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Report links pulpwood estate clearing Bornean orangutan habitat to RGE Group

Mongabay - March 27, 2024

Hans Nicholas Jong, Jakarta – Indonesia is experiencing a resurgence in forest clearance due to the expansion of pulpwood and oil palm plantations, reversing years of declining deforestation associated with these two industries.

And at the forefront of this new wave of deforestation is a single company identified in a report by a coalition of environmental NGOs that include the Environmental Paper Network, Woods & Wayside International and Rainforest Action Network.

Since 2021, according to the report, pulpwood producer PT Mayawana Persada has converted 33,070 hectares (81,718 acres) of rainforest to monoculture pulpwood plantations – an area nearly half the size of Singapore – in the western part of Indonesian Borneo.

The report describes it as "one of Indonesia's biggest ongoing cases of deforestation," occurring within a concession that largely overlaps with critical orangutan habitat and carbon-rich peatlands.

Using data from forest monitoring platform Nusantara Atlas, run by technology consultancy TheTreeMap, the report found that more than 80% of the deforestation in the company's concession in 2023 occurred in carbon-rich peat areas. Of this, more than 4,600 hectares (11,400 acres) took place in landscapes with a peat layer 3-7 meters (10-23 feet) deep, according to monitoring by Greenpeace Indonesia, another member of the coalition behind the report.

These areas of deep peats are categorized as protected areas under Indonesian regulations, and thus should be off-limits to clearance and cultivation, Greenpeace Indonesia pointed out.

The loss of tropical peat forests is also a major setback in the fight against climate change; clearing these landscapes for plantations releases massive amounts of CO2 and methane that have been locked in the peat soil over millennia. The report notes that tropical peatlands store double the CO2 found in all of Earth's other tropical and temperate forests.

The report calculates Mayawana Persada's emissions related to deforestation and conversion of peatlands at 12.2 million metric tons from 2020-2022.

Tax havens and shady operators

Due to the extent of the deforestation, NGOs and journalists have repeatedly tried to identify the people behind Mayawana Persada: who directs its operations, who profits from them, and who should be held accountable for the damages done.

But this has always proved to be challenging, since the beneficial owners of Mayawana Persada are hidden behind a complex corporate structure with a chain of holding companies in secrecy jurisdictions like the British Virgin Islands and Samoa. Neither of these tax havens requires public disclosure of the names of shareholders of companies incorporated in their jurisdiction.

"This complex corporate structure, in effect, hides the ultimate beneficial owner(s) of the company and can shield them from the legal and reputational risks of destroying such vast tracts of tropical forest," Greenpeace Indonesia forest campaign team leader Arie Rompas said.

Despite these challenges, the report was still able to find relationships between Mayawana Persada and Singapore-based paper and palm oil conglomerate Royal Golden Eagle (RGE), owned by Indonesian billionaire Sukanto Tanoto.

The report alleges that RGE's palm oil subsidiary, Apical, and other anonymously owned companies in the pulp sector linked to RGE, shared the same corporate officers with Mayawana Persada's corporate shareholder in Malaysia, Green Ascend Sdn. Bhd.

Mayawana Persada also supplied more than 24,000 cubic meters (848,000 cubic feet) of large-diameter rainforest logs in 2022 and 2023 to a plywood mill in Sumatra related to RGE, as confirmed by official company reports submitted to the Indonesian government and by a field investigation.

In response to these findings, RGE issued a statement through its pulpwood subsidiary, subsidiary APRIL, indicating that "RGE categorically refutes the existence of any links between RGE and its shareholders and PT Mayawana Persada."

The NGO coalition called RGE's response "vague," saying it "does not address the credible evidence showing connections between its corporate group and controversial activities."

Critical test case

There's still more than 55,000 hectares (136,000 acres) of rainforest remaining in Mayawana Persada's concession – an area nearly the size of Indonesia's capital, Jakarta.

This makes it "a critical test case for efforts to control deforestation in Indonesia," said Hilman Afif, a researcher at Auriga Nusantara, one of the environmental groups in the NGO coalition.

But despite increasing public scrutiny of the concession and mounting calls to protect the remaining forest in the concession, there seems to be no indication that Mayawana Persada will stop clearing forest anytime soon.

