PT. PP London Sumatera Indonesia Tbk. Dolok Mill and Its Supply Base

Transcription

1 Certification Audit for PT. PP London Sumatera Indonesia Tbk. Dolok Mill and Its Supply Base FMS40044 RSPO Membership number: Audited Address: Dolok Mill: Desa Perkebunan Dolok, Kecamatan Limapuluh, Kabupaten Batubara, North Sumatera IDN Its supply bases: Dolok Estate: Kecamatan Limapuluh, Kabupaten Batubara, North Sumatera IDN Bah Lias Estate: Kecamatan Bandar, Kabupaten Simalungun, North Sumatera IDN Bah Bulian Estate: Kecamatan Raya Kahean, Kabupaten Simalungun, North Sumatera IDN Si Bulan Estate: Kecamatan Tebing Syahbandar, Kabupaten Serdang Bedagai, North Sumatera IDN Date of audit: 24/04/2014 COMMERCIAL- IN CONFIDENCE I The contents of this report must not be disclosed to a third party without the agreement of the SAI Global Client Doc ID: 3843 / Issue Date May 2014 SAI Global Limited Copyright ABN Page 1 of 189

2 Table of contents Page Executive Overview 4 Abbreviations Used SCOPE OF THE ASSESSMENT 1.1 Introduction Audit Objective Scope of Certification Palm Oil Mill Oil Palm Estate Location of Mill and Estates Description of Supply Base Date of Plantings Area of Plantation Approximate Tonnages Offered for Certification (CPO and PK) Other Certificates Held Organisational Information/Contact Person Time Bound Plan for Other Management Units Partial Certification Requirements Date of Issue of Certificate dan Date of Previous Assessment AUDIT PROCESS 2.1 Certification Body Audit Methodology Pre-audit Certification Audit Qualification of the Lead Auditor and Audit Team Members Stakeholder Consultation Date of Next Surveillance Visit AUDIT FINDINGS 3.1 Action taken on previous audit issues Claim and use of certification mark and or logo Description of audit findings RSPO Principle and Criteria, Indonesian National Interpretation Mill Supply Chain Requirements Supply Chain Certification Standard Supply Chain Certification System Recommendation Environmental and social risk for this scope of certification for 135 planning of the surveillance audit 3.6 Acknowledgement of Internal Responsibility and Formal Sign-off of 135 Assessment Findings Page List of Tables 1 Mill and Estates GPS Locations included in certification assessment 8 2 FFB Production of the supply base 16 3 Estate Age Profiles of Planted Palms 16 4 Land use description of Dolok, Bah Lias, Bah Bulian and Si Bulan 17 Estate in Estates and Area Planted Dolok, Bah Lias, Bah Bulian and Si Bulan Estate FFB 18 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 2 of 189

3 Production Trend Actual Production Figure Mill production of Certified Products (CPO and Kernel), actual 20 volume since date of last reporting period (2013) 9 Estimated of production of FFB, CPO and PK Certificates Held by Mill and Estates RSPO Certification Time Bound Plan List of internal and external stakeholder 28 List of Figures Page 1a-d2 Map of Mill and Estates Location 9-15 List of Appendices Page A Audit Record 136 B Previous nonconformities, corrective actions and status 140 C Nonconformities, Corrective Actions and Observations 147 Summary D Stakeholder s issues and comment 185 E Definition of, and action required with respect to audit findings 188 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 3 of 189

4 Executive Overview SAI Global has audited Dolok Mill PT. PP London Sumatera Indonesia Tbk. and its supply bases operations comprising one mill, four oil palm estates, support services and infrastructure. 17 Major Nonconformities were identified during this certification audit. Follow up audits were conducted on 24 th of June and 17 th of September 2014 to review the corrective action taken to the Major Nonconformities and objective evidences reviewed that Major Nonconformities could be closed out. At the conclusion of this audit, Dolok Mill PT. PP London Sumatera Indonesia Tbk. and its supply bases operation found complies with the requirements of the National Interpretation of RSPO Principles and Criteria for Sustainable Palm Oil Production, Republic of Indonesia, May 2008 and the RSPO Supply Chain Certification System, November 2011 and RSPO Supply Chain Certification Standard, Module D CPO Mill: Module D Segregation November Previously PT. PP London Sumatera Indonesia Tbk. Dolok Mill was certified to National Interpretation of RSPO Principles and Criteria for Sustainable Palm Oil Production, Republic of Indonesia, May 2008 and the RSPO Supply Chain Certification System, November 2011 and RSPO Supply Chain Certification Standard, Module D CPO Mill: Module D Segregation November 2011 by PT. TUV NORD Indonesia (Certificate # TNI RSPO , expiry date 29 th of April 2014). Last surveillance audit was performed on 19 th 20 th of September The report indicated that there were major and minor non-conformances and the report mentioned that all non-conformances have been corrected. The reason of moving to SAI Global was for refreshment and late report from the previous Certification Body. The recommendation from this audit is that certificate can proceed for PT. PP London Sumatera Indonesia Tbk. Dolok Mill as a producer of RSPO Certified Sustainable Palm Oil and Palm Kernel Segregation Model. Estimated tonnage of certified CPO produced Estimated tonnage of certified PK produced 48,527 MT 11,841 MT Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 4 of 189

