS

6.136 This component deals with changes in employment and with reports the findings of the Federal Agency on Environmental, Technical and Nuclear Supervision on the safety of the mini mill.

6.137 700 new jobs will be created in the new mini mill. Of these jobs 96% will be for skilled workers, and 4% for unskilled workers. 20% of the new jobs will be undertaken by

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women. Due to the nature of the work (heavy and arduous), many of the jobs under Russian law are not open to women.

6.138 Due to the skilled nature of the work, salaries are expected to be higher than the average wage. The acquisition of new and marketable skills is attractive to many workers.

6.139 A comprehensive training programme is being implemented with four local metallurgical universities and colleges, with plants already using similar technologies and in addition staff will be trained in country and overseas in the use of the new equipment by DEMAG.

6.140 Training is being organised with the Ural State Technical University, Nizny Tagil training college, and Ural State lycee “Spector” to train staff in the new technologies and with OAO “Uralmash” (Ekaterinburg) who is undertaking training for crane operators.

6.141 Up to 20 specialists (with more than 3 years experience) will be trained overseas for a period of 2 months. They will be trained in theory and practical applications.

6.142 At present 280 people are employed in the open hearth mills of ChTPZ which are to be closed. Of these people, 42 (15%) are nearing retirement, 126 (45%) will be re deployed in other workshops, and 112 (40%) will be retrained. Of these 84 will then be redeployed in the factory and 28 are expected to leave for a variety of reasons (e.g. location of work, other opportunities, better pay etc.).

6.143 Discussion with the Chief Medical Officer of the PNTZ health centre suggested that the main work related health problems that might be expected in the new works are related to noise. However the new equipment has much higher safety standards than the old equipment and work related health problems are expected to reflect this.

6.144 On 28.12.2006 the Federal Agency on Environmental, Technical and Nuclear Supervision approved the conclusions of the industrial safety report for the mini-mill development prepared by the expert centre 'Standard' for PNTZ. It confirmed that the project design is compliant with the industrial safety norms and requires recommendations set out in paragraph 8.1 of the report to be taken into account during the development of detailed design for each facility of the mini-mill complex.

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ARCHAEOLOGY AND CULTURAL HERITAGE

6.145 The town of Pervouralsk was built in 1930s around the developing industry. The industry was built mostly on Greenfield sites. As a consequence no major architecture or cultural heritage is present there.

6.146 There are no data of any objects of archaeological value at the site or in the neighbourhood.

6.147 The extent of the overall effect and hence the direct impact on material assets is not precisely estimated in this study, however the input of mini mill project was assessed as negligible.

RISK MANAGEMENT: NON-STANDARD OPERATING CONDITIONS AND EMERGENCIES

6.148 The company has a safety certificate for hazardous materials approved by Russian Emergency Ministry (Sverdlovsk Oblast) dated 2005.

6.149 The classification of the plant as a hazardous site is related to the storage of ammonia, diesel fuel, gasoline, kerosene and fuel oil. The certificate describes the level of risk associated with potential emergency situations. It approves also the internal documentation related to emergency response. The following documents are reported to be present on site:

• Organization of technological emergency prediction at hazardous areas: • Civil defence and emergency procedures • Emergency prevention and elimination plan: • Training plan for managers and specialists involved in emergency prevention, isolation and elimination.

6.150 Moreover for all departments where natural gas is used (1, 2, 4, 5, 6, 7, 8, 9, 10, 14, 15, 16, 17, 21, 22, 28, 33, 34, 37, 40) the company has identified explosion risks and developed plans of localization and response in case of an emergency situation. The plans include the possible consequences and analysis of necessary actions. The company has an internal gas-rescue service that has a number of qualified and suitably equipped personnel prepared for undertaking immediate action in case of emergency.

6.151 There is a fire team on site who will deal with any emergency situations. There is a plan of fire drills and exercises and plans for dealing with emergency situations in each area.

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6.152 The new mini mill needs to be included into the company safety assurance system. Safety documentation need to be updated and safety certificate renewed. The mini mill staff need to be trained in emergency situation response as well as PNTZ fire and emergency services. It is assumed that the new mini mill will be fully covered by the system and appropriate procedures implemented and persons responsible for safety issues will be indicated.

SUMMARY OF IMPACTS AND PROPOSED MITIGATION MEASURES

Impacts

Air Quality

6.153 The mini-mill will have an insignificant impact on the air quality in the area. There will be impacts on heath or ecological receptors.

Greenhouse Gas Assessment

6.154 The new mini mill is a new industrial installation within PNTZ. Steel melting

operations are a significant source of greenhouse gases, especially CO2. As a new

installation the new mini mill will add about 26% to the current CO2 emission level of approximately 372,000 tonnes per year. Several indirect sources of GHG emissions may be connected with new investment including: additional heat demand from natural gas-fired boiler plant, emissions from electricity production that will be needed for the new investment (if generated from fossil fuels) and emissions from additional transportation required to serve the investment.

Landscape and visual

6.155 The new mini mill building and stack will to large extend obscured by other industrial buildings from the north and elevated railway siding and solid waste landfill from the south. For inhabitants of the nearest settlement Talica the visual impact should be negligible or minor adverse. The new mini mill development will appear as a relatively small part of the wider PNTZ plant. Other plant items will be visible behind and around the new development and the mini mill development will become part of the industrial elements that make up the view across the PNTZ site. The mini mill stacks will form discrete visual elements, which will join the existing stacks and other vertical elements that form the PNTZ plant skyline.

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Materials use and waste management

6.156 Most of the wastes generated by the operation of the mini mill are expected to be similar in type to the waste currently generated by the PNTZ metallurgical operations. Waste disposal routes are also likely to remain the same, with the majority of inert waste being disposed by the PNTZ. Part of the waste will be landfilled on adjacent inert and non-hazardous waste landfill; general and hazardous wastes will be disposed of at appropriate off-site facilities.

6.157 The most significant change in PNTZ waste management will be associated with generation of large quantities of metallurgical slag from steel melting and ladle processing – about 120,000 tonnes per year. This waste needs to be cooled, transported to storage area, processed to recover iron and produce by-product (construction materials). PNTZ needs to undertake the decision about the technology to be adopted and future process operator. Filter dust from de-dusting installation is another type of waste that will be generated in significant quantities – about 26,000 tonnes per year – and may be hazardous to environment. Methods for utilisation of this waste need to be sought by PNTZ.

6.158 Both issues require further monitoring and may be crucial for future operation of the new Plant. As a substantial proportion of the wastes generated by the mini mill are likely to be disposed of or temporarily stored (like slag) on PNTZ disposal sites, it is recommended that a programme of monitoring and inspection of PNTZ landfill sites and storage areas is implemented. PNTZ’s waste management procedures need to be updated to cover specific problems associated with mini mill operation, improve control of waste over the entire waste cycle and minimize waste generation at source.

Ecology

6.159 From the information available concerning the potential impact of the new plant on the closest areas of nature protection or biological value, it is not likely that there will be a significant impact.

Water and Wastewater

6.160 The mini mill project will use the existing water supply infrastructure at the PNTZ as well as existing waste water networks. The consumption of water and generation of waste water will increase significantly. Water use is expected to increase by 80- 100%, industrial waste water discharges will increase about 24-25%. However both numbers stay within the permit and local infrastructure is capable to supply proper water delivery and waste water collection.

