Michelin to fund 'eco' NR JV

PARIS (May 20, 2015) — Michelin Group has formed a joint venture in Indonesia to cultivate and process natural rubber using “natural, eco-friendly” sustainable farming procedures that will involve reforestation oversight by the Worldwide Fund for Nature (WWF).

Michelin's joint venture partner is Barito Pacific Group, a Jakarta, Indonesia-based firm engaged in the forestry, petrochemicals, property and plantation industry sectors.

Barito Pacific is the majority owner of the as-yet unnamed venture with a 53-percent ownership stake. Michelin will contribute a capital investment of $55 million to the venture, whose mission involves the reforestation of three concessions, representing more than 217,000 acres of land, which the partners said is “ravaged by uncontrolled deforestation.”

On half of these areas, situated respectively in the provinces of Jambi (Sumatra) and North-East Kalimantan-Timur (Borneo), Michelin said the venture will plant rubber trees that eventually are expected to yield about 80,000 metric tons of rubber year.

The other half of these properties will be earmarked for re-creating a natural environment and community crops. This project ultimately will create more than 16,000 direct or indirect long-term and stable local jobs, Michelin said.

In the framework of promoting practices of sustainable natural rubber production, Michelin said it has chosen to enter into long-term cooperation with the WWF, a non-governmental organization.

This four-year partnership, signed on April 24 by Jean-Dominique Senard, CEO of the Michelin Group, and Marco Lambertini, President of WWF International, comprises three facets:

• A global partnership involving the promotion of best practices in rubber tree plantation and the extraction and transformation of latex, among the international bodies representing the rubber industry.

• A partnership with WWF France and Panda WWF Indonesia for researching and establishing the best possible solutions in the plantation zones, with the WWF having presence on concessions bordering those of Michelin/Barito in Jambi.

  To better address the CSR aspects of the project, Michelin and Barito Pacific Group have put in place a specific governance body, which will include WWF.  The local coordination between Michelin, Barito and the WWF also aims to protect the Tigapuluh National Park and Limau Protected Forest, which are today under threat of deforestation.

• A targeted partnership with the WWF France Foundation involving protection, conservation and restoration operations for the fauna and flora within and around the concession zones.

Michelin and Barito Pacific already are joint venture partners in a synthetic rubber venture, P.T. Petrokimia Butadiene Indonesia (PBI).

Michelin and PBI's parent, P.T. Chandra Asri Petrochemical Tbk., agreed in 2013 to invest $435 million together through 2017 to build an SR plant in Indonesia to support Michelin's growing operations in Asia. Barito Pacific is the ultimate parent company of Chandra Asri.

Barito Pacific Group started as a timber company in 1970s, but it phased out of this by the mid-2000s and diversified into petrochemicals, geothermal, power, oil and gas, mining, real estates and plantations.

The WWF is one of the primary independent organizations for protection of the environment worldwide, with a network of offices in more than 100 countries and 5 million members.