Analysis by the research consultancy AidEnvironment has found that in its clearing activities, Mayawana Persada has developed stacking lines across 6,268 hectares (15,489 acres) of its concession that's covered in primary peat forest. These lines of stacked woods indicate the area is set to be developed into pulpwood plantations in the near future.

Hilman said satellite images show this particular area has been divided into a number of blocks, a further indication that it's being prepared for plantations.

"Our concern of losing the remaining natural forests [in Mayawana Persada's concession] is becoming more real," he told Mongabay.

And the scale of deforestation could be greater than the 6,268 hectares estimated by AidEnvironment, given that there are still more than 55,000 hectares of rainforest left in the concession, he said.

If these 6,268 hectares are cleared, the resulting emissions will amount to 344,740 metric tons of CO2 equivalent, according to Andi Muttaqien, executive director of the Indonesian environmental NGO Satya Bumi. That makes it paramount for the government, in this case the Ministry of Environment and Forestry, to compel Mayawana Persada to halt its deforestation, he said.

"The Ministry of Environment and Forestry has to take responsibility over the deforestation," Andi said.

Orangutan presence

Activists have also flagged the potential impact the ongoing deforestation is having on the local population on critically endangered Bornean orangutans (Pongo pygmaeus).

A habitat map released by the IUCN, the global wildlife conservation authority, indicates that 49,208 hectares (121,596 acres) of forest in Mayawana Persada's concession area are suitable habitats for the orangutan.

AidEnvironment also discovered orangutan nests in the stacking line area, suggesting the presence of orangutans within the part of the concession that could be cleared imminently.

The concession is also surrounded by areas with a confirmed orangutan presence, including the 108,000-hectare (267,000-acre) Gunung Palung National Park, a protected area that's home to an estimated 2,500 orangutans.

To the south of the concession is the Sungai Paduan protected peat forest. This 6,788-hectare (16,774-acre) area consists mostly of peat swamp rainforest and has been identified as an orangutan haven as it provides a relatively stable year-round supply of food for the apes.

Conservation workers from the Palung Foundation, an NGO that supports orangutan conservation efforts in Gunung Palung National Park and the Sungai Paduan protected peat forest, say they've heard male orangutans' distinctive calls from the direction of the Mayawana Persada concession while they were conducting surveys in Sungai Paduan. The males make long calls to let the females know where they're located and to warn other males against entering their territory.

The Palung Foundation researchers estimate 61 orangutans live in the area around Sungai Paduan, based on observations of nests and calls and the availability of food sources in that area.

Tri Susanto, who lives in Padu Banjar village inside Sungai Paduan, said orangutan sightings have become scarcer since Mayawana Persada started operating in the region.

"They cleared the forest saying that there's no orangutan nest, but actually there are many orangutan nests found [here]," he said. "Before the company entered, the population of orangutan here was quite a lot. After the land was cultivated [for pulpwood], there's still orangutan, but it's decreasing."

Sulidra Fredrik Kurniawan, the wildlife protection and rescue manager at the Palung Foundation, said the destruction of orangutan habitat in the area would further push the apes into human-occupied areas, which in turn would increase human-wildlife conflict, one of the main threats to the survival of orangutans.

"There'll be lots of negative interactions between the orangutans who have been isolated with people who have farms," he said.

Those parts of the Mayawana Persada concession that overlap with known orangutan habitat must be categorized as areas of high conservation value (HCV), said Arie from Greenpeace Indonesia.

HCV areas are prohibited from being degraded or cleared under the no-deforestation policies adopted by RGE and the major consumer brands that continue to do business with the group, and under the certification standards of the Forest Stewardship Council (FSC), the world's leading sustainable forestry certifier.

Arie also questioned why the government had granted permits to Mayawana Persada in the first place for land that's a known orangutan habitat and deep peat area.

Conflicts with Indigenous peoples

Mayawana Persada's land-clearing and plantation development activities have also triggered conflicts with local communities within and near the company's concession.

