Palm oil companies linked to haze see share prices drop

mongabay.com
June 24, 2013



Three firms linked to fires in Sumatra saw their share prices decline since the haze crisis worsened a week ago.

Golden Agri-Resources Ltd (SGX:E5H) led the pack with an 8 percent decline since June 18. Wilmar International Limited (SGX:F34) dropped 5 percent, while First Resources Ltd (SGX:EB5) lost 4 percent. All three firms are listed on the Singapore Stock Exchange and have been cited in media reports based on hotspot data from NASA.

Officials in Singapore and Indonesia say they will pursue action against firms found to be illegally setting fires to clear land on Sumatra. However the three companies say they have "no burn" policies and aren't responsible for the fires.

Most of the fires detected over the past week are located on peatlands within plantation concessions. But the origin of hotspots within peatlands can be difficult to determine, according to the Roundtable on Sustainable Palm Oil (RSPO), a body that sets eco-certification standards for palm oil production


An excavator creates a canal in Riau Province, Indonesia, despite the heavy smoke caused by the forest fires. © Ulet Ifansasti / Greenpeace


"Peat systems cover large areas and each system may include multiple landowners and land use," said RSPO. "Fires that begin within peatlands do not necessarily manifest in the same location as it is often indicated that they spread along great distances underground, invisible to the eye before the fire actually appears."

It's unclear whether the decline in the companies' stocks is associated with the haze — the broader Straits Times Index is down about 4 percent during the period (Indofoods and Bumitama Agri, Indonesian peers that haven't been linked to fires are down only 1 percent during the period). But if the palm growers are found to be negligent in their plantation management, they could possibly face fines. More significantly, it could could hinder their efforts to expand their land banks in the future.

There has already been one law enforcement action as a result of the haze. On Monday, police in Riau announced they had arrested a former Bank Rakyat Indonesia official who they accussed of setting illegal fires across "thousands" of hectares of land, according to Antara News.











AUTHOR: Rhett Butler founded Mongabay in 1999. He currently serves as president, head writer, and chief editor.




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CITATION:
mongabay.com (June 24, 2013).

Palm oil companies linked to haze see share prices drop.

http://news.mongabay.com/2013/0624-haze-stocks.html