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6.161 Water will be used mainly for cooling systems. Cooling systems will operate as closed loop systems in two modes: indirect cooling (clean) and direct cooling (dirty) used for vacuum degasser cooling and continuous caster’s hot strand spray cooling. Water will be prepared in treatment plant (part of the project), used water will be treated and excess water discharged to industrial-storm water system of the PNTZ. Biocides and corrosion inhibitors will be added to water systems.

6.162 Blow down water from cooling systems will be discharged to existing PNTZ system and after treatment in sedimentation ponds discharged to the Pachovka River, trubutary of the Tchusovaya River. The PNTZ does not conform to current standards for industrial-storm water discharge. The PNTZ developed and agreed on the municipal level the program of improvement. This program consist from 4 tasks (including one for subsidiary plant), one of the tasks was already implemented allowing for reuse of water from the outlet in the industrial processes. The implementation of two outstanding tasks for main plant of the PNTZ should result in waste water reduction by 5880 m3 per day and about 2,100,000 m3 per year – about 45% of the discharge in 2006. The tasks are focused on reduction of waste water generation “at source” and will allow for better water management, and provide compensation for increased waste water generation by new mini mill.

6.163 Sanitary waste water will be discharge to municipal networks operated by Vodokanal and transported to municipal waste water treatment plant. Increase of amount should not exceed 2.5%.

6.164 Implementation of water management improvement programme is suggested to be monitored within the investment as the result may influence overall plant status, in worst case it may result in problems with authorisation of waste water discharges from the plant by municipal and governmental bodies. It seems also that the possibilities of blow down water reuse in other PNTZ systems should be sought, especially for blow down water from “clean” closed water circuits of the mini mill.

Land quality & groundwater

6.165 The main structures of mini mill plant presents inherently low potential for soil or groundwater contamination to arise during operation, and the measures proposed for oil, chemical and wastewater handling are considered to be appropriate. The common oil lubrication system and hydraulic oil systems should be fully contained within the main EAF and CC structures, and the oil reservoirs should have appropriate secondary containment. Wastewater pipes and wastewater sumps will be newly constructed. Oils, water treatment chemicals and other potentially hazardous substances will be stored in bunded areas, isolated from surface water drains or in paved areas.

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6.166 More care is required for scrap handling area and storage areas for slag and filter dusts. Especially scrap handling area required proper isolation from ground as scrap may include hazardous substances that would migrate with rain water to the ground. Slag handling area should also be placed on hardened areas.

Traffic

6.167 Traffic generated by mini mill operation is likely to have significant impact on neighbourhood especially in the area close to the new gate and communication paths from the gate to Pervouralsk-Ekaterinburg road. Significant increase of traffic may be associated with scrap metal supplies, other materials deliveries, products transport to Chelyabinsk and handling of slag. It is recommended that railway transportation is used as primary transportation mean for scrap and product deliveries. Heavy vehicle movement on the local roads should be a subject to traffic management plant to avoid major impacts in night hours and in peak traffic hours to avoid congestion.

Archaeology and cultural heritage

6.168 No adverse impacts on archaeology or cultural heritage have been predicted.

Mitigation Measures

6.169 Proposed mitigation measures are presented in the Table below:

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Table 6.16 - Summary of Impacts and Mitigation Measures

Environmental Impact Proposed Mitigation Residual Impact Residual Impact Rating

Excessive pollutants loads in waste - PNTZ has elaborated and Amount of waste water discharge is Excessive pollutants loads in waste water discharged from PNTZ to agreed the water management decreased by 30-50% (depends on water discharged from PNTZ to Tchusovaya river improvement programme, one the share of water from natural Tchusovaya river of three tasks for main plant are precipitation). already finished Quality of discharged waste water - PNTZ programme is compliant with local legal implementation needs to be requirements. supervised with the investment to avoid problems with waste water evacuation Blow down water from closed water - possibilities for reuse of blow Amount of blow down water from Blow down water from closed water loops are discharged into industrial- down water (especially from mini mill discharged to PNTZ’s loops are discharged into industrial- storm water system of PNTZ “clean” circuits) should be industrial and storm water system is storm water system of PNTZ sought decreased significantly.

Additional amounts of storm water - Housekeeping and materials The loads of suspended solids and Additional amounts of storm water will be generated from roofs, storage measures wuill be oil are significantly reduced in will be generated from roofs, hardened surfaces and roads implemented to minimise storm discharged storm water. This issue hardened surfaces and roads is also important because current - oil separators should be PNTZ treatment system is not installed in the areas for efficient. vehicles parking and maintenance Potential for leaks from lubrication - Oil handling systems need to No risk of leakage of oils to the Potential for leaks from lubrication and hydraulic systems containing be fully contained within the ground from the systems and hydraulic systems containing oil and local ground contamination. main mini mill structure, and oil and local ground contamination. the oil reservoirs need to have appropriate secondary

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Environmental Impact Proposed Mitigation Residual Impact Residual Impact Rating containment. - Pipework of lubrication, hydraulic, waste water systems need to be a subject to periodic leakage inspections. Potential ground contamination by - Oils, water treatment chemicals All hazardous substances, scrap Potential ground contamination by leakage or leachate from storage of will be stored in roofed or metal, slag, filter dust are stored in leakage or leachate from storage of hazardous substances, closed storage areas with isolation from the ground hazardous substances, contaminated scrap metal or slag hardstanding, isolated from contaminated scrap metal or slag surface water drains or in paved areas. Chemicals will generally be held in either purpose built tanks or with drummed supplies where this is not required. - Scrap metal should be stored on hardstanding and roofed areas (scrap yard, scrap bay) isolated from the ground. Scrap can be potentially contaminated with oils and other chemical substances. - The slag and filter dust should be stored in isolation from the ground on hard surfaces. Water from slag cooling should be used in closed cycle and excess waste should be discharged to waste water system. Dust generated in the slag cooling process should be

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Environmental Impact Proposed Mitigation Residual Impact Residual Impact Rating minimised by suitable handling to prevent secondary soil contamination. Storage of solid waste (inert and - on-going monitoring and Landfills are controlled, proper Storage of solid waste (inert and non-hazardous on PNTZ landfills) inspection of on-site landfill actions are undertaken in case of non-hazardous on PNTZ landfills) sites necessity

Waste management - Arrangement (update) of all Waste management of the mini mill Waste management solid waste management is fully covered by internal licences and permits procedures, legal status is regulated - Establishment of slag processing techniques and Increased quantity of waste to be choice of contractor landfilled on site. - Establishment of filter dust Increase in recycling/reuse of waste handling procedures and generated. choice of the contractors - Oily scale disposal techniques including the briquetting need to be decided - Review of waste minimisation and recycling options for all wastes generated by new mini mill Increased heavy vehicles traffic in - Planning scrap metal Traffic from the mini mill does not Increased heavy vehicles traffic in the neighbourhood of new gate for transportation by the means of cause congestion problems on local the neighbourhood of new gate for the mini mill rail transportation instead of roads and no complaints from local the mini mill cars residents are reported.

