Sinar Mas subsidiary Tjiwi Kimia bought a 35 percent stake in pulp, paper and tissue maker Oki Pulp & Paper Mills for $30 million earlier this month, reports The Jakarta Post.
The deal, which closed July 11, will allow Sinar Mas to expand its production capacity. According to the Investor Daily, Sinar Mas has set aside up to $400 million for new capital expenditure, including a new paper machine and a power plant.
Like Sinar Mas and its subsidiary Asia Pulp & Paper (APP), environmentalists have targeted Oki for its forest management practices. But Sinar Mas and APP earlier signed a forest conservation that excludes any fiber sourced via the conversion of natural forests. The new policy applies to “all its suppliers in Indonesia, any Indonesian fibre utilized by APP’s mills elsewhere, including China, [and] all future expansion.” The policy is being monitored by The Forest Trust, an NGO.
Pulp and paper production has been one of the most important drivers of deforestation in Sumatra over the past thirty years. Environmental groups estimate that more than 3 million hectares of natural forest and peatlands were cleared by APP, its competitor APRIL, and supplier companies since 1984.