Environmental groups have warned that a massive new $US2.6 billion pulp mill opening later this year in South Sumatra could threaten Indonesia's remaining virgin forests.
Pulp and paper giant Asia Pulp & Paper (APP) says its new OKI mill could produce between two and 2.8 million tons a year.
A new report by a dozen international and Indonesian environmental groups estimates that APP will face a significant shortfall in its supply of plantation-grown wood after the new mill begins operating, even at a two-million-ton capacity. The company could then face a choice between using higher-cost imported wood or looking the other way as its suppliers encroach upon virgin forests, said the report.
"APP, while it has been presenting itself as a champion of zero deforestation, is building one of the world's biggest pulp mills," said Christopher Barr of Woods & Wayside International, one of the groups behind the report. "There will be a great deal of pressure to ensure it receives adequate supplies of wood to keep it operating at full capacity. Our analysis shows the group's existing planted area in South Sumatra is unlikely to produce the volumes of wood the mill is expected to consume at projected capacity levels."
The report details major risks to the productivity of pulpwood plantations established to supply the new mill, including catastrophic fires, peatland subsidence, flooding, social conflict, pests and diseases. It estimates that APP's plantations in South Sumatra have never produced even half of the wood needed to feed a two million tons a year pulp operation. The shortfall is compounded by last year's devastating forest and peatland fires across Indonesia that destroyed more than a quarter of APP's planted trees in South Sumatra.
In a statement, APP said the new mill would start operating later this year at a 'low level,' with production to increase gradually, based on demand and the availability of wood from its suppliers. "Whilst the new mill significantly increases APP's production capacity, we have been clear that our Forest Conservation Policy commitment takes precedence over maximizing our production," said a company press release.
Pulp production and any future increase in production will be subject to the availability of raw materials from our suppliers. The design capacity of the mill is 2.8 million tons per year. We will continuously monitor and review our production and supply of raw materials to ensure that we adapt our pulp production accordingly based on the available supply of raw materials from our pulpwood suppliers. Our pulpwood suppliers will continue to be bound by all the commitments of our Forest Conservation Policy (FCP) which, amongst other things, includes no clearance of natural forest by our pulpwood suppliers since February 2013.
Whilst the new mill at OKI significantly increases APP's production capacity, we have been clear that our FCP commitment takes precedence over maximizing our production. We are taking the following steps to ensure that we will be able to achieve optimum production whilst maintaining the commitments made in the FCP:
1. Increasing productivity and yield in our plantations: We are working on increasing yield through improved control of pests and disease. In addition, we are reducing mortality and wastage as well increasing efficiency in our harvesting methods by using mechanization techniques.
2. Research into new species: APP has been conducting research, in partnership with Euroconsult Mott MacDonald, to identify alternative plant species that can provide better yields and thrive in wetter peatland conditions. Several plant species have already been prioritized for this research,and field experiments are scheduled to commence soon.
3. Embracing community forestry into our supply chain according to the government regulations and guidelines: We are planning to strengthen community forest initiatives in our supply chain. The primary objective of these initiatives is to adopt local wisdom, reduce poverty and enhance the alternative livelihoods of communities living in and around our concessions, through agroforestry, intercropping between plantation trees including pulpwood, cash crops and animal husbandry, as well as reducing risks of further forest degradation and fires.
4. Sourcing woodchips from global suppliers: If these measures still prove to be insufficient, then APP will look towards sourcing for woodchips from global suppliers that meet our policy requirements in accordance to our Responsible Fiber Procurement and Processing Policy.
The bottom line is that there is no question in our minds that the commitments we made in the FCP come first. The OKI mill entering into production will not affect our commitment.
Meanwhile, a Greenpeace meeting in Sydney next week will examine how Indonesia has lost forest land equal to the size of Germany in the past 25 years.
Kiki Taufik, the global head of Greenpeace's Indonesian forest campaign, will outline why protecting Indonesia’s forests is critical to global efforts to stabilise the climate and preserve biodiversity. "At the height of last year’s fires, Indonesia was emitting more carbon than the entire US economy," said Greenpeace in a statement. "We need to turn the tide."
The event - organised in partnership with the Sydney Environment Institute and Sydney Ideas - will be chaired by David Ritter, CEO of Greenpeace Australia Pacific.
When: Friday, May 6, 5.00pm - 6.30pm
Where: Law School Foyer
Level 2, Sydney Law School
Eastern Avenue
The University of Sydney
Cost: Free if you register here
