Sumatra rayon mill to move to China, pulp mill to reopen

Down to Earth No 53-54  August 2002

The Indorayon pulp mill - one of Indonesia's most notorious polluters - was shut down in 1998 following years of protests from the local communities suffering the impacts. The company was renamed PT Toba Pulp Lestari and recently won government approval for reopening its pulp mill in Porsea, North Sumatra. The rayon plant is being sold to China and will be dismantled.

The sell-off of Indorayon's 60,000 tonnes/yr rayon plant and reported move to China is due to the long-standing dispute with local people and the local administration. According to a deputy district head in Toba Samosir, the firm is dismantling machinery and the move will be finished by September. The money raised by the sale is to be used to help maintain the pulp equipment, which has stood idle since 1998, when protests by local people forced a closure of the mill.

PT Indorayon Inti Utama's integrated rayon and pulp mill, owned by Sukanto Tanoto's Raja Garuda Mas group, was approved in 1986. Even before the official opening in 1989, there were protests against the mill's high levels of air and water pollution. In Indonesia's first civil environmental case brought against the government in 1989, the Indonesian NGO, WALHI, mounted a legal campaign to stop the mill, but the case was thrown out. The publicity surrounding the case was a major breakthrough for the environmental movement, however, and is now seen as a milestone in the development of public awareness of pollution issues in the country.

In the following years, the company was involved in cases of land-grabbing for pulpwood plantations, failure to pay compensation, failure to fulfil employment guarantees and illegal tree felling as well as continued pollution of air and local water resources used for farming by local people.

In the politically turbulent period following Suharto's resignation in May 1998, protests against the plant gathered momentum, blockades were mounted to stop logging trucks getting to the mill and the plant was effectively closed down in late 1988. Attempts by police and military personnel to break the blockades resulted in over a dozen deaths and hundreds of serious injuries. The Habibie government ordered a complete review of the environmental and social impacts of the plant - but this never took place. In May 2000, the Wahid administration decided that the pulp production could resume, but that rayon production could not. Community opposition prevented the mill reopening at all, however.

Indorayon suffered heavy financial losses due to the closure, but attempts to convince the community that the company was now genuine about commitments to the local communities failed. By September 2000, 1,000 of the 7,000 workers had been dismissed. The company changed its name to PT Toba Lestari Pulp in an attempt to make a fresh start and the mill's foreign backers injected a further $4 million.

Pulp plant to reopen

In May this year, the Megawati cabinet agreed to permit the 240,000 tonnes/yr pulp plant to re-open. This is a controversial decision, opposed by many MPs - a parliamentary commission says it reached agreement with the government not to reopen the plant unless it was outside the current location in Porsea, but this agreement appears to have been ignored.

The decision is also being vigorously opposed by local people. In June over 5,000 people from the Lake Toba area gathered in the town of Porsea to protest. "The government must be held responsible for any negative impacts in future," warned WALHI's Effendi Panjaitan. Two hundred students staged a protest outside the North Sumatra provincial governor's office in Medan in early June and demanded that the government revoke Indorayon's licence. The potential for further violent conflict in future remains high: local police chief Ansyad Mbai said he would take stern measures against agitators trying to disturb the mill's operations.

(See DTE 45; DTE 48 and dte.gn.apc.org/Cind.htm for more background. 
Source: Jakarta Post 6&11/Jun/02; 29/May/02; Asia Wall Street Journal, 5/Jul/02)