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Rainforest at fire: Kvaerner with vast contracts

Kvaerner is a major supplier of turn-key pulp plants worldwide, and has no less than three major jobs in Sumatra, Indonesia. The three companies Kvaerner serves is on the Indonesian Government's list of those companies who are responsible for the large forest fires raging the rain forest this autumn. The three same companies are in serious conflicts with the local population. In total, Kvaerners contracts are worth almost 1.2 billion NOK. Kvaerner itself does not consider themselves responsible for the situation in Indonesia.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
Kvaerner is a major supplier of turn-key pulp plants worldwide, and has no less than three major jobs in Sumatra, Indonesia. The three companies Kvaerner serves is on the Indonesian Government's list of those companies who are responsible for the large forest fires raging the rain forest this autumn. The three same companies are in serious conflicts with the local population. In total, Kvaerners contracts are worth almost 1.2 billion NOK. Kvaerner itself does not consider themselves responsible for the situation in Indonesia.

By Morten Rønning

Kvaerners Finnish companies Kvaerner Pulping Oy Power Division and Tampella Power Oy have currently large deliveries of equipment to Indonesian pulp factories in Sumatra.

Kvaerner Pulping builds one of the world's largest recycling plants for chemicals at the Perawang factory of PT Indah Kiat Pulp and Paper in the Riau province. Tampella Power, which Kvaerner bought in 1996, delivers chemical and energy recycling plants to PT Tels new plant in Maura Enim in South Sumatra and two recycling boilers to April Companies factory R. T. Riau Andalan in the Riau province.

All the three companies are among the companies the Government 15th September pointed out as those responsible for the fires which presently devastate Sumatra. Both the companies in the Riau province had their timber rights temporarily suspended the 3rd October, when they could not prove for the Government that they were not responsible for the fires. In addition, the pulp and paper companies forces the local population off their traditional areas, and destroys their livelihood, by denying them to live in traditional ways.

Paul Emberley, vice president of Kvaerner's information department in London is surprised to be associated with the forest fires in Indonesia:

- Kvaerner takes a global responsibility for all its activities. But seriously, in this matter you should talk to our customers in Indonesia, not us. We know the problems associated with the forest fires in Indonesia, but it is the sole responsibility of the pulp and paper companies to act correctly.

Tor Traasdahl, executive director of The Future in Our Hands, comments Kvaerner's role as follows: - I can not understand that Kvaerner can be associated with customers who behave so blatantly in neglect of environment and human rights. It is not enough to say «this is not our table» anymore. With Kvaerner's reputation, they should put pressure on their customers to ensure a minimum of ethics and considerations for the environment.

Below is a review of the critic of Kvaerner's customers in Sumatra:

PT Tel:
When it is completed in year 2000, PT Tel's pulp and paper factory will be one of the largest in South East Asia. The factory will produce 500.000 tons of pulp annually, a figure which will increase to 1 million tons later. The timber, around 2 million cubic meters a year, is taken from the mother company Barito Pacific's timber licence of 300.000 hectare. These areas are already cleared and planted with eucalyptus and acacia.

The area for the factory - 1250 hectare - is cleared as well. These areas previously belonged to the population of the Desa Dalam, Muara Niru, Grin-Am, Tebat Agung and Banuyayu villages, villages which mainly did small scale rubber plantations.

According to the London based Down to Earth (DtE), which works for the protection of the environment in Indonesia, the construction work has also led to flooding of several rubber plantations nearby, and the owners have lost their trees.

Brutal treatment
The compensation for these areas was set by the Government at 25% of the demands from the local population, and several have denied to sell their areas. However, their areas have still been partly cleared, which has led to a loss of income. This has forced some to accept the low compensation.

Palembang Legal Aid Bureau currently handles a number of cases between the company and more than 20 villages in the area. The farmers who have denied to sell have been pressured hard by the authorities which supports the company in their plans. The local population has been accused of belonging to banned political groups and has been brutally treated by military personnel.

According to DtE, there is also a discrepancy between what the company pays and what the authorities pays to the land owners. Consequently, the authorities keeps a part of the compensation.

