PT MUTUAGUNG LESTARI

ASSESSMENT REPORT Roundtable on Sustainable Palm Oil Certification

[ ]Stage 1

[√]Stage2 [ ]Surveillance

Plantation Management/Owner Plantation Name Location

: PT ADEI PLANTATION - KUALA LUMPUR KEPONG Bhd. : Mandau POM and Mandau Estate : Sub District of PINGGIR, District of BENGKALIS, Province of RIAU, INDONESIA

Certificate Code Date of certificate issue Date of expiry of certificate

: : : Report Finalization Date

Assessment

Assessment Date

ST1

19 – 23 Maret 2012

2 April 2012

ST2

23 – 28 April 2012

31 Mei 2012

MUTU-RSPO/021 PT. Mutuagung Lestari Auditor Nanang Mualib (Lead Auditor) Deni A. Novendi, Muardi Marwas, Marsudi Eko Santoso Nanang Mualib (Lead Auditor) Faruk A. Nasir, Marsudi Eko Santoso

Checked by

Approved by

Taufik Margani

Tony Arifiarachman

Taufik Margani

Tony Arifiarachman

Submitted to RSPO on:

Approved by RSPO on:

Approved by Certification Body on:

11/07/2012

15/10/2012

18/10/2012

Mutuagung Lestari • Raya Bogor Km 33,5 Number 19 • Cimanggis • Depok 16953• Indonesia Telephone (+62) (21) 8740202 • Fax (+62) (21) 87740745/6 Email : [email protected] ● www.mutucertification.com MUTU Certification • Approved by RSPO Secretariat on June 2008

PT MUTUAGUNG LESTARI ASSESSMENT REPORT TABLE OF CONTENT FIGURE Figure 1. Location Map of PT Adei Plantation Figure 2. Operational Map of Adei Plantation

1 2

1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9

SCOPE of the CERTIFICATION ASSESSMENT National Interpretation Used Organization Information Type of Assessment Location of Plantations, Mill and Area Statement Description of Supply Base Dates of Plantings and Cycles Approximate Tonnage Certified Other Certifications Time Bound Plan for Other Management Units

3 3 3 3 5 5 6 7 7

2.0 2.1 2.2 2.3 2.4 2.5

ASSESSMENT PROCESS Certification Body Lead Assessor and Assessment Team Assessment Methodology, Assessment Process and Locations of Assessment Stakeholder Consultation and List of Stakeholder Contacted Determine Next Visit

8 8 9 13 13

3.0 3.1 3.2 3.3 3.4 3.5 3.6

ASSESSMENT RESULT Summary of Assessment Report of the RSPO Certification Summary of Assessment Report of Supply Chain Requirement Conformity Checklist of Certificate and Logo Use (Only apply for Surveillance Assessment Report) Summary of Time Bound Plan Verification of the RSPO Certification Identification of Findings, Corrective Actions, Observations, Opportunity for Improvement and Noteworthy Positive Components Summary of Arising Issues from Public, Management and Auditor Responses

4.0 4.1

CERTIFIED ORGANIZATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY Formal Sign-off of Assessment Findings

65

1. 2. 3. 4. 5

APPENDICES Peer Review Report Result of RSPO Committee - RSPO Certification List of Stakeholder Contacted in the RSPO Certification Process Assessment Plan Glossary

66 67 68 70 73

SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

14 45 48 49 50 60

i

PT MUTUAGUNG LESTARI ASSESSMENT REPORT Figure 1. Location Map of PT Adei Plantation

Mandau Complex

The distance between Pekanbau- Mandau Complex is about 200 km along Pekanbaru-Duri Highway

SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

Page 1

PT MUTUAGUNG LESTARI ASSESSMENT REPORT Figure 2. Operational Map of PT Adei Plantation

Mandau POM

SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

Page 2

PT MUTUAGUNG LESTARI ASSESSMENT REPORT 1.0

SCOPE OF THE CERTIFICATION ASSESSMENT

1.1

National Interpretation Used

1.2 1.2.1 1.2.2 1.2.3

Organization Information Company name Contact person Company address

1.2.4 1.2.5 1.2.6 1.2.7 1.2.8 1.2.9 1.2.10 1.2.11 1.2.12 1.3 1.3.1 1.3.2 1.3.3 1.3.4

National Interpretation, RSPO Principles and Criteria (P&C) for Sustainable Palm Oil Production, Republic of Indonesia - RSPO INA-NIWG, May 2008 and Supply Chain Requirement for CPO Mill, November 2011.

Kuala Lumpur Kepong Sdn. Berhad Tan Kei Yoong Kompleks Pertokoan Taman Anggrek Blok B2 – B5 Jl. Tuanku Tambusai,Pekanbaru, Riau Telephone 0761 – 571885 Fax 0761 – 571862 E-mail [email protected] Web page address www.klk.com.my Company status Private Management Representative who completed the application for Tan Kei Yoong certification Registered as RSPO member October 8, 2004 Registration No. 1-0014-04-000-00 1.529 peoples Number of employee 38 Contractor Type of Assessment Scope of Assessment Type of certificate Company names listed in the certificate

Palm Oil Mill and Estate Single PT ADEI Plantation 2 Mills (Mandau Palm Oil Mill and Mandau Kernel Crushing Plant) and 7 estates which are: KMS 1, KMS 2, KMS 3 and KMS 4 (Kebun Mandau Selatan); KMU 5, KMU 6 and KMU 7 (Kebun Mandau Utara).

Number of management unit

1.4 1.4.1

Locations of Plantations, Mill and Area Statement Location of estate Name of Estate(s)

Location

Kebun Mandau Selatan (KMS) KMS1 District of Bengkalis, Riau Province. KMS2 District of Bengkalis, Riau Province. KMS3 District of Bengkalis, Riau Province. KMS4 District of Bengkalis, Riau Province. SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

GPS Latitude (N)

1º4’39” - 1º9’6” 1º4’39” - 1º9’6” 1º3’12 - 1º6’41” 1º3’18” - 1º6’44”

Longitude (E)

101º16’55” -101º20’7” 101º16’55 - 101º20’7” 101º18’2” - 101º21’42” 101º22’8” -101º25’6” Page 3

PT MUTUAGUNG LESTARI ASSESSMENT REPORT Kebun Mandau Utara (KMU) KMU5 District of Bengkalis, Riau Province. KMU6 District of Bengkalis, Riau Province. KMU7 District of Bengkalis, Riau Province. 1.4.2

1.4.7

101º17’10” - 101º19’25” 101º15’39” -101º19’2” 101º15’35” -101º19’0”

Location of Mill Name of Mill

1.4.3 1.4.4 1.4.5 1.4.6

1º8’40” - 1º11’9” 1º11’9” - 1º12’47” 1º11’57” - 1º13’38”

Location

Mandau POM

District of Bengkalis, Riau Province.

Mandau KCP

District of Bengkalis, Riau Province.

