Draft Amendment Application Report, Agni Steels SA February 2011 Executive Summary EXECUTIVE SUMMARY

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1 EXECUTIVE SUMMARY PROJECT BACKGROUND AND DESCRIPTION On the 16 February 2009, Agni Steels SA (Pty) Ltd (formerly Afro Asia Steels), was issued an Environmental Authorisation for the construction and operation of a Steel Recycling and Processing Facility in Zone 6 of the Coega Industrial Development Zone, Nelson Mandela Bay Municipality. In May 2010, Agni India, agreed to jointly set up the proposed steel recycling and processing plant with the SA partners. Agni Steels Pvt Ltd, India is a secondary steels manufacturer with facilities to manufacture Sponge Iron, MS Billets and Re-Bars. The brand name AGNI TMT is well known in South India for its quality Re-Bars. In order to carry the benefits of the brand name, Agni India are proposing the name Afro Asia Steels is changed to Agni Steels SA Pty Ltd. There is no change proposed in the process envisaged, no change in the capacity of the 25 Ton Induction Furnace, and no change in the final product to be manufactured (neither in its physical properties nor in its chemical properties), as issued in the environmental authorisation, dated 16 February Agni s plant and machinery equipment is designed to keep various norms below allowed limits which will result in increased productivity, product quality, qualitative employment and sustained growth. The Final Environmental Impact Assessment and Environmental Authorisation have been reviewed in order to ensure Agni s plant and machinery equipment design complies with the conditions of the Environmental Authorisation. This process has identified the need to undergo an Amendment Application process in order to ensure that the conditions of the Environmental Authorisation comply with the details of the plant, equipment and machinery to be installed and operated by Agni Steels SA. It must also be noted that Agni Steels, has applied to DEDEA for an extension to their Environmental Authorisation, to be extended to February OVERALL APPROACH Condition of the Environmental Authorisation issued by the DEDEA in February 2009 states: Any changes to, or deviations from, the project description set out in this Environmental Authorisation must be approved, in writing, by the Department before such changes or deviations may be effected. In assessing whether to grant such approval or not, the Department may request such information as it deems necessary to evaluate the significance and impacts of such changes or deviations and it may be necessary for the holder of this Environmental Authorisation to apply for further authorisation in terms of the regulations. Based on the discussions held with DEDEA on the 28 January 2011 it was confirmed that the proposed changes to the project description fall within the scope of condition As such, Agni Steels SA is not expected to go through another full EIA process and obtain a new Environmental Authorisation. Agni Steels SA must, through their appointed consultant, prepare an Amendment Application Report and submit this to the DEDEA for decision making. The overall approach to the Amendment Application Report is to identify changes to and /or deviations from the Final EIA and the original project description, determine where these might alter the predicted significance of impacts, and review the mitigatory measures accordingly. Prior to the preparation of this report interested and affected parties were provided with an opportunity to register their interest on the project database for the Amendment Application. A Draft Amendment Application Report has been compiled (this report), and is being made available to DEDEA, other Affected Authorities and I&APs for their review and comment. The comments received during the review process will be compiled into a Final Amendment Application Report which will be submitted to the DEDEA for their decision making. Thereafter, and depending on the findings of the Amendment Application Report, DEDEA may issue an amended Environmental Authorisation. i

2 UPDATED PROJECT DESCRIPTION AND RECOMMENDATIONS Name and Address Change The name and address details change in an amended Environmental Authorisation does not alter the significance of impacts as contained in the Final EIA and does not require any additional mitigatory measures. Site Coordinate Amendments The area originally allocated to Agni Steels SA, within Zone 6 of the Coega IDZ did not allow for the most efficient layout for the facility and could negatively impact on the layout for later phases of the project. The applicant requested that the configuration of the space allocated for the project by the CDC be altered to allow for a more efficient site layout for Phase 1 and for later phases of the project. The boundary of the site, within Zone 6 of the Coega IDZ, was subsequently amended by the CDC to incorporate an approximate additional 3 hectares and thereby allow for a more efficient layout. The additional area incorporated into the amended layout was not assessed in the Final EIA or considered in the issuing of the Environmental Authorisation and was considered in this Amendment Application process. The findings of the review of the Amendment Application identified that it is not anticipated that the additional 2.97 ha of vegetation which will be cleared for the amended site layout would alter the significance of the impacts on the ecology (vegetation & habitat). Existing conditions in the Environmental Authorisation adequately address the implementation of mitigation to ensure that additional vegetation clearing required for the amended site layout does not result in significantly different impacts from those assessed in the EIA. The measures imposed by these conditions will result in the impacts associated with the clearing of the vegetation on the site remaining of Medium Significance, as assessed in the EIA for the Proposed change in land use of the remaining area within the Coega IDZ (SRK Consulting, 2006). No additional mitigation measures are recommended for inclusion in the amended Environmental Authorisation. The Environmental Authorisation should be amended to reflect the changes to the boundary of the site. Additional Cranes The installation of an additional crane or cranes, to more efficiently handle projected production volumes as stated in the Final EIA, will not require an increase in raw material input or waste outputs other than those described in the Final EIA. The amendment proposed to the Environmental Authorisation, to allow for the installation of additional cranes of varying capacities, does not impact on the significance of impacts identified and assessed in the Final EIA, and no additional mitigatory measures are proposed. In order to allow for the installation of additional cranes of varying capacities the following amendment is considered: Section 2. Bullet point 1 (page 3 of 12) to be amended to read as follows: Electrically operated overhead cranes with varying capacities for the handling of scrap metal and to help in various other handling operations. Air Quality Management System One of the principles of NEMA note that the best practicable environmental option (BPEO) is defined as being the option that provides the most benefit, or causes the least damage to the environment as a whole, at a cost acceptable to society, in the long-term as well as in the short-term (National Environmental Management Act, No 107 of 1998). Agni Steels SA is proposing to install a system that is more suited to manage the types of emissions anticipated from the facility, and one which will allow ii