Certain death
On average, a family made approximately USD 420 a month on rubber farming. On the pulp and paper factory, which will employ up to 1000 people, the salary will be USD 46, with longer hours, according to DtE.

A group of rubber tappers expressed the following to the organisation: «If they take our land away, we might as well drink Baygon.» Drinking pesticides (Bay-gon) is not an unusual way of committing suicide in these areas.

The local paper Sriwijaya Pos, which has focussed on PT Tel and other environmental problems, was closed in 1996 by the authorities for 15 months. After less than 6 weeks of operation the paper was closed again this summer.

Indonesian authorities have approved the EIA carried out by the company, but the report is not publicly available. According to the environmental organisation WALHI, which has had access to the report, it isolates the pulp and paper activity both from the problems associated with the forest activity as well as the local population's loss of land.

«If they take our land away, we might as well drink Baygon.»
A group of rubber tappers who will lose their areas to PT Tel. To drink pesticides (Baygon) is not an unusual way of committing suicide in these areas.

100.000 affected
The PT Tel factory will use water from the Lemantang river in its production, and dump the waste from the production in the same river. The EIA contains little information related to treatment of the waste.

The river passes 32 villages, and it has been calculated that as many as 100.000 people will be negatively affected by the factory. The river is a source of both potable as well as cleaning water, as well as providing income to both fishermen and farmers.

Barito Pacific owns 51% of PT Tel, the Japanese company Sumatra Pulp owns 33% and the daughter of dictator Suharta, Siti Hardijanti Rukmana, owns 16% through the company Citro group.

Paul Emberley in Kvaerner will not, when we talked to him, comment on whether there are problems associated with making business with the Suharto family. The Suharto family also has owner interests in both Barito Pacific and Sinar Mas (see below).

When completed, the factory will cost approx. USD 16 million, and be the first in Indonesia with foreign financing. Loans have been acquired from Japan, USA, Austria and England, while among others both Sweden and Finland have given export guarantees. Swedish Celmark and Japanese Marubeni will buy the pulp. Kvaerners contract with PT Tel is worth USD 45 to 50 million.

«Should be exterminated»
Suharto spoke of the project in 1991 in an interview with Jakarta Post and said, among other things, that semi-nomadic agriculture should be exterminated because reforestation and protection of the environment was contrary to Indonesian policy.

Many of Sumatra's acacia and eucalyptus plantations have been built with Nordic financial aid and participation. Many of the plantations have drained the land and reduced the possibilities for agriculture. The timber supplies to the pulp and paper factories are already under hard strain, something which will open up for increasing illegal forestry.

Indonesian environmental organisations have joined the Network for Advocacy on Paper Pulp, and are working against PT Tels factory.

Their demands to the authorities is a shelving of the plans, that all foreign investors and export credit agencies pull out of the project, that PT Tel pays fair compensation to those who have lost their land and that all similar projects in the future must take due considerations to the local population's right to the land as well as to the national environmental laws and the standars these laws set for EIA-reports.

Indah Kiat
Indah Kiat is a company in the Indonesian Sinar Mas-group, and runs two factories (9 mills) in Perawang. Sinar Mas is the largest pulp and paper producer in South East Asia, and the factories in Perawang has a total annual capacity of 790.000 tons pulp.

The largest combustion boiler supplied by Kvaerner became operational in February this year, the next has a planned start-up date towards the end of 1998. The value of this last delivery is USD 46 million. Previously, Kvaerner has delivered a fiber line to the factory, which is located in the Riau province. Indah Kiat has timber licences of 300.000 hectare in Sumatra. Still, this is not enough to cover the need. The company was fined more than USD 1 million a few years back, because it brought in outside loggers to carry out illegal logging.

In its quest for timer to its pulp and paper production, Indah Kiat has expelled indigenous people of both the Parawang- and Sakai-people. The company forbid the Sakai-people to carry out both rotation crops and gleaning in their traditional areas as early as 1980.

Burial grounds
Many small rubber plantations have been cleared to give room for the company's plantations, and many burial grounds and sacred places have been planted.

This also goes for the Sakai-people who have been moved to Riau by the authorities. The only areas they have been allowed to plant, is the area between the newly planted acacia trees. In practice, this has forced the Sakai to either take a job in the pulp and paper industry or move.

