The South Korean conglomerate POSCO Daewoo expands oil palm plantation in Papua, Indonesia

POSCO Daewoo operates in Indonesia since 2007, through its subsidiary PT BIA. Between 2012 and 2017, PT BIA destroyed 26,500 ha of forest in connection to its concession, and has been met by resistance both locally and abroad.


Description

POSCO Daewoo, describing itself as Korea's biggest trading company, operates in the province of Papua though its subsidiary PT Bio Inti Agrindo (PT BIA), in which it has an 85% stake. Since 2007, PT BIA holds a palm oil concession located in Merauke Regency, which is divided into an eastern and western block, comprised by 6,800 and 29,400 ha respectively (1, 2). The company also administers a mill in the area, which was put into operation in 2017 (3).  PT BIA's concession is located in Indonesia's largest intact rainforest, an ecoregion known for its extremely diverse flora and fauna. It is home to a number of endangered species such as the tree kangaroo and birds of paradise (4, 5). A social and environmental impact assessment was conducted in 2009 as part of the company's operation permit application at the National Government. It listed several potential detrimental impacts of PT BIA's operations on the surrounding environment and communities. Those included for instance river pollution, decreased water quality, soil erosion and disturbance of the habitats of protected species. Despite this, the company was granted the permit. Tragically, the potential impacts listed have all been seen in the area since the assessment was made (5).   PT BIA was responsible for destroying 26,500 ha of forest in connection to its plantations between 2012 and 2017, which could be proven through thorough satellite mapping (6, 3, 13). The clearing of its western block begun in 2012 and finished in 2014. It is now fully converted into oil palm plantations, while the eastern block is only partly deforested (3). Satellite imagery has also shown an unusually large hotspot frequency and distribution within the concession (3, 4, 6). Moreover, notably, the concession of PT BIA is bordering that of Korindo Group PT, another company similarly accused of deforestation and forest destruction. It has been speculated that the remaining 15% of the shares in PT BIA are owned by Korindo (1).  The investment of PT BIA in Meruke Regency is located within the bigger Merauke Integrated Food and Energy Estate (MIFEE), a mega-project endorsed by President Jokowi focused on industry, palm oil and food crops in the regency (7). Upon arrival to the area, PT BIA did allegedly pay the local population 50,000 rupiah (USD 3.5) per hectare of land surrendered to the company. However, the community members were not informed of the fact that the company would later apply for and obtain a commercial use permit (HGU) from the national government over the land. An HGU permit is valid for 35 years, and after its expiration the land returns to the state, and not to the local population. As such, the communities lost their rights to the land as PT BIA obtained its HGU permit (8).  In response to this, protests were seen in Jayapura in 2012. The same year, a blockade of the PT BIA plantation was organised in Kampung Selil (7). Several indigenous communities in the area have mobilised, supported by for instance Malind Bian Customary People’s Association (LMA). For instance, in 2013, a meeting was held between the customary councils of Mbian and Mandobo tribes, the local police chiefs, the District Head and local military representatives, which resulted in compensation being paid to the indigenous groups (9).  In 2015, Norwegian Government Pension Fund Global (GPFG), the largest sovereign wealth fund globally, announced a withdrawal of its investments in POSCO Daewoo in reaction to the impacts of PT BIA's operations (1, 4, 10).  Street protests against POSCO Daewoo's destructive activities have been seen in the Korean capital Seoul, organised by Mighty Earth and the Korea Federation for Environmental Movements (KFEM) (2, 11, 12).  As a response, POSCO Daewoo announced a temporary moratorium on forest clearance in Merauke in January 2018 and employed a sustainability consultant. Despite the moratorium, 10 hectares have been cleared within its concession since the beginning of the year, according to recent satellite mapping (2).  

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Basic Data
NameThe South Korean conglomerate POSCO Daewoo expands oil palm plantation in Papua, Indonesia
CountryIndonesia
ProvincePapua
SiteKecamatan Ulilin, Kabupaten Merauke
Accuracy of LocationHIGH local level
Source of Conflict
Type of Conflict (1st level)Biomass and Land Conflicts (Forests, Agriculture, Fisheries and Livestock Management)
Type of Conflict (2nd level)Plantation conflicts (incl. Pulp
Deforestation
Land acquisition conflicts
Specific CommoditiesLand
Palm oil
Project Details and Actors
Project DetailsPOSCO Daewoo operates in Merauke through its subsidiary PT BIA, in which is has an 85% stake. PT BIA's concession in Merauke is divided into two blocks, comprising 6,800 and 29,400 ha respectively. The company also owns a mill in the area, which was put into operation in 2017.
Project Area (in hectares)36,000
Type of PopulationRural
Potential Affected Population8000
Start Date2009
Company Names or State EnterprisesPOSCO Daewoo from Republic of Korea
PT Bio Inti Agrindo (PT BIA) from Republic of Korea
Environmental justice organisations and other supportersThe Korea Federation for Environmental Movements (KFEM)

http://kfem.org/

Mighty Earth

http://www.mightyearth.org/

AwasMIFEE!