Maps Country Region Tenure Private State Community

Area Statement Total area Mature area Immature area Palm Oil Mill Rubber Factory Infrastructure low land/swamp Palm Oil Mill Water Pond Nursery River/riparian zone Swakabudaya/Inclave (Desa jihad) Occupation by PT Caltex Land Dispute (unplantable area) Rubber plantation HCV Area* *) Based on the document of HCV Identification

SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

GPS Latitude (N)

Longitude (E)

1º4’56”

101º19’59”

1º4’56”

101º19’59”

( Figure 1 & Figure 2 ) Indonesia Asia Tenggara

14,900 Ha (HGU Numbers: 12/HGU/1990)

14,900 6,750 813 38 20 281 404 44 16 78 200 30 2,544 3,611 112,41

Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT 1.5 1.5.1

Description of Supply Base Estate(s) Total Area (Ha)

Name of Estate(s)

FFB (tonnes/year)

%

7,553.49

13.91

7,553.49

100

KMS2

3,334

664

8,723.43

13.13

8,723.43

100

KMS3

2,076

1,984

58,162.14

29.31

58,162.14

100

KMS4

2,395

2,183

60,773.83

27.83

60,773.83

100

KMU5

1,579

430

11,246.13

26.15

11,246.13

100

KMU6

1,478

668

10,610.85

15.88

10,610.85

100

KMU7

1,950

1,091

28,546.2

26.16

28,546.2

100

7,563

185,616.1

24.54

185,616.1

100

102 14,901

*Source: Data of Estate Production on 2011 Smallholder(s) and others Member(s)

Independent Smallholder

Location

Total Area (Ha)

FFB (tonnes/year)

800

12,602.03

Village of Penaso, Sub District of Pinggir District of Bengkalis *Source: Data of FFB Acceptance on 2011 Description of Mill

Supplied to Mill FFB % (tonnes/year)

-

Capacity (tonnes/ hour)

Name of Mill

1.6 1.6.1

Supplied to Mill

543

Smallholder(s) Scheme

1.5.4

Yield (tonnes/ha/year)

1,987

Total

1.5.3

FFB (tonnes/year)

KMS1

POM, KCP and Rubber Factory

1.5.2

Planted Area (Ha)

FFB Processed (tonnes/ year)

CPO Out put (tonnes)

Extraction (%)

Palm Kernel Out put (tonnes)

Extraction (%)

Mandau Palm Oil 60 198,218 46,457 23.44 10,038 4.73 Mill Mandau Kernel 800 218,222 Crushing Plant (tonnes/day) *Source: Data of Mandau POM and Mandau KCP Production on 2011 Product categories FFB, CPO, PK and PKO Dates of Plantings and Cycles Age profile of planted palms* Planting Year

12,602.03

PKO Out put (tonnes)

Extraction (%)

-

-

95,690

43.85

1998

Hectarage (Ha) 2,350

Age (year) 14

1999

886

13

SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

100

Page 5

PT MUTUAGUNG LESTARI ASSESSMENT REPORT 2000

387

12

2001

37

11

2002

57

10

2003

225

9

2004

1,260

8

2005

1,151

7

2006

367

6

2007

30

5

2010

315

2

2011

380

1

2012

118

0

Total

7,563

1.6.2 1.6.3

New Development area after November 2005 Planting Cycle

1.7 1.7.1

Approximate Tonnage Certified Past Annual Claim Certified Product FFB Production CPO Production Palm Kernel (PK) Production Palm Kernel Oil (PKO) Production

1.7.2

1,210 (1st Cycle) 26

-

Ha Years

Tonnes/year Tonnes/year Tonnes/year Tonnes/year

Claim Certified Tonage of FFB Name of Estate(s)

Total Area (Ha)

Planted Area (Ha)

FFB (tonnes/year)

Yield (tonnes/ha/year)

KMS1

1,987

543

8,437

15.53

KMS2

3,334

848

9,296

10.96

KMS3

2,076

1,984

57,222

28.84

KMS4

2,395

2,183

58,653

26.86

KMU5

1,579

430

11,947

27.78

KMU6

1,478

668

11,199

16.76

KMU7

1,950

1,091

31,215

28.61

POM, KCP and Rubber Factory

102

Total

14,901

7,747

187,969

24.26

*Source: Budget Projections on 2012 SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT 1.7.3

Claim Certified Tonage of Palm Product Name of Mill

FFB Processed (tonnes/ year)

Capacity (tonnes/ hour)

Mandau POM 187,969 60 and KCP *Source: Budget Projections on 2012

CPO

Palm Kernel

Out put (tonnes)

Extraction (%)

Out put (tonnes)

Extraction (%)

Out put (tonnes)

Extraction (%)

44,172

23.5

9,399

5

4,459

47.44

1.8 1.8.1 1.8.2 1.8.3

Other Certifications ISO 9001:2008/ISO 14001: 2004 OHSAS 18001:2007 HACCP

1.8.4

Others (Plantation Class Assessment) by Plantation Class II Agency

1.9

Time Bound Plan for Other Management Units Management Address Unit Kebun Malindomas Perkebunan Berau, East Kalimantan Kebun Hutan Hijau Mas Berau, East Kalimantan Kebun Jabontara Eka Karsa Berau, East Kalimantan Kebun Karya Makmur Abadi Mentaya Hulu, Central Kalimantan Kebun Menteng Jaya Sawit Mentaya Hilir Utara, Central Perdana Kalimantan Kebun Mulia Agro Permai Baamang, Central Kalimantan Kebun Mandau Bengkalis, Riau Kebun Nilo Kebun Mutiara Kebun Sekarbumi Alam Lestari Kebun Steelindo Wahana Perkasa Kebun Parit Sembada Kebun Alam Karya Sejahtera Kebun Basilam Kebun Gohor Lama Kebun Padang Brahrang Kebun Bukit Lawang Kebun Tanjung Keliling

PKO

-

Hectarage (Ha) *) 7,971 7,343 14.086 13.127 6.399

Time Bound Plan 2014 2014 2014 2014 2014

9.056 14.799

2014 2012

Riau Riau Riau Belitung

12.197 1.800 6.200 14.065

2012 2012 2012 2012

Belitung Belitung Langkat, North Sumatera Langkat, North Sumatera Langkat, North Sumatera Langkat, North Sumatera Langkat, North Sumatera

3.990 6.012 2.337 7.464 5.004 4.299 2.369

2013 2014 2014 2014 2014 2014 2014

SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

Complete Audit

Audited 2012

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT 2.0

ASSESSMENT PROCESS

2.1

Certification Body PT Mutuagung Lestari Jl. Raya Bogor Km 33,5 No. 19, Cimanggis - Depok 16953 Telp. +62-21-8740202; Fax +62-21-87740745/46 Website: www.mutucertification.com; Email : [email protected]

