United Malacca halts JV ops in Sulawesi to address environmental issues raised by NGOs

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KUALA LUMPUR (Sept 25): United Malacca Bhd (UMB) is halting the operations of its 60%-owned joint venture (JV) PT Wana Rindang Lestari (WRL) in Sulawesi, to address environmental issues highlighted by non-government organisations (NGOs).

In a bourse filing, the group said NGOs had highlighted environmental issues surrounding the operations of WRL, which has a business licence to source timber products (Izin Usaha Pemanfaatan Hasil Hutan Kayu Pada Hutan Tanaman Industri) over a land area of about 59,920ha in the regencies of Tojo Una-Una and Morowali in Sulawesi.

"UMB has decided to stop work in Sulawesi until environmental concerns raised by the NGOs are addressed. Throughout this process, UMB will engage with the JV 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," it said, but did not detail what the concerns raised were.

Meanwhile, it said it has conducted an assessment on the soil and terrain of the land, and that an environmental assessment report has also been completed and approved by the authorities. "To provide additional assurance to all stakeholders, UMB's board will look into the additional environmental concerns raised," it added.

UMB acquired the 60% stake in WRL for US$7.2 million in August 2018, as part of its long-term plan to diversify its crop mix into the planting of cash crops such as stevia, coconut, cocoa and coffee to widen its earnings base beyond palm oil.

The group started land clearing activities on WRL's land in 2019, it said.

Shares in UMB were not traded today. The stock last settled at RM4.70 on Sept 23, which gave it a market capitalisation of RM985.92 million.

Tan Choe Choe