https://awasmifee.potager.org/

Lembaga Masyarakat Adat [Malind Bian Customary People’s Assocation] (LMA)

Aliansi Demokrasi Untuk Papua (ALDP)
The Conflict and the Mobilization
Intensity of Conflict (at highest level)MEDIUM (street protests, visible mobilization)
When did the mobilization beginIn REACTION to the implementation (during construction or operation)
Groups MobilizingFarmers
Indigenous groups or traditional communities
International ejos
Local ejos
Neighbours/citizens/communities
Social movements
Forms of MobilizationBlockades
Involvement of national and international NGOs
Media based activism/alternative media
Objections to the EIA
Street protest/marches
Arguments for the rights of mother nature
Boycotts of companies-products
Impacts
Environmental ImpactsVisible: Surface water pollution / Decreasing water (physico-chemical, biological) quality, Biodiversity loss (wildlife, agro-diversity), Loss of landscape/aesthetic degradation, Air pollution, Fires, Soil erosion, Deforestation and loss of vegetation cover, Other Environmental impacts
OtherSeveral IUCN-listed endangered species live within the concession, including a number of bird species and the tree kangaroo as well as flying possums.
Health ImpactsVisible: Other Health impacts
Potential: Infectious diseases, Other environmental related diseases
OtherRisk of the spread of diseases like malaria, ISPA (acute respiratory tract infection), and diarrhea as a result of polluted water and ecosystem changes
Socio-economic ImpactsVisible: Militarization and increased police presence
Potential: Land dispossession, Loss of livelihood, Loss of traditional knowledge/practices/cultures, Violations of human rights, Loss of landscape/sense of place
Outcome
Project StatusIn operation
Pathways for conflict outcome / responseUnder negotiation
Project temporarily suspended
Development of AlternativesLMA demands the national government to cancel all location permits of companies in the plantation sector in Merauke Regency. AwasMIFEE! works for a revocation of the Merauke Integrated Food and Energy Estate as a whole, on the basis of it being unjust and harmful to both the local environment and communities. Mighty Earth and KFEM focus more directly on the activities of POSCO Daewoo and PT BIA, and demand a stop to its forest destruction.
Do you consider this as a success?No
Why? Explain briefly.Despite the announcement of the current temporary moratorium, forest clearing within the PT BIA concession has not stopped. If the company decides to make adjustments to its way of operating remains to be seen.
Sources and Materials
Links

(1) Mighty Earth, KFEM, SKP-KAMe Merauke & PUSAKA (2016). Burning Paradise: The oil palm practices of Korindo in Papua and North Maluku.
[click to view]

(2) Mongabay (2018). South Korean Company under Fire for Alleged Deforestation in Papua Oil Palm Concession
[click to view]

(3) Mighty Earth (n.d). Buyers beware POSCO Daewoo's Deforestation Palm Oil Ready for International Markets – But Global Buyers are rejecting it.
[click to view]

(4) Etikrådet (2015). Recommendation to exclude Daewoo International Corporation and POSCO from the Government Pension Fund Global.
[click to view]

(5) Mighty Earth (2017a). This palm oil company promised destruction – and it delivered.
[click to view]

(6) Mighty Earth (2017b). New Satellite Mapping Reveals POSCO Daewoo continues to clear Indonesian rainforest at rapid pace in second half of 2017.
[click to view]

(8) AwasMIFEE!, (2013b). MIFEE: Recent News Reports: Company’s promise to build education facilities were lies.
[click to view]

(11) Business Korea (2017). Malpractice in Indonesia: POSCO Daewoo's Destroying Rainforests in Indonesia.
[click to view]

(12) Mighty Earth (2018). Activists in South Korea Rallying Against Indonesian Rainforest Destruction by Korean Conglomerate POSCO Daewoo.
[click to view]

(10) Mongabay (2016). World's largest sovereign wealth fund just dropped 11 companies over deforestation.
[click to view]

(7) AwasMIFEE!, (2013a). Daewoo International Corporation
[click to view]

(9) AwasMIFEE, (2013c). Meeting with Company, Local Communities Received Compensation of IDR 1 Billion.
[click to view]

Other Documents

PT BIA's (red) and Korindo's (orange) concessions Source: https://www.dropbox.com/s/n1i5ic3ld9jqo49/2016-08-25%20FINAL%20Korindo%20report%20-%20English%20%283%29.pdf?dl=0
[click to view]

Boundary between PT BIA plantation and still intact forests. Source: https://www.flickr.com/photos/[email protected]/28594299070/in/album-72157671372281801/
[click to view]

Activists against POSCO DAEWOO Source: http://www.mightyearth.org/activists-in-south-korea-rally-against-indonesian-rainforest-destruction-by-korean-conglomerate-posco-daewoo-2/
[click to view]

Meta Information
ContributorEmmy Iwarsson (ICTA-UAB)
Last update28/05/2018
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