Indonesia's Sinar Mas defends palm oil expansion

JAKARTA (Reuters) - Sinar Mas Group, one of Indonesia's top palm oil growers, denied on Friday accusations that its activities were damaging the environment and said it would stick to plans to expand its plantations.

Greenpeace activists have targeted Sinar Mas in a recent campaign for contributing to deforestation in Indonesia, which is blamed as a key source greenhouse gas emissions in the Southeast Asian country.

"We should have been arrested if we had ever been involved in deforestation," Gandi Sulistiyanto, a managing director of Sinar Mas Group, told Reuters.

He said the company only opened up new plantations in degraded land that had been farmed on or previously logged and not rainforest.

Sinar Mas Group owns publicly-listed PT Sinar Mas Agro Resources Tbk (SMART), which runs its palm oil business, and Asia Pulp & Paper (APP), which operates the pulp and paper business.

Bustar Maitar, Greenpeace Southeast Asia forest campaigner, accused Sinar Mas of destroying forest areas.

"We are facing the greatest threat to humanity -- climate chaos, yet still companies like Sinar Mas can continue to destroy forests and peatlands, rather than protecting them for future generations," Maitar said in a statement.

As of the end of September, SMART managed 127,124 hectares (314,100 acres) of planted oil palm, according to the company.

It produced 410,314 metric tons of crude palm oil in January-September last year, against 509,095 metric tons in all of 2007.

The group has earmarked a $100 million palm expansion this year and is not planning to pull back the plan.

"We are still a growing company. We (Indonesia) are still competing with Malaysia to become the world's top producer of palm oil. So we must keep planting," Sulistiyanto said.

He said the current financial crisis may slow down the expansion but would not stop the firm from planting in new areas.

According to Greenpeace, Sinar Mas has 200,000 hectares of unplanted concessions in rainforest in Indonesia and plans to acquire an additional 1.1 million hectares, mainly in Papua.

Sulistiyanto said the firm was currently focused on managing the 11,000 hectares that it has planted with oil palm in the past 14 years in Papua.

"Everybody is eyeing Papua because of its huge land but we haven't got any more concessions there," he said.

Indonesia, the world's top producer of palm oil -- used in a wide range of products, from soap to biodiesel -- is expected to produce 20.25 million metric tons of palm oil in 2009, up from 18.8 million in 2008, the industry association has estimated.

Annette Cotter, campaign manager for the forests campaign in Greenpeace Southeast Asia, has urged Indonesia palm growers to squeeze far higher yields from existing plantations rather than open up more land.

Indonesia yields only about 2 tons per hectare from its plantations, or just a third of the 6 to 7 tons in countries such as Malaysia with better estate management practices.