Singapore based APRIL Group has halted all harvesting of natural forests for its pulp and paper operations in Indonesia, it has even gained PEFC certification on more than 300,000 hectares of its concession area so far – and it is expanding its papermaking production. Mark Rushton, Editor, Pulp & Paper International visits the mill, and speaks to APRIL Group President, Praveen Singhavi
It has been an exciting and furiously busy few months at APRIL in the forestry and plantation areas. On the back of the announcement that it will eliminate all deforestation from its supply chain, it has also managed to get more than 300,000 ha of its concession area PEFC certified – in fact it holds the very first PEFC certificate to be awarded in Indonesia, No.0001.
But the only real way to get any kind of understanding of the challenges involved in running an integrated plantation, pulp and paper business on the island of Sumatra, Indonesia, is from the air. Whether on a scheduled airline, or being given a helicopter overview, what becomes pretty clear straight away when looking down at the layout of the land, is that there are plenty of challenges.
On my flight in from Singapore to Pekanbaru – the nearest large town closest to APRIL’s giant pulp and paper mill at Kerinci - I counted no less than six fires – which are supposedly illegal in this part of the world. And then later on during my mill visit, from the APRIL helicopter, more fires, and an ever-changing landscape below of small forest clearings with palm, rubber, and other small plantations, which it seems, are gradually intruding into larger concessions of plantations. “The smoke from the fires you can see are most likely illegal. Even though they are outside our concession area they pose a real risk, so we try and educate the local communities to find better ways of clearing their land.” says John Bathgate, a senior forester with APRIL.
APRIL in fact takes the fire hazard risks very seriously, it has a strict ‘no-burn’ policy, has rapid response teams all over the Kerinci region and has dedicated educational programs encouraging the local community to not use fires at all as a way of clearing land.
A target for NGOs
All of this illustrates that running a plantation pulp and paper business on this island is no walk in the park. Kerinci is operated by two APRIL subsidiaries, Riau Andalan Pulp & Paper (RAPP) which is the pulping division and Riau Andalan Kertas (RAK). APRIL is part of the RGE group.
On top of the daily challenges on the ground, APRIL has been a target of some NGOs over the last few years as it was continuing to use mixed tropical hardwood (MTH) from forests it was clearing for plantations as a raw material to make pulp. These areas were often secondary or tertiary degraded lands that had already been harvested before, and although it was legal to clear them, they still come under the highly emotive and inflammable “deforestation” banner that has become a major part of the NGO remit, particularly Greenpeace, but also WWF and Rainforest Alliance. These NGOs have had particular success in the region with other campaigns against pulp and paper companies.
APRIL Group president, Praveen Singhavi says: “Sustainability has always been an important focus for us at APRIL, and this latest announcement is a major step on our 15 year journey to creating a sustainable and responsible business in the area. We were well on the way to eliminating MTH from the supply chain, and with our latest announcement we have sped things up considerably”.
The latest announcement contains a list of commitments that have been welcomed not only by the NGOs, but governments and environmental commentators from all around the world. The list includes the following commitments:
- No new development on forested land or forested peatland
- Added High Carbon Stock (HCS) assessments to existing High Conservation Value (HCVF) assessments
- The reinforcing of unprecedented landscape conservation that will mean protected areas equal in size to its current 480,000 ha of planation, 70% of which is already completed
- The strengthening of peatland management with the establishment the Peat Expert Working Group
- Enhancing of programmes for poverty alleviation, job creation, access to education and Free, Prior, Informed Consent rights for local communities
- Closer co-operation with NGOs
APRIL has engaged an independent, international body of experts for its Stakeholder Advisory Committee (SAC), which includes well-known figures from the world of forestry, ecology, social science and commerce, who regularly meet to review and provide recommendations on the company’s sustainability objectives, commitments, performance targets and timelines.
“We have always been serious about sustainability,” reiterates Singhavi “Starting back in 2005 we introduced HCVF assessments for our plantations - we were one of the first companies to adopt this. We also implemented a wood legality system, which prevented illegal wood from entering the supply chain.
