The Chain: Bunge cuts off supplier planning to clear peatlands; GAR and TFT announce action plan for re-engagement

Bunge cuts off supplier planning to clear peatlands

On Tuesday, agribusiness giant Bunge (BG:US) responded to reports that Malaysian palm oil company BLD Plantation Bhd plans to clear 14,000 hectares of peatlands in Sarawak. BLD is a supplier to the palm oil refinery Kirana, which sells its products to Bunge. Just days after a formal complaint from civil society groups, Bunge publicly announced that it was cutting business with the company: “In light of the recently reported plans of BLD, Bunge has suspended indefinitely any new commercial activity with Kirana and its affiliates. This decision is effective immediately,” a spokesperson told Mongabay.

In October 2014, Bunge joined other industry leaders by adopting a No Deforestation, No Peat, No Exploitation policy for its palm oil supply chain, which extends to the company’s subsidiaries and third-party suppliers, meaning that BLD’s planned peatland development would violate Bunge’s sustainability policy. This development could have an enormous climate impact, emitting roughly 37 million tons of CO2 into the atmosphere – the equivalent of putting about 7 million cars on the road. Bunge’s decision shows continued progress by major traders to stop doing business with irresponsible producers.

GAR and TFT announce action plan for re-engagement

This week, palm oil trader Golden Agri-Resources (GGR:SP) and third-party implementation partner The Forest Trust released an “Agreed Action Plan for Re-Engagement” – an important step toward having GAR’s suspension of membership with TFT lifted. As we have previously described, GAR’s PT Smart affiliate had its membership with TFT suspended due to serious breaches of the company’s Forest Conservation and Social and Community Engagement policies. GAR was also banned by the RSPO from “acquiring or developing any new areas” after an investigation of one its subsidiaries operating in Kalimantan. In recent weeks, GAR has taken several steps to clean up its supply chain. The Action Plan with TFT outlines several strategic and operational conditions that the company must meet to have its membership reinstated.

Briefs

  • Malaysia’s Felda Global Ventures Holdings plans to buy 37% of Indonesia’s PT Eagle High Plantations from the Rajawali Group for around US $680 million, a Rajawali executive said recently. Felda plans to buy 30 percent of Eagle High in cash and 7 percent by issuing new shares. Felda will also buy 95% of Rajawali’s sugar project for around US $67 million.
  • Thailand’s PTT said its unit had sold its 95% stake in a palm oil business in Indonesia for US $35 million as part of a plan by the top Thai energy company to divest non-core assets. Kalimantan Thailand Palm Pte LTD, a subsidiary of PTT’s wholly owned PTT Green Energy Pte Ltd, had sold the stake in PT Mitra Aneka Rezeki to PT Prasada Jaya Mulia and the transaction was completed on June 9, PTT said in a statement.
  • Malaysia’s Felda Global Ventures Holdings, the world’s third-largest palm plantation operator, says it has bought 836 hectares of land with mature palm trees in east Malaysia from Golden Land Bhd for 655 million ringgit (US $173.92 million).
  • Genting Plantations Bhd has made its maiden sukuk issuance comprising RM 1 billion (US$ 269.7 million) sukuk murabahah. The company told Bursa Malaysia that the sukuk, issued by unit Benih Restu Bhd, was part of its sukuk murabahah programme of up to RM1.5 billion in nominal value. The sukuk murabahah has a tenure of 10 years, at a profit rate of 4.62% per annum. Benih Restu will advance the proceeds from the issuance of the sukuk murabahah to Genting Plantations and/or its subsidiaries via a syariah-compliant intercompany advances. The group will thereafter apply such proceeds for general corporate purposes. Maybank Investment Bank Bhd and OCBC Al-Amin Bank Bhd are the joint principal advisers and joint lead arrangers for the sukuk murabahah programme. The joint lead managers and joint book runners for this issue are CIMB Investment Bank Bhd, Maybank Investment Bank Bhd, OCBC Al-Amin Bank Bhd and RHB Investment Bank Bhd.