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Environmental Impact Proposed Mitigation Residual Impact Residual Impact Rating - Maximise the use of the rail network for bulk deliveries and abnormal loads. - Restricting delivery hours to reduce noise nuisance; avoid heavy truck movements in the night hours - Considering whether deliveries should be scheduled to avoid peak times to reduce congestion; - Heavy construction traffic will be subject to a traffic management plan, as necessary; Emergency situations - New mini mill needs to be The mini mill is covered by all Emergency situations covered by PNTZ safety safety procedures and emergency procedures (update required) services (fire fighting, gas emergency service) from the first - Safety certificate needs to be day of operation updated - Training needs to be provided to mini mill staff as well as to PNTZ emergency services Social Impacts - Generation of long term skilled The mini-mill will provide economic Social Impacts jobs benefits to the area - Economic security for company - Closure of polluting furnaces in

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Environmental Impact Proposed Mitigation Residual Impact Residual Impact Rating Chelyabinsk resulting in loss of employment Excessive pollutants loads in waste - PNTZ has elaborated and Amount of waste water discharge is Excessive pollutants loads in waste water discharged from PNTZ to agreed the water management decreased by 30-50% (depends on water discharged from PNTZ to Tchusovaya river improvement programme, one the share of water from natural Tchusovaya river of three tasks for main plant are precipitation). already finished Quality of discharged waste water - PNTZ programme is compliant with local legal implementation needs to be requirements. supervised with the investment to avoid problems with waste water evacuation Impact Rating Scale – Definition Very severe adverse Severe adverse Moderate Adverse Minor Adverse Negligible / Nil Minor Beneficial Moderate Beneficial Substantial Beneficial

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7. IMPACTS ASSOCIATED WITH CLOSURE AND DECOMMISSIONING

INTRODUCTION

7.1 The operational life of the mini mill is not currently known but it is expected to exceed 20-25 years. When the decision to close the plant is made, details of how the plant will be decommissioned will be determined and a site closure plan will be agreed with the local regulators. As this point is anticipated to be many years in the future, it is not possible to determine the exact decommissioning technique(s) that will be used and the contents of the plan. Future legal regulations are also impossible to predict. In the absence of specific information, Atkins has provided a summary of best practice, based on experience from the decommissioning of facilities in western Europe and the requirements of the IPPC Directive. In general decommissioning is expected to require the:

• Removal of all surface equipment and units; • Removal of hardstanding and surface cover; • Abandonment of sub-surface utilities or filling and abandonment as appropriate; • Reinstatement of the site and all project areas to pre-construction conditions.

SITE CLOSURE PLAN

7.2 It is recommended that a site closure plan is developed during the detailed project design phase. This plan should be updated periodically throughout the life of the project. The plan will address the methods to be used in decommissioning and site restoration. The methods used and standards applied must be consistent with local legislation in force at the time of decommissioning and recognized international standards (e.g. World Bank), EU IPPC guidance, and industry practice. The plan should include arrangements for decommissioning the plant in a manner which avoids any pollution and return the site to an acceptable state, and should include:

• A methodology for the removal or the flushing out of pipelines and vessels where appropriate and their complete emptying of any potentially harmful contents;

• plans of all underground pipes and vessels;

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• The method and resource necessary for the clearing of lagoons; • The method of ensuring that any on-site landfills can meet the equivalent of surrender conditions;

• The removal of potentially harmful materials; • Methods of dismantling buildings and other structures; and • Guidance on the protection of surface and groundwater at construction and demolition-sites.

7.3 At this stage the environmental impacts associated with decommissioning can not be predicted with any detail. However, in broad terms, the process of decommissioning gives rise to impacts that are similar to those that can be expected in the construction phase, and proposed mitigation measures will be similar to those employed in the construction phase. Broad impacts and likely mitigation measures are summarised below.

AIR QUALITY

7.4 Levels of dust generated in decommissioning may be higher than those generated in construction due to activities such as concrete and masonry breaking and the possibility that on-site crushers will be used to process demolition waste. Dust will also be generated by traffic movements and the stockpiling and transportation of materials.

7.5 Air emissions will be generated by vehicle movements; no information on the scale of vehicle movements is known, but they are likely to be on a similar scale to the construction vehicle movements.

7.6 Mitigation measures that are likely to be employed include:

• Sheeting vehicles; • Enforcing speed limits; • Using dust suppression on crushers; and

• Dampening down surfaces.

7.7 As with the construction phase, the magnitude of dust impacts is expected to be low and of temporary duration if appropriate mitigation measures are used.

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SURFACE WATERS AND EFFLUENT

7.8 Potential impacts on surface waters and effluent from decommissioning are similar to construction impacts. The main risks come from water running over disturbed land and materials stockpiles entraining silt and/or contaminants, and through escapes of polluting materials and stored wastes entering the surface water system.

7.9 As the site is level, the risk of significant sediment transport is considered low. Controls over the construction and operational phases of the project will reduce the risk of contamination caused by spills of polluting materials.

7.10 Good site practice measures will be employed to reduce the risk of escapes of polluting materials (such as oils) used in the decommissioning process. These include the provision of adequate storage areas, complete with spillage protection, for storage of fuels, oils and chemicals. It is recommended that hazardous materials storage areas (with proper mitigation measures applied) including maintenance of equipment of machines used for demolition should be removed in the final phase of works.

LAND QUALITY AND GROUNDWATER

7.11 There is the potential that contaminants present in the ground before construction, from historic site uses or generated during plant’s operation could be released either as windblown dust or mobilised and enter groundwater. This risk will be reduced as areas of gross contamination encountered during the construction phase will have been removed and disposed of at appropriate hazardous waste sites. Any areas of gross contamination encountered during decommissioning will be dealt with similarly. Materials used to construct the development will be specified to ensure that low hazard materials are used wherever practicable. This will minimise the risks to human health and the environment connected with the potential exposure of hazardous materials during decommissioning.

7.12 Decommissioning activities involve the use of machinery and storage of oils and wastes; there is the potential for these substances to escape and cause ground and water pollution. This risk will be mitigated by the use of appropriate storage facilities for potentially polluting materials, including secondary containment.

MATERIALS USE, WASTE AND EFFLUENT

7.13 Waste streams that are likely to be generated include:

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• Non-hazardous non-biodegradable/combustible solid wastes such as concrete, masonry and scrap metals;

• Non-hazardous biodegradable/combustible solid wastes such as wood, cardboard, paper;

• Aqueous wastes – sewage from construction workers; • Hazardous solid wastes such as paint cans and chemical containers; • Hazardous liquid wastes such as oils.

7.14 The decommissioning plan will include a waste management plan which will:

• Identify waste streams likely to be generated; • A waste minimisation / storage / treatment / re-use / disposal strategy for each identified waste stream;

• Methods for properly managing wastes (including training, storing, labelling, transporting and disposing of wastes);

• Identify the landfills / storage sites that will be used for wastes which cannot be reused or recycled.

ECOLOGY

7.15 The decommissioning of recently use industrial buildings is not expected to have any ecological effects. At the time of decommissioning an assessment will be made to determine whether there is the possibility that animals such as bats or birds may have colonised the structures; if so appropriate ecological surveys will be carried out prior to demolition works.

7.16 There are no identified ecological sites outside the development site that may be affected by decommissioning activities.

LANDSCAPE AND VISUAL

7.17 The effect on the landscape after decommissioning will depend on the land use that the site is put to and its setting.