The concession overlaps with 3,650 hectares (9,019 acres) of the ancestral territory of the Indigenous Dayak community of Kualan Hili, according to AMAN, Indonesia's main alliance of Indigenous peoples.

The Dayak community reportedly met with Mayawana Persada representatives on May 11, 2020, during which the company agreed to relinquish part of its concession to the community.

However, in April 2022, some community leaders claimed that, contrary to the agreement, Mayawana had cleared forests considered sacred by the community and agroforestry sites that are important to households' incomes.

As a result, the Dayak group imposed customary sanctions and fines on the company in September 2022. Community members also staged a number of protests by obstructing the heavy machinery used to clear forests in 2023.

In the course of these and earlier protests, a number of community members were questioned by police and at least one person was charged.

Tono, the head of the West Kalimantan chapter of AMAN, said Mayawana Persada had violated the rights of the Dayak community by clearing the protected ancestral land known as Tonah Colap Torun Pusaka.

"According to AMAN West Kalimantan, what Mayawana Persada does can't be tolerated anymore, and [we] ask the Ministry of Environment and Forestry to revoke the permits of Mayawana Persada, both the permit to operate and the permit to produce," Tono said.

Links to RGE

NGOs are also calling on RGE to acknowledge its relation to Mayawana Persada, and to commit to full transparency in the structures of ownership and control of its subsidiaries, affiliates and companies with which it's related.

The coalition of NGOs said it has found overlapping corporate officers, operational management connections, and supply chain links between RGE and Mayawana Persada.

For instance, Green Ascend, the majority shareholder in Mayawana Persada since December 2022, has corporate officers who have served, and in some cases continue to serve, as corporate officers for the Malaysian holding companies of other forestry companies in Indonesia linked to RGE.

These forestry companies include PT Industrial Forest Plantation and PT Adindo Hutani Lestari, which have recently cleared forests to develop their own pulpwood plantations. They also include a woodchip mill in East Kalimantan province, PT Balikpapan Chip Lestari, which shipped wood to RGE's pulp mill in China, and the holding companies for a massive new pulp mill being developed in North Kalimantan province, PT Phoenix Resources International, which is under common control with RGE, according to civil society and media reports.

RGE has in the past denied that it's affiliated with these pulpwood plantation companies, the wood chip mill in East Kalimantan, or the new pulp mill in North Kalimantan.

Mayawana Persada's corporate structure also has connections to RGE's publicly acknowledged palm oil group Apical, according to the report.

Yap Ritchie, Green Ascend's corporate secretary until Jan. 12, 2024, simultaneously served as corporate secretary of Apical (Malaysia) Sdn. Bhd., the Malaysian office of Apical. The previous corporate secretary of Green Ascend until 2022, Phang Kim Mee, was at the same time the corporate secretary of Apical (Malaysia) Sdn. Bhd.

Supply chain evidence also indicates RGE's connection to Mayawana Persada.

Official documents and shipment-tracking efforts show that logged rainforest trees from Mayawana Persada's concession went to a plywood mill operated by PT Asia Forestama Raya, a company that, until 2008, was directly owned by RGE founder and chairman Sukanto Tanoto. He later split ownership of the company with another company domiciled in Indonesia, PT Dasa Anugrah Mandiri.

PT Dasa Anugrah Mandiri was, in turn, also owned by Sukanto Tanoto until July 2023, when his ownership was transferred to Glory Heights Limited, a company domiciled in the British Virgin Islands that was linked to RGE by information in the Offshore Leaks revelation by the International Consortium of Investigative Journalists (ICIJ).

According to the NGO coalition report, Mayawana Persada shipped more than 24,000 m3 of large-diameter rainforest logs in 2022 and 2023 to Asia Forestama Raya's plywood mill in Riau province on the island of Sumatra. Last year, Mayawana Persada supplied more than 98% of the natural forest wood (and 38% of the overall wood supply) received by Asia Forestama Raya.

RGE has denied any links between the group and its shareholders and Mayawana Persada, saying the information presented in the report relating to individuals merely indicates standard professional networks and relationships.

"Like any other sector in Indonesia or globally, directors and professionals move freely between entities as part of normal career progression and to retain network connections," RGE, via its subsidiary APRIL, said in response to the report. "The commentary regarding corporate links is speculative and unfounded, given the lack of any detailed, factual information."

