MATERIAL USAGE

The Company has two main activities, plantation cultivation and processing. Material needed for plantation cultivation activities starting from planting, maintenance of oil palm trees, up to harvesting that includes: fertilizers and pesticides (insecticide, herbicide, fungicide). The product of plantation cultivation is fresh fruit bunches (FFB) harvested periodically and then were transported to processing plants to be processed into crude palm oil (CPO). All materials are consumable and none of them are recycled. [EN2]

All fertilizers obtained by the Company through direct purchase from the producers, PT Petrokimia Gresik, PT Pupuk Kaltim, PT Pupuk Kujang and authorized importers, while fresh fruit bunches of oil palm for CPO production are obtained from the Company's own plantations and also purchased from farmers' plantation who are participants of partnership (plasma and KPPA) programs, or IGA program.[EC6]

ENERGY USAGE

Direct  energy  from primary  sources  such  as diesel  fuel  and premium gasoline are used as fuel for vehicles transporting FFB from plantation to  processing plant as well as other operational activities  including production process in the plant and the transport of products from plant to consumer.  While in production process, indirect energy is electricity originated from diesel-fueled generators. [EN3][EN4]

In palm oil processing plants, diesel fuel is only temporarily used for generators. Once the production process starts, the generators are deactivated and switched to power generating turbines driven by steam from boilers. The electricity from the generators is then used for operational activities of the processing plants, offices and housing in surrounding areas. [EN5]

The Company also takes several measures that can indirectly reduce energy consumption, through improvised equipment and control techniques with the following methods:

1. Retrofitting Equipment: increase the boiler capacity from 20 tons to 40 tons
2. Technology engineering: increase the boiler pressure from 20 to 30 bars and replace the single stage turbine to multi stage [EN6]
   

Utilization of boiler steam power generating technology is a clear evidence that the Company conserves the energy while saving the use of fossil fuel. The Company also utilizes FFB shells and oil palm fiber as alternative fuel in the boiling process. The use of these alternative fuels has managed  to reduce and save consumption of fossil fuels, as well as become an alternative for solid waste management. [EN7][EN22]

WATER USAGE [EN8]

Water is used for plantation and processing plant activities. In plantations, the Company utilizes water with conservation concept, which means  decreasing soil erosion by reducing run off. Based on the variety of land conditions, this concept can be realized in several ways, Including terracing,  cover crop, check dam building, and waterways management. Thus, ground water reserves can be adjusted in times of drought or when it is  excessive during rainy season, as well as maintaining soil fertility. Efforts to adjust the water reserve support the Company in managing efficient use of water according to needs. Regular monitoring  of water is conducted  by Water Management Team and Biodiversity Conservation Management Team. The monitoring duties cover the measurement of a number of parameters including ensuring the existence of biodiversity.[EN10]

Water is mainly used in the production process as supplementary material for boiling process and steam power generators to produce CPO. The Company also utilizes water for domestic purposes. All the water used comes from surface water sources that have passed through treatment processes.

Surface water used by the Company originated from the river/creeks inside plantation area. The Company has built reservoirs to hold water to ensure the availability of water at all time. Utilization of surface water sources requires permission from local regional governments and its use is conformed to the applicable rules in each region.

From the results of monitoring conducted during the reporting period, there were no findings that indicated disturbance on surface water sources. The Company did not receive any complaints or grievances, both from the community and authorities related to the disturbed surface water sources due to utilization by the Company. [EN9]

In addition to regular monitoring, the principle of prudent use of surface water is carried through the process of water reuse. The Company recycles water from condensate sterilizer for crude oil dilution in the press unit. Residual water that is not reused is stored and managed as a liquid waste.

GREENHOUSE GAS MONITORING [EN16][EN17]

During limited period of reporting, the Company has measured total CO2 emission including greenhouse gas (GHG). The measurement was conducted at PT Perkebunan Lembah Bhakti (PLB) in Singkil Regency, Aceh and PT Surya Indah Nusantara Pagi (SINP), Kotawaringin Barat Regency, Central Kalimantan.

The measurement was performed by Safety, Health and Environment (SHE) Management and Biodiversity Conservation Management. The objects of measurement were liquid waste, land utilization, plantation operations (covering uses of diesel fuel, fertilizer and pesticides), processing plant operations (covering emissions and diesel fuel), as well as transportation activities. The study generally indicated that during palm oil production process, level of emission  (CO2)  absorbed  is greater  than discharged emission (CO2).

The Company also carried out several initiatives aimed at reducing GHG emission. The efforts that have been carried out in 2011 include: [EN18]

• Composting empty fruit bunches (EFB) of oil palm at PT SINP PT Kimia Tirta Utama (KTU) in Siak Regency, Riau; and PT Karyanusa Eka Daya (KED) in Kutai Timur Regency, East Kalimantan.
• Optimizing utilzation of oil palm shells and fiber as fuel to reduce oil fuel consumption.
  