“In 2013 we began a really important stage of the sustainability journey when we began our eco-restoration projects when we started working with UK based Fauna and Flora International on a project of 20,000 ha on the Kampar Peninsular. Now, in 2015 we have 70,000 ha in total. We also currently conserve and protect more than 250,000 ha of HCV forests within our concessions.”
One of the perhaps unique elements of the new commitments from APRIL is the 1:1 commitment where the company will establish conservation areas that equate to its plantation areas. Singhavi says that the company is well on the way to that achievement with some 320,000 ha already being conserved. APRIL has plantations totalling 480,000 hectares. “We are actually going beyond “zero deforestation” and actually reforesting in our concessions,” Singhavi adds.
So how does conservation take place in such a difficult situation with complicated land rights and interconnected concession areas? APRIL has developed what it calls a landscape approach, where a buffer zone of plantation is put around an area to be conserved, thereby making it difficult to enter. Singhavi explains: “The landscape approach in Indonesia is a necessity. For example if conservation areas are left alone they will get encroached upon, cleared and planted on – even in national parks where some of them have been degraded by up to 80%. To counteract this, in our concession areas we create what we call the “ring concept” where we put our plantations around protected forests, which in turn protect the natural forest. In just one of our landscape concessions we have an area of 140,000 ha surrounded by plantations acting as a buffer zone. Our NGOs partners are excited by this concept which has been proven to work.”
What is the cost?
The question has got to be asked at this stage – what is the cost of all this eco-restoration and conservation? We are in the real world here of the pulp and paper industry, not always known as being awash with cash, particularly in these challenging times. Singhavi says: “There certainly is a short-term cost, but I can tell you that these commitments have been made with the long-term future sustainability of the company in mind.”
Just one example of the cost is a 20,000 hectare piece of land that has been set aside for eco-restoration which is going to cost the company some $17 million over the next 10 years. “These costs include forest nurseries where we grow the indigenous species to plant, the patrolling costs for protection, camera traps for bio-diversity and to check any of the fauna that the forest might attract,” explains Singhavi.
“So we are now focussing on two important areas; intensifying our plantations by increasing production and yield and then making sure that we aim for the quality, value-added end of the market for our paper products.”
Singhavi admits that the Mean Annual Increment (MAI) yield of APRIL’s acacia and eucalyptus plantations in Indonesia are not yet up there with the Brazilians who are achieving upwards of 60 MAI per hectare, but he is optimistic that huge improvements will be made with maximum effort being applied in the company’s research laboratories and in the field. APRIL does have a leg up there in that department in the shape of one of its sister companies in the RGE Group, Bracell, which is a leading player in the specialty cellulose business.
“The Brazilian forest industry is a mature one, perhaps 60 or 70 years old, whilst we in Indonesia have only been in production for 20 years,” says Singhavi. “We are working hard from top to bottom on the yield, with scientists working at local domestic level, and it is my view that we will achieve even better results in the future as our yield improvement plan kicks in."
Graphic Papers: optimism for the future
The other area APRIL is concentrating on for future gains to compliment its sustainability commitments is to focus on added value products among its papermaking offerings. Unlike Europe and the US, Asia is still a very healthy market to be operating in when it comes to graphic papers, and Singhavi has an optimistic outlook for the grade in the region. He says: “I don’t see why people are saying that the paper products sector is weak. Taking a macro view, China, India and South East Asia have a combined population of 3 billion people, added to which the middle class is growing. We are absolutely sure that this is going to be a strong growth area."
To underpin this optimism, APRIL has recently embarked on an expansion program that will see a third paper machine added to the existing PM 1 and PM 2 at the mill in Kerinci. The investment represents Rupiah 4 trillion ($300 million) and will increase the company’s capacity from 820,000 to 1,150,000 tonnes/yr. The new machine, which will be supplied by “an internationally recognised supplier” has been designed with the latest technology that will allow for grade changes to be made at maximum speed to cater for the relatively new world of digital printing which demands new, bespoke sizes and grades. The paper produced will be mostly supplied under APRIL’s own PaperOne brand, one of the leading brands of cut size paper sold in more than 70 countries worldwide.
