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25th September 2020

United Malacca Berhad (“UMB” Or The “Company”) Response To Concerns On Environmental Issues Raised By Non-Governmental Organisations (NGOs) Regarding The Company’s Investment In Sulawesi, Indonesia

UNITED MALACCA BERHAD

Type

Announcement

Subject

OTHERS

Description

UNITED MALACCA BERHAD (“UMB” OR THE “COMPANY”)

RESPONSE TO CONCERNS ON ENVIRONMENTAL ISSUES RAISED BY NON-GOVERNMENTAL ORGANISATIONS (NGOs) REGARDING THE COMPANY’S INVESTMENT IN SULAWESI, INDONESIA

The Board of Directors wishes to respond to environmental issues raised by non-governmental organisations (NGOs) relating to the company’s effective 60% stake in the joint-venture PT Wana Rindang Lestari (WRL) operations in Sulawesi.

 

Information on WRL

 

WRL, a private limited liability company incorporated in Indonesia, has obtained a business licence “Izin Usaha Pemanfaatan Hasil Hutan Kayu Pada Hutan Tanaman Industri” over land area measuring approximately 59,920 hectares in the Regencies of Tojo Una-Una and Morowali, Province of Central Sulawesi, Indonesia (“WRL Land”) from the Minister of Forestry, Indonesia in June 2014.

 

In August 2018, UMB completed the acquisition of a 60% effective equity stake in WRL for a total consideration of USD 7.2 million, with the remaining 40% equity held by PT Sinar Kemilau Cemerlang. This acquisition was part of the Board’s long-term plan to diversify its crops mix into the planting of cash crop such as stevia, coconut, cocoa and coffee to widen UMB’s earnings base beyond a single commodity, i.e. oil palm. UMB started land clearing activities on WRL Land in 2019.

 

Concerns

 

As a concerned and responsible plantation company, UMB is committed to complying with sustainable environmental practices. UMB had conducted an assessement on the soil and terrain. Additionally, an environmental assessment report was completed and approved by the authorities. To provide additional assurance to all stakeholders, UMB’s Board will look into the additional environmental concerns raised.

 

UMB’s immediate Response

 

UMB has decided to stop work in Sulawesi until environmental concerns raised by NGOs are addressed. Throughout this process, UMB will engage with the Joint Venture Partner, PT Sinar Kemilau Cemerlang to discuss the next course of action.

 

At this juncture, UMB is unable to ascertain the financial and operational impact, if any, of its JV in WRL.

 

This announcement is dated 25 September 2020.