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PT. MUTUAGUNG

LESTARI

SURVEILLANCE REPORT

Roundtable on Sustainable Palm Oil Certification

[√]S-1 [ ] S-2 [ ] S-3 [ ] S-4 [ ] Re-Assessment

Plantation Management/Owner : MINAMAS PLANTATION –

SIME DARBY Plantation Sdn Bhd

Plantation Name : Alur Dumai POM (PT. LAHAN TANI SAKTI)

Location :

Rokan Hilir District, Riau Province, Indonesia

Certificate Code : MUTU-RSPO/011

Date of certificate issue : 16 January 2012

Date of expiry of certificate : 16 January 2017

Assessment Assessment Date

Report Finalization

Date

PT. Mutuagung Lestari Auditor

Checked by

Approved by

ST-2 18-23/10/2010 01/07/2011 Aryo Gustomo; Hera Hendrasana;

Henry Marpaung; Ibnu Satria

Prabudi

Taufik

Margani

Tony

Arifiarachman

S1 22-25/10/2012 24/11/2012 Octo HPN Nainggolan, Oktovianus

Rusmin, Marsudi Eko Santoso,

Ardiansyah, Moh Arif Yusni

Taufik

Margani

Tony

Arifiarachman

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

Submitted to RSPO on:

Approved by RSPO on:

Approved by Certification Body on:

1 February 2013

1 November 2012

http://www.mutucertification.com/

PT. MUTUAGUNG

LESTARI

SURVEILLANCE REPORT

SPO – 4006a.4 i Prepared by Mutuagung Lestari for PT. Lahan Tani Sakti – Alur Dumai POM

TABLE OF CONTENT

FIGURE

Figure 1. Location Map of PT. Lahan Tani Sakti Figure 2. Operational Map of PT. Lahan Tani Sakti

1 2

1.0 SCOPE of the SURVEILLANCE ASSESSMENT

1.1 National Interpretation Used 3

1.2 Organization Information 3

1.3 Type of Assessment 3

1.4 Location of Plantations, Mill and Area Statement 3

1.5 Description of Supply Base 4

1.6 Dates of Plantings and Cycles 4

1.7 Tonnage Certified 5

1.8 Other Certifications 6

1.9 Time-Bound Plan for Other Management Units 6

2.0 ASSESSMENT PROCESS

2.1 Certification Body 7

2.2 Assessment Team 7

2.3 Assessment Methodology, Assessment Process and Locations of Assessment 7

2.4 Stakeholder Consultation and List of Stakeholders Contacted 9

2.5 Date of Next Surveillance Visit 10

3.0 ASSESSMENT FINDINGS

3.1 3.2

Summary of Assessment Report of the RSPO Certification Summary of Assessment Report of Supply Chain Requirement

10 29

3.3 Conformity Checklist of Certificate and Logo Use 33

3.4 Summary of Time Bound Plan Verification of the RSPO Certification 34

3.5 Identification of Findings, Corrective Actions, Observations, Opportunity for Improvement and Noteworthy Positive Components

35

3.6 Summary of Arising Issues from Public, Management and Auditor Responses 43

4.0 CERTIFIED ORGANIZATION’S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

4.1 Formal Signing of Assessment Findings 45

APPENDICES

1. List of Stakeholders Contacted in the RSPO Certification Process 48

2. Assessment Plan 49

3. Glossary 51

PT. MUTUAGUNG

LESTARI

SURVEILLANCE REPORT

SPO – 4006a.4 i Prepared by Mutuagung Lestari for PT. Lahan Tani Sakti – Alur Dumai POM

Figure 1. Location Map of PT. Lahan Tani Sakti

PT MUTUAGUNG LESTARI

ASSESSMENT REPORT

SPO – 4006a.4 2 Prepared by Mutuagung Lestari for PT. Lahan Tani Sakti – Alur Dumai POM

Figure 2. Operational Map of PT. Lahan Tani Sakti

PT. MUTUAGUNG LESTARI

ASSESSMENT REPORT

SPO – 4006a.4 Page 3 Prepared by Mutuagung Lestari for Sime Darby Plantation, PT. Lahan Tani Sakt i – Alur Dumai POM

1.0 SCOPE OF THE CERTIFICATION ASSESSMENT

1.1 National Interpretation Used National Interpretation, RSPO Principles and Criteria (P&C) for Sustainable Palm Oil Production, Republic

of Indonesia - RSPO INA-NIWG, May 2008 and RSPO Supply Chain Certification Standard November

2011.

1.2 Organization Information

1.2.1 Company name MINAMAS Plantation – SIME DARBY Group

1.2.2 Contact person Mohamad Pirabaharan

1.2.3 Company address The Plaza Lt. 36 JL. MH Thamrin Kav. 28-30 Jakarta 10350

1.2.4 Telephone +62-21-29926000

1.2.5 Fax +62-21-29922686

1.2.6 E-mail [email protected]

1.2.7 Web page address www.simedarby.com

1.2.8 Company status Private

1.2.9 Management Representative who completed the application for certification

Mohamad Pirabaharan (Head of PSQM Minamas Plantations-Sime Darby)

1.2.10 Registered as RSPO member 8 September 2004

1.3 Type of Assessment

1.3.1 Scope of Assessment Palm oil Mill and Estate

1.3.2 Type of certificate Single

1.3.3 Company names listed in the certificate PT. Lahan Tani Sakti

1.3.4 Number of management unit 1 (one) palm Oil Mill (Alur Dumai POM) which receives FFB supply from 1 (one) unit estates Alur Dumai Estates (ADE)

1.4 Locations of Mill, Plantations and Area Statement

1.4.1 Location of Mill

Name of Mill Location

GPS

Latitude Longitude

Alur Dumai Estate Sub District of Pujud,District of Rokan Hilir, Province of Riau

1° 28' 38" - 1° 36' 31" 100° 28' 29" - 100° 34' 39

1.4.2 Location of Estate(s)

Name of Estate(s) Location

GPS

Latitude Longitude

Alur Dumai Factory Sub District of Pujud,District of Rokan Hilir, Province of Riau

1° 33' 40 01" 100° 32' 30 08"

1.4.3 Country/Region Indonesia / South East Asia

1.4.4 Tenure

Private

State 3,759.14 Ha*

mailto:[email protected]

http://www.simedarby.com/


ASSESSMENT REPORT


Community

1.4.7 Area Statement

Total area 3,759.14 Ha

Mature area 2,416.3 Ha

Immature area 983.65 Ha

Mill 12.33 Ha

Emplashment 39.8 Ha

Infrastructure 84.2 Ha

Nursery 6.4 Ha

Occupation 193.09 Ha

HCV 23.1 Ha

1.5 Description of Supply Base

1.5.1 Description of Mill

Name of Mill Capacity

(tonnes/ hour)

FFB Processed

(tonnes/ year)

CPO Palm Kernel PKO

Out put (tonnes)

Extraction (%)

Out put (tonnes)

Extraction (%)

Out put (tonnes)

Extraction (%)

Alur Dumai 15 53,042 11,886 22.41 2,689 5.07 - -

*Source Production Data on October 2011 – September 2012

1.5.2 Description of Estate(s)

Name of Estate(s) Total Area

(Ha)

Planted Area (Ha)

FFB (tonnes/year)

Yield (tonnes/ha/year)

Supplied to Mill

FFB (tonnes/year)

%

Alur Dumai Estate 3,759.14 3,400 60,225 17.7 53,042 88

*Source Production Data on October 2011 – September 2012

1.5.3 Smallholder(s) and others

Smallholder(s)

Scheme Member(s) Location

Total Area (Ha)

FFB (tonnes/year)

Supplied to Mill

FFB (tonnes/year)

%

- - - - - - -

PT. Lahan Tani Sakti – Alur Dumai POM does not reveived smallholders FFB

1.5.4 Product categories FFB/CPO/PK/PKO

1.6 Dates of Plantings and Cycles

1.6.1 Age profile of planted palms*

Planting Year

Hectarage (Ha)

Alur Dumai Estate Total

1989 53.3 53.3

1990 154.7 154.7

1991 113.8 113.8


ASSESSMENT REPORT


1992 561.9 561.9

1993 50.3 50.3

1994 82.2 82.2

1995 95.9 95.9

1997 147.2 147.2

1999 40.5 40.5

2000 124.4 124.4

2003 215.2 215.2

2004 152 152

2005 99.5 99.5

2006 189.7 189.7

2007 335.7 335.7

2009 509.11 509.11

2010 224.61 224.61

2012 249.93 249.93

Total 3,400

1.6.2 New Planting area after November 2005 1509.5 Ha

1.6.3 Planting Cycle 1(One) Cycle 25 Years

1.7 Approximate Tonnage Certified

1.7.1 Past Annual Claim Certified Product

FFB Production 47,766 Tonnes/year

CPO Production 10,866 Tonnes/year

Palm Kernel (PK) Production 2,268 Tonnes/year

Palm Kernel Oil (PKO) Production - Tonnes/year

1.7.2 Claim Certified Tonage of FFB

Name of Estate(s) Total Area

(Ha) Planted Area

(Ha) FFB

(tonnes/year) Yield

(tonnes/ha/year)

Alur Dumai Estate 3,759.14 3,400 60,225 17.7

1.7.3 Claim Certified Tonage of Palm Product

Name of Mill Capacity

(tonnes/ hour)

FFB Processed

(tonnes/ year)

CPO Palm Kernel PKO

Out put (tonnes)

Extraction (%)

Out put (tonnes)

Extraction (%)

Out put (tonnes)

Extraction (%)

Alur Dumai 15 60,225 13,496 22,41 3,053 5,07 - -

1.8 Other Certifications

1.8.1 ISO 9001:2008/ISO 14001: 2004 -

1.8.2 OHSAS 18001:2007 -


ASSESSMENT REPORT


1.8.3 HACCP -

1.8.4 Others -

1.9 Time Bound Plan for Other Management Units

Management Unit

Address Hectarage

(Ha) *) Time Bound

Plan Complete

Audit

PT. Indotruba Tengah Seruyan and Kotawaringin Barat District – Central Kalimantan Province

7,734.60 2009 Certified

PT. Tunggal Mitra Plantations Rokan Hilir District – Riau 13,836 2009 Certified

PT. Aneka Inti Persada Pekanbaru and Siak District– Riau 11,134 2010

Certified

PT. Bahari Gembira Ria Muaro Jambi District – Jambi 1,202.04 2010 Certified

PT. Bina Sains Cemerlang Musi Rawas District- South Sumatera 6,513 2010 Certified

PT. Bhumireksa Nusa Sejati Indra Giri Hilir District– Riau 25,662 2010 Certified

PT. Kridatama Lancar Seruyan and Kotawaringin Timur District – Central Kalimantan Province

14,779.92 2010

Certified

PT. Lahan Tani Sakti Rokan Hilir District– Riau 3,759.02 2010 Certified

PT. Ladangrumpun Suburabadi

Tanah Bumbu District – South Kalimantan Province

6,077 2010 Certified

PT. Sajang Heulang Tanah Bumbu District – South Kalimantan Province

7,794 2010

Certified

PT. Bersama Sejahtera Sakti Kotabaru District – South Kalimantan Province

13,925 2010 Certified

PT. Teguh Sempurna Seruyan and Kotawaringin Timur – Central Kalimantan Province

16,601.66 2010

Certified

PT. Budidaya AgroLestari Ketapang District – West Kalimantan Province

1,002 2011 Audited

PT. Guthrie Pecconina Indonesia

Musi Banyuasin District – South Sumatera Province

10,139.91 2011

Certified

PT. Langgeng Muaramakmur Kotabaru District – South Kalimantan Province

16,361.77 2011

Certified

PT. Mitra Austral Sejahtera Sanggau District – West Kalimantan Province

8,741.29 2011 Audited

PT. Padang Palma Permai Aceh Tamiang and Aceh Timur - Nangroe Aceh Darussalam

6,451.99 2011

Audited

PT. Paripurna Swakarsa Kotabaru District – South Kalimantan Province

14,892 2011

Certified

PT. Perusahaan Sri Kuala Aceh Tamiang District - Nangroe Aceh Darussalam

1,128.90 2011

Certified

PT. Sandika Natapalma Ketapang District – West Kalimantan Province

8,406.21 2011

Audited

PT. Swadaya Andika Kotabaru District – South Kalimantan Province

10,361.18 2011

Certified

PT. Tamaco Graha krida Morowali District – Central Sulawesi Province

4,145.00 2011

Certified


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 Lead Assessor and Assessment Team

2.2.1 Assessment Team

S1 The assessment team was consisted of: 1. Octo Nainggolan (Witnesses). A bachelor of Agriculture, majoring of Social Economics of Agriculture

(Agribusiness). He has a working experience since 2004 oil palm Plantation Company in Indonesia. Trainings attended namely: Training of Conservation of Natural and Biological Resources in supporting HCV, Basic Plantation Management Program, Plantation Integrated Pest Management training, Followed the Management System Certification (ISO 9001-2008/SNI 19011-9001:2008), Environment Management System (ISO 14001:2004) , RSPO Lead Auditors Training Course, Indonesian Sustainable Palm Oil (ISPO) Lead Auditor training course and supply chain certification system training by BM Trada. Currently, he worked at Professional Certification Body. In the assessment activity, he assessed on legal aspect, best practices, environment aspect, social aspect, workers welfare, FFB Processing and supply chain requirement.

2. Oktovianus Rusmin (Lead Auditor Witnessed). Bachelor’s Degree in Social & Political Sciences Department of Anthropology. Specialists in the field of Social and Cultural (Social Impact & Conflict Resolution) and HCVF. Followed the Forest Management Auditor Training (FSC Standard), ISO 14001 Environmental Management System Training & SVLK (wood legality) auditors, Indonesian Sustainable Palm Oil (ISPO) Auditor and Management System Certification (ISO 9001-2008/SNI 19-9001:2008) Lead Assessor. He was several times involved in the assessment of Sustainable Forest Management Certification (Standard LEI). Had worked at the Center for the study of Anthropology, University of Indonesia; and experts to the field of Social Tropical Forest Trust (TFT) Indonesia. He was numerously involved the Social Impact Study and Identification HCV in Oil Palm Plantations and natural forest concessions. In this assessment activity, he conducted assessment of social, legal and land concession.

