Pulping Borneo

A new investigative report, Pulping Borneo, finds that the Royal Golden Eagle (RGE) Group, the world’s largest viscose producer and major paper products company, continues to rely on deforestation in its supply chain despite a high-profile commitment to “No-Deforestation”.

PRESS RELEASE 

New Report Exposes Hidden Deforestation in Royal Golden Eagle (RGE) Supply Chain and RGE Control of Pulp Mill Under Construction in Borneo – Putting Indonesia’s Rainforest At Risk

Jakarta, 23 May 2023 – A new investigative report, Pulping Borneo, finds that the Royal Golden Eagle (RGE) Group, the world’s largest viscose producer and major paper products company, continues to rely on deforestation in its supply chain despite a high-profile commitment to “No-Deforestation”. The report, co-published by five organizations, also reveals a chain of offshore shell companies pointing to RGE Group control behind a new mega-scale pulp mill in North Kalimantan, putting some of the world’s largest remaining rainforests at risk.

“The RGE Group and its subsidiaries, APRIL, Sateri, Asia Pacific Rayon, and Asia Symbol promised that RGE companies have eliminated deforestation in their supply chains, but this report shows that promise has not been kept,” said Sergio Baffoni, the Senior Campaign Coordinator of the Environmental Paper Network. “Ordinary people around the world are using these companies’ products in their everyday lives: the viscose is in clothes from global fashion brands, paper packaging in grocery stores, and tissue products in our kitchens and bathrooms,'' added Baffoni.

 The investigative report published today reveals that Asia Symbol, RGE’s pulp mill in China has been using wood from companies that have recently cleared large tracts of tropical rainforest in Kalimantan, Indonesia’s territory on the island of Borneo. Much of the rainforest, before it was destroyed, was habitat for endangered Bornean orangutans, according to data published by Indonesia’s Ministry of Environment and Forestry. Evidence presented in the report was obtained through analysis of satellite imagery, and the review of export data, vessel tracking reports and supplier disclosure data.

“RGE’s role in forest destruction is only made possible by those bankrolling and excusing their destructive practices," said Tom Picken, Campaign Director for Forests & Finance, Rainforest Action Network. "RGE’s top 15 banks have pumped more than USD 5 billion into the group’s forest-sector operations since 2016. For example, Mitsubishi UFJ Financial Group has provided more than USD 430 million — despite the bank having policies against financing deforestation. Meanwhile, the Forest Stewardship Council is pushing to bring APRIL back into the FSC system despite these links to ongoing deforestation. These banks and other facilitators must stop willfully ignoring the deforestation which remains part of RGE’s business model," added Picken.

The investigative report examined corporate records to document RGE’s links to a new mega-scale pulp mill, which PT Phoenix Resources International is currently constructing on the island of Tarakan in northeastern Kalimantan. “The Phoenix mill is expected to drive the development of large areas of monoculture pulpwood plantations, placing pressures on natural forests. Areas most directly at risk include portions of over 600,000 hectares of tropical rainforest in RGE-linked forestry concessions in South and West Papua, as well as in RGE supplier concessions in Kalimantan,” said Syahrul Fitra, of Greenpeace Indonesia. “The demand for wood to feed this mill threatens communities in these regions, as well as biodiversity loss and greenhouse gas emissions,” added Syahrul.

“This mill is a flashing red-alert signal for a new wave of industrial-scale deforestation, this time in Kalimantan and Papua,” cautioned Syahrul. He added, “In Sumatra, the demand for wood from mega-scale pulp mills drove catastrophic and irreversible deforestation. Now the same pattern could repeat itself in Kalimantan, starting with this new mega-scale pulp mill.”

The report is co-published by five organizations: Yayasan Auriga Nusantara, Environmental Paper Network, Greenpeace International, Rainforest Action Network, and Woods & Wayside International. The full report, along with company responses to the findings, is available  : Pulping Borneo.

Editor’s notes:

1. The investigation found that in 2021 and 2022, Asia Symbol’s pulp and paper mill in Rizhao, China, received wood from companies in Borneo that cleared rainforest via PT Balikpapan Chip Lestari, a woodchip mill in Kalimantan linked to RGE. Since June 2015, when RGE’s Forestry, Fibre, Pulp & Paper Sustainability Framework – which prohibits deforestation – took effect, suppliers to this woodchip mill have cleared 37,105 ha of natural forest in Central, East, and North Kalimantan. This area is equivalent to over one-half the size of Singapore.
2. Neither of the parties responsible for monitoring APRIL’s implementation of its own sustainability policies – namely, its Stakeholder Advisory Committee (SAC) and the global accounting firm KPMG – has publicly reported this deforestation in the RGE supply chain. 
3. This investigation examined corporate records to document RGE’s links to a new mega-scale pulp mill – which is currently under construction on the island of Tarakan in northeastern Kalimantan (near to the district of Juata Permai, a few kilometers from the town of Tarakan) – through its connections to the reported owner of the mill, PT Phoenix Resources International. The Phoenix pulp mill is reportedly designed to produce semi-chemical pulp, and according to the project’s Environmental Impact Assessment, the mill will have two production lines and a total pulp capacity of 1.7 million tons/year. Once it is fully operational, the mill is projected to consume at least 3.3 million green metric tons (GMT) of wood fiber on an annual basis.
4. The Phoenix pulp mill will place new pressures on natural forests in Indonesia, as the mill’s demand for wood fiber is likely to drive the development of large areas of monoculture pulpwood plantations. Forest areas most directly at risk include those within forestry concessions currently supplying BCL in the provinces of North, East, and Central Kalimantan and those linked to RGE companies in South Papua and West Papua. Spatial analysis using satellite imagery identifies over 600,000 hectares of standing tropical rainforest within seven timber and plantation concessions that could be impacted by the mill’s development. 
5. In response to the report’s findings, RGE subsidiary Asia Symbol (Shandong) Pulp & Paper, which operates a pulp mill in Rizhao, China, has said it will conduct an investigation. Asia Symbol’s full response and those of other parties mentioned in the report are found in the appendices of the published report.

Document Press Release

Media contacts:       

Timer Manurung, Chairman, Yayasan Auriga Nusantara

timer@auriga.id, +62 811-125-006 (WIB)

Igor O’Neill, Greenpeace Indonesia

ioneill@greenpeace.org, +61 414 288 424 (WIB)

Christopher J. Herrera, Communications Director, Rainforest Action Network

christopher@ran.org, +1 510 290 5282 (PT)

Sergio Baffoni, Senior Campaign Coordinator, Environmental Paper Network

sergio.baffoni@environmentalpaper.org, +49 162 381 2528 (CET)