Working Conditions and Management of Worker Relationship - At the peak of the construction period, the Project will require a temporary work force of approximately between 8,600 and 9,000 workers qualified and skilled levels to perform the various phases of project construction. About 50% of the total construction workforce of the construction is expected to be employed locally and regionally from other cities of the State of Paran?. Worker camps will only house workers who live too far for daily commuting and total capacity for 4,600 workers during the peak of construction. The Sponsor will also make use of locally available hotel and housing rental space to house professional level staff. The Sponsor?s approach to the management of this large temporary workforce is described further below under the respective section of this summary. During the operational phase, the Project will require an approximate direct labor force of 1,900 in the pulp mill. Forestry operations will require another 500 direct employees. The Company plans to apply its existing corporate human resources management system to the Project once it becomes operational. The Company communicates employee rights and responsibilities through a brief, publicly available, Human Resource Policy (http://www.klabin.com.br/pt-br/recursos-humanos/default.aspx) and in more detail through individual employment contracts, the Company Code of Conduct, and through collective bargaining agreements signed with local unions. The HR Policy outlines the Company?s commitment to the well-being of employees; key employment benefits, such as employee profit sharing, complementary pension plan, discounted drugs, dental assistance, and life insurance; focus on occupational safety; and leadership training, among others. Individual employment contracts define such terms as salary or hourly rates, working hours, and payment schedule. The Company Code of Conduct defines some of the employer and the employee rights and responsibilities in such areas as relations between employees and external parties (i.e. community, clients, and service providers) in order to avoid conflicts of interests; use of drugs and alcohol; occupational safety; political activities in the workplace; and responsibility for the protection of the Company property. IFC found no evidence that Sponsor restricts freedom of association of its employees. In Brazil, workers normally affiliate with local or regional labor unions organized to cover their specific industry activities. Operational employees in the Company?s pulp and paper mill in Tel?maco Borba are affiliated to the Union for Workers of the Pulp and Paper Industry (?Sindicato de Trabalhadores da Ind?stria de Papel, Celulose, e Pasta de Madeira? - http://www.sindicatodopapeltb.com/) a union specifically focusing on pulp and paper industries and an example of the type of unions available for future employees at the new pulp mill. In the case of Tel?maco Borba, the Company and the Union have signed a Collective Bargaining Agreement for the 2011-2012 period which covers key labor aspects such as: salaries; working hours; contracting and layoffs; labor stability; benefits, rights and responsibilities; occupational health and safety; workers organization and union relations; and contributions to the union. Klabin has also engaged in negotiations and collective agreements with unions during construction phase, which means that terms of collective bargains will have to be negotiated with worker?s unions and approved by directly by workers in open reunions (Assembleia de trabalhadores, in Portuguese). The Company is also committed to the continued contribution to local economic development and plans to maximize the hiring of local labor for the construction and operational phases of the project. The Company is engaged with the government-sponsored National Industrial Service Training Institute (Servi?o Nacional de Aprendizagem Industrial ?SENAI?) representation in Tel?maco Borba to develop and implement training programs for regional residents interested in pursuing careers in the new pulp mill. Klabin has been collaborating with government-sponsored labor agencies from local municipalities (Ortigueira, Telemaco Borba, Tibagi, Pontagrossa, Londrina and Curi?va), which are receiving CVs from local workers, and putting together a labor database for contractors that are encouraged by Klabin to use these sources for recruitment of its own workforce. The Company actively encourages employees and managers to openly discuss and resolve conflicts. Employees are currently able to lodge complaints internally through the Human Resources department and Company management and externally through the public Labor Rights system (Justi?a do Trabalho). Due to the large number of workers during the construction phase, Klabin takes working environment very seriously to avoid generalized conflicts and potential stops or strikes. The Project Puma Management rules document defines expected labor practices for contractors, such as terms of employment, restrictions for subcontracting, engagement with worker?s Unions, migrant worker?s rights, remuneration policy and collective bargaining, leave and rest time, medical benefits, workers transport, supply of uniforms, food supply, among other things. In addition Klabin is implementing an internal grievance mechanism (ouvidoria, in Portuguese), available for all workers to better manage conflicts. As a set forth in ESAP, Klabin will create an internal grievance procedure defining the channels for placing grievances, as well as recording procedures, treating and responding to complaints. Klabin has defined a set of HR measures described in its Management Normative of Puma Project Development to limit and avoid uncontrolled influx of workers across contractors. Klabin has put in place a web based database in which contractor?s feed with workers information and have to provide copies of required documents for verification (employment contract, admission and periodic medical exams, ID, address or accommodation site, copy of workers? labor booklet etc?) before Klabin issues individual access permission. Klabin has full control of access to construction site and contractors must demonstrate compliance with all requirements defined in the Project?s Management Normative. Klabin has developed a local labor pool database in collaboration with local labor agencies, and contractors must use this resource as a primary source for recruitment. Klabin has also defined geographic limitations for migrant workers, that can only be coming from immediate adjacent states from Paran? (700km from Ortigueira), meaning S?o Paulo, Santa Catarina, Mato Grosso do Sul and eventually Rio Grande do Sul. Klabin has engaged in a National Agreement to Improve Working Conditions in the Construction Industry that defines some rules for hiring migrant workers. Accordingly, and to