3. Marsudi Eko Santoso (Auditor). Bachelor of 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 this surveillance activity, he assessed on Best Practices, Soil and water conservation, Integrated Pest Management and safety and health.

4. Ardiansyah (Trainee Auditor). Bachelor of Forest Resources Conservation, Department of Forestry, Bogor Agricultural University. He has followed several activities such as preparing EIA document for plantation and plantation forest, assistance in the GAP analysis, and helped draft the HCV document. It has been several times following audit activities related to sustainable palm oil certification system as an auditor. In this Surveillance-1 assessed the environmental aspects, HCV, soil and water conservation.

5. Moh. Arif Yusni (Observer).

2.3 Assessment Methodology, Assessment Process and Locations of Assessment

2.3.1 Assessment Dates

S1 22-25 October 2012

2.3.2 Estimate of person days to implement assessment

S1 Number of auditors : 4 persons Number of days for S-1 at site : 4 days Number of working days for S-1 at site : 16 Man days

http://www.mutucertification.com/

mailto:[email protected]


ASSESSMENT REPORT


2.3.3 Detail process of assessment

S1 The assessment was conducted by measuring the sufficiency of implementation with the consistency done by the PT. Lahan tani Sakti (PT. LTS) 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: (1) document review, aiming to observe the sufficiency of types or substances from required documents; (2) interview, aiming to obtain more detailed information and cross check the information; and (3) field visitation, aiming to observe directly the sufficiency of implementation on site. Some opportunities for improvement of the results Surveillance-1 delivered by the auditor MAL to the management unit and the results are the subject will be verified at the next assessment phase (Surveillance-2). Improvement of findings from main assesment findings were observed by auditors at this first surveillance assessment. All information obtained was recorded in Check List of PT Mutuagung Lestari (MUTU) and part of Surveillance report. The assessment process please find Appendix 4

2.3.4 Locations of Assessment

S1 Location of field observations:

1. Sri Kayangan Village. Interviews with village officials regarding the impact of oil palm plantation existence, CD/CSR implementation of PT. LTS, and clarification with a villager signing the resolution agreement of land dispute in the village.

2. Tangga Batu Village. Interviews with local contractors regarding the collaborations which have been done with PT. LTS (work contract and payment mechanism, etc.).

3. Pondok Kresek Village. Interviews with village officials regarding the impact of oil palm plantation existence, CD/CSR implementation of PT. LTS.

4. Workshop. Interviews with certified welders, the handling of hazardous waste in the form of used oil in traction, emergency response equipment supplies

5. Block G012. Observations on HCV area and the availability of HCV area notice boards and protected animals posters

6. Employees Housing division I. Observations on the condition of facilities and infrastructures in housing complex.

7. Block G011. Observations on monitoring wells application and liquid waste application on the land. 8. Block F009. Observations of empty bunch application which was done according to the results of MRC

recommendation. 9. Interviews with the contractors (the drivers of empty bunches transportation). Interview with Mr. Adil on the

monthly wage received and PPE received. 10. Block F007. Observations and interviews with a harvester (Mr. Sitompul) and harvest foreman regarding

harvesting activities. The observation results showed that the harvester understood proper harvesting techniques, wore Personal Protective Equipment, performed the harvesting with harvest ripe criteria of >10 loose fruit. It also showed that the company provides basic wages in accordance with Provincial minimum wage, natura wage (35 Kgs of rice for wife and children) and also provide premium; the company also implement a 3 month-training for new harvesters with foreman’s assistance. The harvest foreman has understood occupational accidents potentials and first aid emergency; the foreman is equipped with first aid emergency box.

11. Employees Housing division II. Observations on the condition of facilities and infrastructures in housing complex.

12. Block D007. Observations and interviews with the Spraying Foreman and spraying workers regarding good and proper spraying techniques, periodic checkups performed regularly by the company, the use of complete Personal Protective Equipment, the provision of pudding extract in the form of egg and milk for the workers, the prohibition of spraying in the riparian, the provision of reproductive rights in forms of maternity leave and breastfeeding in 2002, the provision of wage in accordance with Provincial Minimum Wage and observation on boundaries pole No. 116.


ASSESSMENT REPORT


13. Clinic. Observations and interviews with the nurses regarding the clinical waste management, periodic check up and health services.

14. Day Care. Observations and interviews with a care worker (Mrs. Lastun) regarding her job transfer from a spraying worker to a care worker because she was pregnant and interview son day care facilities and the provision of wage to a care worker.

15. E006 (Pole No. 124), Block D007 (Pole No.116), Block G007 (Pole No.172) and Block B001 (Auxiliary Pole). Observations on the proof of poles maintenance activities implementation. The poles were found in good condition and well maintained.

16. Blok G011. Observations and interviews with manuring workers and manuring foreman regarding good and proper manuring techniques, periodic check-ups which have been performed regularly by the company, the use of complete Personal Protective Equipment, the prohibition of manuring in the riparian, the provision of reproductive rights in forms of maternity leave and breastfeeding in 2002, the provision of wage in accordance with Provincial Minimum Wage.

17. Block C001. Observations and interviews with Foreman I regarding the existence and the nursing of legume crops.

18. Block G001. Observations and interviews with Foreman I regarding terracing in Replanting area and not found HCV in the replanting area.

19. Collection Road 8/Block F005. Observation the existence of beneficial plant of Integrated Pest Management program.

20. Block G04. Observations and interviews with estate assistant regarding the existence and the condition of barn owl nests (rats’ bone and barn owls’ dung were found).

21. BSS House Division II. Observations on the location of PPE washing and work equipment and the management of washing waste water.

2.4 Stakeholder Consultation and List of Stakeholders Contacted

2.4.1 Summary of stakeholder consultation process.

Summary of stakeholder consultation process Consultation of stakeholders for LTS was held by public consultation meeting with internal stakeholders by interviews and local stakeholders conducted by visits to villages and interviews with local peoples. Numbers of input from stakeholders were clarified by LTS.

2.4.2 List of stakeholder contacted

Please find appendix 3

2.5 Determining Next Visiting

The next visit (Surveillance 2) will be determined one year after this surveillance-1 (October 2013).


ASSESSMENT REPORT


3.0. ASSESSMENT RESULT 3.1. Summary of Assessment Report of the RSPO Certification

MUTUAGUNG LESTARI has conducted a Surveillance-1 assessment of PT Lahan Tani Sakti – Alur Dumai POM, Sime

Darby Operation consisting of 1 (one) mill and 1 (one) oil palm estates. MUTUAGUNG LESTARI found that PT Lahan

Tani Sakti comply with the requirements of RSPO Principles & Criteria and National Interpretation, RSPO Principles and

Criteria (P&C) for Sustainable Palm Oil Production, Republic of Indonesia - RSPO INA-NIWG, May 2008.

Therefore MUTUAGUNG LESTARI recommends a certificate of compliance is maintained.

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.

Management Unit of PT. LTS has SOP of Request for Information (001/LTS-PI/09) which is valid from 4 March 2009 which aims to provide guidance in making responses of information requests from stakeholders addressed to Operations Unit. According to the SOP, requests for information will be studied and answered by the Operations Unit Manager, and the letter draft and/or the reply letter made by the Head of Section / KTU. Outgoing and incoming mails from and to Operation Unit are stored in the Head Office. The time procedures of the process of requests and responses to the requests for information are contained in 1 to 2 weeks. The company has been disseminating SOP of Request for Information to the parties, for example: On 19 September 2012 in Sri Kayangan village and Pondok Kresek Village. There are examples of requests records, for example Letter No.525/DISBUN/EP/201157.2 dated 29 November 2011 from the Plantation Agency of Rokan Hilir regarding Request for Information Data Assistance for the Preparation of Plantation Statistical Data and Compulsory Company Manpower Report Number 1409/0061/2009/DTKT/0061/2012 dated 21 May 2012 from the Agency of Manpower and Transmigration of Rokan Hilir District. There are records of responses to requests for information, such as Data of Area and Production as a form of response to Letter No.525/DISBUN/EP/201157.2 dated 29 November 2011 of Plantation Agency of Rokan Hilir District regarding Request for Information Data Assistance for the Preparation of Plantation Statistical Data.

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.

SOP of Requests for Information (001/LTS-PI/09) which is valid since 04 March 2009 explains the type of confidential documents and documents that can be accessed by public. According to the SOP, documents can be accessed by public among others are: a. Environmental Management Plan / Environmental Monitoring Plan for the plantation activities of PT. LTS. b. Recapitulation of CSR containing the records of company's contribution to local development. c. Records of the policy and the implementation of Occupational Health and Safety for the estates and POM. d. Mapping of HCV areas and the management plans. PT. LTS already has procedures for Records Management (RSPO/P&C), which aims to ensure that the identification, collection, storage, maintenance and removal of notes or records are well-executed for easy retrieval. This procedure contains validity period and records removal, among others: the needs of audit inspection / assessment is 3 years, as reference documents is 10 years, the legal / governments regulation until there is a revision, customer request is 3 years, the company's policy is 3 years and records of land compensation is unlimited.



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.

List of Regulations or Legislations that have been updated (updated up to September 2012) by the management of PT. LTS according to the aspects of the regulations (there are 53 rules according to the aspects, for example related to legality, Environment, OHS & Employment, etc). LTS has completed the compliance with relevant regulatory, including: 1. There is Hazardous Waste Landfill permit in accordance with Environmental Impact Control Agency of Rokan Hilir

District No. 25/BPDL/2011 dated 5 July 2011 regarding the Permit for Temporary Storage of Hazardous and Toxic Waste to Palm Oil Mill (POM) of PT. Lahan Tani Sakti referring to Government Regulation No.18 year 1999.

2. The evidence of goods delivery on the date of 29 September 2011, regarding the delivery of Quarterly Environmental Monitoring Report of Report for period of April - June 2011; Reports of environmental management plan /environmental monitoring plan for Semester II year 2011, and the Quarterly Hazardous Waste Balance for period of October to December 2011.

Minor non compliance CAR.2010.04 is closed.

There is the List of Regulations Types (updated) up to September 2012 stored in the Office of PT. LTS and the Evaluation of Compliance with those Legislation and regulations. Several regulatory compliances have been verified by the auditor for instance: Related to Minimum Wage for Subsector of Agriculture / Plantation of Coconut and Oil Palm And Rubber Plants of Riau Province in 2012 according to Riau Governor Regulation No. 11 Year 2012 dated 6 March 2012 which is of IDR 1,389,450, Minamas Plantation (Human Resource Management) has issued Memorandum No. 045/HRM-13/IV/2012 dated 2 April 2012 regarding the wages of Daily Permanent Employees (SKU) &the Salary Structure of Monthly Permanent Employees (SKU) of Plantation in 2012 to make adjustment to the Riau Governor Regulation Year 2012.


2.2 The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights

The documents of land tenure: The company has land tenure documents such as Land Use Title (HGU) Certificate No. 3 (3,187.579 hectares) on 19 January 2001 and No. 4 dated 19 December 2000 (covering 571.435 hectares) with a total area of 3,759.014 hectares in accordance with the Decree of the Head of National Land Agency no. 45/HGU/BPN/2000 dated 3 October 2000. The whole area owned has been measured and mapped by the National Land Agency and is available in the location. Documents of Land Use Permit: There are Business Permit documents available according to Decree of Investment Coordination Board No. 108/T/PERTANIAN/2005 which states that Plantation Business Permit is given to PT. Lahan Tani Sakti for the Sector of Oil Palm and Rubber Plantation Business. Currently, all businesses engage in oil palm sector on the basis of the letter of Plants Type Change Approval No. 2385/PD.320/E1/7/2010 from the Plantation Directorate General of Agriculture Ministry. There are legal proofs of boundary poles in the forms of Land Area Map for Div I, II, IV area with the scale of 1:20,000 and Div. III map with the scale of 1:10,000 made by National Land Agency in the form of Boundary Perimeter Map (Land use Title) with areas of 3,187.579 hectares (Div I, II and IV) and 571.435 hectares (Div III), which was signed by the Head of Measurement and Land Registration of National Land Agency of Riau Regional Office on 19 June 2000. There are Documents of Program and Realization of Estate Boundary Poles Replacement for Period of 2012/2013. Based on the boundary poles identification number of missing poles is 472 pieces, poles replacement plan for year 2012/2013 is as many as 247 pieces and up to October 2012 and the replacement has been done for as many as 154 poles. There are also the Minutes of Replacement and Maintenance of National Land Agency Poles on 20 September 2012 at Division II Block G005, G004, G006 and F004 as many as 6 poles. The document of estate boundary poles replacement for budget period of 2013/2014 is available. The program plan mentioned above is for the activities of Boundary Poles Replacement as many as 163 poles. Minor non compliance CAR.2010.38 is closed


ASSESSMENT REPORT


There is a notification letter to National Land Agency No. 022/LTS/PSD/UM/X-2012 concerning requests for provision of assistance on the poles installation and poles installation verification on 17 October 2012. The results of the field visits in Block E006 (Poles No. 124), Block D007 (Poles No. 116), Block G007 (Poles No. 172) and Block B001 (Auxiliary Poles) showed that the poles were in a good condition and well-maintained. LTS has conflict resolution procedures. The procedure is implemented and there are proofs of the conflict resolution in the forms: correspondence between Estate Manager and PSD Manager, Minutes of Joint Agreement, reports of compensation realization, letters from the village officials to Management Unit of PT. LTS, proof of compensation payment (receipt), waiver of land rights, photographs of resolution process and payment of compensation, and the proofs of land rights. Resolution process has involved the parties, in this case, village and district officials. Minor non compliance CAR.2010.39 is closed

Status: Compliance with observation

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.

Based on the information from Pujud Sub district Officials (Head of Sub district and Secretary of Sub district) that the existence of customary rights/hak ulayat (customary land) should be based on the local regulation, and in Riau there has not been any regulations on land customary rights. In fact, in Pujud areas there are no land customary rights. The information from the Sub district Officials is corroborated by the information obtained from Sri Kayangan Village official (Secretary of Village) that there is no existence of customary rights in the area. Based on the documents of HCVA identification results conducted by Pollito Consultant in 2010, there were no areas that are in the ownership of indigenous people.