2.2 2.2.1

Lead Assessor and Assessment Team Assessment Team ST1 The assessment team consist of: 1. Nanang Mualib (Lead Assessor). Bachelor of Forestry Science, Forest Technology Department in Bogor Agriculture Institute. He worked in Forest Company in 2000 – 2004 as a technical assistant of Sustainable Forest Management Implementation, Joint program with Forest Faculty Bogor Agriculture Institute and WWF Indonesia in 2006 – 2010. As a professional, he was involved in HCV social study of Sustainable Forest Management, HCV Identification in 3 palm oil plantation in Indonesia. Currently, he works as professional HCV assessor. In Stage-1 activity he assessed legal, social, environment and HCV Identification. 2. Deni A. Novendi (Assessor). Bachelor of Forest. Natural Resources conservation department special in ecology and social. He involved in study of social economy of Citanduy-Cisanggarung watershed, Ciamis district, and East java. And also have experience within 13 years in forest planning and conservation on forest concession at Indonesia. Since 2003, he worked for independent certification body as auditor for forest sustainable certification (FSC and LEI scheme); Chain of study, ISO 9001 and RSPO. He audited for several companies. In Stage-1 activity, he focused on environmental aspects, Commitments to transparency, legality and the social Aspect. 3. Muardi Marwas (Assessor). A Bachelor of Agriculture Majoring in Agronomy and Horticulture, Agriculture Faculty of IPB Bogor. Currently he has been working with an independent certification agency as auditor. Training he has followed are: Lead Auditor RSPO, Auditor ISPO, Awareness HACCP, Awareness HACCP certification, Awareness SQMS Mc Donald, In House Training Green House Gas and Awareness ISO: 9001. He has followed several audit activities related to certification system of sustainable palm oil (RSPO certification) as observer and Auditor. He has been working with an independent certification body as auditor. In Stage-1 activity he assessed legal, environment, and man power. 4. Marsudi Eko Santoso (Assessor). Bachelor of Science in Agriculture, majoring in Agro technology. Followed the Management System Certification (ISO 9001-2008), Awareness HACCP certification, training of RSPO auditor and training of RSPO Lead Auditor training, ISPO Lead auditor training and distribution quality management process - APMEA. He had involved several time in RSPO certification assessment activities as an auditor. Currently he works for Independent Certification Body. In Stage-1 activity, he conducted assessment on Best Practices, Soil and water conservation, Integrated Pest Management, workers welfare, Occupational Safety and Health. ST2 The assessment team consist of: 1. Nanang Mualib (Lead Assessor). Bachelor of Forestry Science, Forest Technology Department in Bogor Agriculture Institute. He worked in Forest Company in 2000 – 2004 as a technical assistant of Sustainable Forest Management Implementation, Joint program with Forest Faculty Bogor Agriculture Institute and WWF Indonesia in 2006 – 2010. As a professional, he was involved in HCV social study of Sustainable Forest Management, HCV Identification in 3 palm oil plantation in Indonesia. Currently, he works as professional HCV assessor. In Stage-2 activity he assessed legal, social, environment and HCV Identification. 2. Muardi Marwas (Assessor). A Bachelor of Agriculture Majoring in Agronomy and Horticulture, Agriculture Faculty of IPB Bogor. Currently he has been working with an independent certification agency as auditor. Training he has followed are: Lead Auditor RSPO, Auditor ISPO, Awareness HACCP, Awareness HACCP certification, Awareness SQMS Mc Donald, In House Training Green House Gas and Awareness ISO: 9001. He has followed several audit activities related to certification system of sustainable palm oil (RSPO certification) as observer and Auditor. He has SPO – 4006a.4 Page 8 Prepared by Mutuagung Lestari for Adei Plantation

PT MUTUAGUNG LESTARI ASSESSMENT REPORT been working with an independent certification body as auditor. In Stage-2 activity he assessed legal, environment, and man power. 3. Marsudi Eko Santoso (Assessor). Bachelor of Science in Agriculture, majoring in Agro technology. Followed the Management System Certification (ISO 9001-2008), Awareness HACCP certification, training of RSPO auditor and training of RSPO Lead Auditor training, ISPO Lead auditor training and distribution quality management process - APMEA. He had involved several time in RSPO certification assessment activities as an auditor. Currently he works for Independent Certification Body. In Stage-2 activity, he conducted assessment on Best Practices, Soil and water conservation, Integrated Pest Management, workers welfare, Occupational Safety and Health. 4. Faruk Ahmad Nasir (Assessor). Bachelor's Degree in Agriculture, Soil Science Major. Specialist in Ecology and Soil Conservation. He has numerously involved in studies concerning ecology, land use suitability, and environmental impact due to oil palm plantations establishment. Aside from the agricultural prospective, he has also numerously involved in studies of performance assessment (LPI) in forestry, for both natural and industries forests plant. In this Stage-2 assessment, he assessed the soil and environmental aspect. Curriculum Vitae (CV) of the members of the Assessment Team is available at PT Mutuagung Lestari Office.

2.3 2.3.1 ST1 ST2

Assessment Methodology, Assessment Process and Locations of Assessment Assessment Dates March 19–22, 2012 April 23–28, 2012

2.3.2 ST1

Estimate of person days to implement assessment Number of involved assessors: 4 persons Number of days for on-site Stage1 assessment activities: 4 days Number of working days for on-site stage1 assessment activities: 16 person days Number of involved assessors: 3 persons Number of days for on-site Stage2 assessment activities: 5 days Number of working days for on-site stage2 assessment activities: 15 person days

ST2

2.3.3 ST1

Detail process of assessment The Stage-1 was conducted to measure the sufficiency of implementation with the consistency done by the company (PT Adei) to the requirements of National Interpretation of the Republic of Indonesia from RSPO Principles and Criteria for Sustainable Palm Oil Production (RSPO INA-NIWG, May 2008) and Supply Chain Requirement for CPO Mill. The Stage-1 was conducted in three methods: First Method is review of documents, to assess the adequacy of the type and substance of the required documents; Second Method is interview management unit’s personnel, to obtain more detailed information and to cross check; Third Method is field visit, to assess the adequacy of the actual implementation in the field. 19 March 2012. From morning until early afternoon, the team traveled from Jakarta to the site, then continued holding an opening meeting in the afternoon. The opening meeting was held in the Training Center Room attended by the General Manager, Senior Estate Manager, Assistants, and other related personnel’s. Further, a study of the company documents was carried out relating to the legal aspects, social management, environmental management, and operational activities reports in Mandau Selatan Estate. March 20, 2012. The team reviewed the company documents related to the information management, long-term planning, working procedures, waste management, management of air emissions, energy utilization, and employment in Mandau Utara Mill and Mandau Utara Estate. March 21, 2012. The team visited the operational sites of the company (estates and mills) to assess the implementation of the company policy and other documents related to P & C RSPO.

SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT March 22, 2012. From morning until early afternoon the team carried out a discussion to compile reports on the nonconformance of the assessment results. A Closing Meeting was carried out in the afternoon. The Closing meeting was held in the Training Center Room attended by the General Manager, Senior Estate Manager, Assistants, and other related personnel’s. March 23, 2012. The team traveled from the site to Jakarta. ST2

The Stage-2 was conducted to assess the sufficiency of implementation with the consistency done by the company (PT Adei) to the requirements of National Interpretation of the Republic of Indonesia from RSPO Principles and Criteria for Sustainable Palm Oil Production (RSPO INA-NIWG, May 2008) and Supply Chain Requirement for CPO Mill. The assessment was conducted in three methods: First Method is review of documents, to assess the adequacy of the type and substance of the required documents, Second Method is interview with stakeholders and management unit’s personel, to obtain more detailed information and to cross check; and Third Method is field visit, to assess the adequacy of the actual implementation in the field. A number of findings and opportunity for improvement resulted from the Stage-2 assessment activities were submitted by MAL auditors to unit management (PT Adei), and the improvement results would be taken as verification for the next assessment (Surveillance-1). All information obtained were recorded in the Checklist of PT Mutuagung Lestari and become the main attachment to the Assessment Report. In detail, the second stage assessment process is as follows: April 23, 2012. From morning until early afternoon the team traveled from Jakarta to Pekanbaru. In the afternoon the team visited NGOs in Pekanbaru namely Scale Up and Jikalahari in order to consult. Then, the team studied documents in the head office of Pekanbaru regarding the contractors used, contractors payment, evidence of land restitution process, and evidence of tax payment. April 24, 2012. In the morning, a public consultation is carried out with the local and district stakeholders. Eko and Faruk held a public consultation with the local stakeholders (in village and sub district level) while Nanang Mualib held a public consultation with related agency. In the afternoon, an Opening meeting was held in Training Center Room, attended by the Regional Director, Senior General Manager, General Manager, Senior Estate Manager, Assistants, and other related personnel’s, then continued reviewing the company documents related to the legal aspects, social management, environmental management and operational activities reports in Mandau Selatan Estate. April 25, 2012. The team reviewed company documents related to the information management, long-term planning, working procedures, waste management, management of air emissions, energy utilization, and employment in Mandau Utara Mill and Estate. April 27, 2012. The team visited the company operational sites (estates and mills) to assess the implementation of the corporate policy and other documents related to P & C RSPO. April 28, 2012. From morning until the afternoon, the team carried out a discussion to compile reports on the nonconformance of the assessment results. In the afternoon, a Closing Meeting was held. The Closing meeting was held in Training Center Room attended by the Regional Director, General Manager, Senior Estate Manager, Assistants, and other personnel’s concerned.