avoid uncontrolled flow of migrant workers to Ortigueiras, construction contractors must only hire non local worker?s at their home town, and pay for all expenses of the transport from and to their home town when the work is finished. Contractor?s must inform regional Ministry of Labor office at workers home town and get a clearance document to be presented at Ortigueiras Labor office. All accommodations for migrant workers will be provided and controlled by Klabin and all workers must inform local address or accommodation site to get access permission. Accommodations for skilled professionals (hotels and town houses), normally permanent workers from contractors, must be informed and will be audited. Subcontracting is only allowed for temporary activities not considered core business of the contractor (a.e. air conditioning maintenance, fleet repair etc.) Protecting the Workforce Brazilian labor laws prohibit discriminatory practices and define minimum of age of work. The Sponsor complies with local requirements, supporting equal opportunity and non-discrimination in employment and requiring all prospective employees to demonstrate proof of age of 18 years or older. Occupational Health and Safety During the construction phase of the project, according to Brazilian legal requirements, the Sponsor and its contractors will be required to develop and implement a series of mandatory occupational health and safety (OHS) management programs, including: Medical Surveillance Program (PCMSO, Programa de Controle M?dico e Sa?de Ocupacional); Internal Commission for Prevention of Accidents (CIPA, Comiss?o Interna de Preven??o de Acidentes); Personal Protective Equipment (PPE) Program; and Environmental Risk Prevention Program (PPRA, Programa de Preven??o de Riscos Ambientais). Klabin has an OHS Management Program that requires contractors do follow all Brazilian OHS Standards (Normas Regulamentadoras do Minist?rio do Trabalho), and implement specific management tools, such as: Occupational Safety assessment of all activities; Daily Occupational Safety Discussions Permission for hazardous works Internal OHS management system including Policy statement, verification and compliance with legal requirements, OHS objectives and targets, management programs, worker?s safety commissions, commitment, internal audits and forma procedures. In addition, and as described above in PS1, Klabin will require conformity with its own EHS Guidebook for Contractors during construction phase. During the operational phase of the Project, the Sponsor plans to implement plant-specific OHS management programs that comply with its corporate OHS Management System which is currently applicable to all of its operations in Brazil. The OHS Management System contains a comprehensive set of plans and procedures covering such aspects as: Identification and assessment of potential OHS risks; Over 40 OHS operational procedures including, for example: work in confined spaces; machine safety; potential exposures to radioactive energy sources; work in heights; electrical safety and lock-out-tag-out procedures; permit-required activities; handling of chemical substances etc.; Training and training effectiveness review; and OHS monitoring and the use and disclosure of the monitoring results. Workers Engaged by Third Parties During the Project?s construction phase, contractors will be legally bound to follow the Sponsor?s ?Contractors Human Resources Management Manual? and a ?Contractors OHS Manual? both of which outline local legal requirements and provide additional details about occupational illness and accident prevention procedures required by the Sponsor and which include minimum requirements to ensure that subcontractors? workers can integrate into the Sponsor?s own Safety, Health and Environmental (SHE) Program. The Project?s Normative comprehensively outlines a series of Sponsor requirements to ensure that the workers engaged by Contractors are afforded minimum standard of labor rights and benefits. These include: HR administrative structure with capacity for effective HR management; Recruitment, selection, and contracting including requirements to focus on local labor sources to the extent feasible; Mobilization and demobilization of migrant workers including payment terms; Contract terms including definition of payment terms, working hours etc.; Grievance process and rights to exercise freedom of association; Accessory benefits including quality of temporary lodging, food etc.; Emergency care (equipment and staffing requirements); and OHS organizational capacity requirements (i.e. minimum number of OHS technicians and supervisors, among others). The Contractors OHS Manual provides approximately 30 specific OHS procedures applicable to civil / mechanical construction works as well as OHS obligations specifically designed for a list of 20 different types of service providers. These manuals are also applicable to contracted service providers for existing Company operations and will be applied during the operational phase of the project to suppliers of products and services. Based on the results of the socio-economic baseline and complementary assessment of impacts, the Sponsor will evaluate the risk of influx of project workers on public services (e.g. health, education, and utilities) and developed a Workers Influx Management Program. The program shall provide mitigation measures commensurate with the risk, including but not limited to: local worker recruitment plan to reduce the chance of unplanned camp followers, including procedures to identify who are local hires or not, in coordination with local public authorities; operation of local contracting office where workers will need to show verification of local residence; requiring contractors to provide minimum percentages of non-qualified local hires; actions to pursue gender balance, monitoring the potential pressure of worker influx in public services, and establishing formal agreements with local public agencies to ensure that corrective measures are implemented if pressure on public services is detected. Supply Chain The operation of the proposed pulp mill will depend on the continued supply of pine and eucalyptus wood to produce 1.1 million tons per year of eucalyptus based pulp and 0.4 million tons of pine based pulp. Wood will be supplied from sources located at an average of 72 km from the proposed pulp mill. Approximately 63% of the sourcing will be from the Sponsor?s own plantations, 10% from leased properties operated by the Sponsor, and another 27% from independent suppliers. The Sponsor currently supports a network of approximately 8,000 small plantation independent growers providing them with pre-financing, seedlings, and technical support. The Sponsor presently audits a small sample of the third party suppliers in order to comply with the FSC certification requirements for controlled sources of wood.