7.18 Visual effect during decommissioning will be similar to those experienced in construction, with increased vehicle and mobile plant movements, buildings being dismantled, and cranes appearing against the skyline. However, it should be noted that the visual impact will be reduced as the development will still be located within an industrial area characterised by large scale structures.

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7.19 No mitigation measures are proposed due to the low level of impact significance and the temporary nature of the decommissioning works.

TRAFFIC AND TRANSPORT

7.20 No estimates of decommissioning traffic are available, however, in general the transport requirements and amount of traffic generation is likely to be similar that experienced during the construction period. It should be noted that traffic intensity during decommissioning may be higher than in construction if the decommissioning programme is shorter. In addition, the cumulative effects of traffic in the construction period are not likely to be realised in the decommissioning period unless other projects are decommissioned at the same time.

NOISE AND VIBRATION

7.21 Noise levels associated with decommissioning activities can not be established until details of the programme, methods used and plant and equipment are established.

7.22 Noise levels will be controlled on the site and appropriate measures will be used, as in the construction phase, to mitigate noise impacts. Noise mitigation measures will be incorporated into the decommissioning plan.

SOCIO-ECONOMIC ASPECTS

7.23 The decommissioning of the plant may potentially have an impact on the local community through the loss and/or relocation of jobs associated with the running of the plant and potentially the creation of short term employment in order to execute the decommissioning programme.

7.24 The company should therefore devise an exit strategy to address these issues prior to decommissioning.

ARCHAEOLOGY AND CULTURAL HERITAGE

7.25 There are no archaeological or cultural heritage features identified on or in the vicinity of the site that are likely to be affected by decommissioning.

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RISK MANAGEMENT: NON-STANDARD OPERATING CONDITIONS AND EMERGENCIES

7.26 All safety procedures effective during plant construction and operation should be applied also during decommissioning period. Proper safety arrangements should be incorporated into the decommissioning plan.

7.27 Special safety procedures need to be developed and implemented for:

• Demolition of high structures (buildings, stacks), especially if explosives are used; • Demolition of natural gas networks; • Removal of tanks.

7.28 The PNTZ services and procedures need to be applied and supervision of Emergency and Occupational Health and Safety specialist will be granted.

7.29 Involvement and communication with municipal fire, environmental, work safety authorities is required.

SUMMARY OF IMPACTS AND PROPOSED MITIGATION MEASURES

Impacts

7.30 At this stage of the project lifecycle it is not possible to confirm the decommissioning techniques that will be used and their potential environmental impacts. However, the methods and techniques selected must be in accordance with national and international standards prevailing at the time of decommissioning. In the absence of specific information, Atkins have provided a best practice summary which has been based on experience from the decommissioning of facilities in western Europe, and the requirements of the IPPC Directive, and Atkins professional experience.

7.31 In general, decommissioning is expected require the:

• Removal of all surface equipment and units; • Potential removal of hardstanding and surface cover; • Abandonment or removal of sub-surface utilities as appropriate;

• Reinstatement of the site and all project areas to pre-construction conditions.

7.32 It is recommended that a site closure plan is developed during the detailed project design phase. The plan should be periodically updated throughout the life of the development. The plan should include arrangements for decommissioning the plant

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in a manner which avoids any pollution and return the site to an acceptable state, including:

• Methodology for the removal or the flushing out of pipelines and vessels where appropriate and their complete emptying of any potentially harmful contents

• plans of all underground pipes and vessels • the method and resource necessary for the clearing of lagoons • the method of ensuring that any on-site landfills can meet the equivalent of surrender conditions

• the removal of potentially harmful materials • methods of dismantling buildings and other structures • guidance on the protection of surface and groundwater at construction and demolition-sites

7.33 No assessment of environmental impacts associated with decommissioning can be made at present. In broad terms, the process of decommissioning is likely to give rise to impacts similar to those experienced in the construction phase, and proposed mitigation measures are likely to be similar to those employed in the construction phase. Likely key impacts are outlined below.

7.34 Dust is likely to be generated by demolition activities, especially those involving concrete breaking and earthworks. Due to the distance to off-site sensitive receptors, the main risk is likely to be to site workers. This risk will be reduced by the use of water dust suppression and the provision of appropriate personal protective equipment.

7.35 Decommissioning activities can give rise to water and groundwater contamination as a result of existing contamination present in the ground being mobilised and/or as a result of escapes of materials used during construction. These risks will be reduced by removing any areas of gross contamination for appropriate disposal as they are found, and preventing pollution through the careful storage of potentially polluting materials on site.

7.36 Wastes will be generated from decommissioning activities. Where possible wastes will be re-used or recycled. Where this is not possible, procedures will be put in place to ensure wastes are handled and disposed of correctly.

7.37 Visual impact during decommissioning is likely to be similar to that experienced during construction, with increased vehicle movements and the use of cranes. The visual impact of the site after decommissioning will depend on the site’s end use and any restoration measures adopted.

7.38 As there are no details of decommissioning phase it is not possible to make any assessment of traffic or noise impacts. Measures to reduce noise levels and traffic impacts will be considered during decommissioning phase planning.

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7.39 Overall, decommissioning activities are transitory, and are likely to be similar in magnitude to construction impacts.

Mitigation Measures

7.40 Proposed mitigation measures are presented in the Table below:

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Table 7.1 - Summary of Impacts and Mitigation Measures

Environmental Impact Proposed Mitigation Residual Impact Residual Impact Rating Emission prevention - development of Site Closure Updated information on risks and Minor Beneficial Plan requirements is available at site closure Dust emissions during ground - water spraying roads Dust propagation will be limited to Minor adverse works demolition area and will not - sheeting vehicles carrying influence local community. dusty materials However, workers should be - speed limits on unmade supplied with dust masks especially surfaces in dry days - dust emission monitoring in selected points Discharge of silty and contaminated - potentially polluting materials Ground contamination and storm Minor adverse storm water via PNTZ will be stored in dedicated water contamination will be limited sedimentation ponds to the storage areas on site by proper handling and Tchusovaya river storage of materials and - machines and equipment equipment. Storm water will be Ground contamination by leakages technical condition will be treated in PNTZ sedimentation from machines reviewed periodically ponds, the impacts on overall - machines and equipment will quality of discharge waste water will be sited on hard surfaces be minor - all storm water will go via PNTZ sedimentation ponds and oil separation - procedures for finding contaminated material during

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Environmental Impact Proposed Mitigation Residual Impact Residual Impact Rating excavations will be established - covering and damping of excavated materials - appropriate storage of contaminated material if found Solid waste generation - segregation and recycling of Solid waste will be passed to Minor adverse waste and proper storage in contractors sand disposed isolation from the ground according to their permits. Noise and emissions generated by - traffic management plant Local traffic congestions problems Moderate adverse vehicles avoided. - use of rail traffic for bulk transportation for abnormal loads Emergency situations during - local fire and emergency Procedures for prevention of Minor adverse construction works squads available on-site handling with emergency situations will be implemented. Proper training - availability of PNTZ and and equipment need to be contractors inspectors on site delivered to the staff. Social impacts - There will be job losses Plans to re-deploy workers will be Moderate adverse developed

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Impact Rating Scale – Definition Very severe adverse Severe adverse Moderate Adverse Minor Adverse Negligible / Nil Minor Beneficial Moderate Beneficial Substantial Beneficial

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8. OUTLINE ENVIRONMENTAL MANAGEMENT PLAN & MONITORING PROGRAMME

INTRODUCTION

8.1 This outline environmental monitoring plan (EMP) has been developed in order to ensure the mitigation measures recommended in the Environmental Statement are delivered at each stage of the mini-mill development, covering the construction, operation and decommissioning phases.