2.3.4

Locations of Assessment 1. Block 12 A Mandau Selatan Estate, the area of the ongoing conversion of rubber plantation to be oil palm main plants. Ensuring zero-burning land preparation; observation of conservation activities undertaken to reduce soil erosion by planting Mucuna bractiata, terracing, and tree trunks piling (perumpukan). 2. Block 10 Mandau Selatan Estate, the area where the leguminous cover crops are cultivated to prevent land erosions and to maintain soil fertility – Observation on the leguminous cover crop (mucuna bractiata) condition under 1-year-old oil palm main plants, and the cultivation techniques.

ST1

SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT 3. Block 11C Mandau Selatan Estate, the preparation area (conversion of rubber main plants to be oil palm main plants) on the hilly slopes – Observation on the forms and eligibility of terracing which is intended to prevent erosions and water flow control at ground level as long as the land covering has not been effective yet. 4. Semunai Village – Interview with the Secretary of Semunai Village (Mr. Baharudin Yusuf) concerning the disclosure of information, management of conflict, contribution of the company, and local labour absorption. 5. Boundaries Pole Number BPN 53 (Block 231 – 98 A 03 A SE), is the demarcation boundary of PT. ADEI with oil palm lands belong to people of Sei Balai Hamlet, Muara Basung Village. Observation on the existence and the conditions of boundaries pole and ditch which separate the company area (ADEI) from public land. 6. Boundaries Pole Number BPN 44 (Block 116 – 98A 02 ER), is the demarcation boundary of PT. ADEI with oil palm lands belong to people of Air Hitam Hamlet of Semunai Village. Observation on the existence and conditions of Boundaries pole and ditch which separate the company area (ADEI) from public land. 7. Estate Employee Housing of Division 7 Mandau Utara Estates. Observation and interview with the employee (Syarif – harvester) concerning the eligibility of the infrastructure and facilities provided by the company such as clean water, housing, lights, and household facilities. 8. Hazardous Waste Warehouse of Mandau Selatan Estate 1. Hazardous material warehouse is located in a permitted location with limited access. The amount of hazardous waste is managed and monitored. Access for other workers to enter the warehouse is limited. The warehouse officers routinely inspect the inflow and outflow of the hazardous waste. A hazardous material symbol has been provided at the site according to the rule. 9. Hazardous Material Warehouse of KMS1. Material Safety Data Sheet (MSDS) is available for every chemical material used and is translated to the local language so it is easy to understand for the employees. MSDS material storm and pointer are not available yet. Regular checking of the fire extinguisher is conducted every month by checking the conditions and the expiration date. 10. Diesel Fuel Tank. The layout of the diesel fuel tank has been customized with the rules. The receptacle with a capacity of 110% of the tank capacity (50,000 liters). Direct contamination of diesel fuel to the soil is minimized by hardening the shelter floor. 11. Reservoir (HCV4). Rain tree (Samanea saman) planting was found around the buffer zone area of reservoir. ADEI delineated 10 meters on the edge of the reservoir as a buffer zone, where activities of spraying and manuring are not allowed. 12. Application Land of P04. Application land area of P04 has been appropriate based on the recommendation of permit issued by the Head of District. 13. Monitoring Well of P04. Observation on sampling site for water quality test. 14. Pesticides mixing warehouse. Hazardous Materials symbols have been set in this area. Waste water in the water trap has been reused for pesticides dilution. 15. Pesticides mixing place in Mandau Utara Estate 6. Observation and interview about the techniques of pesticide mixing, OHS implementation, efforts on managing the waste water from pesticide washing that is reused for spraying and efforts on preventing the pesticide waste contamination. 16. Workshop in Mandau Utara Estate 6. Observation and interview with the head of the workshop about safety work procedures, the use of Personal Protective Equipment (PPE), management of used lubricant oil waste, the risk and handling of occupational accident. 17. Hazardous Material Warehouse in Mandau Utara Estate 6. Observation and interview with the head of the warehouse concerning the Hazardous material management, OHS implementation, medical check-ups, the existence of paraquat, and the existence of pesticide containing active material Brodifacoum which was not found. 18. Clinic in Mandau Utara Estate 6. Observation and interview with the company doctor concerning the workers medical screening, the absence of poisoning indications, medical waste management. 19. Block 126 Mandau Utara Estate 6. Observation on the existence of the sign boards of prohibition in hunting protected animals. 20. Along the Main Road Block 80-111 Mandau Utara Estate 6. Observation on the existence of Tunera subulata plant. 21. Block 72 Mandau Utara Estate 7. Observation and interview with supervisors and fertilization workers SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT

22.

23. 24.

25. 26. 27. 28. 29. ST2

1.

2. 3. 4.

5.

6. 7.

concerning technical work of fertilizing, the types and dosages of fertilizers used, regular check-ups, environmental policy implementation related to the Agrochemical application and the use of PPE, facilities and infrastructures provided by the company. Block 106 Mandau Utara Estate 7. Observation and interview with the supervisors and spray workers concerning technical works of spraying, types and dosages of the pesticide used, environmental policy implementation related to the Agrochemical application, the use of PPE, implementation on the recognition of reproductive rights, regular check-ups. Block 79 Mandau Utara Estate 7. Observation and interview with the supervisors and harvesters concerning technical work of harvesting, the use of PPE, First Aid Emergency. Pole of Land Use Title Block PE 06 (Mandau Selatan Estate 3), Pole of Land Use Title No. 100 (Mandau Selatan Estate 3 Block PE 05), Pole of Land Use Title No. 217 (Mandau Selatan Estate 3 Block PE 06), Pole of Land Use Title No. 218 (Mandau Selatan Estate 3 Block PE 06). Observation and interview concerning the existence of the boundaries poles and their maintenances. Penaso River Block BN 21, Mandau Selatan Estate 4. Observation and interview about Water Pump, Water Level, and Water Gate. Jihat Hamlet. Interview with the Custom Leader and the Caretaker of the Grave of Datuk Panglima Darah Putih concerning management of HCV 6 area, information request mechanism and social management. Block BN 11, Mandau Selatan Estate 4. Observation and interview about management of peat area. Mess of Mandau Selatan Estate 1. Interview with the Chairman of the Worker Union concerning the labour welfare. Office of Mandau Selatan Estate 1. Interview with the gender committee leader about recognition of reproductive rights and gender committee work program. Hazardous waste warehouse Mandau Selatan Estate 1. Hazardous waste warehouse is located in a permitted location with limited access. The amount of hazardous waste is managed and monitored. Access for other workers to enter the warehouse is limited. The warehouse officers routinely inspect the inflow and outflow of the hazardous waste. A hazardous material symbol has been provided at the site according to the rule. Clinic in Mandau Utara Estate 1. Observation and interview with the company doctor concerning the workers medical screening, the absence of poisoning indications, medical waste management. Block Q90 (Landfill) Mandau Selatan Estate 2. There are 2 holes of landfill according to the waste characteristics (organic and inorganic waste); there are not any traces of waste-burning found. Block 90 D Mandau Selatan Estate 1 (Simpang Jepang). Observation of the road condition which is the responsibility of PT. Chevron because of its function as an access to the oil fields and there are pipelines underground. The avalanche of road is in the process of improvement (road hoarding). Boiler Station – Observation and interview with boiler operators about the PPE provided by the company include air plug, masks, glasses, helmets and gloves (available in good condition and are always worn); workers health (health condition of the workers is good); working procedures (the workers comply with the SOP); training (company provides training for operators); complaints to the company (never); boiler safety equipments (boiler panels are isolated and only official workers are allowed to approach the panels); Emergency Response Procedures (workers understand the emergency response procedures); observation and interview about air sampling site with examination every semester, safety fences are provided around the sampling holes. Thresher Station – Observation and interview with the thresher operators about operational records compiled by the supervisors, equipments maintenance conducted by the Maintenance Staff every week. Mill Workshop - Observation and interview with the head of the mill about the PPE provided by the company include masks, glasses, helmets and gloves (available in good condition and are always worn); workers health (health condition of the workers is good); working procedures (the workers comply with the SOP); training (company provides training for operators); Emergency Response Procedures (the workers understand the

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT

8. 9. 10. 11.