5 Abbreviations Used AK3U AMDAL AME BHL BKM BLE BLH BLRS BOD BPN COD CPO CSR DLE DO EFB EMS EWS FFB GAPKI GPS Ha HCV HGU GHG HIPERKES HO IDN IPM ISCC ISO ISPO Jamsostek Kepmen KTU LA LD Lonsum LSU LTI MCU MSDS MT NCR NGO OER OHS OHSAS P2K3 Occupational Health and Safety Expert (Ahli K3 Umum) Environmental Impact Analysis (Analisis Dampak Lingkungan) Area Manager Engineering Daily worker (Buruh Harian Lepas) Log book of group leader activity (Buku Kegiatan Mandor) Bah Lias Estate Environmental Agency (Badan Lingkungan Hidup) Bah Lias Research Biological Oxygen Demand National Land Agency (Badan Pertanahan Nasional) Chemical Oxygen Demand Crude Palm Oil Corporate Social Responsibility Dolok Estate Delivery Order Empty fruit bunch Environmental Management System Early Warning System Fresh Fruit Bunch Indonesian Palm Oil Association (Gabungan Pengusaha Kelapa Sawit Indonesia) Global Positioning System Hectare High Conservation Value Land Use Title (Hak Guna Usaha) Green House Gases Industrial Hygienist Head Office Indonesia Integrated Pest Management International Sustainability Carbon Certification International Standards Organisation Indonesia on Sustainable Palm Oil Man Power Social Assurance (Jaminan Sosial Tenaga Kerja) Degree of Man Power Ministry (Keputusan Menteri Tenaga Kerja) Head of Administration (Kepala Tata Usaha) Land Application Lethal Dosage London Sumatera Leaf Sampling Unit Loss Time Incident Medical Check-Up Material Safety Data Sheet Metric Ton Non Conformance Report Non-Government Organisation Oil Extraction Rate Occupational Health and Safety Occupational Health and Safety Assurance Services OHS Committee Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 5 of 189

6 P&C Principle and Criteria PEL Environmental Evaluation Presentation (Penyajian Evaluasi Lingkungan) Permen/Permenaker Regulation of Man Power Ministry (Peraturan Menteri Tenaga Kerja) Permentan Regulation of Agricultural Ministry (Peraturan Menteri Pertanian) PK Palm Kernel PKB Joint Working Agreement (Perjanjian Kerja Bersama) PKWT Contracted worker (Pekerja Waktu Tertentu) POM Palm Oil Mill POME Palm Oil Mill Effluent PP Government Regulation (Peraturan Pemerintah) PPE Personal Protective Equipment PUK Caretaker Unit (Pengurus Unit Kerja) QC Quality Control R&D Research and Development RABQSA Quality Society of Australia RKH Daily Work Plan (Rencana Kerja Harian) RKL Environmental Management Plan (Rencana Pengelolaan Lingkungan) RPL Environmental Monitoring Plan (Rencana Pemantauan Lingkungan) RSPO Roundtable on Sustainable Palm Oil SCCS Supply Chain Certification System SG Segregation SIA Social Impact Assessment SIO Operator Lisence (Surai Ijin Operasi) SMK3 Occupational Health and Safety Management System (Sistem Manajemen Kesehatan dan Keselamatan Kerja) SPSI Indonesian Worker Union (Serikat Pekerja Seluruh Indonesia) SOP Standard Operational Procedure UKL Environmental Management Effort (Upaya Pengelolaan Lingkungan) UPL Environmental Monitoring Effort (Upaya Pemantauan Lingkungan) Walhi (Wahana Lingkungan Hidup Indonesia) WWF World Wild Fund WWTP Waste Water Treatment Plant Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 6 of 189

7 1.0 SCOPE OF THE ASSESSMENT 1.1 Introduction SAI Global conducted an audit of PT. PP London Sumatera Indonesia Tbk. Dolok Mill and Its Supply Base on 21/04/2014 to 24/04/2014 with Major Nonconformities identified. Follow up audit has been conducted on 24 June and 17 September 2014 for verification of corrective action taken by the organisation. The purpose of this audit report is to summarise the degree of compliance with the relevant criteria, as defined on the cover page of this report, based on the evidence obtained during the audit of your organisation. SAI Global audits are carried out within the requirements of SAI Global procedures which also reflected the requirements and guidance provided in the international standards relating to audit practice such as ISO/IEC 17021, ISO 19011, RSPO Certification System, relevant RSPO Supply Chain Certification System and other normative criteria. SAI Global Auditors are assigned to audits according to industry, standard or technical competencies appropriate to the organisation being audited. Details of such experience and competency are maintained in our records. The audit team is detailed in the attached audit record. In addition to the information contained in this audit report, SAI Global maintains files for each client. These files contain details of organisation size and personnel as well as evidence collected during preliminary and subsequent audit activities (Documentation Review and Scope) relevant to the application for initial and continuing certification of your organisation. Details of your primary contact persons and their contact details and site addresses are also maintained. Please take care to advise us of any change that may affect the application/certification or may assist us to keep your contact information up to date, as required by SAI Global Terms and Conditions. Please note that this report is subject to independent review and approval. Should changes to the outcomes of this report be necessary as a result of the review, a revised report will be issued and will supersede this report. 1.2 Audit Objective This is certification audit. The purpose of this audit was to determine compliance of your organisation s management system with the audit criteria (National Interpretation of RSPO Principles and Criteria for Sustainable Palm Oil Production, Republic of Indonesia, May 2008 and the RSPO Supply Chain Certification System, November 2011 and RSPO Supply Chain Certification Standard, Module D CPO Mill: Module D Segregation November 2011) and its effectiveness in achieving continual improvement and system objectives. It was also to verify the volume of certified and uncertified FFB entering the mill and volume sales of RSPO certified producers, and the implementation of any processing controls (for example, if segregation is used) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 7 of 189