3 for a 10% improvement in the predicted emissions, which will potentially result in less damage to the environment in the long term. The Air Quality Specialist Assessment undertaken by Airshed identified that emissions from the facility would be within SA standards as well as SANS and EC limits. The baseline data identified in the air quality specialist assessment and the emissions inventory are still relevant to the project and do not require amendment. The proposed change to the air quality management system will allow for the implementation of the best practicable environmental option in order to ensure that emissions from the facility are kept within the legal limits. The proposed amendment does not impact on the construction or decommissioning phases of the project or the significance of impacts and mitigatory measures outlined in the Final EIA report. The specialist air quality assessment identifies the significance rating for the proposed operational activities to be medium for PM10 concentrations and Low for dust deposition. (Airshed, 2007, pg 4-10). It is anticipated that the proposed change to the air quality management system will result in an approximate 10% reduction in the predicted air quality impacts, however it is not anticipated to change the findings of this study and the significance of impacts identified. In order to allow for the implementation of the best practicable environmental option (BPEO) for the management of air quality, the following amendment is considered: Section 2, bullet point 5 (page 3 of 12) to change to read as follows: An appropriate air quality management system to ensure compliance with legal limits. Section 2, last two paragraphs, first sentence to remain (remainder of the last two paragraphs to be deleted) followed by the following insertion (page 3 of 12): The pollution control system consisting of, inter alia, the following components, a canopy hood for extraction, a spark arrestor (if needed), a bag filter, centrifugal fan and a chimney. In order to ensure that emissions are kept within the legal limits. Manufacturing Process and Sponge Iron In order to use any type of available steel scrap, Agni Steels SA need to use sponge iron, where required, along with the scrap metal to bring down the carbon level in the scrap metal. The use of sponge iron in the melting furnace is determined by the carbon content of the scrap metal and is a key component of the production process. The use of sponge iron in the melting furnace is not a new step or additive in the production and is discussed and assessed in the Final EIA. The proposed amendment to the Environmental Authorisation does not impact on the significance of the findings of the EIA and not additional mitigatory measures are proposed. In order to accurately reflect the use of sponge iron in the production process, the following amendment is considered: Section 2. Bullet point 7 (page 3 of 12) to be changed to read as follows: Charging the scrap into the induction melting furnace, with sponge iron, where and if required. Manufacturing Process and Continuous Casting Machine A key component of the Agni Steels SA production process is a Continuous Casting Machine (CCM) for producing Billets, which is captured in the Final EIA (SRK 2008) and in the Environmental Authorisation (Section 2, bullet point 10, page 3 of 12). However the narrative section in section 2, page 3 of 12, the 1 st paragraph (last sentence) does not specifically reflect this component of the production process. In order to ensure that the production process is accurately and consistently reflected in the Environmental Authorisation, Agni Steels SA iii

