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Project Number: 
Expected Consideration Date by the Board: 
Date Posted: 
INDEF Servicios Forestales Ltda. (“INDEF”)
Financing Requested: 
Loan of up to US$3.5 million
Wood, Pulp, and Paper
Los Ángeles
Scope Objective: 

INDEF is a company whose core activities are forestry services (earthmoving, fertilization, and planting) and the processing and sale of forest biomass for energy generation.

INDEF is carrying out a program with small and medium-size landowners whose land is suitable for forestry activities and who receive a subsidy from the Chilean government in exchange for each hectare they successfully plant with saplings. Because these SME landowners do not have the necessary know-how or financing to establish their own forestry plantations, they instead hire INDEF for this purpose and pay it with the government subsidy within 15 months of the service date.

The purpose of this IIC operation is to provide INDEF with working capital financing that will enable it to develop and plant some 4,000 hectares annually. The IIC financing would amount to up to US$3.5 million.

Environmental Review: 

Environmental and Labor Issues

Environmental Classification: This is a category III project according to the IIC’s environmental and labor review procedure because it could produce certain effects that may be avoided or mitigated by following generally recognized performance standards, guidelines, or design criteria. Environmental and labor considerations related to the project include: management of natural resources, liquid effluents, air emissions, and solid waste; handling of hazardous materials; personal safety; fire protection; emergency response; labor practices; and social and community affairs.

Although INDEF is not certified under international standards, it must nevertheless comply with standards ISO 14000, OHSAS 18000, and those of Chile’s sustainable management certification system (CERTFOR, based on the Forest Stewardship Council’s international forest management certification standards), in order to provide services to customers that are certified under these standards. A related company, Indef Agrícola Ltda., grows blueberries for export and has organic production and GLOBALG.A.P certification.

Natural Resources Management: Forestry activities (earthmoving, planting, plantation management, and harvesting services), whether for the company’s own production or for third parties, is carried out on suitable land that was previously used for agricultural purposes or in lieu of formerly-operating plantations. No native woodlands are felled, although authorized management of such woodlands is carried out on a smaller scale. The agency tasked with regulating, authorizing, and overseeing forestry activities is the National Forestry Corporation (CONAF), a division of Chile’s Ministry of Agriculture. The Chilean government grants a subsidy for forestry activities as a means of fostering the development of new plantations, but only on land suitable for such activities. As a condition for receiving said subsidy, the area must be reforested following the first harvest.

Water Supply: The company has two camps—each of which can accommodate lodging, food, and recreation services for approximately 100 forestry workers. Water for the camp at Yumbel is supplied by a well and subsequently treated in a water purification system, whereas water for the camp at San Javier is supplied by a municipal water system. Water for the seedling nursery—located in Nacimiento—and Indef Agrícola’s blueberry plantation, is likewise supplied from wells. The company has secured the relevant permits for the water extraction process issued by the General Water Authority, a division of the Ministry of Public Works.

Management of Liquid Effluents: With respect to the camp at Yumbel, sewage from restrooms is channeled to a septic tank equipped with a soakaway pit, whereas solid waste is removed by a licensed company in accordance with local legislation. The camp at San Javier is serviced by a municipal sewage network under private management. Hazardous liquid waste (e.g., spent oil, solvents, and agrochemical residue) is treated by an external company, which issues the pertinent certification regarding the transport and final disposal of such waste, in accordance with current regulations.

Air emissions: The main sources of air emissions are heavy vehicles operating on unpaved roads and forestry crews tasked with earthmoving, biomass extraction, and harvesting operations. All vehicles are inspected and their emissions controlled; maintenance operations must be performed in accordance with the strictest of standards. Roads are watered down to reduce dust emissions. However, the use of closed cabin vehicles is required with a view to reducing workers’ exposure to dust.

Solid waste management: Biomasa Chile S.A., an INDEF related company, extracts forest waste that it processes into fuel for steam boilers, resulting in significant energy savings. Such recycling offers substantial advantages to forestry services companies, as it leaves the land in better condition for replanting, mitigates the risk of fire, and produces a positive environmental impact by cutting greenhouse gas emissions as it uses organic waste in lieu of fossil fuels.

Domestic waste generated in the camps is removed by companies specializing in the collection and disposal of municipal waste. Agrochemical product containers are triple washed and handed over to the Chilean Association of Agrochemical Manufacturers and Importers (AFIPA), which has a processing plant in Chillán and issues the pertinent certification for the final disposal of such containers. Other hazardous waste, such as lubricant and solvent containers and contaminated rags, are handed over to a company that specializes in the treatment of this type of waste.

Handling of Hazardous Materials: Agrochemical products are handled by trained personnel under the supervision of the technical manager of the plantations. Only products that have been authorized by the Agriculture and Livestock Service (SAG)—a division of Chile’s Ministry of Agriculture—are used, and efforts are made to apply only organic or low-toxicity products. Access to the company’s agrochemical depot is restricted. The depot is equipped with the necessary safety equipment and is authorized by the health authority (Ministry of Health). Employees in charge of the depot receive training in herbicide handling and are provided with the appropriate personal protection gear.

Personal Safety and Emergency Response: INDEF has job-specific internal order, health, and safety regulations that reflect the internal procedures of its client companies. These regulations spell out the necessary personal protection gear for each task and specific training for each area, which is provided with the support of the workplace insurance company (Asociación Chilena de Seguridad). At the beginning of each workday, the foreman or -woman emphasizes the company’s safety message in his or her comments to the work crew. A risk matrix has been developed to assess the pertinent risks by job. This matrix is used to establish the requisite procedures, training needs, and protection gear. INDEF has a joint occupational health and safety committee tasked with identifying, evaluating, and mitigating risks. The committee meets monthly to formulate recommendations.

One of the services INDEF provides is forest fire control and suppression. INDEF has professional brigades that are trained and equipped to fight forest fires and the technical resources to fight fires on the ground and from the air, especially during the summer season. The company has developed its own general contingency plan, which includes some specific risks, such as spills, accidents, and fires.

Labor Practices: INDEF complies with domestic labor laws and International Labour Organization (ILO) standards. Mandatory core labor standards include: legally-mandated benefits; freedom of association; organization of workers’ unions; and nondiscrimination in the workplace. Company personnel are not members of any union. All workers are provided health insurance coverage, which they are free to choose from either a public or private plan. The company also provides workplace accident insurance through the Asociación Chilena de Seguridad, as well as other health, education, financial, and wellbeing-related benefits through the Caja de Compensación Los Andes.

Social and Community Issues: INDEF is promoting forestry activities in the Mapuche indigenous communities, especially in Region IX. The company is working with the National Indigenous Development Corporation (CONADI) to promote planting plans that would be eligible for the government-issued subsidy. INDEF has signed four agreements with communities and another dozen or so have expressed interest in signing an agreement. In this way, the company is helping develop the sector while integrating the indigenous communities into the productive development process.

Monitoring and Reporting: INDEF shall prepare an environmental and social action plan (ESAP) satisfactory to the IIC to ensure compliance with domestic regulations and the IIC’s environmental and workplace safety and health guidelines. As part of the ESAP, an annual report shall be prepared with updates on environmental and occupational safety and health parameters.