8 1.3 Scope of certification The scope of certification is the CPO production from one (1) Palm Oil Mill and four (4) FFB supply base owned by PT. PP London Sumatera Indonesia Tbk Palm Oil Mill Dolok Mill PT. PP London Sumatera Indonesia Tbk. Location: Desa Perkebunan Dolok, Kecamatan Limapuluh, Kabupaten Batubara, North Sumatera IDN GPS Location: East 99 o North 3 o Mill capacity: 45 MT FFB/hour Oil Palm Estate 1. Dolok Estate PT. PP London Sumatera Indonesia Tbk. Location: Kecamatan Limapuluh, Kabupaten Batubara, North Sumatera IDN GPS Location: East 99 o North 3 o Bah Lias Estate PT. PP London Sumatera Indonesia Tbk. Location: Kecamatan Bandar, Kabupaten Simalungun, North Sumatera IDN GPS Location: East 99 o North 3 o Bah Bulian Estate PT. PP London Sumatera Indonesia Tbk. Location: GPS Location: East 99 o North 2 o Kecamatan Raya Kahean, Kabupaten Simalungun, North Sumatera IDN 4. Si Bulan Estate PT. PP London Sumatera Indonesia Tbk. Location: GPS Location: East 99 o North 3 o Location of mill and estates Kecamatan Tebing Syahbandar, Kabupaten Serdang Bedagai, North Sumatera IDN Table 1: Mill and Estates GPS Locations MILL AND ESTATE EASTING NORTHING Dolok Mill 99 o o Dolok Estate 99 o o Bah Lias Estate 99 o o Bah Bulian Estate 99 o o Si Bulan Estate 99 o o Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 8 of 189

9 Figure 1a Map of Mill and Estates Location Lima Puluh Note : DLE Dolok Estate. BLE Bah Lias Estate Source: Lonsum, April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 9 of 189

10 Figure 1b Map of Mill and Estates Location Serdang Note: BBE Bah Bulian Estate, SIE Si Bulan Estate Source: Lonsum, April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 10 of 189

11 Figure 1c Map of Dolok Estate Source: Lonsum, April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 11 of 189

12 Figure 1d Map of Dolok Estate Sei Bejangkar Division Source: Lonsum, April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 12 of 189

13 Figure 1e Map of Bah Lias Estate Source: Lonsum, April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 13 of 189

14 Figure 1f Map of Bah Bulian Estate Source: Lonsum, April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 14 of 189

15 Figure 1e Map of Si Bulan Estate Source: Lonsum, April 2014 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 15 of 189

16 1.5 Description of supply base The FFB sources are four (4) organisations owned by PT. PP London Sumatera Indonesia Tbk. and no FFB from the third party. The hectarage and FFB production of the plantation is shown on Table 2. Table 2: FFB Production of the supply base ESTATE PLANTED AREA (HA) FFB (TON/YEAR) Dolok Estate 2, ,235 Bah Lias Estate 3, ,503 Bah Bulian Estate 1, ,237 Si Bulan Estate ,134 Total 8, ,109 Source: Lonsum, March Date of plantings Year Dolok Estate Table 3: Estate Age Profiles of Planted Palms 2014 Bah Lias Estate Bah Bulian Estate Si Bulan Estate Total % of Planted Area *) *) *) 1, , *) *) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 16 of 189

17 Year Dolok Estate Bah Lias Estate Bah Bulian Estate Si Bulan Estate Total Audit Report % of Planted Area Mature 2, , , , Immature Total 2, , , , Source: Lonsum, November 2013 Note: *) replanting 1.7 Area of plantation The areas details for organisation owned estates are shown on Table 5. Review of estate boundary maps could be done. The organisation objections to send estate boundary maps due law of Republic of Indonesia #4/2001 mentioned that boundary maps was only organised by the organisation for their own interest and cannot disseminated. Table 4: Land use description of Dolok, Bah Lias, Bah Bulian and Si Bulan Estate in 2014 AREA DOLOK BAH LIAS HECTARES BAH BULIAN SI BULAN TOTAL Mature area 2, , , , Immature area Total area planted 2, , , ,204.5 Emplacement and Mill Rubber plantation Other area (enclave, water ponds, land with slope >30%) Total leased area 3, , , , , HCV Area (included in planted area Source: Lonsum, September 2014 Table 5: Estates and Area Planted 2014 ESTATE MATURE (HA) IMMATURE (HA) TOTAL (HA) DOLOK 2, , Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 17 of 189