12.

13. 14.

15. 16. 17.

2.4 2.4.1

2.4.2

2.5

emergency response procedures); head of the workshop understands occupational risks and how to deal with occupational accident in the Workshop. Waste Water Ponds. Observation of the Mill liquid waste management. The liquid waste is managed through several phases in 7 ponds. The liquid waste in the 7th pond is then channeled to the Application Land area. Kernel Crushing Plant. Observation and interview about kernel production and processing. Block PN 12 A. There are not any burning activities in land clearing. The target of rubber land conversion to be oil palm until 2016 covers 300 Ha/year, there are terracing activities. Mandau Selatan Estate 3. Observation and interview with the supervisors and spray workers concerning technical works of spraying, types and dosages of the pesticide used, environmental policy implementation related to the Agrochemical application, the use of PPE, implementation on the recognition of reproductive rights, regular check-ups. Block PE04 Mandau Selatan Estate 3. The application land area of PE04 has complied with the permit recommendation from the head of district. Observation on the sampling site for water quality examination (Monitoring Well) and further observation of the public consultation result which stated that Block PE04 is an application land area with Flat Bath system. Beringin Village. Interview with the community leader about information request mechanism, complaints, management of conflicts and contribution of the company to the local community development (CD/CSR). Office of Mandau Selatan Estate 1. Interview with the Chairman of Worker Union Riau Independent regarding complaint solving, consultation and communication between the company and the Worker Union. Interview with the representative of CV Sejahtera Jaya regarding the process of labour agreement, payment and mechanism of assigning contractors. POM Housing. Observation and interview with the workers concerning the Realization of the Expansion of Kindergarten based on CSR program. Mandau Utara Estate 7 Housing. Observation of the pump house, diesel spill management, available facility program and transportation facility for the workers and students. Mandau Selatan Estate 4. Borders community areas of Beringin Village include BPN Pole Number 83 (Block BN 02), BPN 84 (Block BN 03), BPN Pole Number 86 and 87 (Block BN 07), all in good condition and the Boundaries Pole codes are still clearly legible.

Stakeholder Consultation and List of Stakeholders Contacted Summary of stakeholder consultation process. Public consultation process conducted through 2 (two) ways i.e.: 1) Public announcement in the RSPO website (www.rspo.org) minimum 30 days before the activity conducted. 2) Send the Comment and input letter and consultancy response form to related stakeholders through mail post and email. Conducting a Public Consultation. 3) Public consultation with local stakeholders carried out on April 24, 2012 at KMS 1 meeting room and visiting the NGOs and District government on April 23-24, 2012. A number of verbal recommendations from the stakeholders both positive and negative were received by the audit team to be taken into account in Stage-2 assessment process. List of stakeholder contacted Please find Appendix 3 Determining Next Visiting The next visit (Surveillance 1) will be determined later, one year after certificate issued.

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT 3.0.

ASSESSMENT RESULT

3.1.

Summary of Assessment Report of the RSPO Certification

Ref Std.

VERIFICATION RESULT of MUTU-Certification

PRINCIPLE #1 COMMITMENT TO TRANSPARENCY 1.1 Plantation and Palm Oil Factory have to give adequate information for stakeholders in appropriate language and forms, to ensure the effective participation of stakeholders in decision-making. Records of information request are documented in Socialization and Information Logbook and Responses Record is documented in Socialization and Information Logbook which is then recapitulated in Expedition Logbook. Socialization and Information Logbook contains Information Requests, responses from the company and realization evidence from every information request, for example: 1. Information Request about the needs of mountain rocks for road maintenance in the area of Mandau Selatan Estate 2 dated 06 January 2012 which was verbally submitted by Mr. Suroto and was also verbally responded by the company (Mr. Hermanto). Realization of the request was taken in February 2012 signed by related Stakeholder (Mr. Suroto). All information about the request and company responses processes are documented in Socialization and Information Logbook of Mandau Selatan Estate 2. 2. Information Request from community leader of Balai Pungut Village (Mr. Suirman) on 06 March 2012 regarding request for the company’s cooperation to prevent intrusion elephants. This request was responded by the company on 07 March 2012 by cooperating with the community to banish elephants and to direct them to the west where there are still forests (Kojo area). This information request was submitted verbally and has been already documented in Book of Information/Socialization Request, consultation and Communication of Mandau Selatan Estate I. The company has established the retention time of the information request and responses. The document has not been saved in retention time based on the concernment. For example, the document of SOP is kept for a 5-year retention time. Status: Full Compliance. 1.2 Management documents are publicly available, except where this is prevented by commercial confidentiality or where disclosure of information would result in negative environmental or social outcomes. It is documented in Document Main List dated 1 November 2011, the classification of the documents based on RSPO Principle and in the status is given a remark whether the document is Confidential (1) or available for Public (2). For example, Document of Plantation Manager Memo is Confidential and External/Internal Letter is a Public Document. Legal Document such as: 1. Location Permit; NoKPTS.30/I.L-VIII/1989 dated 30 August 1989 issued by the Governor of Riau Province regarding Location Permit and Right Acquisition/Land Purchasing covering more or less 15,800 hectares in Mandau Subdistrict of Bengkalis District for rubber plantation on behalf of PT. Adei Crumb Rubber Factory. 2. Forest Area Acquisition; Decree of Forestry Minister No. 027/Kpts-II/90 dated 13 January 1990 regarding Forest Area Acquisition in Riau Province include some of Forest Cluster of Samsam River – Penaso River in Bengkalis District covering 15,826.25 Ha and Forest Cluster of Air Hitam River and surrounding areas in Kampar District covering 12,734 Ha for planting cultivation on behalf of PT. Adei Crumb Rubber Factory. 3. Plantation Business Permit; No. HK.350/E5.335/04.97 dated 22 April 1997 regarding Agreement of Cultivation for Plantation Principle to customize cultivation coverage of PT. Adei Plantation dan Industry of Riau Province. Area of Oil Palm Estate: 19,440 hectares, Rubber: 6,000 hectares. Capacity of POM is 90 tons of FFB/hour for Kampar and Bengkalis. 4. Plantation Business Permit No. 744/UT.512/VI/2004 issued by Head of Plantation Agency of Bengkalis dated 18 June 2004 SPO – 4006a.4 Page 14 Prepared by Mutuagung Lestari for Adei Plantation

