- Bumitama Agri Ltd (BAL) (Unrated) announced that two petitions have been addressed to RSPO (Roundtable for Sustainable Palm Oil).

- One petition came from the Centre for Orangutan Protection and the other one was sent by the International Animal Rescue and Friends of Borneo.

- The two petitions demand that BAL stop activities on two parcels of landbank in Kalimantan as orang utans have been found in the areas. BAL conducted a conference call on this issue yesterday.

- The problem faced by BAL highlights another risk of carrying out plantation activities in Kalimantan.

- We understand that BAL has not completed the acquisition of one of the parcels of land. The existing management has been facing the issue of orang-utans since 2007. Nongovernmental organisations (NGO) were invited to the area to observe and monitor if there were any orang-utans. However, the NGOs could not find any, at the time.

- On the second parcel, BAL only realised the existence of orang utans when they took over the land from the previous management.

- Since then, the orang utans have been relocated to a suitable area with the assistance of the Agency for Natural Resources Conservation Ketapang.

- On both parcels of landbank, land clearing activities have stopped. Consultants have been hired to conduct HCV (High Conservation Value) and SIA (Social Impact Assessment) studies. The surveys would detail the presence of endangered animals in the area, if any.

- BAL is not likely to withdraw its plantation activities from its landbank as the quality of the land is good. If there were more orang utans to be found, then the group is likely to designate a certain area for the animals.

- The above developments are not expected to affect BAL’s new planting target significantly. BAL plans to develop about 15,000ha of palm oil in FY13F.

- BAL is supposed to plant about 1,000ha on the second parcel of land, which it has taken ownership. The size of the second parcel of landbank is about 6,450ha in total.

Source: AmeSecurities