18 BAH LIAS 3, , BAH BULIAN 1, , SI BULAN TOTAL ,204.5 Source: Lonsum, September Approximate tonnages offered for certification (CPO and PK) Approximate tonnages offered for certification is estimated based on the organisation last three years actual FFB production of Dolok, Bah Lias, Bah Bulian and Si Bulan Estate as well as last year CPO and PK, OER and KER of Dolok Mill. The OER and KER of each supply bases were estimated based on laboratory analysis. The projection of FFB production in 2014 taken into account that increasing of productivity from immature to mature trees more than decreasing of productivity because of replanting activity. The increasing of production which inline with age of plant from early mature to full mature was estimated around 11%. Table 6: FFB Production Trend Actual Production (MT) YEAR Dolok Estate Bah Lias Estate Bah Bulian Estate Si Bulan Estate Total , , , , , , , , , ,410, , , , , , Table 7: Actual Production Figure 2013 Supply Base FFB Processed (MT) CPO Production (MT) Acual production 2013 Dolok Estate* 57, , OER (%) PK Production (MT) 3, Bah Lias Estate* 76, , , Bah Bulian Estate* 26, , , Si Bulan Estate* 12, , Total 172, ,921 10,696 Estimated production 2014 Dolok Estate* 62,166 15,518 3,786 Bah Lias Estate* 86,770 21, ,285 Bah Bulian Estate* 31,282 7,809 1,905 KER (%) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 18 of 189

19 Si Bulan Estate* 14,188 3, Total 194,405 48,52 11,841 Source: Lonsum, November 2014 *Detail see Table 8 **Based on laboratory analysis The Gunung Malayu Mill processed FFB only from Dolok, Bah Lias, Bah Bulian and Si Bulan Estate therefore it is used RSPO Supply Chain Segregation Model Module D. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 19 of 189

20 Table 8: Actual Dolok Mill Production of CPO and PK derived from Dolok Estate, Bah Lias Estate, Bah Bulian Estate and Si Bulan Estate FFB in 2013* Month FFB Production (ton) Palm Oil (MT) PK (MT) Bah Bah Bah Bah Si Bah Bah Si Bulan Total Dolok Total Dolok Lias Bulian Lias Bulian Bulan Lias Bulian Dolok Si Bulan Total January 3,404 4,805 1, , , February 3,602 4,885 1, , , March 4,308 5,276 1, ,174 1, , April 3,778 5,382 2, , , May 3,223 5,375 2, , , June 5,927 8,697 2,989 1,287 18,898 1, , ,140 July 5,881 7,470 2,702 1,321 17,375 1,477 1, , ,060 August 5,302 6,732 2,465 1,279 15,445 1,273 1, , September 6,374 7,621 2,468 1,365 18,164 1,593 1, , ,108 October 5,297 7,119 2,368 1,175 15,944 1,309 1, , November 5,198 5,829 1,924 1,024 13,985 1,290 1, , December 4,704 7,340 2,755 1,120 16,002 1,143 1, , ,031 Total 57,000 76,528 26,756 12, ,736 14,163 19,016 6,648 3,094 42,921 3,529 4,738 1, ,696 Source: PT. Lonsum, November 2014 *Dolok, Bah Lias, Bah Bulian and Si Bulan Estate are the certified FFB sources Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 20 of 189

21 Table 9: Actual Dolok Mill Production of CPO and PK derived from Dolok Estate, Bah Lias Estate, Bah Bulian Estate and Si Bulan Estate FFB in 2014* FFB Production (ton) Palm Oil (MT) PK (MT) Month Bah Bah Si Bah Bah Si Bah Bah Si Dolok Total Dolok Total Dolok Lias Bulian Bulan Lias Bulian Bulan Lias Bulian Bulan Total January 3,490 5,224 1, , , , February 3,209 5,311 1, , , , March 4,832 5,899 2, ,020 1,182 1, , April 4,035 5,854 2, ,535 1,009 1, , May 4,715 5,845 2,665 1,205 14,429 1,179 1, , June 5,358 8,899 3,636 1,499 19,392 1,340 2, , ,183 July 5,058 8,742 3,092 1,511 18,403 1,264 2, , ,123 August 6,172 5,941 2,671 1,499 16,284 1,543 1, , September 6,270 10,317 3,520 1,419 21,527 1,568 2, , ,313 October 6,240 8,190 2,140 1,266 17,835 1,560 2, , ,088 November 6,619 8,339 2,190 1,126 18,274 1,655 2, , ,115 December 6,166 8,208 2,655 1,191 18,221 1,542 2, , ,111 Total 62,166 86,770 31,282 14, ,405 15,518 21,659 7,809 3,542 48,527 3,786 5,285 1, ,841 Source: PT. Lonsum, November 2014 *Dolok, Bah Lias, Bah Bulian and Si Bulan Estate are the certified FFB sources Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 21 of 189