Complied

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.

The company has established long-term work plan documents named Analisa Biaya Total (Total Cost Analysis)-Final in the form of budget of 2012/13 and projections for 2014-2016. The document is used as a guide in the Estate operation, informing among others: Production (tons), Fixed Cost (consisting of Estate admin, Road & Bridges, labor (including ESH estate), HO admin and depreciation), Direct Cost consists of mature upkeep (spraying, manuring, harvesting & collection, transport); Cost for replanting. The company has also set a Budget document (plans) of 2012/2013 and projections for 2013-2015 for Alur Dumai POM containing the information of processed FFB (kg), CPO (kg), PK (kg) OER (%) and KER (%) and direct cost and fixed cost (e.g. Training, ESH, Social, etc.). The company has set replanting program of 2010 - 2030 (Long Range replanting Program) with criteria: minimum General Replanting of 20 years and Yield per Hectare of 14-16 tons / hectares. It is mentioned in the document that PT. LTS will undertake replanting in the year 2011/2012 covering an area of250 hectares (already realized) and in 2012/2013 covering an area of 202 hectares. The company has also established procedures of replanting. Part 3 of the Agronomy Reference Manual No. Policy. 110/EST-ARM/08 containing replanting policies and criteria. In determining the area to be replanted, the company has conducted a study in the form of Justification of oil palm replanting program in accordance with long range replanting program of 2012-2030 in Alur Dumai Estate containing the reasons for replanting by observing historical data of plant population per hectare and achieved production in tons per hectare. The company has set replanting program of 2012 - 2030 (Long Range replanting Program) General with criteria: minimum General Replanting of 20 years and Yield per Hectare of 14-16 tons / hectare. It is mentioned in the document that PT. LTS will undertake replanting in the year 2012/2013 covering an area of 202 Hectares. The company also found materials / plant sources that generate the potential production of 30 tons / hectare (sprouts from Oil Palm Research Center/PPKS and Socfindo). There are examples of the examination results of Seed from Oil Palm Research Center by the Office of Seed and Plant Protection of Medan No. B.502/LB.620/E8/PPKS/X/2011 (seed has met the standards of Quality Seeds) and Certificate of Oil Palm Seed from PT. Socfin Indonesia (Socfindo) No. 33935/2011-19 October 2011.

Status: Full Compliance.


ASSESSMENT REPORT


PRINCIPLE #4 Use of appropriate best practices by growers and millers

4.1 Operating procedures are appropriately documented and consistently implemented and monitored.

The company has the procedures starting from FFB receipt, processing until CPO and PKO dispatch for operational activities of Alur Dumai Palm Oil Mill authorized on July 26, 2010 by the Head Plantation Operations (HPO) which contains among others: 1. SOP No.110/POD-FAC/07,

CHAPTER I. Basics of Oil Palm Processing activities: Fruit receipt (1.1), Sterilization (1.2), Striping (1.3), Digesting (1.4), Pressing (1.5), Purification (clarification) (1.6), Separation of palm kernel and pulp (1.7), Kernel Station (1.8), CHAPTER II. Stockpiling Oil and Palm Kernel, including Palm Oil Stockpiling (2.1), Laboratory Management (5.9), etc.

2. SOP No.110/POD-FAC/07 Boiler (6.1), Power Plant Engine (6.2), Types of Power Plant (6.3), Occupational Security and Safety (6.10), etc.

3. SOP No.130/POD-FAC/07 Fundamentals of Oil Palm Processing, including General Description (I), the Organization of POM (II), the Administration Procedures of POM Operations (III), the Administration Procedures of CPO or PKO delivery (3.3)

The company has mechanism for monitoring operational activities at the mill and the estates. Inspection activities in the estate include:

Plantation advisory, which was last conducted in December 2011.Points examined include: Harvesting costs, nursing costs of mature and immature plants.

Work sheets of the conclusion of Assessment by Internal Auditor, Semester II of 2011/2012 in July 2012, PT. LTS.

ESH Audit which is conducted once a year. The last assessment was conducted on 20 September 2012 by ESH Manager and PSQM Staff)

There is assessment of operational activities in the POM, among others:

Work sheets of the conclusion of Assessment by Internal Auditor, Semester II of 2012/2013 in September 2012 and the points examined are related to finance at POM.

Mill Advisory semester I of 2012/2013 on 30-31 August 2012, the assessment was regarding the performance of the mill.

The company also periodically reports operational activities in estates and mills. The results of operational activities are set forth in the Monthly Report of Estate Unit made by the Estate Manager. The document stated information on all operational activities in estates and mills.

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 Analysis Report dated 9 May 2012 based on sampling data on 23 April 2012 is available. For example, sample from Block D013 Division I LSU No. ADE-0101-A,the analysis results: ASH 10.82%, N 2.98%, P 0.142%, K 1.042%, Mg 0.205%, Ca 0.528%, FE 104.6 PPM, Cu 4.8 PPM, Zn 13.48 PPM. The records of the results of the soil analysis are available in the form of Soil Analysis Result by Minamas Research Center on 21 - 27 October 2010 for Alur Dumai Estate. Soil analysis will be conducted every 5 years. The analysis of the increase in fertility in terms of Yield Trend is available, which is contained in the Technical Field Report conducted in December 2011 in the Table of Ton / Hectare ADE. For example, in Block G012, planting year 2006, the yield 10/11 was 11.58 tons / hectare and productivity in 2011/2012 was 21.61 tons / hectare The records of activities to improve soil fertility are available, among others: 1. The report documents of the empty bunch and Effluent Applications 2012-2013 ADE explaining about:

• EFB Application Data of 2012/2013 informing about the Block, and the volume of EFB applications realization with research Recommendation of 200 Kg /palm/year.


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• Monthly effluent application data informing about the location of Blocks and Effluent Applications Volume with the Flat bad number of 211 units, covering an area of 4.2 hectares and volume of 330 tons/month.

2. Documents of manuring realization and recommendations in July 2012 - June 2013. For example, Block E014 the urea application in September 2012 was realized in accordance with the recommendations (2.5 Kg/palm/year).

3. Documents of Legume Crops Planting Activities realization for period of July - September 2012 are available. Legume Crops Planting accordance with SOP of Estates (Agronomic Manual No. 5xx/PTK-KCG/2004).

Status; Full Compliance

4.3 Practices minimize and control erosion and degradation of soils.

The company has also showed the land class slope map created by CV Pollito, showing slope level of land in PT. LTS. Based on the map, most of the land slope is 0-8% and 5-8%, and there is a small area with a slope of more than 40% (block F50/G50). The company already has a management strategy for planting on particular slopes, among others: - The construction of conservation pit on slightly sloping land (slope of 8 - <14%) with the length of 6 m, top width of

0.6 m, bottom width of 0.4 m, depth of 0.6 m, and the distance between conservation pits of 24 m. - The construction of continued terraces on sloping land (slope of 14 - <25%) and on extremely sloping land (slope

of > 25%). - Land in estate area with a slope angle of> 40% (or > 21.800) is intended as reserve land which is cultivated or

uncultivated, if in the area there has been vegetation plants, they shall be preserved / maintained and recommended for being planted by of forest trees.

In addition, there is the work plan and realization program of for the road maintenance of 2012-2013 period (226,872 M) and had been realized for 35,960 M up to September 2012.


4.4 Practices maintain the quality and availability of surface and ground water.

The management of Minamas Plantation has a policy in order to protect water flow and wetlands, including keeping and maintaining riparian areas, in the form of Memo document No. POD-UM-061/IV/2010 from the Head of Plantation to all estate managers, which contains: productive oil palm trees located along the river should not be applied with inorganic fertilizer manually and should not be treated chemically; the replanting area of 50 meters on left and right sides of the natural river flow should not be cut down and need to be gradually replaced with local woody plants. Based on field visit and interview with sprayers is known that productive oil palm trees located along the river should not be applied agrochemical. The Company has conducted periodic testing for application monitoring wells, non-application monitoring wells, employees’ wells and pit water trench quality. There are no parameters that do not meet quality standards, except for the parameter of pH in employees’ wells and an evaluation on the test results has been conducted. Water quality standard refers to Regulation of Health Ministry No. 416/MENKES/PER/IX/1990. The tests were conducted by the Testing Technical Unit, Public Works Agency and Government of Riau Province. Records of monitoring of the effluent BOD on raw effluent and effluent treatment conducted every month are available. There are no parameters that do not meet quality standards. Effluent quality standard refers to Decree of Environment Minister No. 28 year 2003 and Governor regulation No. 35 year 2007. The test was conducted by the Testing Technical Unit, Public Works Agency, Government of Riau Province. Available records of water usage per month for the mill, such as the use of water for FFB processing for 1 year (2011-2012) were as much as 100,329 M3 for processing 54,018 tons of FFB.


4.5 Pests, diseases, weeds and invasive introduced species are effectively managed using appropriate Integrated Pest Management (IPM) techniques.

The company has a mechanism of Early Warning System to ascertain the level of pests and diseases in the estate area are below the economic threshold, which is done every month.


ASSESSMENT REPORT


IPM programs are available including: 1. Work Sheet Document of Nettle Caterpillars Control (Budget of 2012/2013), which consists of: planting beneficial

plant from Turnera subulata type, Casia cobanensis and Antigonon leptosus around the work area of PT. LTS; 2. Work Sheet Document of Rats Control (Budget of 2012/2013), which consists of: the making and installation of nest

boxes for maintaining owls as rats control and predator as many as 59 pieces 3. Work Sheet Document of Oryctes Control consisting of census, population and control strategies.

As the implementation of those procedures, the company already has the following records: 1. Planting realization of beneficial plant until September 2012

• Cassia cobanensis as long as 20,344 m • Antigonon leptopus as long as 3,010 m • Turnera subulataas long as 51,349.05

2. Map of owl nests position with details of division I: 20 units, division II: 26 units, Division III: 17 units and division IV: 21 units. Monitoring in September 2012 of owl developments as in the division I: 4 adults, 4 juveniles and 1 eggs found; Division II:3 adults, 3 juveniles and 5 eggs found; Division III:2 adults, 2 juveniles and 4 eggs found; Division IV:2 adults, 2 juveniles and 2 eggs found

3. Monthly report of Pest and diseases control per division that includes monitoring of planting beneficial plants, nettle caterpillars census, Ganoderma, Rat and Oryctes attacks census including the area of attack and the. For example, the results of monitoring nettle caterpillar in census of June 2012 in block D011.

4. The company has conducted of IPM training on 10 July 2012 regarding the census, caterpillars controlling and integrated management of Ganoderma on 20 January 2010.

The company has monitored the toxicity of pesticides in IPM, and also has lists of active substances and LD50 of the chemicals used such as Decis 25 WC with RI registration number of 387/11-2002/T active ingredient is Delta methrin 25 g/l; pesticides used is 180 liters, active substance used is 4.5 kg; the area of application is 3,409 Hectares; the use of active ingredient per hectare is 1.32 g.


4.6 Agrochemicals are used in a way that does not endanger health or the environment. There is no prophylactic use of pesticides, except in specific situations identified in national Best Practice guidelines. Where agrochemicals are used that are categorized as World Health Organization Type 1A or 1B, or are listed by the Stockholm or Rotterdam Conventions, growers are actively seeking to identify alternatives, and this is documented.

There is Recapitulation documents of pesticides used in the period of 2011-2012 informing about Registration number of all agrochemicals used, such as: Audit 486 AS; BA: Iso Propilamina Glifosat 486 gr/l; No.Register RI.1863/9-2008/T. The Company has provided records of pesticide use in the form of documents of program and work realization of Chemical (Spraying the space between path (gawangan )is done 3 times a year, Circle of Chemise is every 3 months and the control of Imperata cylindrica is every 4 months);the information of area applied such as block names and dosages used is available. For example: spraying circle in July 2012 in Block E 005, E006 and F006 covering 152.7 hectares used Audit pesticide (active ingredient: Iso Propylamine Glyphosate 486 g/l); 43.2 liters (dose of 0.28 l/hectare) and Trap (active ingredient: Metsulfuron),substance used of 4.3 kg (dose of 0.03 Kg / Hectare). The pesticides brochures which inform direction of use are available. For example, the brochure of Supremo 480 SL, direction of use for oil palms plants: Target Weeds (broadleaf weeds), Application technique (spraying with a dose of 3 liter / hectare). There is also MSDS (Material Safety Data Sheet) for each pesticide and fertilizer explaining about product identification, physical and chemical properties, toxicology, first aid emergency in poisoning, self-protection, maintenance and storage. The company has conducted training to the spraying team regarding spraying procedures; the document evidence is in the form of photographs of the training activities. It was conducted on 5 April 2010, attended by 11 persons consisting of spraying foreman of each division. Training Facilitators were the Estate Manager and Senior Assistant. Pesticides Packaging Waste Management is conducted in accordance with the management of Hazardous Waste. See


ASSESSMENT REPORT


Criterion 5.3. Based on the data of pesticides use, it is identified that the company was no longer using pesticides type of 1 A and 1 B WHO, for example (active substance Brodifacum based on Warehouse Card of Klerat Item,Item Code No. 160003383,the last Stock on 26 July 2007 was as much as 325 kg and the last outgoing item was on 26 February 2011). The company has also not used Paraquat pesticide since January 2009. Medical screening for spraying operators is performed every 6 months by a company physician who has a Company Hygiene and Occupational Health (hyperkes) certificate (No. 23.138/DH-1/10) obtained from Company Hygiene and Occupational Health training for Company physician (dr. Rudi Bastian) on 7 November 2010 in collaboration with the Thamrin Clinical Laboratory. There are documents of Medical Screening Results of spraying, manuring and Warehouse guard workers including examinations ofroutine blood, liver physiology (SGOT and SGPT), Thorax examination, Inspection Results Follow Up. There is a policy on prohibition of hiring Pregnant and Breastfeeding women to work in divisions related to chemicals, according to Manager memos dated 8 April 2011. There are job transfer letters, for example job transfer notification letter No. 02-SKAK/KLNK PT.LTS/LTS/OKT/2012 to Lastun (spraying team), based on the results of the Gravida IV (pregnant), she was transferred from the spraying division to the Nursing baby 7 July 2012.