PT MUTUAGUNG LESTARI ASSESSMENT REPORT regarding Plantation Business Permit on behalf of ADEI P & I Mandau Estate of Pinggir Subdistrict with Oil Palm Estate covering 8,900 Ha and Rubber of 6,000 Ha so the total area is 14,900 Ha. 5. Land Use Title No 12/HGU/1990 dated 10 July 1990 covering 14,900 Ha, valid from 10 July 1990 until 31 December 2020. 6. Extension of Agreement of the Conversion from Rubber Plant to Oil Palm Plants on behalf of ADEI Plantation & In PT. ADEI PLANTATION and INDUSTRY from Environment Bodies of Bengkalis District No. 503/BP2T-IR/360 dated 19 December 2011 valid until 19 December 2016 with the target of conversion area 4,427 Ha and 419 Ha of which have been manifested, with a conversion activity report every semester. Environmental Documents for example: 1. Documents of Environmental Impact Assessment (EIA and Environmental Management Plan/Environmental Monitoring Plan) approved by Director General of Nature Protection and Conservation/Chairman of the Central Commission of EIA of Forestry and Plantation Ministry No. 86/DJ.VI/AMDAL/1999 dated 6 July 1999 with an area of study 14,900 Ha area consisting of 8,900 Ha of Oil Palm Estate and 6,000 Ha of Rubber Estate. Capacity of POM of 80 Tons of FFB/hour. 2. Report of Environmental Management and Monitoring every semester, for example period of January-June 2011 which is submitted to the Environment Bodies (BLH) of Bengkalis District dated 24 August 2011 and period of July – December 2011 which is submitted to the Environment Bodies (BLH) of Bengkalis District in accordance with the Forwarding Letter No. 13/1/2012 dated 25 January 2012. 3. Document of HCV Identification in August 2011 compiled by the Aksenta with the Assessor Sudjanika (Approved RSPO), Pupung F. Nurwantha (Approved RSPO), Robert H. Sinaga, Gena Lysistrata, and Yunus Bahar. 4. SOP of environment such as SOP of the Elephant Handling (SOP 15), HCV Identification and Management dated 1 October 2011. 5. HCV Management Plan; for example HCV Management Plan – Mandau Complex dated 13 March 2012. Social Documents such as; 1. Document of direct assistant to every request from community approved by the management is documented in Assistant Request Logbook (RSPO 11), for example assistant request of the Mosque landfilling sent by the Management of Nurul Hikmah Mosque of Muara Basung Village to KMU dated 31 October 2011. The company responded through letter dated 12 November 2011 and the requested was realized in 20 November 2011 according to the receipt of Head of Muara Basung Village. 2. Details of Management Expenses of Elementary School (SD) KLK on behalf of KLK Foundation paid by the Company. 3. Taxes and retribution payment to the government, for example Land and Building Tax (L&B Tax) year 2009 to 2011; a. Land & Building Tax year 2009 according to Deposit Slip of Land & Building Tax dated 22 October 2009 in the amount of IDR 1,623,715,160. b. Land & Building Tax year 2010 according to Deposit Slip of Land & Building Tax dated 25 October 2010 in the amount of IDR 2,271,686,633. c. Land & Building Tax year 2011 according to Deposit Slip of Land & Building Tax, September 2011 in the amount of IDR 2,484,789,860. d. Document of Payment Summary and Taxes Report year 2010 to 2011. 4. List of Company Stakeholders. 5. Company SOPs and policies in Social Field, for example SOP of the mechanism of complaint submission. Company has established the retention time of each document in Document Main List in accordance with the importance, for example RSPO Principle 2 document file has a 5-year retention time but specifically for letter of permission refers to the retention time. Status: Full Compliance SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT PRINCIPLE #2 COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS 2.1 There is compliance with all applicable local, national and ratified international laws and regulations. PT. ADEI has provided evidences of legal fulfillment related to the plantation and Palm Oil Mill operations, include: 1. Document of land exploitation in the form of Land Use Title (HGU) No 12/HGU/1990 dated 10 July 1990 covering 14,900 hectares, valid from 10 July 1990 through 31 December 2020 in accordance with Statue No. 5 year 1960 regarding Agrarian Principle Act; and Regulation of Agriculture Ministry No. 26/Permentan/OT.140/2007 regarding Guidelines of Plantation Business Permit. 2. Plan on fulfilling workers minimum wage referring to the Regulation of Governor of Riau Province No: 11 year 2012 dated 6 February 2012 regarding Minimum Wage of Coconut and Oil Palm Plantation/Agriculture Sub Sector (USMP). The plan is contained in the form of Board of Directors Memo dated 12 March 2012 regarding adjustment of the basic wage of permanent employees to be in the amount of IDR 1,305,450.00 plus 15 kgs of rice equals IDR 84,000.00 = IDR 1,389,450.00 (USMP). Basic wage for workers with 0-1 year working period is IDR 1,420,000.00 and for workers with 21-22 years working period is IDR 1,680,000.00. The policy is to be implemented in the payroll of April 2012, while wage of January-March is to be paid back. 3. Permit of Hazardous Waste Temporary Warehouse from the Environment Bodies of Bengkalis District No 28 dated 18 May 2011, is valid for 5 (five) years in accordance with Government Regulation No. 18 year 1999. 4. Permit of Water Waste Utilization on land to Plantation of PT. ADEI PLANTATION is valid for 5 (five) years, in the form of Decree of Bengkalis District Head No: 70/KPTS/I/2012 dated 17 January 2012 in accordance with Government Regulation No. 18 year 1999 Jo. PP No. 85 year 1999 regarding Hazardous Waste Management. 5. There is an Organization of Guiding Committee of Occupational Safety and Health (P2K3) which is validated by Labour and Transmigration Agency of Bengkalis District, referring to the Regulation of Labour Ministry No. 5 year 1995 regarding Occupational Health and Safety Management System (SMK3). 6. Evidence of document cover letter (No. AD-KMS/64/04/12) of Hazardous Material Balance is available per 3 (three) months on 9 April 2012 accepted by Environment Bodies of Bengkalis for period of November 2011 – February 2012 in accordance with Attachment IIIa. Regulation of Bengkalis Head of District No. 27 year 2010. 7. Application Letter of Training on the Usage of Limited Pesticide and awarding of certificates dated 30 March 2012 (Letter No. ADKMS/Ext/17/III/2012. The company has shown a letter from the Department of Plantation and Forestry, No. 525/DisbunhutPP/IX/2012/0409 about Recommendations usage Herbicide (Gramoxone) and operator training plan on 15 October and 29 November 2012, referring to the Regulation of Agriculture Ministry No. 7 year 2007. 8. Application Letter for Publication of Occupational Health and Safety (OHS) License No. AD-KMS/Ext/16/III/2012 dated 30 March 2012 to the Head of Labour and Transmigration Agency of Bengkalis District referring to the Regulation of Agriculture Ministry No. 9 year 2010, is available. The company has shown a letter from the Department of Labor No. 560/DTKT/PK/IX/201/404 about progress administration License of heavy machinery/Crane Operators (85 operators) are still in the process of issuing from the Ministry of Labor. 9. Company appointed Mr. Adria (Expert of Occupational Health and Safety No. Reg. 7907/PK3/AJ/2011/PO) secretary of Guiding Committee of Occupational Safety and Health for Notification Letter of Guiding Committee of Occupational Safety and Health personnel replacement in accordance with notification letter on 12 April 2012, evidence from the Delivery Service referring to the Regulation of Labour Ministry No. 4 year 1987. 10. Based on the visit in Hazardous Material Warehouse and Diesel Tank in Mandau Utara Estate 6, it is seen that the Hazardous Material symbol has been changed and has been adjusted to the Regulation of Environmental Ministry No. 3 year 2008. 11. From the visit on water reservoir division 7 of Mandau Utara Estate 7 it is noted that company has repaired the water pump house by closing the channel out and making a receptacle for diesel so that direct contamination to the surrounding environment does not occur. It is an effort to fulfill the Government Regulation No. 18 year 1999 Jo. PP No. 85 year 1999. SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT Company already has a list of regulations but it should be supplemented by local regulations, for example Local Regulation (Province, District, or Village). One of the efforts proved to the regulation adjustment is the plan to fulfill employee minimum wage referring to the Regulation of Riau Governor No. 11 year 2012 dated 6 February 2012 regarding Minimum Wage of Coconut and Oil Palm Plantation/Agriculture Sub Sector (USMP). The program is contained in the Board of Directors Memo dated 12 March 2012 regarding adjustment of the basic wage of employees. List of Rules and Regulation related to operations, detailed rules, related RSPO indicators, brief explanation of the rules, and validity period is available. Listed regulations include Statue No. 18 year 2004 regarding Plantation; Statue No. 41 year 1999 regarding Forestry; Statue No. 5 year 1960 regarding Agrarian Principle Act; Regulation of Agriculture Ministry No. 26 year 2007 regarding Business Permit Guidelines. Evaluation on the legal fulfillment is conducted through regulation monitoring by a person in charge, and the result is presented in the Regulation Fulfillment Checklist that detail the types of regulation, fulfillment status, validity period, and person in charge. Status: Compliance with observation Major.2.1.1 2.2 The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights Similar to the ST I implementation where the process of obtaining the land tenure right legally is as follow: 1. Location Permit; No. KPTS. 30/I.L-VIII/1989 dated 30 August 1989 issued by the Governor of Riau Province regarding Location Permit and Right Acquisition/Land Purchasing covering more or less 15,800 Ha in Mandau Subdistrict, Bengkalis District for Rubber plantation on behalf of PT. Adei Crumb Rubber Factory. 