22 Based on the above figures, the estimated of certified CPO and PK offered in 2014 for certification are: Estimated tonnage of certified CPO produced Estimated tonnage of certified PK produced 48,527 MT 11,841 MT 1.9 Other certificates held Table 10: Certificates Held by Mill and Estates MILL/ESTATE Dolok Mill, Dolok Estate, Bah Lias Estate, Bah Bulian Estate, Si Bulan Estate OTHER CERTIFICATION HELD OHSAS 18001:2007, certificate BA from Intertek, expired: 31 October 2014 SMK3, certificate 199/177/2011 from Sucofindo, expired 20 May 2014 RSPO Supply Chain Certification System, November 2011 and RSPO Supply Chain Certification Standard, Module D CPO Mill: Module D Segregation November 2011, certificate #TNI RSPO , expiry date 29 April 2014 Source: Lonsum, May Organizational information/contact person PT. PP London Sumatera Indonesia Tbk. Jl A. Yani No.2 Medan Phone : (+62-61) Fax : (+62-61) Contact person : Mr Muhammad Waras Head of Environmental and CSR Muhammad.Waras@londonsumatra.com 1.11 Time bound plan for other management units PT. PP London Sumatera Indonesia Tbk. is committed to RSPO certification of all its Management Units located in North Sumatera, South Sumatera and East Kalimantan. Time bound plan has been developed to achieve the RSPO certification for all its Management Units by There were some changes from the previous time bound plan due to several requirements of Management Units have not been ready (e.g. building of temporary storage of hazardous waste, permits have not been finished yet) and according to readiness of Unit Management. The time bound plan is realistic and challenging. The plan is detailed on Table 5. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 22 of 189

23 Table 11: RSPO Certification Time Bound Plan Name of Mill Gunung Bais Arta Kencana Belani Elok Sei Lakitan Terawas Indah Mill Address Musi Rawas, Sumatera Selatan Lahat, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Name of Supply Base Plantation Gunung Bais Arta Kencana Kencana Sari Belani Elok Bukit Hijau Batu Cemerlang Ketapat Bening Sei Kepayang Sei Lakitan Sei Gemang Estate Address Musi Rawas, Sumatera Selatan Lahat, Sumatera Selatan Lahat, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Rawas, Sumatera Selatan Musi Sei Punjung*) Banyuasin Bangun Musi Harjo*) Banyuasin Suka Bangun*) Musi Banyuasin Terawas Musi Indah**) Rawas, Proposed Time for Certificati on December 2011 December 2012 December 2013 December 2014 Revised Time Bound Plan December 2015 Remarks 2015 Audit in May Final audit 2015 Audit in May Audit in May 2015 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 23 of 189

24 Name of Mill Pahu Makmur Mill Address Selatan Kutai Barat, Kalimantan Timur Name of Supply Base Plantation Pahu Makmur Isuy Makmur Kedang Makmur*) Source: Lonsum, September 2014 Note: *) still development **) Terawang Estate only for seeding estate Estate Address Sumatera Selatan Kutai Barat, Kalimantan Timur Kutai Barat, Kalimantan Timur Kutai Barat, Kalimantan Timur Proposed Time for Certificati on December 2016 Revised Time Bound Plan Remarks 2015 Audit in November Partial Certification Requirements There was no evidence that uncertified management unit complied with partial certification requirements regarding no replacement of primary forest or any area identified as containing High Conservation Values (HCVs), land conflicts, labour disputes and legal non-compliance. Major non-conformance against partial certification requirements was issued (NCR ). Major Non-conformance NCR There was no evidence that uncertified management unit complied with partial certification requirements regarding no replacement of primary forest or any area identified as containing High Conservation Values (HCVs), land conflicts, labour disputes and legal noncompliance. Major Non-conformance NCR closed. The Environment and CS Staff of organisation conducted the internal audit and reviewing regarding no replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3, land conflict, labour disputes and legal non-compliance to all management units which have not been certified to ensure that partial certification requirements were fulfilled in July October Site visits were conducted by the organisation for ensuring compliance against partial certification requirements according to RSPO Certification System clause 4.2.4: Arta Kencana Estate on 21 st of July 2013 Kencana Sari Estate on 23 rd of July 2013 Pahu Makmur Estate on 10 th of September 2013 Isuy Makmur Estate on 10 th of September 2014 Riam Indah Estate on 22 nd of October 2013 Sei Gemang Estate on 23 rd of October 2013 Sei Lakitan on 25 th of October 2013 Sei Punjung on 24 th of October 2013 Gunung Bais Estate on 29 th of October 2013 Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 24 of 189

25 Based on the reviewing it was concluded that: There was no new planting since January 2010 so there was no replacement of primary forest or any area identified as containing High Conservation Values (HCVs) or required to maintain or enhance HCVs in accordance with RSPO criterion 7.3. There were no land conflict and labour disputes. There was no non-compliance with regulations Date of issue of certificate and date of previous assessment Date of issue of certificate will be the date on approval of this Assessment Report by the RSPO Secretariat. 2.1 Certification body 2.0 AUDIT PROCESS PT. SAI Global Indonesia Graha Iskandarsyah, 4 th floor Jl. Iskandarsyah Raya No. 66 C Kebayoran Baru, Jakarta 12160, Indonesia Phone : , Fax : Contact person : Ms Inge Triwulandari Technical Manager inge.triwulandari@saiglobal.com SAI Global is one of the world s leading business providers of independent assurance. SAI Global provides organisations around the world with information services and solutions for managing risk, achieving compliance and driving business improvement. We provide aggregated access services to Standards, Handbooks, Legislative and Property publications; we audit, certify and register your product, system or supply chain; we facilitate good governance and awareness of compliance, ethics and policy issues and provide training and improvement solutions to help individuals and organisations succeed. The SAI Global business is driven by two equally important client needs - the mandated need for organisations to conform to regulations, standards and legislation in all their locations, and the operational need for organisations to improve business processes and procedures as well as corporate culture. As we are a global company, we can meet these needs for any client - those operating within one country's borders and in one language or those operating across borders and in many languages. There are three business units/divisions within SAI Global namely the Information Services Division, the Compliance Division, and the Assurance Division. The Assurance Division helps organisations manage risk, achieve process or product certification and drive improvement by providing training, registration audits and supplier management programs that can improve business performance. We provide independent audits, assessments and certification of your products or business processes to ensure they comply with industry standards or customer specific requirements. We understand how compliance with those standards can improve the efficiency, Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 25 of 189

