DESCRIPTION
Established in 2000, BTR New Material Group Co., Ltd. (BTR or the Guarantor) is a global leader in the research, production, and sales of lithium-ion battery materials.
Having established several manufacturing facilities in Asia, BTR is constructing its first synthetic anode manufacturing facility outside the region, to be located in Tangier, Morocco (the Project). The Project involves the construction and operation of an integrated synthetic graphite anode materials manufacturing facility with an annual production capacity of 60,000 tons. Synthetic graphite anode materials are a critical component of lithium-ion batteries used in electric vehicles (EVs) and energy storage systems.
The proposed financing consists of a senior corporate loan to BTR Mediterranean Anode New Material Technology (the Borrower), BTR’s subsidiary in Morocco. AIIB’s financing will be used to support the capital expenditure requirements of the Project.
The proposed financing is expected to support the production of lithium-ion batteries used in EVs and energy storage systems, thereby contributing to the decarbonization of transport and energy systems. In addition, the Project will also facilitate the development of battery materials manufacturing capacity in Morocco and strengthen battery value chains serving international markets.
ENVIRONMENTAL AND SOCIAL INFORMATION
Applicable Policy and Categorization. AIIB’s Environmental and Social Policy (ESP), including the applicable Environmental and Social Standards (ESSs) and the Environmental and Social Exclusion List (ESEL), applies to the Project. ESS1 (Environmental and Social Assessment and Management) and ESS2 (Land Acquisition and Involuntary Resettlement) apply, while ESS3 (Indigenous Peoples) does not apply. The Project is categorized as Category B based on the nature, scale and location of the Project, and the findings of the environmental and social due diligence (ESDD). The Project’s potential adverse environmental and social (ES) risks and impacts are expected to be limited in number, generally site-specific and manageable through the implementation of appropriate and agreed mitigation measures and Good International Industry Practice (GIIP).
Environmental and Social Instruments. An independent ES consultant (IESC) was appointed to undertake ESDD of the Project and the Guarantor’s corporate environmental and social management system (ESMS). The ESDD, complemented by AIIB’s own ESDD, concludes that BTR has a relatively mature corporate level ESG management system. The Borrower will develop and implement an ESMS prior to the first disbursement. A draft Environmental and Social Impact Assessment (ESIA), incorporating an Environmental and Social Management Plan (ESMP), has been prepared for the Project in accordance with AIIB’s ESP and applicable ESSs. An Environmental and Social Action Plan (ESAP) will be agreed with the Borrower to address the gaps identified through the ESDD and establish time-bound corrective actions, including applicable conditions precedent, for implementation and monitoring by the Borrower.
Environmental and Social Aspects. The Project is located on industrial land in the Tangier Science and Technology Industrial Acceleration Zone. The land for the Project site was acquired through a government-led process more than three years before AIIB’s consideration of the Project, and no project-specific legacy issues and reputational risks were identified. Potential adverse environmental impacts during construction include noise and dust generation from excavations and other works, and pollution of the surrounding environment if wastewater, domestic sewage and solid waste are improperly managed. These risks and impacts will be managed through mitigation measures implemented by the Contractors, with oversight by BTR. During the operations phase, noise may be generated by equipment (fans, compressors, pumps) and there may be a deterioration in air quality due to dust and flue gas emissions during the manufacturing process. Wastewater from cooling and desulfurization, and domestic solid waste and sewage will also be generated. Operational risks will be managed through appropriate design measures, implementation of BTR’s ESMS, and engagement of third-party service providers. The Project incorporates environmental sustainability measures such as water recirculation and wastewater treatment and reuse. In addition, the Project’s associated facilities include temporary and permanent electricity transmission connections. The mitigation measures for construction of temporary underground lines have been included in the ESMP. As the alignment, design and land requirements of the permanent transmission line have not yet been finalized, the Project-level ESMS will manage the relevant risks, if any, based on ESS2. The ESIA has assessed gender-related risks associated with the Project. To manage these risks, the Borrower will implement a Project-level Worker Code of Conduct explicitly prohibiting GBV/SEA/SH and maintain gender-sensitive grievance channels.
Occupational Health and Safety (OHS), and Labor and Working Conditions. During construction, OHS risks include work at height risks, noise and vibration exposure, manual handling injuries, and heavy equipment/vehicular accidents. These risks will be mitigated through agreed measures with continuous supervision to ensure compliance with the site-level ESMP. During operations, OHS risks include fire and explosion risks, dust exposure leading to respiratory diseases, high-temperature processes causing heat stress and burns, skin irritation from chemical exposure, and exposure to volatile organic compounds and toxic gases. To manage these risks, BTR will implement a series of management procedures, including OHS and emergency preparedness and response. In addition, the site-level ESMP will be required to include corresponding mitigation measures as necessary. The Borrower will manage the labor and employment conditions of Project workers in accordance with applicable host country labor laws. Contractor compliance will be managed and monitored through the dedicated Contractor Management Plan. The Borrower will comply with local laws and regulations pertaining to foreign workers, including the necessary visas and employment permit to work in the country legally.
Stakeholder Engagement and Information Disclosure. During preparation of the ESIA, stakeholder engagement was undertaken with local communities, including separate consultations with women, relevant government authorities and other key stakeholders. Relevant concerns raised by stakeholders have been considered in the ESIA and associated mitigation measures. A Stakeholder Engagement Plan (SEP) has been prepared to guide further inclusive, culturally appropriate and gender-sensitive consultation throughout Project implementation. The Borrower will disclose the ESIA, including ESMP, in accordance with the requirements of AIIB’s ESP, following which AIIB will disclose them on its website.
Project Grievance Redress Mechanism (GRM) and Monitoring Arrangement. The Borrower will establish a Project-level GRM covering Project workers and external stakeholders. The GRM will be understandable, transparent, culturally appropriate, gender-responsive and readily accessible to its intended users. It will allow anonymous complaints and include protection against retaliation. Records of grievances received, actions taken and outcomes will be properly maintained. Information on the Project-level GRM and AIIB’s Project-affected People’s Mechanism (PPM) will be disclosed in an appropriate and timely manner. In addition, the Borrower will monitor the implementation of the ESMS, ESMP and ESAP and submit annual ES monitoring reports to AIIB based on an agreed format. The Borrower will promptly notify AIIB of any material ES incidents, accidents or non-compliances and report on the corresponding corrective actions. AIIB will monitor the Project’s ES performance and ESAP implementation through the review of monitoring reports and supporting documentation, regular engagement with the Borrower and on-site supervision missions, as necessary.