2. Forest Area Acquisition Permit; Decree of Forestry Minister No. 027/Kpts-II/90 dated 13 January 1990 regarding Forestry Area Acquisition in Riau Province include some of Forest Cluster of Samsam River – Penaso River in Bengkalis District covering 15,826.25 Ha and Forest Cluster of Air Hitam River and surrounding area in Kampar District covering 12,734 Ha for planting cultivation on behalf of PT. Adei Crumb Rubber Factory. 3. Plantation Business Permit (IUP); No. HK.350/E5.335/04.97 dated 22 April 1997 regarding Agreement of Cultivation for Plantation Principle to customize cultivation coverage of PT. Adei Plantation dan Industry of Riau Province. Area of Oil Palm Estate: 19,440 Ha, Rubber 6,000 Ha. Capacity of POM is 90 tons of FFB/hour for Kampar and Bengkalis. 4. Plantation Business Permit No. 744/UT.512/VI/2004 issued by Head of Plantation Agency of Bengkalis dated 18 June 2004 regarding Plantation Business Permit on behalf of ADEI P & I Mandau Estate of Pinggir Subdistrict with Oil Palm Estate covering 8,900 hectares and Rubber 6,000 hectares so the total coverage of the area is 14,900 Ha. 5. Land Tenure Status in the final after Land Use Title (HGU) License No 12/HGU/1990 dated 10 July 1990 was published, covering 14,900 Ha, valid from 10 July 1990 until 31 December 2020. Legal border areas are able to be found in forms of: 1. Boundary stone inscribed with National Land Agency (BPN) and pole number. The pole is set in each angle of polygon. From the field visit to KMS 4 that borders the community areas of Beringin Village include Pole No BPN 83 (Block BN 02), BPN 84 (Block BN 03), BPN Pole No. 86 and 87 (Block BN 07), all are in good condition and the HGU Pole codes are still clearly legible. 2. Isolation ditch along the borderline which clearly separates management area of PT. ADEI Plantation from other parties. The isolation ditch connects one boundary pole to another so they form closed polygon. For example, boundary poles BPN 83 – 87 are located in the isolation ditch that separates the management area of PT. ADEI from community land of Beringin Village. Based on the information from company management and the result of visiting Jihat hamlet; Semunai Village and Beringin Village, it is stated that until the ST2 implementation there are not any claims upon the land planted either by the company in KMS or in KMU. SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT In the field, there are indeed the Land Use Title areas which are still controlled by the community, even the hamlet (Jihat). However, the company has a policy acknowledged by the community not to clear the land controlled by community until compensation process is held. Documents of compensation settlement available consist of document of statement letter, Minute of Settlement of Land Compensation Payments, map of collective measurement result between Company and parties concerned, along with the payment receipts from Company. For example: 1. KMS 3; Available documents of land compensation settlement consist of Document of Statement Letter, Minute of Settlement of Land Compensation Payment, Map of collective measurement result between company and parties concerned along with the payment receipt from the company. For example: land belonging to Mr. B. Nababan (citizen of Tengganu Village) covering 3.85 hectares was paid on 27 April 2004. 2. KMS 4; Available documents of land compensation settlement consist of Document of Statement Letter, Minute of Settlement of Land Compensation Payment, Map of collective measurement result between the company and parties concerned along with the payment receipt from the company. For example: land belonging to Mr. B. Mukhtar (citizen of Tengganu Village) covering 8.96 hectares was paid on 29 June 2004. 3. SOP 26 is available. Dispute Negotiation Procedure involving the third parties such as National Land Agency (BPN) and revision Non-Governmental Organizations (12 April 2012) to the community around the company as an effort to involve every party in the conflict settlement. For example: Socialization to Head of Semunai Village and Balai Raja Village (19 April 2012). In Conflict Settlement Mechanism, company classifies Dispute into 3 (three) types as follow: 1. Land/border dispute 2. Squatter Dispute 3. Social Issues Each dispute is handled by GM/Manager through the process according to the types of conflict occurred. Status: Full Compliance 2.3 Use of the land for oil palm does not diminish the legal rights, or customary rights, of other users, without their free, prior and informed consent. Available documents of agreement/negotiation of Land Compensation Settlement equipped with Map of collective measurement result between the company and the land owners which are submitted to the company, for example: 1. Available documents of compensation year 1975 – 1989 at the head office consist of Documents of Statement Letter, Minute of Land Compensation payment, Map of collective measurement result between company and parties concerned along with the payment receipts from the company. For example, land compensation on 12 October 1989 for 79 citizens of Muara Basung Village of Mandau Subdistrict. 2. Available documents of land settlement (compensation) of Beringin Village in June 2003 for T. Hasim’s group covering 237 Ha, Abu Bakar’s group covering 144 Ha, Suandi’s group covering 378 Ha (total coverage 759 Ha) consist of Documents of Statement Letter, Minute of Land Compensation payment, Map of collective measurement result between company and parties concerned along with the payment receipts from the company. 3. Available documents of land (compensation) settlement consist of Document of Statement Letter, Minute of Settlement of Land Compensation Payment, Map of collective measurement result between company and parties concerned along with the payment receipt from the company. For example: land belonging to Mr. B. Nababan (citizen of Tengganu Village) covering 3.85 Ha was paid on 27 April 2004. SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT 4. Available documents of land compensation settlement consist of Document of Statement Letter, Minute of Settlement of Land Compensation Payment, Map of collective measurement result between the company and parties concerned along with the payment receipt from the company. For example: land belonging to Mr. B. Mukhtar (citizen of Tengganu Village) covering 8.96 hectares was paid on 29 June 2004. Available map that indicates areas that are still under public ownerships (In company’s map, it is called lands dispute). Status: Full Compliance PRINCIPLE #3 Commitment to long-term economic and financial viability 3.1 There is an implemented management plan that aims to achieve long term economic and financial viability. Available Forecast for 5 (five) years (2011-2016) for mills that itemize the FFB, OER, oil produced, kernel, Palm Kernel produced, and revenue forecast. For example: 1. 2011/2012 – own FFB (187,969 tons); outsider FFB (20,500 tons) – OER (23.5) – Oil produced (48,990.225 tons) – Kernel 5% - PK Produced (10,423.45 tons) – revenue forecast CPO: IDR 8,000,000/mt and palm kernel: 4,850,000/mt. 2. 2012/2013 – own FFB 190,017 mt – outsider FFB (20,500 mt) – OER (23.5) – Oil produced (49,471,495 mt) – revenue forecast same as above. 3. 2013/2014 – own FFB (195,866 mt) – outsider FFB (20,500 mt) – OER (23.5) – Oil produced 50,846,010 mt) – kernel 5%. Note: CPO cost forecast raises 5% per year. Available Oil Palm Corp Forecast Division Summary 2011 – 2016 and plants projection for the next 5 (five) years, for example KMS 2 Mature Area year 2011/2012 (355 Ha), 2012/2013 (355 Ha), 2013/2014 (355 Ha), 2014/2015 (848 Ha), 2015/2016 (848 Ha). Forecast for 10 years explains total cost of FFB, CPO, and PK production year 2010-2020. There is no replanting program in addition to the conversion from rubber to oil palm. Letter of Extension of Agreement of the Conversion from Rubber Plant to Oil Palm Plant issued by Integrated Licensing Service Agency No. 503/BP2T-IR/360 valid until 2016 for land covering 4,427 hectares is available. Data of Rubber to Oil Palm Program KMS 1 and 2 year 2011-2016 is also available. Oil Palm seeds used are obtained from certified seeds manufacturer (Applied Agricultural Resources Sdn. Bhd.). Certificate as Oil Palm Seeds manufacturer for Applied Agricultural Resources Sdn. Bhd. issued on 25 November 2010 is available. Status: Full Compliance PRINCIPLE #4 Use of appropriate best practices by growers and millers 4.1 Operating procedures are appropriately documented and consistently implemented and monitored. The SOP RSPO of PT. Adei Plantation & Industry is available, validated by General Manager on 1 October 2011 includes activities according to the P&C RSPO and Technical Guidance of Oil Palm Plantation of PT. KLK Agriservindo (Polis No.: GP/AGRIC/OP) 25 November 2004. It includes guidance on Harvesting, Land Maintenance, Nutrient, Pest and Disease, conservation, replanting covered zero-burning land preparation (also contained in SOP 4/Replanting), seeding, blocks identification, road and drainage construction. SOP of LC is not available since the area is a conversion area from rubber plant and should there be a new land clearing, the technical work is to be referred to SOP of replanting. Standard Operational Procedures for Palm Oil Mill processing include the process of weighing bridge receipt, loading ramp, sterilizer, thresher, digester, press and oil room. The standard has achieved validation from Mill Controller (Chong Kong Fat) on 1 December 2011. SOP of SCCS is available namely: SOP of RSPO Supply Chain Certification System Scheme for Palm Oil Mill in October 2011 validated by Mill Advisor.

SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT Operational inspection and monitoring are contained in the document of PT. ADEI/SWP/Sekar Bumi Management Meeting and performance Review. Updated in January 2012 and is held every 2 (two) months. RSPO audit report by Stephen Tiong, Yah Kim Seng, and Florida Hutasoit dated 12 March 2012 – 15 March 2012 is available. Record of operational result for Mandau Selatan/Mandau Utara Estate is available in monthly period of Progress Report for the Month which accumulates data from every Estate (KMS 1, KMS 2, KMS 3, and KMS 4). It describes rubber total crop, cost of production, FFB total crop, Quality and Dispatch Control, Upkeep Mature Area (weeding and P&D Spraying for nettle caterpillars), Upkeep Mature Area cost, Key Performance Area (mature area), Possible harvesting working days for the month, Harvesting Round, and hectare statement. Status: Full Compliance 4.2 Practices maintain soil fertility at, or where possible improve soil fertility to, a level that ensures optimal and sustained yield. Leaf and soil sampling activity is conducted by PT. APPLIED AGRICULTURAL RESOURCES INDONESIA, while the laboratory analysis is held in Kuala Lumpur Laboratory, Malaysia. Leaf and soil analysis is conducted every year. Sample of leaf analysis result (30/7/2011) Sample origin PM1998 A: N (2.52% DM); P (0.157% DM); K (1.07% DM); Mg (0.21% DM); Ca (0.59% DM); Sample of soil analysis result (Attachment 4.0: OIL PALM MANURING RECOMMENDATION 2011/2011) Sample origin PM2005 C1, depth 0 – 15 cm. pH (4.40); Org-C (1.88%); N (0.14); C/N (13.8); P (34 ppm); K (0.1 miliequivalents per 100 g); Ca (0.22 mEq/100 g);Mg (0.08 mEq/100 g) C.E.C (15.9 mEq/100g). Document of Oil Palm Manuring Recommendation 2011/2012 held by Agronomist dated 16 May 2011 is available, which clarifies general description of oil palm plants in every estate and manuring recommendation. For example, manuring recommendation in Mandau Utara Estate 6 (KMU 6) as follows: 1. Manuring block 1 PM 1998 A1 – covering 119 Ha – January 2012 (Urea 1.5 kg/stake); February 2012 (MOP 1.25 kg/ stake); June 2012 (MOP 1.25 kg/ stake); July 2012 (1.25 kg/ stake). 2. Manuring block 1 PM2002A – covering 30 Ha – November 2011 (MOP 1.25 kg/stake); December 2011 (RP 2.50 kg/stake); January 2012 (Urea 1.25 kg/stake); February 2012 (MOP 1.25 kg/stake). Organization has Fertilizer Application Details to monitor manuring activity per block that itemizes: manuring block, block width, types of fertilizer, and amount given to per stake of oil palm. Achievement level of manuring is monitored through Monthly Manuring Report which itemizes types of fertilizer should be given; width of manuring area planned; realization of manuring area; and achievement percentage. Sample of manuring activity in KMU 6 February 2012: 1. MOP – 70,606 tons – realization 395 hectares – achievement 100% - completed 2. RP – 141,212 tons – realization 395 hectares – achievement 100% - completed PT. ADEI has the license for water waste treatment to the soil in the form of Decree of Bengkalis District Head No. 72/KPTS/I2012 (expired) and has been extended with Letter of Decree of Bengkalis District Head No. 70/KPTS/I2012 (extension). Site map of application land is available, sketch of application land networking layout, include: Application Land Pond (13.20 m x 13 m x 2.5 m) and over flow pond. PT. ADEI has conducted liquid waste and soil chemistry analysis; the analysis is conducted every month, while soil chemistry analysis is conducted annually in cooperation with Public Work Agency, Technical Executive Unit of Testing. The latest reports are in February 2012 (KU.02/UPT.P/518/2012 and KU 02.02/UPT.P/290/2011 Report of the amount of water waste monitoring result is available: March 2012: FFB (11,581.960 MT), water waste volume (11.844 M3) with the ratio of 0.98. The water waste volume used is the whole water waste volume produced by the mill and has passed through the process of Waste Water Treatment Plan (WWTP/IPAL). Total of coverage: Application Land realization 41.5 Ha and Application Land year plan covering 12.6 Ha. SPO – 4006a.4 Prepared by Mutuagung Lestari for Adei Plantation

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PT MUTUAGUNG LESTARI ASSESSMENT REPORT Application of Empty Fruit Bunch (EFB) is only carried out in KMS 3, the amount of EFB returned to the estate is about 0.02 – 3.01 % out of production. From the record of March 2012, processed FFB (11,521.560 Mt); the amount of EFB returned to estate is 960.380 tons or about 0.73 %, Balance of EFB is for power generation in KCP. Status: Full Compliance 4.3 Practices minimize and control erosion and degradation of soils. Map of soil type spreading in scale of 1:120,000 is available. 6 (six) land units are identified as follow: 1. Pfq 3.2 (7,068 ha) – Kandiudults, Dystropepts, Hapludox, and tropaquepts – sand – slope 3-8% - good to bad drainage – very deep – very low fertility. 2. Pfq 3.1 (3,841 ha) - Kandiudults, Dystropepts, Hapludox, and tropaquepts – clay, sand – slope 3-8% - good drainage – deep to very deep – low fertility. 3. Pfq 1.1 (1,910 ha) - Kandiudults, Dystropepts, Hapludox, and tropaquepts – clay, sand - slope