• Planting and reforestation, with number of planted trees until the end of 2011 reached 140,814 trees.

OTHER GAS EMISSION MONITORING

The Company also monitors emission of other gases, such as gas containing chlorofluorocarbon (CFC) and  its derivatives  that potentially depleting  the ozone layer. The monitoring found there was no potential emission of gas containing CFC and its derivatives resulting from the use of air conditioning equipment. This was due to the Company's use of environmentally friendly refrigerant R-22A. Meanwhile, the combustion of biomass fuels (oil palm shells and fiber) does not emit gas containing CFC and its derivatives. [EN19]

The Company also conducts periodic measurements of the emission quality from CPO processing plant. Measurements performed include levels of NOx and SOx emissions that directly affect human and animal health, or threaten to damage the forests. The measurement results indicated that the content of NOx and SOx emissions are still below the quality standard threshold set by the government in Ministerial Regulation No 07 of 2007 on Quality Standards of Stationary Source Emission for Boiler.

WASTE MANAGEMENT AND TREATMENT

The Company's operations both in the areas of oil palm plantation and CPO processing plant generate waste, either in liquid or solid form. In order to minimize potential impact on the environment and create economic value, all the generated waste is managed and treated according to their  characteristics.

Liquid waste consists of liquid waste from production and equipment cleaning activities. Liquid waste from production resulted from boiling process, clarification and hydro cyclone. This waste still contains many nutrients needed for plants and soil, but also contain higher level of biological oxygen demand (BOD) than household waste. During the reporting period, total generation of liquid waste reached 2,877,610 million cubic meters, a decrease from the volume in 2010 at 2,911,864 cubic meters. The decrease of was due to efficiency efforts in production activities, such as recycling and reuse of treated water. [EN21]

Liquid waste is processed at the wastewater treatment plant (IPAL) with  physical and biological processes. Physical process is performed to separate the entrained oil residue, sand and lower the temperature of the waste from 80°C to approximately 45-50°C. While the biological process carried out to break down liquid waste with anaerobic bacteria that can lower BOD content. This is in accordance with Minister of Environment Decree No. 29 of 2003, stating that he level of 3,000-5,000 mg/lt is no longer considered potential to cause pollution to groundwater. In addition, with this processing, oil content and dissolved solids have been able to be suppressed so as not to create anaerobic conditions that can cause oil palm trees to die.[EN22]

The final product of the liquid waste treatment is liquid fertilizer to be used to fertilize the oil palm trees in the plantations owned by the Company and plasma farmers. Through this process all generated liquid waste is later reused as fertilizer. Utilization of liquid waste to be used as fertilizer is based on Minister of Environment Decree No 29 of 2003 on Guidelines for the Use of Liquid Waste at Oil Palm Plantations. [EN21]

Liquid waste quality monitoring is conducted regularly every month to ensure that the waste does not exceed the threshold of quality standards set by the Government. Monitoring  is also conducted by providing monitoring wells around liquid waste application areas to monitor its absorption, so there is no impact on the existing biodiversity in water bodies. This is confirmed by the absence of a complaint or report on allegations of pollution in water bodies caused by discharge of  liquid waste. [EN25]

The solid waste generated consists of non-hazardous and toxic waste, including oil palm empty fruit bunches (EFB), fiber, and shells. Then the EFBs are managed and processed through recycling to become compost and used as fertilizer for oil palm trees in the plantation, while the fiber and shells are reused as fuel for boilers.

The Company does not bring in hazardous and toxic waste from other parties. Liquid waste that is generated and categorized as hazardous and toxic waste includes used motor oil, while for solid waste consists of used batteries and medical waste. These wastes were stored in temporary storage then were transferred to the official collectors licensed by the Ministry of Environment. The recycling process was conducted by these official collectors. [EN22][EN24]

During the reporting period, there were no spills of chemical or other hazardous material in significant amounts. This was due to the application of standard operating procedures in handling transportation, storage, transfer and use of chemical substance or other hazardous liquids, which are, categorized as hazardous and toxic waste. [EN23]

The transportation of CPO product is sought so as not to damage the environment. The CPO product is stored in oil storage within the processing plant area. Then sales of CPO are conducted using tanker trucks to the port for shipment to buyers from outside the island. However, there are also some buyers who directly pick up the CPO from the Company's plants using transporter at their own expenses. [EN29]

Environmental and Compliance Costs

The Company has particularly provided a budget to fund the implementation of  various programs  and  activities  that  are dedicated to preserve the  environment, including the funds for community development.

The Company realizes that the efforts have been made.''3f.''3fto preserve the environment remains to be improved as a form of social responsibility implementation to all stakeholders and the generations to come. However, the Company should be pleased, as it had never received any form of sanction regarding alleged violation of regulations on environmental management. [EN28]