Plantations, poverty and power - Critical Information Collective

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43 Advance Agro, Thailand: Deforestation, debt and a murky corporate structure Advance Agro is Thailand’s biggest pulp and paper company. The company has two pulp mills with a total production capacity of 580,000 tons a year and three paper plants with a total capacity of 600,000 tons a year. Advance Agro was founded in 1989 by the Dumnernchanavit family. The company is part of the agribusiness Soon Hua Seng (SHS) Group, which was founded in the 1950s by members of the Dumnernchanavit family. Soon Hua Seng started growing eucalyptus on a commercial scale in the late 1980s. Advance Agro was listed on the Stock Exchange of Thailand in 1995. In 2006, Advance Agro’s profit amounted to 1.97 billion Baht. 182 In addition to pulp and paper, Advance Agro also generates a total of 108 MW of electricity, using wood waste and black liquor as fuel. 183 The company does not generate all its own energy and buys some electricity from a coal-fired power station. 184 The company exports 60 per cent of its paper to Hong Kong, China, Australia, and Europe. 185 In 2003, Advance Agro used 50 per cent of its pulp to produce paper. Five per cent was sold in Thailand and the remainder exported to Australia, China, Korea, and Malaysia among others. 186 The company claims not to have any impact on native forests in Thailand, conveniently forgetting that in 1990 company employees were caught red-handed clearing forest to make way for eucalyptus plantations. 187 Advance Agro’s plantations have been one factor leading to the deforestation of large areas of eastern Thailand. Other factors include road building (partly built during the war in Indochina to link bases for US troops with the port at Chon Buri and also to access Cambodia’s forests), and promotion of large-scale industrial agriculture by the government with support from the World Bank. One of the beneficiaries of these policies was Soon Hua Seng, Advance Agro’s parent company. 188 When Advance Agro’s subsidiary Agro Lines started establishing its eucalyptus plantations, villagers found they could no longer grow rice in neighbouring fields. The company bought villagers’ farmland in Prachinburi to convert the land to plantations. Allegations of intimidation of villagers surrounded the 182 “Advance Agro Pulbic Company Limited”, Stock Exchange of Thailand, website accessed 6 December 2007. http://www.set.or.th/set/companyinfo.dotype=profile&symbol=AA&language=en&country=US 183 “Opinions of Independent Financial Advisor for the delisting of AA”, 30 November 2007. http://www.set.or.th/set/newsdetails.dofilename=dat%2Fnews%2F200712%2F07043448.e07++++++++++++++++++&h eadline=Opinions+of+IFA+for+the+delisting+of++AA&type=H&symbol=AA&time=1196925840000&language=&count ry= 184 “Environmental Benefits of Double A Paper“, Access Economics, May 2007. http://www.accesseconomics.com.au/publicationsreports/showreport.phpid=125 185 “Thailand’s Advance Agro rating raised to ‘B-’ after completion of debt restructuring”, Thai Press Reports, 10 June 2004. 186 “TRIS rating assings ‘BBB’ rating to ‘Advance Agro’ with ‘stable’ outlook”, Thai Press Reports, 20 October 2004. 187 Keith Barney (2005) “At the Supply Edge: Thailand’s Forest Policies, Plantation Sector, and Commodity Export Links With China“, Forest Trends, Center for International Forestry Research, The York Center for Asian Research, pages 1-2. http://www.forest-trends.org/documents/publications/Thailand%20Report%20New.pdf 188 Chris Lang (2003) “Thailand: Eucalyptus, encroachment, deforestation and pollution linked to pulp and paper company”, World Rainforest Movement Bulletin no 70, May 2003. http://chrislang.org/2003/05/10/thailandeucalyptus-encroachment-deforestation-and-pollution-linked-to-pulp-and-paper-company/