4 is requesting an amendment to section 2, the 1 st paragraph, last sentence of the Environmental Authorisation. This amendment is viewed as an administrative amendment to accurately reflect the production process and ensure consistency within the Environmental Authorisation. The amendment proposed does not impact on the significance of the impacts assessed in the Final EIA and no additional mitigatory measures are proposed. In order to accurately reflect the production process and ensure consistency in the Environmental Authorisation, the following amendment is considered: Section 2. 1 st paragraph, last sentence (page 3 of 12) to be changed to end with the following: or into a Continuous Casting Machine to make billets. Water Consumption The internal review conducted by Agni Steels SA has identified that the actual water requirement for the facility is L per day and not L as identified in the Final EIA and reflected in the Environmental Authorisation. The water requirement of L per day, use and discharge thereof has been assessed as part of this Amendment Application process. Water Use Increased pressure on the water supply as a result of the altered operational phase water demand of the proposed facility would be a Regional issue. Should the water supply in the area be affected negatively as a result of increased pressure on the water supply, the impact would be considered of Medium intensity since natural and social functions would continue to function albeit in an altered manner. The impact would remain in the Long Term, for the duration of the existence of the facility, or until the water supply status quo changes. Based on the above the consequence rating of increased pressure on the regional water supply would be considered High. The CDC has a Water Utilities Agreement with the Metro, in which water is allocated to the CDC. Currently, water is being made available to investors based on the Water Utilities Agreement and the quota of water allocated to the IDZ. As per agreement with the CDC, Agni Steels SA will be provided water allocated from this quota. The likelihood of the impact occurring is therefore considered improbable. By applying the rating methodology as outlined in the Final EIA the impact of the proposed increased water consumption at the facility is rated as Medium negative. Waste Water Discharge The impact of process waste water generation and discharge was assessed in the EIA, and was rated as having Medium Significance in the absence of mitigation. However specific mitigation measures were recommended which would reduce the impact to Low Significance. While the volume of waste water is expected to be higher based on the amended waste consumption value of L per day, only L waste water will be discharged into the municipal sewage system from where it will be treated at a registered municipal waste water treatment works. Written confirmation has been obtained of sufficient treatment capacity for the proposed waste water volume. Conditions have been included in the Final EIA and EMP, as well as the Environmental Authorisation, which seek to ensure that the discharge water quality meets the required discharge standards. The mitigation measures for the management of waste water which were included in the EIA remain relevant, and are considered adequate to ensure that waste water impacts on the environment are limited. iv

5 In view of the above it is not anticipated that the additional waste water discharge would change the significance of the impacts of process waste water as assessed in the EIR for the project. In order to accurately reflect the estimated water consumption, the following amendment is considered: Section 2, 1 st paragraph, second sentence to change to read (page 4 of 12) "Water consumption is estimated at L per day." Source of Scrap Metal Condition would only allow Agni Steels SA to operate their facility using scrap metal that originates from the Republic of SA. This condition does not take into account potential instances where there might be a shortage of scrap metal in SA and in such instances for Agni Steels SA to source scrap metal from neighboring countries in order to ensure the sustainability of the facility. In addition, while not a legal activity, this condition could potentially result in price fixing of materials and would not allow Agni Steels to source scrap metal at a competitive market rate. It is proposed that the Environmental Authorisation is amended to enable Agni Steels SA to maintain their market competitiveness and thereby ensure their sustainability by having the ability to purchase scrap metal not only from South Africa, but other African Countries, when required. This amendment would still allow for local scrap merchants to export their product, as is currently the norm, while expanding the local market and ensuring the sustainability of the Agni Steels SA facility. The impact is anticipated to have a positive regional impact of medium intensity and of longterm duration. Based on the impact rating methodology in the Final EIA this equates to a Consequence score of High and a possibility rating of improbable and an overall significance rating of medium positive. The following mitigatory measure is proposed: As far as possible preference should be given to sourcing scrap metal from SA. The Environmental Authorisation is amended as follows. Condition to be amended to read as follows: Only scrap metal that originates from African countries is to be accepted for processing in the Agni Steels SA Recycling and Processing Plant Compliance Conditions Condition makes reference to other conditions in the Environmental Authorisation, condition and 3.2.5, which when read together could result in a situation of non-compliance by the holder of the Environmental Authorisation, as not all contractors on the project will be appointed 30 days prior to any construction commencing on site. It is however important that the intention behind condition and , which ensures good environmental practice, is retained within any proposed amendment. The proposed amendment to the Environmental Authorisation is viewed as an administrative issue and does not impact on the significance of the impacts assessed in the Final EIA or require additional mitigatory measures. It in order to retain the intention behind condition read together with conditions , 3.2.5, the following amendment is considered: Proposed Amendments to Condition , as follows (strike through deleted sections and underline inserted sections): Proof of compliance with Conditions and , as well as conditions , 3.3.5, and and must be submitted to this Department at least 30 days prior to the commencement of any construction activities related directly or indirectly to this project. v

6 Insert the following additional condition under as follows: Proof of compliance with Conditions and must be submitted to this Department at least 14 days prior to the relevant contractors commencing with any construction activities related directly or indirectly to this project. WAY FORWARD The Draft Amendment Application Report is currently available to authorities and I&APs for a 14 day review period. Subject to the review of the Draft Report this Chapter will be updated to incorporate comments that are received during the review process. A final Amendment Application Report will then be submitted to DEDEA for them to consider in issuing an amendment to the Environmental Authorisation. vi