June 4, 2018

Supply chain data highlights Greenpeace allegations against APP

(foresthints.news) - PT Muara Sungai Landak (MSL) is one of two pulpwood companies to have its operations uncovered by Greenpeace via a press release (May 16) due to the company’s involvement from 2013 to 2017 in clearing and draining peat forests to make way for new acacia plantations covering an area of nearly 3,000 football fields.

Using satellite imagery, Greenpeace decided to expose the operations of PT MSL, which is situated in a peat ecosystem lying in Indonesian West Kalimantan’s Mempawah regency, as this company is alleged to have an ownership connection on a certain level with Sinarmas Forestry, which according to Greenpeace is a sister company of Asia Pulp and Paper (APP).

Owing to PT MSL’s destructive peat operations, among other reasons, Greenpeace made an uncompromising move on the day of its press release to end all of its engagements with APP / Sinarmas, which most notably pertain to the implementation of the pulp and paper giant’s more than five-year old Forest Conservation Policy (FCP)

On the same day, APP responded to the allegations by denying the substance of the Greenpeace press release, in particular with respect to the alleged level of ownership connection, while also declaring that its supply chains are not linked to the peat forest clearing undertaken by PT MSL.

This is the first news report concerning Greenpeace's decision and focuses on PT MSL’s legal supply chain data provided by forestry research-based NGO Greenomics Indonesia. This legal evidence was later reinforced by an on-site investigation conducted by the foresthints.news team aimed at obtaining ground-based evidence from the legal supply chain of PT MSL.

Legal supply chain data

By referring to a set of legal supply chain data from PT MSL and APP mills, which was officially reported by the companies on a regular basis to the Indonesian Ministry of the Environment and Forestry, Greenomics was able to divulge that there has been in fact no flow of mixed tropical hardwood (MTH) from PT MSL to the APP mills.

“This means that the peat forest clearing and drainage done by PT MSL is not linked to APP’s legal supply chains,” Vanda Mutia Dewi, Executive Director of Greenomics, explained in a discussion forum held at the ministry building in Jakarta (May 24). 

Below are photos taken by the foresthints.news team (May 26) which depict the extent to which peat forests have been converted by PT MSL into acacia plantations. According to legal supply chain data, these plantations are not linked to APP’s legal supply chains. 

“The MTH originating from the clearing of the peat forests in PT MSL’s concession from 2013 to 2015 was partly utilized by its own industry, while some was sold to local buyers in West Kalimantan province. However no link was found between APP’s legal supply chains and PT MSL during that period and that remains the case until now,” Vanda explained in her presentation. 

Vanda went on to say that in 2016, PT MSL again supplied some of the MTH derived from the clearing of peat forests in its concession to its own wood-based processing industry for its sawn timber and veneer business.

Meanwhile, she added, the remaining MTH was supplied to PT Cakrawala Persada Biomas (PT CPB), PT MSL’s integrated company.

PT CPB, a wood pellet-producing company located relatively close to the PT MSL concession, refers to itself as “the company (that) has constructed one of the largest Wood Pellet Plants in Asia.”

“An official audit report released in November 2016 disclosed part of the supply chain data concerning PT MSL's MTH. It confirmed that the company sold its MTH to a local plywood company (CV Surya Utama) from July 2015 to August 2016. However, this legal evidence was not reported by either company to the ministry,” Vanda explained.

In 2017, she continued, most of the MTH felled from the peat forests in PT MSL’s concession was supplied to PT CPB, while a smaller portion was used for its own wood processing industry.

“The supply of MTH from PT MSL to PT CBP in 2017 accounted for over 90% of the total MTH obtained from peat forest clearing in the PT MSL pulpwood concession,” Vanda pointed out.

The following are some more photos taken by the foresthints.news team (May 25) showing stacks of MTH, cleared from the peat forests in PT MSL’s concession, in the PT CPB complex, as well as the wood pellet production process carried out by the company.

Link to Sinarmas?

The President Director of PT CPB (whose initials are AS), Greenomics pointed out, is the former managing director of PT Smart Tbk, an Indonesian-listed palm oil company and key subsidiary of Golden Agri-Resources (GAR), the palm oil business arm of the Sinarmas Group.

When confirmation of this was sought from the top management of PT Smart (May 27), they stated that AS had left the GAR-owned palm oil company years ago and that it was irrelevant to comment further on him and his company’s operations.

Furthermore, a newly-published report (May 30) from a coalition consisting of 12 civil society organizations (CSO) doesn’t reveal an ownership connection between PT MSL or PT CPB and APP or the Sinarmas Group.

Serial peat violator

Ground-based evidence demonstrates that significant swathes of peat forests remain standing in the PT MSL concession, as seen in these photos taken by the foresthints.news team (May 25).

Nonetheless, a spatial analysis performed by the foresthints.news team using time-series based satellite imagery, in the form of USGS Landsat 8, ESA Sentinel-2 and Google Earth images, actually reveals that PT MSL is a company which commits multiple violations of peat-related regulations and measures.

In early November 2015, Environment and Forestry Minister Siti Nurbaya issued a circular letter banning all pulpwood and palm oil companies from clearing peat forests, including the construction of new canals. PT MSL clearly did not respect the minister’s circular letter. 

Later, in mid-September 2016, most of the PT MSL concession was included in the targeted peat restoration areas established by the Indonesian Peat Restoration Agency (BRG). This, however, did not stop PT MSL from continuing to clear and drain the peat forests in its concession.

Further photos taken by the foresthints.news team (May 25) portray examples of canals previously constructed by PT MSL which fortunately didn’t lead to large-scale new acacia plantation development.

Subsequently, in early December 2016, President Joko Widodo signed a revised government regulation prohibiting any new peat development. Typically, PT MSL also contravened this government regulation by continuing new peat forest clearing and peat drainage.

Almost three months later, towards the end of February 2017, Minister Nurbaya designated almost the whole PT MSL concession as part of a peat protection zone.  Once again, PT MSL disregarded this by continuing to commit peat violations albeit on a relatively small scale.

Any new peat development undertaken by PT MSL would merely be a continuation of the peat violation behavior displayed by this pulpwood company ever since the first ban on new peat development was imposed in early November 2015. 

Even though the legal evidence indicates that the series of peat violations committed by PT MSL is not linked to APP’s legal supply chains, the fact that peat forests are still quite predominant in this pulpwood concession means that continued monitoring of possibly destructive operations on the part of PT MSL is a must.