“Make no mistake,” says Singhavi. “PM 3 is a state-of-art machine that is going to produce top quality, high grade paper, just like we already produce and that our customers like. We plan to capture other markets and segments with this paper, including the growing market of digital printing. One of our key advantages of the paper we produce is that it is designed for maximum efficiency of ink use, and as we all know, it is the ink that is the most expensive part of digital printing, whether it be for the at home market or production printers.”
PM 3 is set to start-up in the latter part of 2016.
Corporate Social Responsibility – in APRIL’s DNA
The central philosophy that runs right through the whole of the RGE group comes right from its founder, Sukanto Tanoto, which is: “to operate in a manner that is good for the community, good for the country, and good for the company." In fact APRIL’s Kerinci mill is something of a legacy to that philosophy as well as a showcase for modern corporate social responsibility.
The first foundations for the mill were laid at Pelalawan Kerinci in Riau province in 1993, where there was a small village of 200 households. The Kerinci township is now a thriving, mini metropolis with a population of over 200,000 that has grown as the mill has developed.
“Back then there was nothing here. There were no roads, so I had to take a boat from Kampar River and then walk to the site. A trip to Kerinci from Pekanbaru would take easily 4 hours for me. But life was even harder for those who lived here – many were either illegal loggers or fishermen”, said Sukanto Tanoto who built the 50,000 strong RGE group and started his business as a spare parts supplier."
“When we are given a licence to operate in a certain area, there is an enormous amount of responsibility that goes with it,” says Singhavi. “A lot of thought goes into the on-going development of the local community, as this can be a very sensitive area when operating in remote communities. We spend a lot of time and effort engaging with the local people, improving livelihoods, providing healthcare, free education, and teaching farming methods, as well as providing opportunities at the mill”.
The list of APRIL’s achievements in this area is impressive, just a few of them are:
- The creation of over 90,000 direct and indirect jobs
- Over 1,000 households benefit from APRIL’s Integrated Farming System that provides training for community farmers
- Provided 128 businesses with start-up capital, and supported 189 local entrepreneurs to support APRIL's operations
- Provided 17,613 scholarships to primary and secondary school students
- Trained 1,184 teachers in contextual teaching and learning
- Provided free community medical treatment
- Supported the building of 178 worship and religious schools, 96 public schools and 17 sporting facilities
- Has built and continues to maintain 2,600 kms of roads for public use.
“The fact is, we are part of the solution in Indonesia; our model has the right balance between economic development and environmental imperatives, which means balancing sustainable plantations, conservation and restoration as part of a landscape-level approach. With our model, we can be a voice for reasoned, executable change,” concludes Singhavi.
Clearly, APRIL’s progress is good for the community, good for Indonesia, and good for the image of the industry.
A PEFC first for APRIL and Indonesia
On the 8th June at a special event held in Jakarta, managing director of APRIL’s Indonesia operations, Tony Wenas, publically received the first Programme for the Endorsement of Forest Certification (PEFC) certificate from PEFC CEO Ben Gunneberg.
Wenas says: “This has been a long process and journey, and ultimately it means that we are recognised and can now have the confidence that we are doing the right thing. Of course, it also means that APRIL can create more markets and sell to more international customers who recognise the importance of PEFC certification.”
“It also means that other emerging countries can follow our lead,” Wenas concludes.
Gunneberg says: “This certificate awarded to APRIL, and to Indonesia, represents a tipping point in the global forest products industry. The achievement acknowledges the work that APRIL has done, as well as the progress the country has made towards a sustainable future for Indonesian forestry - a future that recognizes the interdependence of environmental, social and economic objectives”.