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Pulp and paper giant gets $1.8B loan from China for Indonesia’s largest mill

Asia Pulp & Paper (APP) secured a $1.8 billion loan from China Development Bank (CDB) to finance the development of what will be Indonesia’s large pulp mill, according to a statement released by the company.

The total cost of the new mill, located in South Sumatra and run by APP affiliate OKI Pulp & Paper Mills, will be $2.6 billion. It will will have an annual capacity of 2 million metric tons of pulp and 500,000 tons of tissue paper, potentially South Sumatra’s pulp production by 36 percent.

The OKI mill will be subject to APP’s forest conservation policy, which prohibits the use of fiber sourced by clearing of natural forests and peatlands and requires the company and its affiliates to employ the concept of “free prior informed consent” (FPIC) in dealing with local communities. APP established the “zero deforestation” policy this past February after a long-running campaign by environmental groups over its damaging forestry practices, which NGOs said destroyed vast areas of rainforest, triggered social conflict, and put critically endangered species at risk.

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