44 company’s plantations in eastern Thailand throughout the 1990s. 189 Canadian academic Keith Barney notes that “Thai NGOs have organized in opposition to the land displacement resulting from eucalyptus farming in eastern Thailand associated with the mill”. 190 Villagers living near Advance Agro’s pulp mill complain of ash from factory chimneys being deposited in their gardens. Some villagers have developed itchy skin and the pulp mill often smells. In August 2000, black, stinking water from piles of wood and charcoal in Advance Agro’s factory compound leaked into a neighbouring canal killing a large number of fish. The cause was a collapsed dyke inside the factory compound. 191 The company routinely pours its waste water from pulp mill between the rows of eucalyptus trees. The water is filthy and green and lies in channels in the stony infertile soil. 192 In 2007, the company announced that it would be delisting from the Stock Exchange of Thailand and that Yothin Dumnernchanavit would buy up all the shares in the company. 193 Having bought the company, Yothin intends to restructure it, at which point he may list the company once again on the SET or any other stock exchange. 194 Before the delisting, the four biggest shareholders in Advance Agro were all banks: UBS AG Singapore (21%), Citibank Nominees Singapore (10%), BNP Paribas Hong Kong (7%) and Deutsche Bank Singapore (6%). 195 The announcement of the delisting led to a drop in Advance Agro’s credit rating. Standard & Poor’s lowered the company’s long term credit rating, saying that AA’s liquidity position is weak and its 2007 financial performance has been below expectations. 196 The drop in credit rating could perhaps have something to do with Yothin’s record. Yothin is the eldest son of Kitti Dumnernchanavit and majority shareholder in Soon Hua Seng and Advance Agro. In August 2003, Yothin was forced to resign as managing director of Advance Agro after he failed to settle a 99 million baht debt guarantee with Bangkok Bank. 197 The Central Bankruptcy Court ordered the 189 Keith Barney (2005) “At the Supply Edge: Thailand’s Forest Policies, Plantation Sector, and Commodity Export Links With China“, Forest Trends, Center for International Forestry Research, The York Center for Asian Research, page 2. http://www.forest-trends.org/documents/publications/Thailand%20Report%20New.pdf 190 Keith Barney (2005) “At the Supply Edge: Thailand’s Forest Policies, Plantation Sector, and Commodity Export Links With China“, Forest Trends, Center for International Forestry Research, The York Center for Asian Research, page 30. http://www.forest-trends.org/documents/publications/Thailand%20Report%20New.pdf 191 “Power plant sparks protest: Villagers suffer from lignite dust pollution”, Bangkok Post, 9 August 2000. 192 Chris Lang (2003) “Thailand: Eucalyptus, encroachment, deforestation and pollution linked to pulp and paper company”, World Rainforest Movement Bulletin no 70, May 2003. http://chrislang.org/2003/05/10/thailandeucalyptus-encroachment-deforestation-and-pollution-linked-to-pulp-and-paper-company/ 193 “Opinions of Independent Financial Advisor for the delisting of AA”, 30 November 2007. http://www.set.or.th/set/newsdetails.dofilename=dat%2Fnews%2F200712%2F07043448.e07++++++++++++++++++&h eadline=Opinions+of+IFA+for+the+delisting+of++AA&type=H&symbol=AA&time=1196925840000&language=&count ry= 194 “Opinions of Independent Financial Advisor for the delisting of AA”, 30 November 2007. http://www.set.or.th/set/newsdetails.dofilename=dat%2Fnews%2F200712%2F07043448.e07++++++++++++++++++&h eadline=Opinions+of+IFA+for+the+delisting+of++AA&type=H&symbol=AA&time=1196925840000&language=&count ry= 195 “Advance Agro Pulbic Company Limited”, Stock Exchange of Thailand, website accessed 6 December 2007. http://www.set.or.th/set/companyinfo.dotype=profile&symbol=AA&language=en&country=US 196 “Advance Agro ratings placed on negative watch on restructuring plans – S&P”, CNNMoney.com, 12 November 2007. http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-20903603.htm 197 Somluck Srimalee (2003) “Soon Hua Seng’s debt plan on hold”, The Nation (Thailand), 22 August 2003.