4.7 An occupational health and safety plan is documented, effectively communicated and implemented.

The Company has established OHS policy endorsed by the CEO No. 724/TQEM-SPMS/09 dated 1 April 2010 which focused on the following: 1. Formulating, establishing and implementing OHS Management System (SMK3). 2. Staffs / employees are trained according to their job competencies / expertise. 3. Complying with act, government regulations and rules established by the Plantation Upstream Indonesia regarding

OHS and cultural codes of ethics applied in the operations Plantation Upstream Indonesia. 4. Continually improving occupational health and safety performance. 5. Committed to prevent accidents and always seek to provide harmonious work environment. The policy has been

disseminated to workers. In the implementation, LTS has sought to implement OHS policies have been made including: The company has established persons in charge of OHS in the form of Guiding Committee of OHS (P2K3) for the Estate endorsed by the Labor Agency of Rokan Hilir No: 021/DTKT-PK/SK-P2K3/2012 dated 21 May 2012 with the Secretary of Guiding Committee of OHS (Mr. Afrijal). OHS Expert, certificate registration No. 9921/PK3/AJ/31/2011/PO. Committee of OHS has held meetings on a quarterly basis to discuss OHS issues in the company, for example, on 2 July 2012 and 4 October 2012. The Report of Committee of OHS of 2nd quarter (April-June) in 2012 is available, which was reported on 19 July 2012 and 18 September 2012. Occupational Accident Insurance is available for all employees in Labor Social Assurance (JAMSOSTEK) program. Evidences showed by the company include: The payment details of Labor Social Assurance period of August 2012 in accordance with the employees check roll data in August 2012. Payment Evidence of Bilyet Giro No. JI858745 and Bilyet Giro Sheet No. II901584 on 24 September 2012. Medical screening for employees who work at the high risk station is performed every 6 months by a company physician who has been Company Hygiene and Occupational Health (Hyperkes)certified (No. 23.138/DH-1/10) as the result of Company Hygiene and Occupational Health training for company physician (dr. Rudi Bastian) on 7 November 2010, a collaboration with Thamrin Clinical Laboratory. There are report documents of Health Examination results for Employees working in stations with high noise levels (Generator Operator, Mill Employee) including examination of audiometric, liver physiology (SGOT and SGPT), Thorax examination, and Examination Results Follow Up. The Company has established risk analysis for OHS program in estates in the form of Hazard Identification Risk Assessment Control (HIRAC) Document. POM HIRAC is available for each station, such as in risk control activities in limited / closed space (activities in threser and steam), it is mentioned that there are work permits and gas testing. It has been applied to the implementation of activities by the operators that have licenses, such as boiler operators on behalf of Mr. Suaji (No. reg. 159 OPK3-PUBT-B.1/III/2011). Observations CAR.2010.40 is closed


ASSESSMENT REPORT


The Company already conducted OHS trainings, for example: 1. Training of the safe harvesting techniques on 2 July 2012 the Division IV, attended by 15 participants (Harvesting Foreman harvesting workers, list of participants is available). 2. Training of Classification and Reporting of accidents on 29 September 2012 in the office of Alur Dumai Estate, attended by 13 participants (list of participants is available). 3. Socialization of duties and responsibilities of Guiding Committee of Occupational Safety and Health (P2K3) on 5 January 2012 in the Office of Alur Dumai Estate, attended by 13 participants (list of participants is available). Emergency Response Procedures are available including: • SOP of Fire Fighting (011/LTS-PPK/10 document) describing the Fire Fighting Team, Fire Control Management, Reporting and administration of incidents. • SOP of Emergency Preparedness and Recovery Response (RSPO / IN 4.7/PKD) Reg. No: 015/LTS-KKS/09. • SOP of Explosion Prevention and Handling (Document No. 012/LTS-PPL/10 including procedures for explosion

handling, identification of explosion sources, prevention efforts of explosion widespread, • SOP of Handling of Occupational Accident Causing Employees die on the spot (RSPO / IN. 4.7/KKS) Reg. No.:

020/LTS-KKM/09. • SOP of Handling of Occupational Accident with survived Employees (No.: 016/LTS-KKS/09.) describing the

procedures for the handling and investigation (evaluation of occupational accidents, Head of section reports to Labour Social Assurance (JAMSOSTEK), Assistant disseminates the results of the evaluation).

• SOP of Flood Handling (Reg. No.: 027/LTS-PB/11) including procedures for preparation, flood handling team, flood control management, administration and reporting.

• SOP of Flood Handling (Reg. No.: 026/LTS-PB/11) including procedures for preparation, flood handling team, flood control management, administration and reporting.

The Company has an organizational structure of Emergency Response (Fire, Flood, Landslide and Earthquake) dated 1 July 2012 with Estate Manager and Mill Manager as the chairman; Mr. Dedi Suheri as the Head of Emergency Control Team, with 6 members from the estates and 6 members of the POM; the evacuation and first aid emergency team chaired by Saiful Abidin with two members from the estates and one member from POM; the Supporting team chaired by Jamal Sinaga with 4 members from the estates and 2 from POM. The layout of evacuation routes during an emergency is available, such as in the Head Office of Alur Dumai Estate. Emergency response training, such as Emergency Response Simulation and Training, includes training of the use of Fire extinguishers, Emergency Condition, Earthquake Procedures, Evacuation Procedures, Fire Procedures and Emergency Response and Safety at outside the workplace on 15 October 2012 attended by 17 participants in POM (attendance list, photos of activities, training materials and Minutes are available). There are evidences of OHS program equipment fulfillment, among others: Firefighting Equipment at Alur Dumai Mill: 1 unit of Hydrant Pump, 4 units of Fire Hose Reel, 21 units of fire extinguishers. The records of fire extinguishers monthly inspection results are available. The number of First Aid Emergency boxes distributed in estate locations is 26 boxes in ADE and 4 at POM (there are records of fire extinguishers monthly inspection results, with the results: all of the boxes are complete). The number of fire extinguishers available in the estate locations is 54 units in ADE and 21 units in the POM (the records of fire extinguishers inspection results updated in September 2012 are available). List of PPE handover is available, such as the provision of New Rubber Gloves to 10 manuring workers in Division I on 8 March 2012. The Company has conducted First Aid Emergency training for personnel in operational activities such as: First Aid Emergency training dated 21 September 2012 which was attended by foremen, namely Nur Yasin (Spraying Foreman), Dismawarsie (Foreman I, Division III), Maruli Gultom (Foreman 1 Division I), Ribuan Harahap (ADFsupervisor), Ohto Joko (Nursing worker Div. IV), Lastun (Nursing worker Division II). The records of monthly occupational accident monitoring and report of occupational accidents analysis results every 3 months by Guiding Committee of OHS contained in the report of Guiding Committee of OHS are available. The


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company obtained a Zero Accident Award Certificate (No. Reg. ZA.0588/454/2012) from the Ministry of Manpower and Transmigration of the Republic of Indonesia on the achievements of companies in implementing OHS program so that it achieved 2,856,784 hours persons without accident, dated from 1 January 2009 to 31 December 2011.


4.8 All staff, workers, smallholders and contractors are appropriately trained.

The Company has established a training program for all levels of staff (Manager, Senior Assistant, Assistant, Assistant TQEM,) Employees (Supervisors, warehouse heads, foremen, machine / heavy equipment operators, mechanics, harvesters, spraying / manuring workers, general workers, forests protection workers, OHS Experts, Guiding Committee of OHS, emergency response teams, security) and contractors. Training Needs Documents for Operation Units (Alur Dumai Estate) in 2012/2013 are available. Training Realization of PT. LTS Alur Dumai Estate Year 2012/2013 up to October 2012 is available. Trainings had been done up to October 2012, among others: 1. Census and control of caterpillars held on 10 July 2012, with the location of Division IV. 2. Oil palm plantations Techniques (Harvesting), dated 17 July 2012, with the location of Division IV. 3. Training of Emergency Response Simulation on Landslides and flood, dated 12 September 2012, with the location

of Division II. 4. First Aid Emergency Training, dated 21 September 2012, with the location of Estate Head Office. 5. Land Fire Fighting Training, dated 2 October 2012, with the location of Emplacement Reservoir. 6. Training of Emergency Response Simulation on Landslides and Flood in Division II on 12 September 2012. 7. Training of Land Fire Fighting Training Implementation, dated 2 October 2012.

Records of training activities that have been conducted including training records for each employee are well stored in the RSPO secretariat in the training file. The company has used trained contractors. For example, the results of an interview with one of the local contractors (Mr. Rusdy) for FFB transportation in Desa Tangga Village showed that based on his statement, the main requirement for the acceptance of truck drivers for FFB transportation who work for him is having the driving license and having work experience in other company. Two drivers working for Rusdy currently have driving license of B and B1 as a requirement to drive a vehicle of truck type.


PRINCIPLE #5 Environmental responsibility and conservation of natural resources and biodiversity

5.1 Aspects of plantation and mill management, including replanting, that have environmental impacts are identified, and plans to negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate continuous improvement.

There are EIA documents prepared by the third party (PT. Anima Rekayasa Persada) and the EIA document preparation team members have had the competence to prepare the EIA document (EIA A and EIA B). EIA document was approved by the Central EIA Commission No. RC.220/887/B/V/94 dated 19 May 1994 for the effective area of approximately 13,500 hectares which consists of: (1) oil palm plantation covering 8,000 hectares with a mill capacity (POM) of 30 tons FFB / hour, (2) rubber plantation covering 5,500 hectares with a mill capacity of 600 tons RSS-I/month. Environmental management plan / environmental monitoring plan (RKL/RPL) reports of the 1stsemester and the 2ndsemester of 2011 and the 1stsemester of 2012 are available. The content of the Environmental management plan / environmental monitoring plan reports has been in accordance with the existing Environmental management plan / environmental monitoring plan. There are also evidences of Environmental management plan / environmental monitoring plan report delivery to related institution which is done regularly every 6 months. There are documents of Environmental management plan / environmental monitoring plan in accordance with the Decree of the Head of the Regional Environmental Impact Control Agency of Rokan Hilir District No. 666.1/AMDAL-BAPEDALDA/2008/63 dated 16 April 2008 on the approval of the environmental management plan (RKL) and environmental monitoring plan (RPL) of plantation and palm oil mills operations of PT. Lahan Tani Sakti.



ASSESSMENT REPORT


5.2 The status of rare, threatened or endangered species and high conservation value habitats, if any, that exist in the plantation or that could be affected by plantation or mill management, shall be identified and their conservation taken into account in management plans and operations.

There have been HCVA identification documents done by the third party (POLLITO) on 16 November 2009 to 21 November 2009. The list of species of flora and fauna is presented in HCV identification document (Appendix 1-11), while the measures for its management is contained in Chapter IV (4.1 HCV management plans; 4.2 monitoring plan HCV). Based on these reports, in the work area of PT. LTS, there are 53 types of flora and 62 types of fauna (consisting of 52 species of birds, 6 species of mammals, and 4 species of reptiles). In the work area of PT. LTS, habitats of high conservation value covering 89.68 hectares were also identified. The determination of HCV has been through public hearing process held on 8 January 2010, attended by 28 participants representing several institutions. Records of meeting are available in the form of minutes of meeting. There is a statement letter from POLLITO (No. 70/P-DN-PRD-XII/2010) dated 10 June 2010 which states that the HCV identification document preparation has involved NGOs (LSI, BCI, Peramu, Wetland Aceh, Conture, Jejak and Sidikara) and Peer Review has been done by Bogor Agricultural Institute (IPB). The management plan of rare, endangered, and threatened species and habitats is contained in the Report of the HCV identification results in CHAPTER VI - Management and Monitoring Plan of identified HCV, arranged in the form of a matrix detailing the types of HCV, HCV conditions, and management recommendations. There were several efforts done by the company to protect endangered or threatened species and their habitats, among others: Issuing a policy in the form of Memorandum No. ADE/024/IV/10/M dated 6 April 2010 signed by the Manager of Alur Dumai Estate (ADE), regarding the prohibition of catching Fish, Animals, and Plants around the area of HCV; installing posters and boards of prohibition of hunting in the locations considered strategic areas where there are HCV areas, and conducting monthly monitoring on areas of HCVA. There are posters about the protected animal species, such as the HCVA monitoring report in September 2012. It is known that sign boards animals protected in blocks F007 and F010 are in good condition. There are records of HCVA socialization done by LTS, for example, a notification letter to Datok Penghulu of Pondok Kresek, Sri Kayangan, Bakti Makmur and Tanjung Barat (13 September 2012) on dissemination plan of SOP of conflict resolution and socialization of HCV. There are documentations of meeting, minutes of meeting and attendance list during the socialization of HCV dated 29 September 2012. Observation CAR.2010.41 is closed There is a special officer for monitoring and management of HCVA based on Internal Memo No. LTS/RSPO/4/12/s dated 1 June 2012 regarding the assignment of HCVA monitoring and management officer on behalf of Mr. Jipinullah Damanik. There is receipt of Assignment Letter (SK) Handover to the officer concerned on 23 June 2012. There is a evidence of HCV training on behalf of Rinno Ferryno issued by Aksenta. There is HCV internal training attendance records from Mr. Rinno Ferryno attended by 7 persons (EHS, PSQM of ADE, Head of Mechanical Division, HCV Officer, ADE Assistant) on 20 September 2012 in ADE.