26 economy and profitability of your operation. With auditing and assessment staff located around the world, our clients include large global corporations as well as single site organisations. 2.2 Audit methodology Pre-audit SAI Global planned the stage 2 certification audit based on review of the data given during stage-1 ISPO audit including: stakeholder, land title, etc. on 26 th of November SAI Global has already communicated with RSPO Secretariat and ASI and it was confirmed that stage-1 is not mandatory under RSPO Certification System Certification audit The Certification Audit was performed on 21 st 24 th of April 2014 integrated with ISPO Peraturan Menteri Pertanian #19/Permentan/OT.140/3/2011. The audit programme was included in the body of report. The audit has to be done according to the requirement on section 4.2 of the RSPO Certification system document (2007; being approved by Executive Board on 2011). As described under 4.2.9, the level of sampling to take place during a certification shall include every mill and be based on a minimum sample (of sub management unit) of 0.8 y. Section nevertheless require that assessments should include but not limited to areas of potential environmental and social risk. There are four estates as supply bases of Dolok Mill, which are Dolok Estate, Bah Lias Estate, Bah Bulian Estate and Si Bulan Estate. Audit conducted in Dolok Mill and two supply bases (Dolok Estate and Bah Lias Estate) based on minimum sampling rule 0.8 y (y = number of estates). Based on result of stakeholder interview, it was informed that there were no issues regarding environmental and social in two other estates (Bah Bulian and Si Bulan Estate). The audit methodologies for collection of objective evidences are site inspection, documentation and record review and interview with staffs, workers, and other stakeholders. Objective evidences from documentation/record review in one area may also be cross checked with other objective evidences in other areas and with the evidence of implementation on site during the audit. Inputs from stakeholders via letter, , or other communication media were also considered for this certification audit. Audit plan is available in Appendix A of this report on page Qualification of the lead auditor and audit team member Ria Gloria Lead Auditor Ria Gloria graduated with Bachelor of Chemical Engineering from Bandung Institute of Technology in She has working experience as Environmental Consultant for many years. She has completed ISO (1995), ISO 9001 (2004), RSPO P&C (2009) lead auditor training courses, RSPO SCCS (2010) and ISPO (2012) lead auditor training courses. For the last 9 years she has been involved in quality (ISO 9001) and environmental (ISO 14001) management system audits for very broad industrial and in the palm oil sector since 2003 for several plantations and mills. She has received training for good agricultural practices including integrated pest management and Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 26 of 189

27 high conservation value ( ). Anwarsyah Harahap Audit Team Member Anwarsyah Harahap graduated with Bachelor of Natural Forest Resource Conservation from Bogor Agriculture Institute in He has working experience as biodiversity researcher at palm oil plantation in Since 2008 to 2013, he has working experiences in palm oil plantation on Sumatra as a team member of sustainable certification task force (such as: Biodiversity and HCV management, RSPO, ISCC, ISO and ISPO) and his last position was as a sustainable and Environment Officer. He has completed ISO 9001 (2013), ISO (2013), RSPO (2013) and ISPO (2013) lead auditor training courses. He was also as an OSH auditor accredited by Labour and Transmigration Ministry of Indonesian (SMK3 Auditor based on PP No.50/2012). Edy Widodo Audit Team Member Edy Widodo graduated with bachelor of the Faculty of Agriculture, Department of Agricultural Technology, University of Padjadjaran, Bandung. Earlier he worked as an Assistant Estates Manager in PT SMART Tbk. (1999 to 2005). He joined SAI Global in 2013 as a Lead Auditor for ISO 9001: He has working experiences in the industrial sector and audit Plantation, and also the processing industry and agricultural mechanization. He was also the ISPO auditor who has obtained a certificate from the ISPO Commission, Ministry of Agriculture of Indonesia, in February He has gotten a certificate of training Understanding ISO 14001: 2004 & Auditing ISO 14001: 2004 in He has followed RSPO P&C training (2013). Daniel Sitompul Audit Team Member Daniel Sitompul graduated with Bachelor of Chemical Engineering degree from Indonesia Institute of Technology in He has working experience as Quality, Environment and Safety Consultant for many years. He has completed ISO (2007), OHSAS (2010), Ahli K3 Umum (2007), ISO 9001 (2009), RSPO PC Training (2013), Auditor SMK3 (2013) dan ISPO Auditor Training (2013). He has also completed the training form government regarding to Safety Management System (SMK3), PROPER and AMDAL (environment). For the last 5 years he has been involved in quality (ISO 9001), Safety (OHSAS 18001) and environmental (ISO 14001) management system consultancy and audits for very broad industrial and in the palm oil sector since 2013 for several plantations and mills. 2.4 Stakeholder consultation Public notification was made on 3 rd of March 2014 and was published on RSPO website as well as SAI Global website. Stakeholder consultation was performed to internal and external stakeholders. Internal stakeholders included staffs and workers. External stakeholders were selected by considering that they have an interest in the organisation activities, directly border with organisation, area where the workers live. External stakeholders included NGO, government and civil societies. Letters were also sent to external stakeholders to invite for comment or individual / group discussion. Group and individual discussions with stakeholders (Table 12) were conducted during audit, to verify compliance against relevant criteria and indicator related to land status and conflict, environmental, social aspect and HCV. Surrounding village of estate and mill has been chosen to represent societies. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 27 of 189

