South Korean company under fire for alleged deforestation in Papua oil palm concession

  • A report by WRI shows ongoing deforestation in an oil palm concession in Papua, Indonesia, operated by a subsidiary of South Korea’s POSCO Daewoo.
  • The company has responded by saying its operations in Papua are legal and fully permitted.
  • Concerns over deforestation by POSCO Daewoo have prompted other companies to say they will not allow its palm oil into their supply chains. These include big-name brands such as Clorox, Colgate Palmolive, IKEA, L’Oreal, Mars and Unilever.
  • POSCO Daewoo has issued a temporary moratorium on land clearing in its Papua concession and hired a consultant to advise it on how to proceed with its operations there.

JAKARTA — A South Korean-owned company previously under fire for clearing vast swaths of pristine forest in Indonesia’s easternmost Papua province has continued to deforest its oil palm concession in an area of rich biodiversity.

A report by the World Resources Institute (WRI) shows that 23 square kilometers (8.9 square miles) of forest, an area six times the size of New York City’s Central Park, has been cleared in the past four months in a concession owned by PT Bio Inti Agrindo (PT BIA), a subsidiary of South Korean giant POSCO Daewoo.

The concession in Merauke, a district in Papua, spans 342 square kilometers (132 square miles) near the border with Papua New Guinea and overlaps with a WWF Global Ecoregion known for its rich assortment of plants and animals.

There are 344 registered bird and 69 mammal species in the region, including a variety of marsupials and birds of paradise, some of which are endangered and only found in this area. Yet the area’s biodiversity remains poorly documented, with many species thought to be undiscovered.

The recently deforested area is part of more than 200 square kilometers (77 square miles) of forest cleared in POSCO Daewoo’s concession in Merauke since 2013, according to WRI.

POSCO Daewoo, which acquired an 85 percent stake in PT BIA in 2011, said in response to the WRI report that its subsidiary’s operations in Merauke were legal and that it had all the necessary permits.

“BIA commenced its business within the legitimate process of permission for a plantation area, which includes various environmental and social assessments,” Joyce Eun Jeong, a spokesperson for POSCO Daewoo, told Mongabay.

Map of Papua province (bright green). Photo courtesy of Bwmodular/Wikimedia Commons.

Business impact

PT BIA began operating in Papua in 2007, when it obtained a permit for the concession in Merauke from the Indonesian Investment Coordinating Board (BPKM).

In 2009, it hired CV Bahana Papua Mandiri, a government-accredited consultant, to conduct an environmental impact assessment. The consultant concluded that the land allocated for planting oil palms comprised mostly previously burned forest, in the form of bushes, reeds and secondary forest.

The assessment, or Amdal as it’s known in Indonesia, was subsequently approved by the governor of Papua.

In a bid to achieve a sustainable operation, PT BIA excluded areas deemed unsuitable for oil palm development, according to its website and its 2017 environmental and social report. Those areas include 35 square kilometers (14 square miles) of wildlife preservation zone, demarcated in 2009; 22 square kilometers (8.5 square miles) of swamp areas in 2013; and areas with high biodiversity, in 2015.

Despite these measures, POSCO Daewoo’s operations in Merauke have come under intense scrutiny in recent years due to reports of deforestation and disputes over land with local communities. Concerns over its operations have cost it several high-profile business partners.

In 2015, Norway’s central bank divested from POSCO Daewoo over deforestation concerns. In June 2017, the environmental NGO Mighty Earth sent out a letter warning palm oil buyers that buying the commodity from POSCO Daewoo would violate their “no deforestation” and Roundtable on Sustainable Palm Oil (RSPO) commitments.

“We got over fifty responses from companies confirming that POSCO Daewoo is not in their supply chains,” Mighty Earth campaign manager Deborah Lapidus told Mongabay. “And over twenty companies assured us that it would remain excluded.”

Companies that said they would exclude POSCO Daewoo from their supply chains until it complied with responsible sourcing commitments include Clorox, Colgate Palmolive, IKEA, L’Oreal, Mars and Unilever. (Of these, only Unilever currently sources some of its palm oil indirectly from POSCO Daewoo; the others are not customers at present.) In December, Boots, the U.K.’s largest drugstore chain, ended its retail partnership with POSCO Daewoo following the Mighty Earth campaign.

The stocky, flightless northern cassowary (Casuarius unappendiculatus) is one of the birds-of-paradise for which Papua is famous. Photo by Rhett Butler/Mongabay

Unannounced moratorium

In response to the pressure, POSCO Daewoo instated a temporary moratorium on new clearing in its Merauke concession in January, according to the company, and hired an environmental sustainability management consultant.

“The management of POSCO Daewoo and BIA agreed that the rest of forest will not be cleared until a professional consulting firm gives advice on the area,” POSCO Daewoo’s Jeong said.

She said POSCO Daewoo was seeking advice from the consulting firm on a variety of issues regarding sustainable management for the rest of the PT BIA concession. She added that details would be announced on PT BIA’s website in due time.

The temporary moratorium appears to be working to some degree, with less than 10 hectares (25 acres) of forest loss detected by GLAD alerts, a satellite-based system that can detect fine-scale deforestation in near-real time, since the start of 2018.

“Our satellite mapping shows that it has indeed greatly slowed clearing in the first couple months of 2018, with just over a hectare of clearance each month,” Lapidus said.

However, she questioned POSCO Daewoo’s commitment to preventing further deforestation in the PT BIA concession, saying the company had not yet made an official public announcement about its moratorium. She said the company had also failed to present its future plans, including the sustainability assessments it will conduct, the assessors it will hire, whether it will seek quality reviews, and a timeline for these actions.

It’s also not clear that POSCO Daewoo will comply with the recommendations from its consultant; the company continues to deny that it has any problems to fix, and representatives have been quoted in South Korean news reports saying that while they would “consider” the advice of the consultant, they would have to “think about” whether to carry out their recommendations.

Lapidus said this made it clear that there was no guarantee POSCO Daewoo would follow through on the sustainability consultant’s advice.

“Of course, even if POSCO Daewoo stops clearing today, it has a huge legacy of deforestation, ecological destruction, and human rights abuse that it must restore and remedy,” she said.


Banner image: A jungle river in Indonesian Papua. Photo by Rhett A. Butler.

This story first appeared on Mongabay

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