5.3 Waste is reduced, recycled, re-used and disposed of in an environmentally and socially responsible manner.

Waste identification performed by LTS is available, which includes the information of the source, the name of the waste, type of waste (liquid, solid, powder), category (Hazardous and Non hazardous), volume, characteristics and handling of the waste. SOP of hazardous waste and non hazardous waste management with document no. 013/LTS-B3/09 is available. The information contained in the SOP includes procedures of hazardous waste storage, hazardous waste packaging requirements, procedures for hazardous waste storage, hazardous waste storage building requirements, procedures of hazardous waste handover to third parties, ways of reducing hazardous and non hazardous waste. There has been for waste management plans (hazardous and non hazardous) contained in the identification of hazardous and non hazardous waste and its handling. Hazardous waste including packaging of agrochemicals is stored in hazardous waste landfill. The permit of hazardous waste (LB3)Landfill is available in accordance with the decree of Environmental Impact Control Agency of Rokan Hilir District No. 25/BPDL/2011 dated 5 July 2011 on the Permit for Temporary Storage of Hazardous and Toxic Waste to Palm Oil Mill (POM) of PT. Lahan Tani Sakti. Records of balance of hazardous waste stored in Landfill are available. For


ASSESSMENT REPORT


example, in the period of April-June 2012 there was incoming pesticide packaging waste to hazardous waste landfill in May 2012 from the division as many as 1033 pieces and there was outgoing waste to the licensed third party (PT. SA) in April. Hazardous waste was sent to the third party (PT. Shali Riau Lestari) who already had the permit for collection of hazardous and toxic waste according to the decree of Environment Ministry No. 237 year 2011 dated 8 November 2012.The provision of Special Cargo to transport hazardous materials. There is the permit of utilization of waste water in accordance with the decree of the Head of Environmental Impact Control Agency of Rokan Hilir District No. 09/BPDL/2010 dated 18 August 2010 on Permit of Utilization of Palm Oil Mills Wastewater on the Land for Oil Palm Plantation of PT. Lahan Tani Sakti of Pujud Sub district and Bagan Sinembah Sub district of Rokan Hilir District. The area allowed to be applied with wastewater is covering 22.5 hectares. This permit is valid for 5 years since the date of the decree establishment. There is monitoring of wastewater utilization which is documented every day, such as the utilization on 30 June 2012 as much as 30 tons. There are records of monitoring of waste quality analysis on effluent treatment which was carried out every month. Effluent quality standard refers to the Decree of Environment Ministry No. 28 year 2003 and Governor regulation No. 35 year 2007. There were no parameters that do not meet quality standards. The tests were conducted by the Testing Technical Unit, Public Works Agency, and Government of Riau Province. There are records of monitoring of groundwater quality on application monitoring wells, non-application monitoring wells and employees’ wells conducted every six months. Water quality standard refers to Regulation of Health Ministry No. 416/MENKES/PER/IX/1990. The tests were conducted by the Testing Technical Unit, Public Works Agency, and Government of Riau Province. There are records of the results of solid waste in the form of empty bunches, boiler ash, fiber, shells and trash. The company has reported the monitoring of waste which is contained in the environmental monitoring reports. Monitoring waste reported includes effluent quality, ground water quality in the monitoring wells, the quality of emissions, ambient air, production and the application of liquid waste and solid waste results recapitulation.


5.4 Efficiency of energy use and use of renewable energy is maximized.

There are records of monitoring of the renewable energy use (fiber and shell) for boiler fuel, for example, the use during 2011-2012: Use of fiber is 2,816,191.31 Kg and shells are 1,368,981.89 Kg. There is analysis of the efficiency of energy use energy / tons of FFB or energy / ton of CPO, such as the use of energy in September 2012 as much as 0.034 kWh / ton FFB or 0.15 kWh / ton CPO. There are records of the use of fossil fuels and mill operations and estates operations. For example, the use of diesel fuel in September 2012 for mills operations as much as 21,995 liters and for estate operations as much as 22,993 liters. The analysis of the efficiency of fossil fuel use for the operations, such as the efficiency of diesel fuel use in July 2012 for the operations as much as 3.7 liters / ton.


5.5 Use of fire for waste disposal and for preparing land for replanting is avoided except in specific situations, as identified in the ASEAN guidelines or other regional best practice.

The company already has a policy on Zero Burning in plantation activities in the PT. LTS which is in Policy No. 724/TQEM-SPMS/09 point 5.7.2 regarding zero burning techniques. The company has also had an agronomy reference manual No. 110/EST-ARM/08 Section 4 Land preparation Clause 3.1 point (b) stating that the land clearing should refer to the Decree of Directorate General of Plantation No. KB.110/SK/DJ BUN/05.95 dated 30 May 1995. There are photographs of land preparation in Block C001 Division IV which was done through with felling, pole installation (pancang), and stacking. The activity was carried out using heavy equipment with zero burning technique. Reports on the work results of land preparation for replanting, such as in Block C001 on 8 May 2012: felling, stacking and chopping trees covering an area of 3 hectares (390 palm). The company showed SOP of Fire Fighting No. 028/LTS-PK/09 dated 12 March 2009 explaining about: Establishment of firefighting organizations in every estate, identification of water sources, an inventory of areas prone to fires, fire patrol, making the Sign of Fire. Must-have equipment is (transportation vehicles, robin machine with a hose of 150 M, Masks , Tractor and TLB if needed, boots, water tanks, Communication Devices, protective helmets and fire fighter vests), administration and fire incidents reporting. Minor non compliance CAR.2010.42 is closed


ASSESSMENT REPORT


The fulfillment of fire equipment is in accordance with the directions in the SOP of fire fighting. Records of the examination results of fire extinguishers conducted monthly are available. The company has had fire-prone areas document in 2012 with the scale of 1:60,000. Fire-prone areas were identified in the replanted areas and areas adjacent to the community. The company has installed signs of fire in those fire-prone areas. There are documents of potential fire monitoring results in 2012. Based on the monitoring results from January to October 2012 any fire spots were not found. Based on the results of field visits, it is known that fire-fighting equipments are in good condition.


5.6 Plans to reduce pollution and emissions, including greenhouse gases, are developed, implemented and monitored.

There is identification of sources of pollution and emissions at the mill coming from the boiler, generator and mill engines. Records of periodic monitoring of emissions and ambient air quality. Based on monitoring results, there are no parameters that do not meet quality standards. Emissions and ambient air quality testing was performed by BINALAB which is an accredited laboratory (LP-412-IDN). The company has reported emissions and ambient air quality contained in the environmental management plan/environmental monitoring plan (RKL / RPL). The company has made efforts to reduce pollution and emissions, such as: fire tube cleaning work program, dust collector, and the main hole chimney and body boiler (every week); generator engine maintenance program every 250 hours and the chamber installation (chimney) of steam engine facing upward to reduce noise and smoke pollution generated by steam engine. There are records evidences of the above activities. There is the permit of utilization of waste water in accordance with the decree of the Head of Environmental Impact Control Agency of Rokan Hilir District No. 09/BPDL/2010 dated 18 August 2010 on Permit of Utilization of Palm Oil Mills Wastewater on the Land for Oil Palm Plantation of PT. Lahan Tani Sakti of Pujud Sub district and Bagan Sinembah Sub district of Rokan Hilir District. The area allowed to be applied with wastewater is covering 22.5 hectares. This permit is valid for 5 years since the date of the decree establishment.SOP of effluent application (No. 023/LTS-AE/12) is available which contains methods such as applications method, application dose, work organization, and implementation of applications. The company has WWTP consisting of 7 ponds. There is monitoring of wastewater utilization which is documented every day.


PRINCIPLE #6 Responsible consideration of employees and of individuals and communities affected by growers and mills

6.1 Aspects of plantation and mill management, including replanting, that have social impacts are identified in a participatory way, and plans to mitigate the negative impacts and promote the positive ones are made, implemented and monitored, to demonstrate the continuous improvement.

There are documents of social impact assessment by POLLITO, including social impact analysis: The Analysis of Positive Impacts (Section 6.3.1) and negative impacts (6.3.2). Social impact assessment also includes assessment of risk status (2.4 page 9) that includes indicators of each of the risk factors, including the risk factor of territorial dynamics around oil palm plantations: the condition of economic facilities, roads, environment and social facilities; risk factors of public welfare around the oil palm plantation: level of education, health, unemployment and poverty. Social impact assessment using data collection method with structured and in-depth interviews with the local village government and the public, observations and participation of the company and the public; it is proved by the book of study implementation report. Records of social impacts management and monitoring plans are included in the revised environmental management plan/environmental monitoring plan (RKL / RPL) document, including therein managed important impacts, among others: job vacancies and business opportunities, roads damage, reduced environmental and public health and public restlessness.


ASSESSMENT REPORT


Community involvement in social impacts management and monitoring can be found in management and monitoring location plan which is done in the affected village administration areas. There are also records in the form of Village Development Program Plan in 2012 conducted by PT. LTS with the community in several villages surrounding plantation areas, among others: • On 19 September 2012 in the village of Sri Kayangan and Pondok Kresek. • On 29 September 2012 in the village of Tanjung Medan Utara. There has been environmental management plan/environmental monitoring plan (RKL/RPL)of the 1stsemester and the 2ndsemester of the year 2011 and the 1stsemester of the year 2012. The delivery receipts of environmental management plan/environmental monitoring plan report to the relevant agencies are available. Its content is in accordance with the approved environmental management plan/environmental monitoring plan. Minor non compliance CAR.2010.43 is closed


6.2 There are open and transparent methods for communication and consultation between growers and/or millers, local communities and other affected or interested parties.

There are procedures of communication and consultation with the public stated in SOP (RSPO/6.2/KKM) which aims to provide guidance in conducting communication and consultation with the community. The procedures stated that communication can be done directly (verbally) and indirectly (via letters) to the estate manager or section heads. The company has had Stakeholders List including the provincial government (Governor, Head of Agency), district government (District Head, Labor Agency, Agriculture and Plantation Agency, etc.), government of sub district and village (headman), contractor partners, community leaders, and buyers. However, to further ensure openness and transparency, it is still necessary to add non-governmental organizations (NGOs) and social environment (at least at the district level), and the companies surrounding adjacent work area to the stakeholders list. The company has also assigned an officer of consultation with the public and has socialized SOP of Communication and Consultation. There are records of evidences in the form of: • Letter No. LTS/RSPO/34/IX/12/S dated 13 September from the Estate Manager of Alur Dumai Estate regarding

Assignment of the Officer Responsible for Consultation and Communication with Public and Submission of Standard Operating Procedures.

• Letter from Alur Dumai Estate Manager No. LTS/RSPO110/X/12/S dated 2 October 2012 regarding the assignment letter of Consultation& Communications Officer on behalf Suparianto (Assistant).

Observation CAR.2010.44 is closed


6.3 There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties.

There is Public Complaints Handling Procedure (005/LTS-PKM/09) which is valid from 2 April 2009. The procedure is a guide in handling public complaints addressed to each operation unit. There is a flow chart in the procedure describing the period of giving responses to public complaints which is 1-2 weeks if it is only done by the Unit Manager and 1-2 weeks if the responses made by the Department Head. The socialization of Public Complaints Handling Procedure has been conducted. Observation CAR.2010.45 is closed A suggestion box has been available in the estate office and complaints handling mechanisms have been included in the SOP of Public Complaints Handling (005/LTS-PKM/09) which is valid from 2 April 2009. Public complaints handling procedures have been socialized to the community. Based on the information from management and the book of monitoring of information received from the public, until now there have not been any complaints from the community around the plantation.


6.4 Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.


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SOP of Land Compensation Payment Resolution Mechanism (024LTS-PGR/10) came into force on 20 October 2010. In the procedure, sub-point (5.6) describes the process of identifying and calculating fair compensation which involves the community and institutions related to measurement activities. The procedure has been disseminated to the villages near the area of the PT. LTS. Records of socialization procedure implementation are available, namely:

On 19 September 2012 in the village of Sri Kayangan (Participant Attendance and photos of socialization are enclosed).

On 19 September 2012 in the village of Pondok Kresek (Participant Attendance and photos of socialization are enclosed).

On 29 September 2012 in the village of Tanjung Medan Utara (Participant Attendance and photos of socialization are enclosed).

The example of records in the form of receipt of land compensation payment for an area of 4 hectares on behalf of Sarimin in the village of Sri Kayangan, dated 30 October 2008, with the value of payments was as much as IDR 24,000,000 (Twenty Four Million Rupiah). There are also photos of Land Compensation Payment Process With Sri Kayangan Village Community.


6.5 Pay and conditions for employees and for employees of contractors always meet at least legal or industry minimum standards and are sufficient to provide decent living wages.

The remuneration in accordance with the Decree of Riau Governor No. 11 year 2012 regarding Establishment of Provincial Sector Minimum Wage (UMSP) in 2012, Minimum Wage for Oil Palm Plantation Sector including Oil Palm Processing Industry is as much as IDR 1,389,450. The company has made changes in wages in accordance with the HRM Memorandum No. 045/HRM-i3/IV/2012 about wage increase with the lowest basic salary of IDR 1,389,450 with natural wages (rice) based on the dependents: worker (15 Kg), wife (9 kg), children up to the third child (7.5 kg) with the price of rice of IDR 7,200/Kg. There is a Payroll describing the wage received by employees in accordance with the HRM Memorandum No. 045/HRM-i3/IV/2012 and the salary increase adjustment paid altogether in April 2012. There are two types of company rules applicable in LTS, namely the Company Regulations established by the BKS-PPS (Cooperation Agency - Sumatera Plantations Company) with the central Board of SPSI (Indonesian Workers Union) in the field of Agriculture and Plantation throughout Indonesia (endorsed on 10 July 2010), applicable to monthly SKU (General Requirements) and daily SKU employees (effective from 10 July 2010 to 09 July 2012). However, based on Article 25, paragraph 3 states that if at the end of the Collective Labor Agreement (CLA), the new CLA has not been established, the Collective Labor Agreement entirely is valid until the issuance of the new CLA. As for the Staff (Managerial), the company refers to the Collective Labor Agreement (CLA) of Minamas Plantation as agreed between the Minamas Plantation party with Bipartite Cooperation Institution and Chairman of SPPP of the respective company (40 companies), which has been signed by the relevant parties on 7 June 2012 in accordance with the decree of the Director General of Industrial Relations and Labor Social Assurance Decree No. 98/PHIJSK - PKKAD/PKB/VI/2012 dated 19 June 2012. It has been effective as of 24 February 2012 until 23 February 2014. The company provides public facilities for all employees (based on List of Buildings), among others: Housing - 429 units, Education facilities - Kindergarten 4 units, Elementary School 7 classrooms (2 classrooms are available for the 1st Grade), Junior High School 6 classrooms; Clean water - private / quarrying wells; Health - Clinic 3 units, and sport facilities: football court 1 location; badminton 4 units, volleyball 5 units. Based on field observations, it is identified that public facilities are available in good condition. Based on the Work Agreement Letter (SPK) of Contractors, for example SPK with fruit transport contractors (Rusdi) SPK No.: ADE/LKL/I/2012/002-TBS;article 7 describes that the contractor must comply with the requirements of employment, for example labor social assurance provision obligations and the provision of PPE. Based on the results of interviews with employees of fruit transport contractors in the mill, it is known that PPE is provided for employees and wages paid to employees are above the provincial minimum wage.