28 For Bah Lias Estate, group discussion was conducted especial for surrounding stakeholder directly affected on estate and mill, i.e.head of village, community leader and local NGO. One on one interview was conducted with head of worker union, worker cooperative and representative worker (Sprayer, Foreman of sprayer, Harvester Division I, Foreman of harvester Division I, Nurse Family worker of Division II). It was conducted to verify compliance against relevant criteria and indicator related to infrastructure facility, labour, social aspect (discrimination and sexual harassment), environment and HCV. Interview was also conducted with Head of Worker Union and Head of worker cooperative. For Dolok Estate and Mill, group discussion was also conducted with Village head and local NGO Topan. Interview was also conducted with representative worker including Sprayer, Forman of Sprayer, Harvester and foreman of harvester Division I, Worker of Smart House Rumah Pintar (Rumpin), Nurse, Head of mill laboratory, weigh brigade worker and processes operator. Moreover, was also sent to National/International NGO to invite for comment to verify compliance against relevant criteria and indicator related to land status and conflict, environmental, social aspect and HCV. The result of stakeholder consultation was used to justify fulfilment of some indicators, e.g. criterion 2.2 indicator major 3, minor 1 and minor 2, criterion 2.3 indicator major 1, criterion 6.5 indicator minor 1, criterion 6.6 indicator minor 1, criterion 6.7 indicator minor 1, criterion 6.8 indicator minor 1, criterion 6.9 indicator minor 1, 2 and 3, criterion 6.10 indicator minor 1 and 2, criterion 6.11 indicator minor 1, etc. The result of these consultations was provided in Appendix D on page 183. Table 12: List of internal and external stakeholders STAKEHOLDERS Internal stakeholder SPSI and Worker cooperative head of Bah Lias and Dolok Representative of worker and nurse Bah Lias and Dolok Estate as well as Dolok Mill External Stakeholder Head of Village around Dolok Estate and Mill Head of Village around Bah Lias Estate and Community leader of Perdagangan Local NGO Topan Transmigration and Labour Department of Simalungun Plantation Department of Simalungun Local Legislator of Simalungun Transmigration and Labour METHOD OF CONSULTATION Individual discussion Group Discussion Individual discussion Group discussion Group discussion Individual discussion An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 28 of 189

29 Department of Batu Bara Plantation Department of Batu Bara Agricultural Department of Batu Bara District Head (Camat) of Lima Puluh District Head (Camat) of Bosar Maligas District Head (Camat) of Se Balai District Head (Camat) of Bandar District Police of Bandar Walhi-Wahana Lingkungan Hidup Indonesia of North Sumatera GAPKI AMAN (Aliansi Masyarakat Adat Nusantara) WWF Indonesia Sawit Watch sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent An invitation letter to comment was sent 2.5 Date of next surveillance visit The next surveillance visit will be 9 12 months from the Intial audit. 3.0 AUDIT FINDINGS 3.1 Action taken on previous audits findings Last surveillance audit was performed on 19 th 20 th of September 2013 by PT. TUV NORD Indonesia. The report indicated that there were major and minor non-conformances and the report mentioned that all non-conformances have been corrected. There were recurrences of the major and minor non-conformance during the audit major, major, major, minor, minor and minor. 3.2 Claim and use of certification mark and or logo CPO and PK were sold under Green Palm, however sales document indicated that CPO and PK were sold under RSPO scheme. (Refer to NCR ). The organisation did not register the transaction in etrace (Refer to NCR ). Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 29 of 189

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31 3.3 Description of audit findings RSPO Principle and Criteria, Indonesian National Interpretation PRINCIPLES 1: COMMITMENT TO TRANSPARENCY REF CRITERION AND INDICATORS Reference Department in 1.1 Oil palm growers and millers provide adequate information to other stakeholders on environmental, social and legal issues relevant to RSPO Criteria, in major Are there any records of information requests? appropriate languages & forms to allow for effective participation in decision making. Communication procedure (EMS- P05), date on 10 August 2009 SPO - 01 Logbook Record of information request and responses. Mill and Estate (Head of administration KTU) Requests information and their responses were determined in a documented procedure. Communication procedure was established and implemented by the organisation. Communication procedure describes the method to follow up the information request from stakeholder. All information requests from stakeholder were listed and recorded by Mill and Estate on logbook SPO 01. Most of letters from stakeholder are notification letters for attending events of stakeholder and also request for donation or assistance. Some of requests information from stakeholder such as: Letter from Coal and Mining Department of Simalungun #540/637/Distamben 2013 to Bah Lias Estate on 31 st of May 2013 about inspection and listing of artesial use. Letter from National Stats Body of Batubara #12195 to Dolok Mill on 17 th of July 2013, about special survey of commodity matrix (SIMAK) Letter from Forestry and Plantation Department of Simalungun No. 525/374 on 1 st of April 2014 to Dolok Estate about record of statistical data of local plantation. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 31 of 189