Page 2 and 3: 1 Plantations, poverty and power: E
Page 4 and 5: 3 CONTENTS Introduction 1. Plantati
Page 6 and 7: 5 New investors have emerged recent
Page 8 and 9: 7 1. Plantations do not plant thems
Page 10 and 11: 9 plantations established on grassl
Page 12 and 13: 11 Nations Food and Agriculture Org
Page 14 and 15: 13 Another reason for the move to t
Page 16 and 17: 15 In his book, “Khor Jor Kor, Fo
Page 18 and 19: 17 Between 1991 and 2006, the numbe
Page 20 and 21: 19 are asking for”, notes WWF. 60
Page 22 and 23: 21 consume fewer goods. Less advert
Page 24 and 25: 23 credit crunch, unstable oil pric
Page 26 and 27: 25 Investment in plantations in the
Page 28 and 29: 27 possible price. Subsidies, linke
Page 30 and 31: 29 2. The anatomy of five pulp proj
Page 32 and 33: 31 However, while the Bank confirme
Page 34 and 35: 33 make way for its tree plantation
Page 36 and 37: 35 In April 2004, about 2,000 famil
Page 38 and 39: 37 Sappi, Swaziland: 50 years of in
Page 40 and 41: 39 after an assessment by the Soil
Page 42 and 43: 41 impact of the plantations on wat
Page 46 and 47: 45 confiscation and liquidation of
Page 48 and 49: 47 management was facing a bankrupt
Page 50 and 51: 49 Indah Kiat, Asia Pulp and Paper,
Page 52 and 53: 51 company owners want profits to b
Page 54 and 55: 53 • US$4.5 billion owed by APP i
Page 56 and 57: 55 explained that “association wi
Page 58 and 59: 57 Indah Kiat faces a series of lan
Page 60 and 61: 59 logging. While the investigation
Page 62 and 63: 61 experimental areas and not from
Page 64 and 65: 63 Staples and Office Depot in the
Page 66 and 67: 65 “the exhaustive studies have c
Page 68 and 69: 67 CEDHA has also filed complaints
Page 70 and 71: 69 of converting grasslands to indu
Page 72 and 73: 71 3. Pulp Inc. Profiles of seven p
Page 74 and 75: 73 Thailand, a power plant for a Ne
Page 76 and 77: 75 Management’s experts the possi
Page 78 and 79: 77 A year after Aracruz’s third p
Page 80 and 81: 79 In January 2003, Pöyry announce
Page 82 and 83: 81 Bank in the early 1990s. Groome
Page 84 and 85: 83 Pöyry’s role in the Baikal Pu
Page 86 and 87: 85 Under carbon financing, Pöyry o
Page 88 and 89: 87 Pöyry is working on second gene
Page 90 and 91: 89 The Confederation of European Pa
Page 92 and 93: 91 CEPI Eurokraft states that “it
Page 94 and 95:
93 sectors need to reduce by 21% co
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95 The ADB’s report notes that th
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97 Nepal In Nepal, the target area
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99 loan for the second plantations
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101 International Finance Corporati
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103 •In December 2000, IFC approv
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105 firm’s activities. After his
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107 safeguards are in practice.
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109 Bank projects are approved by a
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111 •€80 million to Portucel to
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113 The Food and Agriculture Organi
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115 Nevertheless, Poore and Fries n
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117 failure to define industrial tr
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119 FAO’s guidelines recommend th
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121 Rosengren did not reply to my e
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123 Forest Stewardship Council: Mis
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125 body that rubber stamps operati
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127 Criterion 1.6, for example, sta
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129 fast wood plantations have take
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131 Principle 10.8 should prevent t
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133 By April 2004, FSC had, at last
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135 plantations, because it creates
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137 integrated set of common Princi
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139 for clearing areas of Atlantic
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141 Colombia were certified by SGS.
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143 The dissociation became necessa
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145 4. Future planned pulp mills As
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147 Planned pulp projects: 698 Comp
Page 150 and 151:
149 UPM and Sveza Group Vologda Rus
Page 152:
151 paper industry along ecological
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