ASSESSMENT REPORT


6.6 The employer respects the right of all personnel to form and join trade unions of their choice and to bargain collectively. Where the right to freedom of association and collective bargaining are restricted under law, the employer facilitates parallel means of independent and free association and bargaining for all such personnel.

The Company has established a social policy No. 724/TQEM-SPM/09 dated 1 April 2010 signed by Franki Anthony; Point 5 states that the company is expected to respect the rights of all employees to form and join workers unions of their choice and to negotiate together. Agricultural and Plantation Workers Union - Indonesian Workers Union of PT. Lahan Tani Sakti of Alur Dumai Estate has been founded. Legalization / Inauguration of Composition and Personnel of Board of Work Unit based on the Decree of Branch Board of Agriculture and Plantation Federation - Indonesian Workers Union of Rokan Hilir District Number: Kep.039-A/PC-FSP.PP/SPSI/RH/III/2009, dated 25 March 2009.


6.7 Children are not employed or exploited. Work by children is acceptable on family farms, under adult supervision, and when not interfering with education program. Children are not exposed to hazardous working conditions.

The company already has a policy in the form of Head of Plantation Operations (HPO) memorandum No. POD-UM-052/III/2010 dated 24 March 2010 regarding child protection policy, describes the minimum working age of 18 years. Based on Employees List of LTS, there are no employees under 18 years old. The youngest employee is Dedi W Tambunan (Division of loading/loader/assistant) with date of birth:12 March 1994, NIK 082585 (based on List of SKU Employees, September 2012).


6.8 Any form of discrimination based on race, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age, is prohibited.

The Company has established Social Policy No. 724/TQEM-SPM/09 dated 1 April 2010 signed by Franki Anthony (Chief Executive Officer). Point 1 states that all staff / employees are treated fairly and equitably in matters related to the recruitment, progress, work conditions and description regardless of race, degree, race, gender, color, imperfection, sexual orientation, organizational membership, political views and religion. There is the List of Employees of PT. Lahan Tani Sakti up to September 2012, with a total of 528 employees, composed of various tribes and religions:


6.9 Policy to prevent sexual harassment and all other forms of violence against women and to protect their reproductive rights is developed and applied.

The Company has the guidance of Sustainable Plantation Management (Policy No. 724/TQEM-SPMS/09) endorsed by the Chief Executive Officer regarding Social Policy; Points 4 states that the company develops and implements policies to protect women workers from sexual harassment and crime and to protect the rights related to female reproduction. Internal memo from the manager of PT. LTS dated 8 April 2011 where pregnant women and women workers who are breastfeeding are not allowed to work using pesticides / chemicals, and the agreement on women workers dated 1 September 2012 where pregnant women get maternity leave of H2 for 3 months (1.5 months before and after childbirth). The company has established a women committee structure (gender), which aims to be intermediary among all the women workers with the management of PT. LTS, the board committee is responsible for receiving all complaints or problems mainly related to problems faced by women in PT. Lahan Tani Sakti. There are work program plans of board in 2012-2013 among others: training for bathing the corpse, socialization of nutritious food for children, monthly meeting. There are also records of gender committee meeting on 20 September 2012, about SOP socialization (employee complaints handling, socialization of HIRAC and MSDS, socialization of gender committee). In addition, gender committee also regularly conducts meetings conducted every week as on 28 September 2009, 21 September 2012 and 11 October 2012.


6.10 Growers and mills deal fairly and transparently with smallholders and other local businesses.


ASSESSMENT REPORT


Up to now, PT. LTS has not bought and processed FFB from farmers or other sources. The whole FFB processed in Alur Dumai Mill is derived from the smallholders of Alur Dumai Estate. There is a sample of Work Agreement Letter No. ADE/LKL/I/2012/002-TBS dated 30 June 2012 between PT. Alur Dumai (First Party) with Rusdy (Second Party) with the address of Jati Mulia Sub village RT.1/RW.6 Tanjung Medan Village of Pujud Sub district of Rokan Hilir District of Riau Province. The agreement is for Transportation of Fresh Fruit Bunches (FFB), Loose Fruits, Empty bunch, Fiber and other transports made by the Second Party. 1. There are examples of records evidences of payments to local contractors for FFB Transport (Rusdy), among

others: 2. Recapitulation of Rusdy’s Vehicle Transport results, August-September 2012 period of 27 August 2012 – 25

September 2012. 3. Invoice of Local Work Agreement Letter 002 –FFB of Rusdy in September 2012 as much as IDR 41,944,529 4. Minutes of Vehicles Use (BAPK) & Contractor Payment Application of Rusdy dated 28 September 2012, Period of

27 August 2012 –25 September 2012 as much as IDR 42,800,540, Income Tax 23% (2%), Total Invoice: IDR 41,944,529.

5. Payment Receipt (sealed of IDR 6,000) dated 29 September 2012, with the amount of IDR 41,944,529 6. Bank Voucher issued by PT. Lahan Tani Sakti- Alur Dumai Estate on 16 October 2012 for loading FFB in September

on behalf of Rusdy, with the value of IDR 41,944,529 7. Verification of Supporting Documents of Cash / Bank Expenditure


6.11 Growers and millers contribute to local sustainable development wherever appropriate.

There are records of company's contribution to regional development, among others: • CSR Program of PT. LTS in Year 2012 - 2013 (8 types of activities) • CSR Budget of 2012 - 2013 with a total of IDR 948,844,234 • Memorandum No. HRM-086-17-VII-12 dated 23 July 2012 of the Division of Human Resource Management (HRM) in Jakarta on Notification of Departure Schedule Information and Re-registration of Minamas Scholarship Program Recipients - Sime Darby 2012 for Sumatra Region and Enclosed List of Minamas Scholarship Recipients - Sime Darby 2012, S1 Program of BUD IPB – Sumatra Region.


PRINCIPLE #7 Responsible development of new plantings

7.1 A comprehensive and participatory independent social and environmental assessment is undertaken prior to establishing new plantings or operations, or expanding existing ones, and the results incorporated into planning, management and operations.

The development of the company's operations areas was not done but there were replanting activities. There are environmental management documents for new area of land clearing (after 2005) covering an area of 1,716.83 hectares contained in the revised environmental management plan/environmental monitoring plan (RKL/RPL) documents approved by Regional Environmental Impact Control Agency of Rokan Hilir District No. 666.1/AMDAL-BAPEDALDA/2008/63 dated 16 April 2008. In the document, there are eight kinds of major important impacts on the environment and social. The implementation of the environmental management plan/environmental monitoring plan is presented in the form of its reports performed every 6 months. See major indicator 5.1.1. There are documents of replanting impacts on the environment done by Aksenta for 4 days (26 - 29 January 2012). The scope of the replanting study is for an area of 565.54 hectares in Division IV. There has been environmental management plan/environmental monitoring plan (RKL/RPL)of the 1stsemester and the 2ndsemester of the year 2011 and the 1stsemester of the year 2012. The delivery receipts of environmental management plan/environmental monitoring plan report to the relevant agencies are available. Its content refers to the revised environmental management plan/environmental monitoring plan which has been endorsed by relevant agencies.


7.2 Soil surveys and topographic information are used for site planning in the establishment of new plantings, and


ASSESSMENT REPORT


the results are incorporated into plans and operations.

The new area of land clearing after 2005 is covering 1,716.83 hectares. There is semi-detailed soil study at PT. LTS done by PARAM AGRICULTURAL SOIL SURVEY (M) SDN. BHD in November 2008. The available information includes slope classes, types, soil structure, soil texture, soil type and drainage conditions. There is a study of HCV containing information about the distribution of topography, climate and soil type. For replanting areas (planting year of 2012) land suitability assessment for an area of 250 Hectares done by the MRC has been available. The results of the evaluation of the land suitability class for replanting areas of 2012 (250 Hectares) show the marginal suitability level (S3), but there is a huge potential to be suitable (S2) and very suitable (S1). There are records of terracing construction and planting legume crops for replanting area in 2012. There are records of bunch empty bunches utilization, such as the utilization of empty bunches in September 2012 as many as 353.53 tons applied on an area of 9.4 hectares in Division I block F008. Minor non compliance CAR.2010.46 is closed.


7.3 New plantings since November 2005, have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values.

There are environmental management documents for new area of land clearing (after 2005) covering an area of 1,095.39 hectares contained in the revised environmental management plan/environmental monitoring plan (RKL/RPL) documents approved by Regional Environmental Impact Control Agency of Rokan Hilir District No. 666.1/AMDAL-BAPEDALDA/2008/63 dated 16 April 2008. In the document, there are eight kinds of major important impacts on the environment and social. The implementation of the environmental management plan/environmental monitoring plan is presented in the form of its reports performed every 6 months. See major indicator 5.1.1.

There is a document of the study of replanting effects on the environment which among others refers to the study of HCV. The information contained in these documents includes replanting plan maps 2011 - 2030 which has been referred to the study of HCV. Observations and interviews with Foreman I in the Block G001 not found HCV in the replanting area.


7.4 Extensive planting on steep terrain, and/or on marginal and fragile soils, is avoided.

The company has also showed the land class slope map created by CV Pollito, showing slope level of land in PT. LTS. Based on the map, most of the land slope is 0-8% and 5-8%, and there is a small area with a slope of more than 40% (block F50/G50). The company already has a management strategy for planting on particular slopes, among others in SOP of Agronomy Manual Policy Number. 3xx/PTK-KSV/2004: - The construction of conservation pit on slightly sloping land (slope of 8 - <14%) with the length of 6 m, top width of

0.6 m, bottom width of 0.4 m, depth of 0.6 m, and the distance between conservation pits of 24 m. - The construction of continued terraces on sloping land (slope of 14 - <25%) and on extremely sloping land (slope

of > 25%) with the terrace length of ±1,200 m/ha - Land in estate area with a slope of > 40% is intended as conservation area.


7.5 No new plantings are established on local peoples’ land without their free, prior and informed consent, dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.

Based on the information from Pujud Sub district Officials (Head of Sub district and Secretary of Sub district) that the existence of customary rights/hak ulayat (customary land) should be based on the local regulation, and in Riau there has not been any regulation on land customary rights. In fact, in Pujud areas there are no land customary rights. The information from the Sub district Officials is corroborated by the information obtained from Sri Kayangan Village official (Secretary of Village) that there is no existence of customary rights in the area. Based on the documents of HCVA identification results conducted by Pollito Consultant in 2010, there were no areas that are in the ownership of indigenous people.



ASSESSMENT REPORT


7.6 Local people are compensated for any agreed land acquisitions and relinquishment of rights, subject to their free, prior and informed consent and negotiated agreements.

The example of records in the form of receipt of land compensation payment for an area of 4 hectares on behalf of Sarimin in the village of Sri Kayangan, dated 30 October 2008, with the value of payments was as much as IDR 24,000,000 (Twenty Four Million Rupiah). There is SOP of Land Compensation Payment Resolution Mechanisms (024LTS-PGR/10). In the procedure, sub-point (5.6) describes the process of identifying and calculating fair compensation by involving community and institutions related to the measurements activity and photos of Land Compensation Payment Process with Sri Kayangan Village Community.


7.7 Use of fire in the preparation of new plantings is avoided other than in specific situations, as identified in the ASEAN guidelines or other regional best practice.

The company already has a policy on Zero Burning in plantation activities in the PT. LTS which is in Policy No. 724/TQEM-SPMS/09 point 5.7.2 regarding zero burning techniques. The company has also had an agronomy reference manual No. 110/EST-ARM/08 Section 4 Land preparation Clause 3.1 point (b) stating that the land clearing should refer to the Decree of Directorate General of Plantation No. KB.110/SK/DJ BUN/05.95 dated 30 May 1995. There are photographs of land preparation in Block C001 Division IV which was done through with felling, pole installation (pancang), and stacking. The activity was carried out using heavy equipment with zero burning technique. Reports on the work results of land preparation for replanting, such as in Block C001 on 8 May 2012: felling, stacking and chopping trees covering an area of 3 hectares (390 palm).


PRINCIPLE #8 Commitment to continuous improvement in key areas of activity

8.1 Growers and millers regularly monitor and review their activities and develop and implement action plans that allow demonstrable continuous improvement in key operations.

There are work sheets of conclusions of the examination by the Internal Auditor, Semester II 2011/2012 in July 2012, PT. LTS. It includes recommended corrections on examined matters. Measures taken include: The company had also done corrective actions based on the audit findings in the main assessment of RSPO, for example: On 25October 2012 the company has made improvements where some of missing HGU Boundary Poles were replaced and the old poles were re-painted. The company also installed posters and prohibition boards throughout HCV areas and the company also conducted socialization of complaints mechanisms on 13 September 2012.



ASSESSMENT REPORT


3.2. Summary of Assessment Report of Supply Chain

Clause CPO Mills Mass Balance Model Requirements

1 Documented Procedures

1.1

The facility shall have written procedures and/or work instructions to ensure the implementation of all the elements specified in these requirements. This shall include at minimum the following:

a) Complete and up to date procedures covering the implementation of all the elements in these requirements.

b) The name of the person having overall responsibility for and authority over the implementation of these requirements and compliance with all applicable requirements. This person shall be able to demonstrate awareness of the facilities procedures for the implementation of this standard.

a. There is SOP of Supply Chain (Supply Chain), No. 025/LTS-SC/12) endorsed by Manager of Alur Dumai Estate and

Manager of Alur Dumai Mill on 22 September 2012, aiming to identify the raw materials and end products in order to

know the relationship of raw materials and the product quality to traceability the product. The procedure is applicable

from the receipt of raw materials (FFB), the production process and product delivery process to buyers in PT. LTS. The

form of supply chain applied to this procedure is the mass balance.

b. The personnel responsible for implementation of this requirement are:

- Mill Manager who is responsible for storing and maintaining all documents used in the production process and the quality of the end products, verifying the status of the products delivered to the buyer and provide adequate training in supply chain certification requirements to all staffs. - PSQM Assistant who is responsible for the quality inspection of FFB (grading) in the POM and making a daily recapitulation of FFB quality inspection, monitoring shipment and loading / unloading Palm Product, and witnessing the making of Minutes of CPO & Palm Kernel shipping. - Foreman / Laboratory Assistant who is responsible for analyzing and testing the quality of raw materials and products at all stages of the POM production process, storing, maintaining and distributing the results of analysis and quality testing of raw materials and products. - Logistic Department who is responsible for transportation of CPO & Palm kernel from POM to bulking station, handling and storage of CPO and Palm Kernel in bulking station area.

