Thursday, 10 September 2009

Paper giant promises green curbs on expansion

Thu Sep 10, 2009

By David Fogarty and Sunanda Creagh

SINGAPORE/JAKARTA (Reuters) - Asia Pulp and Paper, one of the largest paper producers in Asia, said on Thursday it has no immediate plans to expand its two Indonesian pulp mills and would only do so if it secured sustainably produced timber.

The Indonesia-based company, known by its initials APP, is a target for green groups because some of its products are made from wood from natural forests and peatlands, which release huge amounts of greenhouse gases when cleared.

APP runs two pulp wood mills in Indonesia with an annual pulp production capacity of just under 3 million tonnes. The unlisted firm, a subsidiary of the Sinar Mas Group, has projected 2009 gross revenue of $4 billion, down from $4.5 billion in 2008.

The company, which also has operations in China, has embarked on a programme to continually improve the environmental management of its operations to ensure the greenest possible product, said the firm's head of sustainability, Aida Greenbury.

"The are no plans to expand the two existing mills without access to additional sustainably produced materials," Greenbury said in Singapore during Reuters' Global Climate Change and Alternative Energy summit.

APP is the number one producer of pulp and paper in Asia, outside of Japan, and third-largest globally.

Most of APP's pulp wood is sourced from Indonesia's Riau and Jambi provinces but shortfalls in supply are met by wood from East Kalimantan, West Kalimantan and South Sumatra, said Greenbury.


She said APP has plans to increase yield efficiency at the two mills, a process called de-bottlenecking, depending on the integrity of new sources of raw material.

"Once we get that and we are certain we have sustainable raw materials, we will probably be conducting further activities for the de-bottlenecking process in our mills," she said, adding that new plantations would be on unproductive or degraded land, such as in South Sumatra.

Around 90 percent of APP's suppliers provide plantation wood and the remaining 10 percent is mixed wood residue from natural forest, she said.

In 2007, the Forest Stewardship Council (FSC), an independent sustainability accreditation body, announced it was disassociating itself from APP.

APP's website says that according to the FSC policy, the FSC "will only associate with companies that are not involved with illegal logging, civil rights abuses, destruction of high conservation value forests, forest conversion or genetically modified trees."

Since that incident, APP has reviewed its supplier lists and submitted the results to the FSC, said Greenbury. APP's suppliers have been accused of illegal logging and of burning forest to create access roads, but Greenbury said this was untrue.

"We demand that the pulp wood supplier has to ensure the legality of the wood and if possible, certification," she said. "The fact that our material is 30 percent certified is significantly above global standards."

However, she could not guarantee that illegal logs would not make their way to APP's mills.

"There are no companies in the world who can guarantee 100 percent that their materials are of sustainable source. What my institution has been doing is looking at how can we minimise the gap," she said.

Greenbury said that around 60 percent of APP's total sites in Riau and Jambi province would be on carbon-rich peat lands, which scientists say release huge amounts of greenhouse gases when cleared.

Greenbury said deep peat lands earmarked by government assessors as high conservation areas would be left alone but other deep peat lands could be logged.

Greenbury urged green groups to also consider the jobs created by the pulp and paper industry.

"Yes, we care so much about the environment but we have to address poverty at the same time. The first priority of Indonesia is poverty alleviation," she said.

(Editing by Alex Richardson)