8.2 Monitoring falls into two general groups; qualitative assessment and quantitative assessment. Qualitative monitoring activities include audits and inspection of works, for example during the construction and demolition phases. Quantitative monitoring techniques will include consideration of:

• Concentrations of pollutants in exhaust gases from the plant; • Waste water quality, including site drainage; • Waste management, including recording the type and amount of wastes generated and reuse/recycling/disposal route;

• Energy and water management

8.3 The outline EMP is intended as a framework document that will form the basis of detailed EMPs for each development phase. At this stage of the development programme, monitoring techniques, standards and locations have not been specified. These details will be progressively developed as the project proceeds. Measurement equipment and methods will be selected to comply with international, European or Russian monitoring standards.

8.4 In addition, some of the monitoring requirements and emission limit values will be specified in permits and licences granted to PNTZ by environmental regulators. They will specify the monitoring techniques, measured parameters, frequencies of monitoring and the location.

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Table 8.1 – Mitigation Measures / Enhancement Plans – Construction Phase

Environmental Mitigation / Enhancement Measure Responsibility Phase / Impact Schedule Air emissions During the seasons when there is no dust suppression on the site roads, construction site shall be carried out using watering in the working areas and the roads as required. During GAMA All diesel and petrol vehicles, plant and machinery shall be allowed to operate only after construction their check for conformity to technical standards for emissions and safety eg GOST 21393-75; GOST17.2.2.03-87; GOST17.2.2.04-87; and GOST 17.2.2.05-97 Protection of Public water supply will be used for the builders’ housing area for the period of surface and construction. ground waters. Groundwater pumped from excavations and storm waters will be discharged into reservoirs. This water will then be used for dust suppression and fire fighting. Bulk storage of fuel (eg diesel and petrol) will not be undertaken on the site. Refuelling will be effected with a mobile bowser with suitable secondary containment and spill protection equipment. Potentially hazardous materials will be kept in designated storage areas. The following containment methods shall be employed: During GAMA Secondary containment: For storage tanks and containers above 20litres in total capacity construction (including loading areas) suitable containment must be used: these must have impervious surfaces, free of voids; gaps, cracks, and the used material must be compatible with the materials contained. The total bund capacity must be at least 110 % of the volume of the largest container or tank in the storage area. Proper maintenance of the secondary containment must be undertaken to keep debris, vegetation, leaked hazardous materials and storm water from accumulating. Roofs or covers should be constructed over transfer areas to minimize contact with surface water. All storage areas should be located in areas away from main construction activities and

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Environmental Mitigation / Enhancement Measure Responsibility Phase / Impact Schedule heavily trafficked routes; areas must be kept dry and free of combustible materials; entrances, exits and aisles must be clear and unobstructed; adequate lighting and ventilation must be provided; they must be secure from unauthorized access; all spills and leaks must be cleaned up promptly; hazardous materials should stored away from other storage areas. Suitable spill kits should be provided at all storage areas and at other suitable locations across the site. Workers should be trained in their use. All storage areas must be visually inspected at least monthly and the inspections recorded. Soil Top soil conservation: To protect topsoil layers provision shall be made for construction of Conservation temporary hard-surface roads with the use of broken slag: topsoil removed from the site shall be conserved in stockpiles and used for landscaping purposes; areas used for During GAMA temporary storage or roads shall be restored following construction. construction Soil shall be tested for contamination prior to re-use; any soil unsuitable for landscaping shall be used for other purposes or disposed of in a suitable faculty on or off site. Effect on the All road vehicles accessing the site shall be carried out on the …………………….. transport Transport movements shall be carried out inside the construction site on the temporary movement During roads and the approach roads under design. GAMA construction Limitations in the motor transport traffic speed on the construction site shall be enforced to 20kmph. Boundary noise measurements shall be made at the sanitary protection zone periodically during the construction process. This shall include when piling operations are in progress. During Noise GAMA Provision shall be made for the operation of environmental control of fulfilment of the construction measures on observance of the permissible level of noise impact.

Waste Waste management procedures for all waste streams shall be implemented for the GAMA During

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Environmental Mitigation / Enhancement Measure Responsibility Phase / Impact Schedule management construction process. This will include a waste minimization plan. construction Records shall be maintained of all wastes generated at the site, including types, quantities, contractors used and treatment/disposal site used. All transporters and contractors used for waste collection, re-use, treatment or disposal shall have a current licence for the given type of activity. Contracts for the construction wastes (signed between GAMA and external organizations) and the necessary licenses obtained for the related activities shall be provided to the Lenders Construction Areas used for open storage of materials shall be located in the direct vicinity of the materials construction site in designated areas. Storehouses and sheds for temporary storage of construction materials and equipment During shall be located on hardstanding or other impermeable materials where there is any risk of GAMA construction ground contamination (eg from cement) The location and configuration of the areas for temporary storehouses, their purpose and composition shall be agreed with PNTZ. Waste waters All domestic waste water from the workers camp and the site shell be drained via the temporary networks to the pumping station and then shall be transferred to the biological waste water treatment plan according to a written agreement. The Construction During GAMA Contractor will provide the Lenders with this document. construction Washing of motor transport and construction equipment on open ground or hardstanding on the site is not allowed.

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Table 8.2 – Environmental Monitoring Plan – Construction Phase

Items Measures Responsibility Schedule Limits

Noise Boundary noise measurements to be GAMA • Suitable monitoring locations to be undertaken by competent person using established near receptors. standard methodologies with approved and calibrated equipment: • One-off survey prior to site works to To be obtain background. established in • Baseline study prior to construction consultation • Monthly day time boundary with the • Day-time measurements measurements. regulators

• Night-time measurements • Monthly night time boundary measurements.

Dust Dust monitoring and visual inspection of site GAMA • Weekly inspection during seasons roads and other external areas. Records to be where there is no snow. maintained of inspections

Communications Compile and maintain register of GAMA • Suitable preventive and corrective environmental communications including action to be taken if required. Actions complaints to be recorded in register.

Accidents and Compile and maintain register of GAMA • Suitable preventive and corrective Incidents environmental accidents and incidents action to be taken if required. Actions to be recorded in register.

