Unilever to resume buying CPO if Sinar Mas cleared

JAKARTA Wed Apr 7, 2010 12:04pm EDT

Aerial view of a palm oil plantation in Pelalawan, Indonesia's Riau province November 9, 2009. REUTERS/Beawiharta

Aerial view of a palm oil plantation in Pelalawan, Indonesia's Riau province November 9, 2009.

Credit: Reuters/Beawiharta

JAKARTA (Reuters) - Unilever, the world's top palm oil buyer, will resume palm oil purchases from Indonesia's PT SMART if independent auditors clear the firm over alleged forest destruction, a company spokesman said on Wednesday.

Unilever, which uses palm oil in such products as Dove soap and Ben & Jerry ice cream, canceled its annual 20 million pound ($32 million) contract with PT SMART, which is part of Sinar Mas, in December unless the group could provide proof that none of its plantations were contributing to the destruction of rain forests.

"We will resume buying palm oil from Sinar Mas if studies by independent auditors show that Greenpeace's allegation against Sinar Mas is false," said Sancoyo Antarikso, corporate secretary of PT Unilever Indonesia Tbk.

Greenpeace alleges that Sinar Mas, Indonesia's biggest palm oil producer and the second biggest in the world, has been responsible for widespread deforestation and peatland clearance, practices which release vast amounts of carbon dioxide.

Unilever could also resume buying palm oil from Sinar Mas, even if the audit supported Greenpeace's allegations, if Sinar Mas showed it was addressing the environmental complaints, Antarikso said.

Unilever consumes around 1.9 million tonnes of palm oil each year and has pledged to buy only from certified sustainable plantations from 2015, while around 90 percent of worldwide supply comes from Indonesia and neighboring Malaysia.

PT SMART and PT Unilever Indonesia agreed to appoint two independent auditors -- Netherland-based Control Union Certification (CUC) and British Standard institute -- early this month to investigate the environmental allegations.

The independent auditors were due to begin work on April 20 and complete their study by the end of June, Daud Dharsono, SMART's president director, said.

Other top palm oil buyer Nestle had also joined Unilever to stop buying palm oil from Sinar Mas after Greenpeace released a report alleging the planter cleared rainforests.

Agribusiness giant Cargill Inc has also recently threatened to remove Sinar Mas as a palm oil supplier over allegations of illegal logging.

Analysts said top palm oil buyers halting supply contracts with Sinar Mas and other planters in the future could limit plantation expansion as global food and fuel demand grows.

But Green campaigners and consumers have turned up the heat on multinationals buying palm oil, saying these companies' palm oil suppliers are responsible for deforestation and peatland clearance.

(Reporting by Yayat Supriatna; Writing by Fitri Wulandari; Editing by Ed Davies)

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