For the 3000 Prawang-people, the situation is much the same. They have been forced out of their areas and to find alternatives to farming. The Prawang-people also lived from fishing in the Siak-river, which now is polluted by the pulp industry.

The authorities threatened Indah Kiat with a lawsuit in 1990 for polluting the river. It was claimed that the factory only used the purification facility during inspections. At the same time, both the local population as well as the authorities have complained about the plant's emissions to air.

A study carried out in 1989 showed that in the forest areas cleared by the factory, both undergrowth as well as useful plants had disappeared, while at the same time the frequent forest fires had chased the most of the animals away from the area.

«We know the problems associated with the forest fires, but it is the sole responsibility of the paper pulp companies to act correctly.»
Paul Emberly, vice president of Kvaerners Information Department, London.

Riau Andalan
The Singapore company April Company owns P. T. Riau Andalan Pulp and Paper (Riaupulp) which has been operational for three years.

The factory will produce 615.000 tons of paper pulp in 1997. Riaupulp currently builds the second fiber line at the factory, and expects a production of 2 million tons of pulp in the year 2000.

The Kvaerner company Tampella Power delivers two recovery boilers to Riaupulp. The first will be finished installed in December, the second in June next year. The contract has a value of more than USD 70 million. Riaupulp has cleared at least 20.000 hectare rainforest a year since 1995 in order to feed their mills. Now that the production will increase, so will the rate of the destruction of the forest.

Like with Indah Kiat, the forest licences held by Riaupulp also includes areas used by the local population. The devastation of such areas is a breach of Indonesian law which ensures local people access to its areas.

Legal action
In July 1996 the inhabitants in the Desiki village took legal action against Riaupulp in the national human rights commission. The inhabitants had entered an agreement of renting land from a local palmoil plantation.

Riaupulp later came in and claimed they had users rights of the area. The inhabitants complained that they had not been consulted concerning the construction of the new factory, that the company had accessed the area illegally and that Riaupulp paid insufficient compensation for the areas.

Friends of The Earth (FoE) in Finland has spearheaded a campaign which has as its target to stop the Finnish company UPM Kymmene to form a joint venture with April.

FoE criticises such a co-operation on the basis of the devastation of the rain forest carried out by April/Riaupulp, the illegal acquisition of the local inhabitant's areas and the impossible situation for the labour movement in Indonesia.

Sleeping ban
For a long time, the Indonesian regime tried to blame the forest fires on the climate phenomena El Ni¤o and the non-appearance of the monsoon rain. Finally, however, the authorities had to admit that the timber- and pulp and paper companies had most of the blame.

15th of September 1997, the forest ministry published the names of 176 companies which had not complied with the ban on burning.

The ban, introduced in 1994, must be characterised as a sleeping ban, as not a single company has been punished so far. Though the ministry did not mention it with one word, a number of the 176 companies are owned by people within the power structure, the army and the family of the dictator Suharto.

The companies were given a deadline till 3rd October to prove that they were not to blame for the fires. Indah Kiat and Riaupulp were among the companies which did not submit such documentation, and lost their timber rights until further notice. Later, Riaupulp provided documentation which showed that there had not been any fires on their areas the last three months.

Of the 100 million hectare rainforest still remaining in Indonesia, 1 million hectares are cleared every year. The figure for 1997 is even higher than this.

The paper and pulp industry must take the main responsibility for this devastation, and Kvaerner is heavily involved with the expansion of the industry. This years forest fires in Indonesia are the worst since 1982, when 3-3.5 million hectares burnt in Kalimantan.

Kvaerner at Sumatra
Kvaerner Pulping Power Division has its main office in Finland. In 1996, the company acquired Tampella Power and included this in their own pulp and paper division.

Currently, the division has three deliveries to the pulp and paper industry in Sumatra. The supplies consist of combustion plants and boilers to PT Tel, Indah Kiat and Riau Andelan. The contracts have a total value of approx. USD 170 million.

The largest stockowners in Kvaerner is Bergesen dy ASA 13.38%, Chase Manhattan 7.65%, Folketrygdfondet 7.09% and Orkla ASA 5.9%.

Norwatch Newsletter 17/97