APP stresses three priorities for new mill’s fiber supply

(foresthints.news) - Asia Pulp and Paper (APP) continues to face questions from CSOs and international observers about the long-term fiber supply to its new OKI mill in South Sumatra, which is set to be the largest in Asia with an expected pulp production of around 2 million tons per year, and a tissue paper production of 500 thousand tons per year.

The 2015 land and forest fires badly affected APP-linked pulpwood plantation concessions, with the majority of the burned areas (peatland extending to hundreds of thousands of hectares) being located on concessions that supply plantation fiber to APP's existing mills in Riau and Jambi. This has given rise to serious questions about the fiber supply to the OKI mill, which will commence operations later this year.

"Regarding the total area affected by fires in 2015, we have until now not yet finalized the verification process by the government. We have to wait until the government finalizes the whole process itself. So, please be patient, and that we all wait for the government to finalize the verification on the ground on the concessions in our supply chain," said Aida Greenbury, APP's Managing Director of Sustainability and Stakeholder Engagement during a question and answer session at an event to mark the third anniversary of APP's Forest Conservation Policy on Thursday (Feb 4) in Jakarta.

Many of the questions from the floor concerned the extent of the burned areas on the pulpwood concessions that form part of APP's supply chain in South Sumatra, and how the calamity would affect the fiber supply to the OKI mill.

As to when the OKI mill will commence operations, Aida said that it would be later this year.

"As normal with any pulp mill operations, we will not immediately operate the new mill at full capacity. We will start out with trials at minimum production capacity, not at full capacity. And we will try to gradually increase capacity over the year. Of course, it will depend a lot on the availability of raw materials supplied from Indonesia," Aida said.

As regards the fiber supply issue, Aida said that APP had three priorities.

"Our initial focus is basically to increase of the productivity of existing plantations in our supply chain and also to improve the cost efficiency of harvesting and transportation. These are areas that we are targeting as our first priority," Aida explained.

The second priority, she said, is to increase partnerships with community forestry concessions. “We are working on expanding our collaboration with communities as our partners in our supply chain,” she said.

"Importing chips is going be our last option. We hope that we will not go there. To be honest, we have not calculated the cost yet because we are not actually looking at that option at this stage right now," she said.

Almost 295 thousand hectares of land on APP concessions in South Sumatra Province were burned, some 175 thousand hectares of which consisted of peatland, according to the South Sumatra CSO coalition. The coalition has also revealed that 26% of planted APP pulpwood plantation concessions were destroyed in the fires, equal to approximately 86,000 thousand hectares, an area larger than Singapore.

Prior to the 2015 fires, Indonesian and international CSO groups were already raising serious questions about the fiber supply for the new mill. These questions have become more pressing than ever in the aftermath of the 2015 fires.