Full compliance

1.2

The facility shall have documented procedures for receiving and processing certified and non-certified FFBs.

Up to now, the incoming fruit to Alur Dumai POM is entirely from the smallholders of Alur Dumai Estate (3,759.01 Hectares) so that all FFB processed everyday is derived from sources that have been certified.

Full compliance

2 Purchasing and goods in

2.1

The facility shall verify and document the volumes of certified and non-certified FFBs received.

Up to now, the incoming FFB to Alur Dumai POM is entirely from the of Alur Dumai Estate (3,759.01 Hectares) so that all FFB processed everyday is derived from sources that have been certified. Alur Dumai POM has a computerized system for forms in FFB receipt. The forms consist of: - Fruit Delivery Note from the Estate which is submit by the driver to the scales operator - FFB Receive Ticket (Weighing Ticket), issued after FFB is weighed, in which are included: 1). Division Name, 2). Block Name, 3). Harvest date, 4). Harvest Interval, 5). The number of bunches, 6). Weight of weighing (estimated in the estate), 7). Average bunch weight, 8). Scales at the mill (actual), 9). Actual average bunch weight. Example: Receive Tickets dated 20 October 2012: 1. FFB comes from division I


ASSESSMENT REPORT


2. Block E 015 3. Harvest date of 20 October 2012 4. Harvest Interval 9 days 5. The number of bunches 652 6. Estimated weighing in the estate 9.780 tonnes 7. Average bunch weight of 15 kg 8. The scales in the Mill 8.920 tonnes 9. Actual average bunch weight 13.68 kg FFB Receipt Reports in Mill, report sample dated 22 October 2012, total TBS receipt in Mill 254, 430 tons.

Full compliance

2.2

The facility shall inform the CB immediately if there is a projected overproduction.

Alur Dumai POM recognizes and claims the certified products for a year as much as 10,866.79 tons of CPO and 2,268.89 tons of Palm Kernel in the period of July 2011 to June 2012. When the first Surveillance Audit was conducted certified CPO and Palm Kernel has not overproduction from POM may claim. PT. LTS is committed to providing information to Mutuagung Lestari regarding production of CPO and Palm Kernel which exceeded those projected.

Full compliance

3 Record keeping

3.1

The facility shall maintain accurate, complete, up-to-date and accessible records and reports covering all aspects of these requirements.

The entire records and reports have been created and stored by the company. Document storage system in the form of soft copy in the System Application Program (SAP) program, Sime-Weight Program for weighing FFB, CPO and Palm Kernel, FFB receipt reports at the mill to determine the quality of FFB to be processed, while the documents in the form of hard copy (print out) are stored in the administration room of Alur Dumai POM.

Full compliance

3.2 Retention times for all records and reports shall be at least five (5) years.

In accordance with SOP of Supply Chain No. 025/LTS-SC/12) endorsed by Manager of Alur Dumai Estate and Manager of Alur Dumai Mill on 22 September 2012, the retention time of documents related to supply chain is 5 years.

Full compliance

3.3 (a) The facility shall record and balance all receipts of RSPO certified FFB and deliveries of RSPO certified CPO, PKO and

palm kernel meal on a three-monthly basis. (b) All volumes of palm oil and palm kernel oil that are delivered are deducted from the material accounting system

according to conversion ratios stated by RSPO. (c) The facility can only deliver Mass Balance sales from a positive stock. However, a facility is allowed to sell short.

Alur Dumai POM performs recording every month in the form of Monthly Report. The monthly report explains among others: 1. Schedule of FFB Reception For Every 2 Hours

2. Daily FFB Receipt Data

3. Production & Extraction Statistics

4. Daily Production Data

5. Production Stock

6. Recapitulation of CPO & Palm Kernel Production Delivery

7. Mill Capacity & Utilization of Chemicals Usage & Production Quality External

8. Production losses against Processed FFB Sports

9. Analysis of the received FFB quality


ASSESSMENT REPORT


10. Recapitulation of Mill Cost & Fixed Cost There are Monthly Reports of PT. Lahan Tani Sakti-AlurDumai Mill, January to September 2012

Full compliance

3.4 The following trade names should be used and specified in relevant documents, e.g. purchase and sales contracts, e.g. *product name*/MB or Mass Balance. The supply chain model used should be clearly indicated.

Alur Dumai POM of PT. LTS has shown the document of Sales Contract: 1. Sales Contract with PT. Victorindo Alam Lestari for CPO products, Sales Contract No.00185/TMP/KTR-

MKS/LOK/VII/2012 dated 25 July 2012 that explains the trading name which is CPO (Crude Palm Oil) with the quality of Free Fatty Acid (As Palmitic) maximum 3.5%, maximum Moisture Impurities 0.5%

2. Sales Contract with PT. Inti Benua Perkasatama for Palm Kernel Products, Sales Contract No.00107/TMP/KTR-IKS/LOK/VI/2012 on 19 June 2012 which describes the trading name which is Palm Kernel, product quantity of 300,000 kg, quality of Moisture, Impurities, Sales dirt maximum of 16%.

Full compliance

3.5 In cases where a mill outsources activities to an independent palm kernel crush, the crush still falls under the responsibility of the mill and does not need to be separately certified. The mill has to ensure that the crush is covered through a signed and enforceable agreement.

Alur Dumai POM - PT. LTS only sells Palm Kernel to third parties and does not cooperate with the Kernel Crushing Plant

4 Sales and goods out

4.1

The facility shall ensure that all sales invoices issued for RSPO palm oil delivered include the following information:

(a) The name and address of the buyer

(b) The date on which the invoice was issued

(c) A description of the product

(d) The quantity of the product delivered

(e) Reference to related transport documentation

Alur Dumai POM has ensured that all invoices issued for RSPO palm oil shipments contain information such as: Example: a. Name and address of the CPO buyer, namely PT Victorindo Alam Lestari, Address: Jl. Iskandar Muda No. 107 Barura

Village, Subdistrict of Medan Baru, Medan 12154

b. Date of issuance of invoices: 27 July 2012

c. The description of the product, namely CPO (Crude Palm Oil in Bulk),

d. The amount of products delivered: 1,002,000Kg

e. Shipment and transportation agreed is CPO in Bulk where buyers pick up the products from bulking station specified.

5 Training

5.1

The facility shell specifies and provides the training for all staff as required to implement the requirements of the Supply Chain Certification Systems.

There are recorded evidences that PT. LTS – Alur Dumai Mill has conducted training for staffs which is required to implement the requirements of Supply Chain Certification System. The recording evidences are in the form of:

1) List of Participants Attending Supply Chain Certification Training of Alur Dumai POM (Number of Participants: 12 persons), dated 21 September 2012


ASSESSMENT REPORT


2) Photos of the activity 3) Training Materials

6 Claims

6.1 The facility shall only make claims regarding the use of or support of RSPO certified oil palm products that are in compliance with the RSPO Rules for Communications and Claims.

Alur Dumai POM - PT. LTS has not been able to show the use of claims to support RSPO certified palm oil in accordance with the RSPO Guidelines for Communication and Claims stated in the Sales Contract, Delivery Order and Invoice.


ASSESSMENT REPORT


3.3. Conformity Checklist of Certificate and Logo Use (Only apply for Surveillance Assessment Report)

1. Evidence of permission or approval certificate and logo from Certification Body which submitted by Client

X or√

S-1

LTS has had approval / permit to use the certificate with the number MUTU-RSPO/011. √

2. Implementation of certificate and logo used by Client comply with size and type (shape) against Guideline of Logo Use

X or√

S-1

Not Applicable;

The Company does not use the logo on-product and off-product in the scope of PT Lahan Tani

Sakti .

NA

3. Implementation of Certificate and Logo is not used on product

X or√

S-1

Not Applicable; NA

4. Controlling of Certificate and Logo, including withdrawing inappropriate logo.

X or√

S-1

Not Applicable; NA


ASSESSMENT REPORT


3.4. Summary of Time Bound Plan Verification of the RSPO Certification

Total companies visited (0.8 √Y) Where Y is the total of one holding company The company name : Mustika POM and PT Sajang Heulang full manage scheme smallholders (KKPA)

2.1

There is compliance with all applicable local, national and ratified international laws and regulations.

X or√

Pustika POM and PT Sajang Heulang full manage scheme smallholders are compliance with applicable laws and regulations.

√

2.2

The right to use the land can be demonstrated, and is not legitimately contested by local communities with demonstrable rights.

X or√

PT Sajang Heulang scheme smallholders has demonstrated land use and not legitimately contested by local communities.

√

6.3

There is a mutually agreed and documented system for dealing with complaints and grievances, which is implemented and accepted by all parties.

X or√

PT Sajang Heulang scheme smallholders has documented system for dealing with complaints and grievances, which is implemented and accepted by all parties

√

6.4

Any negotiations concerning compensation for loss of legal or customary rights are dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.

X or√

PT Sajang Heulang scheme smallholders has SOP of Land Compensation Standard and Identification No. 001/PSDS-L&AS, describe Land identification, settlement patterns, Consultative Process Claims, Payment and Reporting Procedures.

√

7.3

New plantings since November 2005, have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values.

X or√

PT Sajang Heulang scheme smallholders have not replaced primary forest or any area required to maintain or enhance one or more High Conservation Values

√

7.5

No new plantings are established on local peoples’ land without their free, prior and informed consent, dealt with through a documented system that enables indigenous peoples, local communities and other stakeholders to express their views through their own representative institutions.

X or√

No land compensation process due the entire smallholders’ scheme plantation land is the property of their respective member smallholders (land tenure is a Certificate of Ownership). PT Sajang Heulang operating the operational activity (full manage scheme smallholders)

√

7.6

Local people are compensated for any agreed land acquisitions and relinquishment of rights, subject to their free, prior and informed consent and negotiated agreements.

X or√

No land compensation process due the entire smallholders’ scheme plantation land is the property of their respective member smallholders (land tenure is a Certificate of Ownership). PT Sajang Heulang operating the operational activity (full manage scheme smallholders)

√


ASSESSMENT REPORT


3.5 Identification of Findings, Corrective Action, Observations, Opportunity for Improvement and Noteworthy Positive Components.

During the stage -2 assessment, there were 6 (six) nonconformities were assigned against Minor Compliance Indicators, 4 (four) opportunities for improvement were identified. Further explanation of the non-conformities raised and corrective actions taken by the company are provided in this section. The company prepared a corrective action that was reviewed and accepted by MUTU and corrective actions taken to close all non-conformities shall be verified during next assessment.

3.5.1 Identification of Findings, Corrective Actions and Observations at Stage 2 Assessment

CAR No

Ref Std Finding Area Grade Time

Limits Corrective Action Observation Status

Closing Date

2010.04

NI-INANIWG 2.1

Fulfillment of the requirements of applicable laws and regulations - LTS has had List of Regulations and legal requirements related to the activities of oil palm plantations and palm oil mills. However, the articles of which must be adhered to, has not been identified and the compliance has not been evaluated.

Mill and

Estate

Minor Before S-1

Organizations must provide evidences of identification and evaluation results of compliance with all applicable legal requirements related to the plantation company activities, among others: performing delineation of protected areas in accordance with Presidential Decree No. 32 year 1990, etc.

The organization has the list of documents of rules and mechanisms of regulatory compliance evaluation; The examples of compliance evidences: delineation of a buffer zone in the area of the reservoir is 50 m in accordance with the Presidential Decree No.32 of 1990. But there are some relevant regulations that have not been complied, such as: 1) location of hazardous material storage of PT. LTS has not obtained the permit from the government as required by Government Regulation No.18 Year 1999 on Hazardous Waste Management, 2) submission of the report of environmental management plan/environmental monitoring plan (RKL/RPL) to relevant agencies was not performed every 6 months as required by the Decree of Environment Ministry No. 45 year 2005 on Guidelines for Preparation of environmental management plan/environmental monitoring plan reports.

Closed 23 Oct. 2012


ASSESSMENT REPORT


CAR No



Closing Date

23 October 2012. The Company has completed the compliance with relevant regulatory, including: 1. There is Hazardous Waste Landfill

permit in accordance with Environmental Impact Control Agency of Rokan Hilir District No. 25/BPDL/2011 dated 5 July 2011 regarding the Permit for Temporary Storage of Hazardous and Toxic Waste to Palm Oil Mill (POM) of PT. Lahan Tani Sakti referring to Government Regulation No.18 year 1999.

2. The evidence of goods delivery on the date of 29 September 2011, regarding the delivery of Quarterly Environmental Monitoring Report of Report for period of April - June 2011; Reports of environmental management plan /environmental monitoring plan for Semester II year 2011, and the Quarterly Hazardous Waste Balance for period of October toDecember 2011.