RGE expansion

The report also highlighted RGE's ongoing expansion and how this would lead to a demand for pulpwood that would most likely come from Mayawana Persada than from RGE's existing plantations.

Mayawana Persada began planting pulpwood species like Acacia crassicarpa in 2019, and based on the typically five-year cycle, it's expected to start shipping its first batches of pulpwood by late 2024 or early 2025, according to Hilman from Auriga.

This coincides with the planned expansion of RGE's flagship mill, run by PT Riau Andalan Pulp & Paper (RAPP), a unit of APRIL, in Riau province. RGE is also linked to a giant new pulp mill currently under construction by PT Phoenix Resources International on Tarakan Island in North Kalimantan province, in northeastern Borneo.

Together, these projects are expected to double RGE's annual pulpwood requirement from 14.7 million m3 to 29.6 million m3 (519 million ft3 to 1.05 billion ft3), according to the report.

APRIL has stated that despite the increase in mill capacity, it won't need to get more wood from additional plantations. Instead, it says it will boost productivity at its current plantations.

"All fibre supply, including third party sourcing, will be in accordance with the company's Sustainable Forest Management Policy 2.0 which explicitly commits to no deforestation in our supply chain from any sources," APRIL said.

However, the report's analysis found that even if APRIL achieves its ambitious productivity improvement targets, it will still require almost 100,000 hectares (247,000 acres) of new plantations to meet its RAPP mill's projected wood requirement.

At existing plantation productivity levels, the planned expansion at RAPP and the Phoenix mill project will require nearly 750,000 hectares (1.85 million acres) of new pulpwood plantations, which is more than the 739,000 hectares (1.83 million acres) currently managed by APRIL and its network of suppliers.

It's therefore reasonable to assume that RGE would have a significant interest in supporting the development of new pulpwood plantations, such as Mayawana Persada's, to meet its anticipated future need for wood fiber, the report said.

The area planted to date by Mayawana Persada represents 6% of the additional net planted area that RGE will need to meet its projected wood fiber needs, said Arie from Greenpeace Indonesia.

"Looking at our report, it seems like there's a connection [between Mayawana Persada's establishment of plantations] with the need from the RAPP mill," he said. "Therefore, the deforestation there [in Mayawana Persada's concession] will keep increasing because there's a need from the mill."

Calls for action

RGE is one of the world's largest producers of wood pulp and the products that are made from it, which include paper, tissue, packaging, and viscose rayon. Its buyers include some of the world's largest fashion brands, consumer goods companies and mass retailers.

Many of these companies have made sustainability pledges that include no deforestation and no community harm. Yet the persistent deforestation activities of Mayawana Persada call these pledges into question, the report said.

The NGOs have called on RGE's customers and its funders to investigate the findings and demand for an immediate halt to the rainforest destruction and social conflicts being driven by Mayawana Persada and other "shadow companies" allegedly related to RGE.

They also called on the FSC to suspend the "remedy process" for APRIL, which is seeking reassociation with the FSC after it was disassociated in August 2013 for destructive forestry practices.

In November 2023, APRIL and the FSC signed an agreement that initiated the implementation of APRIL's remedy process, bringing the company one step closer to reentering the association and having its products endorsed with the FSC logo.

The FSC logo, a green checkmark and tree, is widely recognized as assurance to consumers that the certified wood products have been tracked throughout their supply chains and are guaranteed to come from responsibly managed forests independently monitored by credible third-party auditors.

However, the FSC has also been criticized in the past for allowing certified companies to continue engaging in deforestation and human rights abuses.

The report noted that Mayawana Persada's deforestation makes APRIL's reassociation process untenable. It said the process should be suspended at least until Mayawana Persada stops deforestation and peat drainage in its concession and the company resolves its conflicts with local communities in an equitable and accountable manner.

"What good is a 'remedy process' if the destructive forestry practices and harm to local communities are allowed to continue?" the report said.

Source: https://news.mongabay.com/2024/03/report-links-pulpwood-estate-clearing-bornean-orangutan-habitat-to-rge-group