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Wilmar International, the world’s No. 1 palm oil firm, expects Indonesia’s proposed two-year ban on clearing forests to have a limited impact on its operations as land available for oil palm estates is ample.

Singapore-listed Wilmar’s stand runs counter to many palm oil and mining firms that fear the moratorium — part of a $1 billion deal with Norway aimed at fighting deforestation and carbon emissions — will curb expansion and future earnings.

Wilmar’s head of corporate social responsibility, Jeremy Goon, said oil palm concessions only covered 3.2 percent of Indonesia’s land mass but contributed 70 percent of total agriculture activity in the country.

“We understand there is sufficient non-forest degraded lands in Indonesia to accommodate and support the growth of the plantation businesses,” Goon told the Reuters Climate and Alternative Energy Summit.

Under the deal with Norway, the moratorium would apply from the start of next year, but exactly which areas of forest will be covered remains unclear.

Senior Indonesian officials have raised the idea of land swaps to help palm oil firms expand on already degraded land.

Goon said Wilmar would abide by any regulations that governed land swaps if such rules were drafted.

Indonesia is under international pressure to slow deforestation and the destruction of peatlands, which release vast amounts of planet-warming greenhouse gases when cleared or burned.

Wilmar also faces an uphill task in ensuring its palm oil supply comes from third-party estates that have not illegally cut down forests or drained peatlands to expand, Goon said.

Less than half of the palm oil the firm trades comes from its own subsidiaries, he said.

But unlike companies such as Malaysian-listed planter IOI, which recently excluded an Indonesian supplier over concerns of deforestation, Goon said Wilmar usually engaged with errant planters to help them become more eco-friendly.

“If the Roundtable on Sustainable Palm Oil either suspends or terminates a member, that would prompt us to review our relationship with the company,” he said, referring to the industry body tasked with certifying planters.

Goon, an RSPO board member, said Wilmar planned to expand its investments in cutting carbon emissions and would spend between $12 million and $15 million in 2010-11 on projects around East Asia.

Green groups have targeted palm oil and logging firms for cutting down large areas of forest, destroying rain forests brimming with plant and animal species.

But Goon said firms under the RSPO must complete detailed assessments of any forests with a high conservation value in plantation concessions. He said social impact assessments were also crucial before any development.

“The lands that are normally awarded by governments to palm oil companies are usually degraded, logged-over secondary forest. They usually only give pristine rain forest with commercially viable timber to logging companies and that’s just the way it is.”



Reuters