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Items Measures Responsibility Schedule Limits

Waste Visual inspection of waste storage, collection GAMA • Monthly inspections. Suitable and disposal areas. Records to be maintained preventive and corrective action to be of inspections. taken if required

Visual inspection of all materials (including • Monthly inspections. Suitable Storage areas fuel) storage areas. Records to be maintained GAMA preventive and corrective action to be of inspections. taken if required

Visual inspection of construction waste water • Monthly inspections. Suitable Water pollution drainage systems and reservoirs. Records to GAMA preventive and corrective action to be be maintained of inspections. taken if required

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Table 8.3 – Environmental Monitoring Plan – Operational Phase

Items Measures Responsibility Schedule Limits

Continuous monitoring will be provided for the following parameters: Particulates, NOx, CO and oxygen. • Frequency and methods will be Sampling: Periodic sampling of the stack emissions determined before the beginning of during full load are to be undertaken for PCDD/PCDF the work of the plant. Frequency and methods will satisfy the requirements of Russian environmental legislation Ambient monitoring: Periodic monitoring of and EBRD/IFC/World Bank guidelines contaminant concentrations on the boundary of the on air quality. Emissions sanitary protection zone. To be agreed to air from PNTZ • A report shall be made immediately in with regulators main stack All equipment used for continuous monitoring to be case of deviation from legal or best subject to routine maintenance and calibration practice limits. according to the manufacturer’s instruction.

• All monitoring data and a statement on All sampling and ambient monitoring to be compliance with this EMP shall be undertaken using standard approved methods by reported in the Annual Monitoring accredited contractors or laboratories using suitably Report to Lenders. calibrated and maintained equipment.

Monitoring of workplace particulates, CO, fume • Frequency and methods will be To be agreed PNTZ determined before the beginning of with regulators the work of the plant. Frequency and Fugitive air

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Items Measures Responsibility Schedule Limits emissions methods will satisfy the requirements of Russian environmental legislation and EBRD/IFC/World Bank guidelines on air quality.

• A report shall be made immediately in case of deviation from legal or best practice limits.

• All monitoring data and a statement on compliance with this EMP shall be reported in the Annual Monitoring Report to Lenders.

For all waste streams (solid and liquid) data should • Monitoring data and a statement on To be agreed be kept of: compliance with this EMP shall be with regulators reported in the Annual Monitoring Report to Lenders. • Waste quantities Waste • Physical form and containers PNTZ used/packaging

• Disposal/treatment route

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Items Measures Responsibility Schedule Limits

• Final disposal point

• Recycled/reused quantities

All in house waste disposal/treatment facilities suitable monitoring/inspection in accordance with the relevant permit/licence and Russian legislation.

Any breaches of legal requirements, including permits must be reported immediately.

Evaluation of noise risk zones shall be undertaken by • Monitoring data and a statement on a programme of measurements inside and outside of compliance with this EMP shall be the development. The evaluation will result in a map reported in the Annual Monitoring of noise impacts with designation of zones of Report to Lenders increased noise and the designation of main sources of noise.

Noise control and decrease of the noise level To be agreed Noise PNTZ with regulators

• a noise decrease programme shall be developed on the basis of risk evaluation, including the availability of engineering decisions on the noise decrease on the main noise sources

• a condition on noise is included into all

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Items Measures Responsibility Schedule Limits

contracts for delivery of new equipment, i.e., the maximum noise level shall be 70 dB or less at 1m

A programme of worker protection against noise shall be implemented.

• personnel are trained in use of PPE and informed of the hazards

• PPE shall be given to all personnel for use in the workplace

• all visitors and contractors shall be notified of zones of increased noise, and protection means provided by the plant

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Items Measures Responsibility Schedule Limits

Noise: Personnel examination PNTZ To be developed with the Regulator. To be agreed Health and with regulators Safety • audiometry shall be included in medical examination during employment (including temporary employees)

• regular audiometry shall be performed for the employees submitted to action of the increased noise level

• data on the results of the audiometry programme statistical data shall be used to review the effectiveness of preventive measures in place.

All monitoring to be undertaken using standard approved methods by accredited contractors or laboratories using suitably calibrated and maintained equipment.

Waste All wastewaters discharged from the plant shall be • Frequency and methods will be To be agreed PNTZ waters monitored to demonstrate compliance with determined before the beginning of with regulators the work of the plant. Frequency and

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Items Measures Responsibility Schedule Limits

legislation. methods will satisfy the requirements of Russian environmental legislation and EBRD/IFC/World Bank guidelines Regular inspection of drainage will be included in the on air quality. wastewater monitoring plan.

• Monitoring data and a statement on compliance with this EMP shall be reported in the Annual Monitoring Report to Lenders

Regular internal energy inspections on the plant; PNTZ • Monitoring data and statement on testing and tuning of burners, boilers, metallurgical compliance with this EMP shall be furnaces and so on will be undertaken annually by reported in the Annual Monitoring competent experts with further setting: Report to Lenders

• Annual goals for continuous improvement of energy use; Energy N/A • Purchasing preference to energy-efficient tools and equipment for use where available;

• Plans for the purchase of environmental friendly power equipment for use where available.

The Plant will develop a water management PNTZ Monitoring data and statement on Water • To be agreed programme to ensure continuity and quality of water

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Items Measures Responsibility Schedule Limits

supply. compliance with this EMP shall be with regulators reported in the Annual Monitoring Report to Lenders Conduct an initial Water Usage Assessment and identify opportunities to utilize water resources more efficiently.

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9. PUBLIC INFORMATION PROGRAMME

9.1 This section contains a summary of the full public communications plan document which can be found on the PNTZ web site (www.pntz.ru).

9.2 This section identifies the stakeholders who are affected by or interested in the project, describes the consultation undertaken to date, identifies key concerns of the stakeholders and provides information on the enquiry line / grievance mechanism by which stakeholders can register comments or concerns on issues related to the project.

STAKEHOLDERS

9.3 The section on stakeholders considers people affected by or interested in the operation of the mini mill and stakeholders affected or interested in the construction camp.

Mini Mill Stakeholders

9.4 A matrix of the different stakeholders and their potential interests identified during the initial visit and preliminary meetings is summarised in Table 1 below.

9.5 In developing this PCDP, meetings were held in December 2006 with:

(ix) PNTZ staff responsible for the steel mill project,

(x) PNTZ employee organisations:

• Trade Union;

• Youth Association and Women’s Group;

• Retired Employees Association.

(xi) Local Authorities:

• the Head of the council;

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• Municipal Health department;

• Legislative office (responsible for council budget);

• Council construction department; and

• Municipal Environment Department.

9.6 In January 2007 (following the public meeting), discussion was held with two NGO groups active in Pervouralsk.

9.7 An announcement in the local papers, Vechernij Pervouralsk and Novaya Gorodskaya Gazeta made on 18/01/07 invited all interested members of the public to a public meeting on the 24/1/07. The meeting included a slide presentation of information on the mini mill was provided in line with Ovos requirements.

9.8 The matrix in Table 1 presents a list of stakeholders and some of their areas of interest.

9.9 Key interest groups include:

Local Residents

9.10 Pervouralsk is an industrial town with a number of metal processing and construction works. The town has a population of approximately 133,000 people. There is a low official unemployment rate of 1.16 % in the town and vacancies exceed job seekers. PNTZ employs 12,500 people and is the largest local employer. Additionally there is approximately the same number of veterans, pensioned PNTZ workers. Indirectly local shops and businesses depend on the economic health of PNTZ to maintain local incomes and purchasing power. PNTZ also make substantial contributions to town social and welfare projects.

9.11 Other large employers include: JSC Pervouralsk Plant of the Tubular Building Constructions (PZTSK) producing and installing metal constructing, wall and roofing panels, Pervouralsk Plant of Complete Metallic Construction, Pervouralsk City Dairy Plant LLC employing 165 people, JSC Pervouralsk Silica Plant (JSC Dinur), one of the biggest refractory plant, manufacturing shaped and monolithic refractories and the only producer of silica bricks in Russia. It employs 3,000 people. Approximately 22,000 people commute to work in Ekaterinburg.