32 REF CRITERION AND INDICATORS Reference Department in major major Are there any records of responses to information requests? Does records of information requests from stakeholders, and the responses given, be kept for a period determined in the applicable regulations and taking into account their relative importance? SPO 01 Logbook Record of information request and responses. Procedure EMS- P05 Communication, 10 August 2009 Mill and Estate (Head of administration KTU) Mill and Estate (Head of administration KTU) Records of requests information from stakeholder were kept by Mill and Estate on logbook SPO-01 Record of requests information and responses. The requests from stakeholder were responded by the organization. Evidence of responses including minutes of report handover Several records of responses to requests information such as: Report of inspection and listing of artesial use to Coal and Mining Department of Simalungun at the field observation on 3 rd 5 th of June Plantation data matrix (SIMAK) 2013 to National Stats Body of Batubara on 17 th of July 2013 Record of local plantation stats data to Forestry and Plantation Department of Simalungun on 11 th of April Record of requests information and their responses were kept by the organization. Retention time for records was determined minimum 5 years. Guidance Growers and millers should respond constructively and promptly to request for information from stakeholders. See criterion 1.2 for requirements relating to publicly available documentation. See also criterion 6.2 relating to consultation. 1.2 Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes major Are management documents available and are publicly available? Note: Information request and responses shall include any relevant or required documentation, in accordance with applicable national laws, such as: Legal: Land titles/user rights (Site Permit (Izin Procedure EMS- P05 Communication, 10 August 2009 Mill and Estate (Head of administration KTU) Organisation documents are generally prepared by the organisation. List of management documents are publicly available. The coverage of request on information as stated in the procedure including: Land Legality, such as: Site Permit (IzinLokasi), Land Use Title (HGU), Plantation Operation Permit (IUP), Environment documents such as: Environmental and Environment Impacts Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 32 of 189

33 REF CRITERION AND INDICATORS Reference Department in Lokasi)), plantation operation permit (Ijin Usaha Perkebunan), land use title (Hak Guna Usaha) or other documentation relating to application for Land Use Title in accordance with relevant procedures. Environmental: Environmental and social impact assessment (AMDAL/UKL-UPL) and elated monitoring reports (RKL-RPL). Social: Documentation of social activities of social and community programs. Health and Safety Plan Continuous improvement plan major Are records of information requests from stakeholders, and the responses given, kept for a period determined in the applicable regulations and taking into account their relative importance? Procedure EMS- P05 Communication, 10 August 2009 SPO 01 Logbook Record of information request and responses. Mill and Estate (Head of administration KTU) Analysis document (AMDAL)/, environmental management and monitoring report (RKL and RPL implementation reports), environment policy, environment impact aspect analyses, hazardous waste permit, Social documents, including: Occupational Health and Safety Management Plan, OHS Policy, Corporate Social Responsibility (CSR), management program of OHS, environment and social impact management. Continuous Improvement Plan including minimize chemical use, The documented procedure was established; it mentioned the process, responsibilities and authorities in regards responding the request on information from the public. A documented procedure was established to respond the requests from interested parties. The form to record the respond and associated follow up on respond has been established. It was shown that the records have been well documented. The retention time for record is 5 years. Guidance Examples of commercially confidential information include financial data such as costs and income, and details relating to customers and/or suppliers. Data that affects personal privacy should also be confidential. Examples of information where disclosure could result in potential negative environmental or social outcomes include information on sites of rare species where disclosure could increase the risk of hunting or capture for trade, or sacred sites which a community wishes to maintain as private. Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 33 of 189

34 PRINCIPLES 2: COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS 2.1 There is compliance with all applicable local, national and ratified international laws and regulations major Is there evidence of compliance with laws and regulations, which concern the operation of oil palm plantations? Form EMS f-02a- Register of SPO regulation Form EMS IA-C6- Evaluation of Compliance with Laws and Regulations Ministry of manpower certificates and inspection results MSDS Hazardous waste manifest Result of environmental monitoring and measurement Memorandum internal of HR Director No.# 008/HRD/C- SAL/III/2013, on 13 March 2013 about provisions of salary increase 2013 and internal memo No. No.001/HRD/C- SAL/III/2014, on3 March 2014 about provisions of salary increase 2014 Employee pay list on Safety Officer in charge Environmental Officer Head of Administration Evidence of compliance with applicable local, national and ratified international laws and regulations of Dolok Mill and Estate and Bah Lias Estate has been provided, including: - valid permits: Waste water discharge permit, river water and ground water abstraction permits, hazardous waste storage permit, boiler and pressurised vessel permits, lifting equipment, personnel who conducted lifting equipment, electrical. - Provision of required infrastructure waste water treatment ponds, hazardous waste storage, and availability of MSDS. - environmental: Periodic environmental parameter monitoring (stationary emission, ambient emission and ambient noise, moving source emission, waste water discharge quality, and ground water quality), - System of plant cultivation, oil palm plantation, - list of flora and fauna protected. - Management of guard area. - Paramedic and company doctor, medical check-up, safety committee. - Minimum wage, labour law, occupational safety, employee social benefit. of compliance with laws and regulations was evaluated, and evaluation of compliance result indicated that compliance status was justified with reference to the objective evidence of compliance. Example: social security, training programs, (Major NCR closed) Doc ID: 3843 / Issue Date May, 2014 SAI Global Limited Copyright ABN Page 34 of 189