By Mark Rushton, Editor, Pulp & Paper International Magazine, RISI
Jakarta, Indonesia,
Feb. 8, 2010
(RISI) -
There are five operating companies which comprise of eight mills that come under APP Indonesia which are situated variously around the islands of Java and Sumatra. The five companies are: PT Lontar Papyrus Pulp & Paper Industry, PT Indah Kiat Pulp & Paper TBK, PT Pindo Deli Pulp And Paper Mills, PT Pabrik Kertas Tjiwi Kimia Tbk and PT Ekamas Fortuna. Combined these companies churn out around 7.5 million tonnes/yr of pulp, paper and converted goods including tissue and high quality printed and finished items. In total the operations employ around 70,000 people. The company has plans, along with APP China, to be the number one paper producer worldwide over the coming years.
APP Indonesia may well be huge in terms of size and ambition, but there are also some really big questions when it comes to its environmental performance. The company has been the subject of attack on numerous occasions by NGOs on both a local level and internationally. In the second part of a series of articles on APP Indonesia, Mark Rushton, editor of PPI, speaks to Aida Greenbury, director of sustainability and stakeholder engagement at the company about environmental issues and how the company is tackling them.
Aida Greenbury (left), Director of Sustainability and Stakeholder Engagement, APP Indonesia with Stuart Andrews from APP in Europe
PPI: How would you respond to some of the accusations and attacks that are directed at APP Indonesia:
Greenbury: What has to be taken into account is that we are relative newcomers to the paper industry, and our supply chain operation didn't really start in the industry until the late 1980s. We haven't had the benefit of 200 years experience of say a North American or European operation, so we are seen as the "new kids on the block" and therefore we are much more open to scrutiny. Added to that, we operate in Indonesia, which is itself also under intense scrutiny for deforestation issues. The sum of those two elements gives a clear picture of the microscope we are under in running a pulp and paper operation".
PPI: APP and Sinarmas have been accused of pursuing unsustainable practices in the past, mainly because of the clearance of natural forests to make way for plantations, how does the company respond to those allegations?
Greenbury: As said previously, we are new to the industry, and have had to learn a lot in a short space of time, and nobody is perfect. In late 60's the Indonesian government implemented an investment law to attract investors in pulp and paper industry. The government allocated the land to be developed into pulpwood plantation once the commitment to build pulp mills were in place. The wood material produced from the land development was allocated for the raw material for pulp production. Over the years, the government and relevant stakeholders have significantly improved the precautionary approach to sustainably manage the raw material. I am quite sure that US and European companies made mistakes when they first started, although there wasn't the environmental scrutiny that there is today. But the fact is we are continually improving our environmental practices, by way of certification and supply chain management.
APP Indonesia has two large pulp mills that consume around 12 million tonnes of pulp wood per year. One of the big questions is how much of that pulp wood is from plantations, and how much is from natural forests?
In 2009, the pulp mills consumption proportion is around 80% sustainable plantation wood and 20% mixed wood residues from plantation development. According to the national spatial policy, the mixed residue material is allocated for the pulp industry by the government as the most environmentally friendly option as opposed to leaving it on the ground or burning them that will create forest fires, the release of methane into atmosphere and lead to forest disease outbreaks.
The government of Indonesia has a "spatial plan" that allocates around 3% of the country's total land mass for the use of pulpwood plantation development. What does this means for APP in the future?
The government is planning to expand the development area up to around 10 million ha by 2014. But these pulpwood concession holders (including APP's pulpwood suppliers) only develop wasteland and degraded forest areas that are subjected to Eco-Socio and High Conservation Value Forest (HCVF) assessments to ensure that areas with high conservation values remain protected, while low value land be developed into pulpwood plantations, which play an important role as a buffer/security zone to protect the integrity of high value natural forest within and surrounding the plantations. In other words, paper that APP produces does not and will not contain any fiber of high conservation value natural forest. And that the pulpwood plantations indeed help further protect the biodiversity. The conservation set asides within the pulpwood plantations is in addition to the 30% of total land mass which has been allocated as protected conservation area. Indonesia's total land mass is around 191 million hectares.
Certification, although a relatively new concept even in the west, is proving to be both a reliable and valuable method of ensuring that the wood taken into the pulp mill is from a legal and sustainable source. APP has a variety of certified suppliers, particularly for its long fiber use and uses both PEFC and FSC certified pulp in its paper mills. But when it comes to its own pulp wood supplies, what is the situation regarding certified sources?
Around 30% of our wood comes from certified sources, which is made up of LEI (Eco Labeling Institute of Indonesia), and PEFC, 40% comes from legal origin, and 30% is in the form of recycled paper. We are in the process of continual improvement, and the plan is to be fully certified in the next five years."
It seems to an outsider, that the use of tropical wood is probably the major reason why APP is singled out among other pulp and paper producers. Wouldn't it make sense to completely remove itself from this practice, even if there is a valid explanation for its use? Could APP's paper mills not use certified market pulp to make up the balance?
The use of mixed wood residues is in line with Indonesian government policy and regulation to support sustainable development of the Indonesian community. The careful development of these degraded and denuded lands is necessary to support BOTH the economy and the protection of biodiversity in protected tropical forest. APP is in Indonesia to stay and operate sustainably. Supporting our government, we are acting responsibly to ensure that natural resources are here for the next generations to come. We respect the calls from environmental NGOs and have incorporated their input into our sustainability strategy. We are open to discuss these issues with any responsible stakeholders. One thing to remember is that we can not only listen to one voice from environmental groups, we need to be responsible and to address social and economic needs in balance. Poverty alleviation is a priority in Indonesia.
This is the second part of a series of interviews and articles on APP Indonesia, the first part, a question and answer session with chairman of the company, Teguh Ganda Wijaya, was run in January.