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9.12 The average monthly salary in Pervouralsk in 2005 was about $300 (€ 232), a little lower than the average in the region, which was $350 (€270, Local Information Centre). The local council report the current average monthly salary is Rub 11,000 or € 320. The average salary in PNTZ is Rub 13,500 (€ 393). The national minimum monthly wage is Rub 1100 (€ 32, introduced May 2006) (ILO minimum wages database and PNTZ confirmation) and unskilled workers in PNTZ monthly earnings are Rub 2,500 (€ 72). Salaries increase by 20-30% year. Inflation in 2006 was 10%.

9.13 The nearest residential area is located 795 m to the south of the development site and as such would be expected to be outside of the protection zone of 500 m.

9.14 Each street has a street representative who can act as a key contact for residents in the street.

9.15 People are particularly concerned about environmental issues relating to air quality, the quality of potable water and soil pollution6.

9.16 However, UralKomplektNauka conducted (on behalf of PNTZ) an opinion poll of approximately 3,000 people asking about the new plant. It found that the Pervouralsk citizens view on the new plant. Their preliminary results indicated that about 80% of those interviewed felt positive about the project.

9.17 Under a separate initiative, “Citizen” an NGO (see NGO’s) has established a public enquiry office and have a hot line open for three months (December- February) so people can question and express concerns with the environmental issues in the town. By 24/1/07 there were 950 enquiries registered. The concerns registered related to:

• industrial air pollution (72.5%) • low quality of potable water (22.4%)

6 An opinion poll held 12/06 in Pervouralsk on social, economic and environmental issues, conducted by the Institute of Sociology of the Russian Academy of Science and supported by a number of local public groups. The poll covered 800 people, 653 of which stated that the environmental situation was the town’s main problem. The state of infrastructure and communal services was in second place (559), followed by housing, third (463), and poverty fourth (411). There were concerns for air quality (41%) and quality of potable water (31%); soil pollution (26%); 62% of people believed the industrial technology modernisation was necessary; 56% thought environmental inspection needed strengthening; 50% thought there was a need to increase the local budget for environmental improvements.

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• waste management and problems with municipal landfills located within the town (5.1%)

• the numbers of sick children.

9.18 The planned public involvement activities would normally focus on affected local people. In this project, the site being developed is within the existing works site, and no–one is identified as being directly in a zone affected by the project in terms of environmental or sanitary issues or increased traffic or disturbance. All residents including those who live close to the proposed project site have had the opportunity to attend one or more public meetings. Further public consultation will be announced through the local media (Vechernij Pervouralsk and Novaya Gorodskaya Gazeta). Employees of PNTZ or retired employees will be informed through Trade Union routes, or through the Veteran Workers Association and PNTZ newspaper. Representatives of streets nearest to the Mini mill and construction camp will be contacted by letter. The letter will inform them about the PCDP, identify its location on the company website and that hard copies have been lodged with city libraries.

NGOs

9.19 Environmental NGO’s present at the public meeting of 24/1/07 included “Green Town” and “Citizen”, Pervouralsk.

9.20 Citizen is a Moscow based foundation and is a member of the international environmental network working in the CIS countries. They are mainly involved with fundraising and some research to support the development of environmental groups across the country. They run pilot environmental awareness raising projects in several cities in all Russian regions. In the Sverdlovsk Oblast they are running such a pilot project in Pervouralsk. They have established a public enquiry office and have a telephone hot line open for three months (December-February). As part of the awareness creation and information provision Citizen have organised public hearings on the implementation of the environmental measures by the Chromium Plant on 19/01/07. They are planning to organise a similar hearing regarding the operation of the Copper Smelting Plant in nearby Revda. The pollution from this plant is widely held to affect Pervouralsk.

9.21 The address of the Citizen enquiry office: Pervouralsk, Vatutina St 31, Tel: 6 33 33.

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9.22 The Pervouralsk Community Foundation is one of a number of community foundations established in Russia7 and internationally. It is an umbrella and co-ordinating organisation assisting civil society causes and projects. It helps with establishment, management and sourcing of funds for grant programmes and provides training and support to civil society projects. The Pervouralsk branch is recognised in Russia and outside for establishing an effective and innovative funding mechanism. Commercial and industrial organisations have agreed to fund the NGO giving a percentage of their turn-over. PNTZ is a key funder.

9.23 PNTZ, environment section will contact these 3 organisations by e-mail (contact details in Table 1) to inform them of the PCDP and request that “Citizen” announce it as a news item on their website. A similar process will be undertaken for the draft ESIA document.

Vulnerable people

9.24 No specific groups have been identified who would have difficulty in commenting and contributing to the planned consultation described in section 5. However comments on sick children have been noted and will be considered in the scope of the ESIA.

Local Authorities

9.25 The City Council plays a coordination role in the public involvement processes and especially in conflict prevention / conflict resolution. It also acts as a regulator and grants permits for construction defining any specific requirements arising either through the technical review and public consultation. It is noted that PNTZ contributes a significant amount to the municipal budget.

Construction Camp Stakeholders

9.26 The details of the construction camp and its possible impacts have been described in section 5 of this document.

9.27 The construction camp is potentially significant due to its duration (23 months) and the numbers of foreign workers. The camp and its facilities are well

7 http://www2.cafonline.org/cafrussia/default.cfm?page=cafinrussia

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equipped and arranged in a way to reduce workers needs to interact with the local community.

9.28 Stakeholders likely to be affected by the camp are firstly the workers themselves. They will be directly affected by the living and social conditions of the camp.

9.29 Other potential stakeholders include the mosque goers, as a proportion of the construction work force may be Muslim and choose to use the mosque.

9.30 Sex workers may see an increase in their business and both clients and the workers themselves will have an interest and concern for increased health and disease risks.

9.31 Informal discussion on other aspects of the camp will be held by PNTZ with near by street representatives and with the Imam to foresee any possible inconveniences or issues that might arise.

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Table 9.1 - Summary Stakeholder Analysis

Sector Organisation/ representative Interest /concerns

Resident PNTZ Retired Workers Association Pride in ex employer, interest in employment and social policy re income maintenance.

Resident Residents living adjacent to the plant - street representatives Concerns for significance and range of environmental impacts and interaction with and inconvenience from foreign worker numbers

Resident Residents with employment links to PNTZ ; Positive views re changes in environmental conditions. Interest to ensure standards not exceeded. Interest in new jobs and process for applying

Resident Other residents in Pervouralsk ; Mixed views - concerns for environment, scale of industry, interest in jobs

Local Pervourlask Town Council - head of council, Mr V Popov, Deputy Environmental impacts, change in labour and budgetary implications, Regulator labour-in migration housing and traffic congestion

Regulator Serdlovask Oblast (Regional)Environmental Inspectorate Environmental regulatory process and standard setting and enforcement

Regulator Serdlovask Oblast (Regional) Dept. for Public Health Health implications due to mini mill and also possible disease introduction by foreign workers

Regulator Serdlovask Oblast (Regional) Dept. for Occupational health and Employment health and safety both in mini mill and for construction Safety site foreign workers

Regulator Pervouralsk Environmental Dept. Mr V Plusnyn Environmental regulatory process and standard setting and enforcement

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Sector Organisation/ representative Interest /concerns

Regulator Pervourlask Public Health Dept. Mrs Vyasovchenko Health issues relating to emissions and possible disease introduction by foreign workers

R&D inst. Ural State Technical University New technologies, training of students, need correct certification

R&D inst. Nizny Tagil training college New technologies, training of students, need correct certification

R&D inst. OAO “Uralmash” (Ekaterinburg) Training for crane operators

R&D inst. Ural State lycee “Spector” New technologies, training of students, need correct certification

NGO ‘Green town’, Boyar Yurij Pavlovich; Sverdlovsk Oblast, Pervouralsk, Local Environmental group Trubnikov St, 34; tel/fax (343 92)677 77, 633 33, 8 922 221 81 95; email: [email protected]

NGO “Citizens”, Pervouralsk, Vatutina St 31, tel: 6 33 33, Moscow contact Establishing pilot projects in small towns including Pervouralsk to : Maksim Andreevich Shingarkin; Russia, 119019, Moscow, PO 211; provide more information, increase awareness and encourage tel: +7 903 672 6427; fax: +7 (495)475 59 75; email: transparency. On going hot line and public hearings [email protected]

NGO Pervouralsk community foundation, Vera Ananyina, 43, Vatutina str, Raises funds to support local community projects, including training. (34392) 22663 Promotes civic initiatives & provides information support. ASI representative, funding from local council

Media Local TV station; Reporting news and viewer information and interest

Media Vechernij Pervouralsk and Novaya Gorodskaya Gazeta Reporting news and reader information and interest newspapers;

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Sector Organisation/ representative Interest /concerns

Media Local radio Reporting news and reader information and interest

Employee PNTZ Trade Union Organisation, Mr LHaldin Ensure smooth integration of new workers, establish new TU sub group for mill

Employee CHTPZ Trade Union Ensure good opportunities and minimise disruption for workers in Open Hearth Mills

Employee PNTZ employees (including trade union representation) - TU Chair Employment changes, wage changes, worker welfare Mr L Haldin

Employee PNTZ youth association ,Ms. Irina Tomilova Job opportunity changes, new technology and future opportunities for skilled work and better wages

Employee PNTZ Women’s Association, Ms N Vorobjeva Womens rights and potential opportunities - opportunities are limited in the new work due to the type of work and national law on heavy work

Community Pervourlask town medical community Changes in environmental conditions & implications for health. Changes in worker numbers and implications for admissions and new capital investment needs

Community Potential impact with possible temporary expansion of “congregation” Pervouralsk Mosque and Imam Denis Hazrat from work camp

Community Orthodox church representatives e.g. Church of the Holy Tsarist Potential impacts of increase in Martyrs, United Methodist Church

Commercial Uralgepromez (Ural project organisation) Undertaking National OVOS for PTNZ

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Sector Organisation/ representative Interest /concerns

Commercial Other steel mills Training staff for PNTZ, potential future competition (scrap, markets etc.)

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CONSULTATION UNDERTAKEN TO DATE

9.32 In January 2006 PNTZ voluntarily initiated meetings with employees and key City representatives and residential groups. It undertook two public meetings. One meeting was with pensioned ex-employees of the firm. This group mainly consisted of members of the Veterans Association, of which there are in the order of 10,000 members. The second meeting involved representatives from schools, hospitals and other such organisations. The meetings were held for purposes of awareness creation, and provision of preliminary information and were attended by an estimated 80 -120 people. They were organised through the Social Projects Administration, PNTZ. Though no formal record of the meetings was kept, the type of issues raised included:

• Concerns over the type and level of emissions • The number of new jobs and opportunities and salary levels • What the process of applying for these jobs would be • The use of additional council income from the new works and the level of income from new works which would fall to the town

• The competitiveness of the new mill and works

9.33 On 24th January 2007 a public meeting with respect to the national OVOS for the mini mill was undertaken. At the same meeting the opportunity was taken to provide the public with information on the current ESIA being undertaken to meet EU and national standards and requirements (which ever is the more stringent) for funding purposes

9.34 Comments raised at the meeting included concerns that:

• There should be an agreement to meet environmental protection/mitigation measures between the local authorities and the plant;

• Declining population of the city: population is decreasing at a faster rate than national population. More needs to be done to retain the city population;

• The new plant would add to existing high levels of soil contamination and mass increase of air emissions from the new plant (citing data from the draft OVOS);

9.35 In addition the NGO Citizen suggested that a Public Environmental Review should be conducted (it may do this itself);

9.36 The Environmental Inspector of the Federal Level (Pakhalchak Galiona Yur'evna) suggested that the plant should invest money in the city public health protection and

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the treatment of potable water in the city, though this was not necessarily directly related to the new Mini mill development.

9.37 The full ESIA documentation and a non technical summary will both be available in English and Russian at the PNTZ Environment office and placed in city libraries. They will both also be placed on the PNTZ website. The website address is www.pntz.ru. A copy will also be available at the EBRD regional office, Karla Libknekhta, 22, Office 413, Ekaterinburg.

9.38 An exhibition to present the results of this ESIA will be organised by PNTZ, assisted by Atkins staff. Information on access to the ESIA and invitations to the public exhibition (with details on the location and dates) is announced in the Vechernij Pervouralsk and Novaya Gorodskaya Gazeta newspapers, PNTZ newspaper and through staff announcements. The local council; the media and to NGO “Citizen” and Green Town, and street representatives living nearest to the development are to be informed by letter or e-mail.

9.39 The exhibition will be held in late March / early April over 4 days. A technical representative will be available to give further explanations on the exhibition and ESIA on one day of the exhibition (to be announced in the paper).

9.40 Comments in response to the ESIA and or the exhibition will be recorded through:

• Written comments provided by a comment form (Appendix 3); • Written or telephone responses to the enquiry line set up by PNTZ;

9.41 These comments will be registered and compiled by the Environment section of PNTZ.

Enquiry line and grievance mechanism

9.42 An enquiry line is in operation comments, complaints, questions or other communications on any aspect of the Mini mill development or construction camp can be made either by phone or in writing to Mr Victor Kuznezov, PNTZ.

The telephone enquiry line is open during working hours. The contact details are:

• Mr Victor Kuznezov, PNTZ, Torgovaya Street 1, Pervouralsk, 623112, Sverdlorsk, Tel. (392) 45067.

• Written grievances can be made using the form provided in Annex 3. Copies of the form can be obtained the reception of PNTZ.

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• The PNTZ environment section will keep a register recording the type of enquiry and the details of the enquirer to review the issues and concerns.

• Any register or document will maintain the confidentiality of the respondents, referring to them for example as 35 year old male resident, or resident of “named” district.

• This review will be provided to PNTZ management on a 2 weekly basis for decisions on the form of appropriate action to be taken.

• The review will also be sent to Atkins to inform the ESIA. • As from March the receipt of grievances will be acknowledged in writing within 5 working days of their receipt.

9.43 A copy of the review of all grievances with outcomes will be available from Mr Victor Kuznezov on request at the end of the consultation period (May 2007).

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