2010.38

Major 2.2.2

Legal evidences of area boundary poles - There is a legal evidence of area boundary poles in the form of Land Use Title Boundary poles listed in Land Map published by the National Land Agency, and the company has engaged in

LTS Minor Before S1

The company should ensure the action plan of Land Use Title Boundary poles maintenance and improvement is realized in accordance with the

23 October 2012. There are documents of program and realization of estate boundary poles replacement for the period of 2012-2013. It is known that the number of missing poles is 472 pieces (National Land Agency Poles

Complied with observation

23 October

2012


ASSESSMENT REPORT


CAR No



Closing Date

monitoring the presence of Land Use Title Boundary poles in period of May 2010 - September 2010. The monitoring results indicate that there are as many as 462 missing poles out of 627 poles (74%), and the company has not maintained the poles condition although currently the company has made action plan for the maintenance and repair of Land Use Title Boundary poles.

planned deadline.

and auxiliary poles); The poles replacement program for year 2012-2013 is as many as 247 poles. Up to now, the replacement of 154 poles has been realized and the poles replacement program for 2013-2014 budget year is planned as many as 163 poles. There is a letter of notification to National Land Agency No. 022/LTS/PSD/UM/X/2012 regarding the request of assistance for poles installation and verification. Based on field visits in Block E 006 (pole No. 124), D007 (Pole No. 116), G007 (Pole No. 172) and B001 (auxiliary pole), the poles were found in good condition and well maintained.

2010.39

Major 2.2.3

Resolution of land disputes – There are cases of land occupation covering 268.2 hectares in area of LTS, and areas of 119.53 hectares have been resolved by the compensation system, with the last compensation done in 2008. But until the main assessment, there are cases of land claims covering 148.7 hectares that have not had evidences of resolution or its progress agreed by the parties.

LTS Minor Before S1

The organization must be able to show evidences that the area of 148.7 hectares of land claims cases have been resolved of the evidences of its progress agreed by the parties.

The organization has sent an evidence of improvement effort to the auditor on March 22, 2011, in the form of a written agreement between LTS and the people of Sri Kayangan Village in respect of the land with a total area of 148.7 hectares in Alur Dumai Estate. The meeting was held on March 21, 2011. The meeting has reached the following agreements: the local people having the ownership rights on land within the occupation area were not willing to receive compensation, and the company will not develop the said land. However, the audit team was of the opinion that a further verification is required by conducting interview with a number of parties involved in the agreement at least at

Closed 22 October

2012


ASSESSMENT REPORT


CAR No



Closing Date

the time of surveillance activities 22 October 2012. There are records evidences of resolution process of land disputes covering 148.7 hectares in Desa Sri Kayangan.

2010.40

Minor 4.7.5

Risk analysis – The risk analysis documents are available for mill operations, but there are still high-risk activities that have not been included in the document such as: FFB grading activities in loading ramp station; And there are results of risk analysis in HIRAC documents which has not been implemented, eg: work permit of gas level testing in the steam cleaning activities at the sterilization station.

POM CFA Before S1

The company is recommended to review the HIRAC documents and ensure that all the results of the risk analysis has been implemented

The Company has revised the HIRAC document of POM among others: the list control for the activity in limited/closed room (in thresher and steam); it is mentioned that the control done which is related to the risk is the activities should be carried out by the operator who a license such as the operator named Suaji (No. Reg. 159 OPK3-PUBT-B.1/III/2011) and the activities done by opening all the vents and waiting until the air condition is stabilized. HIRAC for loading ramps includes grading activities, such as hazard risk of being exposed toa hook (gancu); the effect (injured), risk (medium), and risk control (using PPE and performing the activity carefully). There is socialization of POM HIRAC and it has been revised on 9 April 2012, attended by 16 employees of POM.

Closed 22 Oktober

2012

2010.41

Minor 5.2.1

Posters or signboard - Based on field visits, there were some areas of HCV which have no signboards or posters as a form of socialization to all employees and the public, for example Block T49 Division 3 identified as areas of HCV 1

Estate

CFA Before S1

The organization is strongly advised to install posters or signboards in all areas identified as areas of HCV. For example: Block T49 (HCV1 and 5) and Block

The company has installed posters on areas identified as HCV and documentary evidences are available. Based on the results of field visits in Block G012, there have been posters of protected animals and HCV area signboards.

Closed 23 October

2012


ASSESSMENT REPORT


CAR No



Closing Date

and 5, and Block T56 identified as a potential area of HCV 1.

T56 (potential HCV 1).

2010.42

Major 5.5.3

Land fire prevention procedures - The company has provided the land fire prevention procedures including documents of Land Fires procedure, but the company has not clearly explained few related things, for example: fire initial information, mechanisms, person in charge, and minimum equipment used.

Estate

Minor Before S1

The company shall revise the document of land fires procedures owned, and disseminate them effectively.

The company showed SOP of land fire prevention procedures No. 028/LTS-PK/09 dated 12 March 2009 describing the formation of firefighting organizations, identification of water sources, an inventory of areas prone to fires, fire danger signs, fire patrol and equipment.

Closed 22 October

2012

2010.43

Minor 6.1.3

Environmental management and monitoring reports – There is a evidence that the submission of the report of Environmental management plan is not in accordance with relevant regulations (i.e. Every 6 months). For example: Implementation Report of environmental management plan / environmental monitoring plan(RKL/RPL) of semester 1 and 2 year 2009 was submitted to Regional Environmental Impact Control Agency of Rokan Hilir district in June 2010, and the implementation Report of RKL / RPL of semester 1 year 2010 has not been submitted up to the main assessment.

LTS Minor Before S1

The company must submit the implementation report of environmental management plan / environmental monitoring plan in accordance with the regulations (i.e. Every 6 months).

The company has reported environmental management plan / environmental monitoring plan documents every 6 months to the relevant agencies.

Closed 23 October

2012

2010.44

Minor 6.2.3

Officers of consultation and communication with the public - SOP of Public Communications and Consultation stated that the officer who is

LTS CFA Before S1

The company is advised to appoint a special officer in charge of communicating with the public, and to

The company has appointed an officer who is responsible for consultation and communication with the public on behalf of Supariyanto according to Decree No.

Closed 22 October

2012


ASSESSMENT REPORT


CAR No



Closing Date

responsible for communication with the public is the manager of the estate, but the company admitted that so far the duty was done by chief of administration affairs. Based on field visits, the public did not know exactly the person appointed by the company to communicate with the public.

ensure that the public knows about it.

LTS/RSPO/110/X/12/S dated 2 October 2012

2010.45

Major 6.3.1

Complaints handling system - The company has a complaints handling mechanism listed in the SOP of Complaints Handling, and the company admitted that the mechanism had been disseminated to the public (village government). However, based on field visits, the public has not fully known the mechanism, for example: Sri Kayangan village secretary.

LTS CFA Before S1

The company is advised to disseminate complaints handling mechanism to the public effectively.

The company has socialized complaints mechanism in surrounding villages on 21 September 2012 and 29 September 2012

Closed 23 October

2012

2010.46

NI-INNIWG Major 7.2.1 Major 7.2.2

Survey of land suitability – The organization has not been able to provide the records of land suitability as a result of the survey of the land in the area of new plantings conducted from 2006 to 2010; and the records of estate development implementation (new land clearing) based on land suitability are not yet available.

Estate

Minor Before S1

The organization must be able to provide records of land suitability in the area of new planting conducted from 2006 to 2010

The documented proposal of the soil fertility survey has been made available by the company. The proposed soil fertility survey was planned to be conducted in July 2010 to January 2011. However, the audit team was of the opinion that the company has no sufficient evidence of records of the periodical soil analysis result. The organization should immediately conduct the proposed soil fertility survey and provide the auditor team with the documented result of the said survey. 23 Oct 2012

Closed 22 October

2012


ASSESSMENT REPORT


CAR No



Closing Date

The recordsof the results of the soil analysis conducted every 5 years by MRC are available. Updated reports are available for period of 21 - 27 October 2010 in ADE. Semi-detailed soil study conducted by PARAM AGRICULTURAL SOIL SURVEY (M) SDN. BHD is available

3.5.2 Identification of Findings, Corrective Actions and Observations at surveillance - 1 Assessment In this first Surveillance assessment, there is no nonconformance found in the RSPO Standard Compliance and only one opportunity of improvement to be verified on the next second surveillance assessment.

3.5.3 Opportunity for Improvement

No Ref Std Descriptions

1 Minor 5.3.1 Waste material manifest– The company may evaluate the conformance of the date of incoming and outgoing hazardous waste referring to the minutes of hazardous waste delivery.

3.5.4 Noteworthy Positive Components

No Ref Std Descriptions

1 4.7 Has had Zero Accident certificate year 2012 from Labor & Transmigration Ministry of Indonesia


ASSESSMENT REPORT


3.6 Summary of Arising Issues from Public, Management and Auditor Response

Public Issues (Institution/ NGO/Community)

Management Responses Auditor Responses

Sri KayanganVillage

Edi Suprapto (Head of Village) Sumardi (Secretary of Village) Tarzan (Head of Development Affairs&villager who was involved in signing the land dispute resolution agreement at Sri Kayangan Village) 1. Impacts of the presence of oil palm plantation of PT. LTS,

are:

- Opening road access - Creating job vacancies (some villagers work at the

plantation)

Some assistance given by PT LTS, among others are: - Assistance in providing heavy equipment to repair the

village road - Assistance to build worship facility (mosque)

2. Suggestion from Head of Village: for the areas where the

Land Use Title Boundary Poles are missing, they should be

replaced immediately so that the boundaries between the

villagers’ land and the plantation area are more clear and

there will be no more land disputes.

The implementation of CD/CSR is adjusted with the budget of PT LTS. PT.LTS has replaced some missing boundary poles and arranged a plan to follow up the next poles installation.

1. Records of company’s contribution to community development

are available. See criteria 6.11.

2. Records of Plantation Boundary Poles Replacement Program

and Realization Document for Period of 2012/2013 are

available, based on that document it is known that the number

of missing poles are 472 pieces, and the poles replacement

plan for year 2012/2013 is as many as 247 poles and up to

October 2012 the replacement had been done for as many as

154 poles. The report of Replacement and Maintenance of

National Land Agency Poles on 20 September 2012 at Division

II Block G005, G004, G006 and F004 as many as 6 poles is

also available. The document of estate boundary poles

replacement for budget period of 2013/2014 is available. The

program plan is for Replacement of Boundary Poles as many

as 163 poles. See criteria 2.2

Local Contractor

Rusdy (Tangga Batu Village) He has worked together with PT. LTS since 2010 for FFB

Work fields offered to the local contractors correspond to their ability and labor availability.

The sample of payment records evidences to local contractors for FFB Transportation (Rusdy) is available. The example of records evidences: Payment Receipt (sealed ofIDR 6,000) dated 29


ASSESSMENT REPORT


Public Issues (Institution/ NGO/Community)

Management Responses Auditor Responses

transportation service. He owns trucks with 4 workers. The payment is made by PT LTS in the middle of the months and based on the volume of transported FFB. The main requirement to become transportation personnel (Driver) is to have Driving License (B & B1).

September2012, with the amount of IDR 41,944,529. See criteria 6.10

Pondok Kresek Village

Rahmin (Head of Administration Affairs) Sahwan (Head of Development Affairs) Budi Saputra Sirait (Head of General Affairs) 1. Some contributions from PT. LTS to the village, are:

- Assistance in providing heavy equipment to repair village roads

- Assistance in providing clean water in dry season - Assistance on religious celebration days

The impact of the existence of oil palm plantation, is:

- Creating job vacancies, there are some villagers working at the plantation and the mill.

2. Aspiration: the employee recruitment process should be

conducted openly and the village should also be informed

about the available jobs vacancies.

1. The implementation of CD/CSR is adjusted

to the budget of PT LTS.

2. PT LTS will give information according to

existing procedures.

1. The records of company’s contribution to the community

development are available. See criteria 6.11.

2. Procedures related to the community’s aspiration and the

responses/follow-up from the company are SOP of Information

Request, SOP of Communication/Consultation with the

Community and SOP of Community Complaint Handling.See

criteria 2.2


ASSESSMENT REPORT


4.0 CERTIFIED ORGANISATION'S ACKNOWLEDGEMENT OF INTERNAL RESPONSIBILITY

4.1 Formal Sign-off of Assessment Findings

Hereunder sign by management representative from inspected company to acknowledge a field assessment and agree for all content explained in this assessment report, included of non-compliance findings.

Signed on behalf of:

Head of PSQM

Mutuagung Lestari

Minamas Plantation

Lead Auditor

Mohamad Pirabaharan

Octo HPN Nainggolan

24 October 2012

24 October 2012


ASSESSMENT REPORT


Appendix 1. List of Stakeholder Contacted in the RSPO Certification Process

No Institution/NGO/Community Address Phone/Email Form of Contact

Date of Contact

1 Head of Srikayangan Village

Srikayangan Village

Interview

22 October

2012

2 Secretary of Srikayangan

Village

Srikayangan Village

Interview

22 October

2012

3 Head of Development Affairs ,

Srikayan Village

Srikayangan Village

Interview

22 October

2012

4 Local Contractor (Rusdy) Tangga Batu Village

Interview

22 October

2012

5 Head of Administration Affairs,



Interview

22 October

2012

6 Head of Development Affairs ,



Interview

22 October

2012

7 Head of General Affairs ,



Interview

22 October

2012


ASSESSMENT REPORT


Appendix 2. Assessment Plan

DATE 21 - 25 October 2012

PLANNED TIME ACTUAL

PROGRAM PROCESSES / CLAUSES TO BE AUDITED AUDITOR

Sunday 21 Oktober 2012

10.00 – 16.00

Sunday 21 Oktober 2012

10.00 – 22.00

Travelling from Jakarta to PT Lahan Tani Sakti

All Team

Monday, 22 Oktober 2012

08.00 - 09.00 09.00 - 12.30

14.00 - 17.00

Monday, 22 Oktober 2012

08.00 - 09.00 09.00 - 12.30

14.00 - 17.00

Opening Meeting at LTS Office Document Observations, in e.g.

Principal 1 (Information request & Response)

Principal 2 (Fulfilment of Regulation, Land Tenure, Community Agreement.)

Principal 3 (Company Working Plan and Replanting program)

Principal 4 (Operational records of Harvesting, Spraying, Upkeep, Fertilizer Application, IPM, Buffer Zones, Terracing, Stores, Workshop, etc)

Verification of past assessment findings improvements

All Team

Tuesday, 23 Oktober 2012

08.00 - 12.30

14.00 - 17.00

Tuesday, 23 Oktober 2012

08.00 - 12.30

14.00 - 17.00

Physical Inspection and interviews at Alur Dumai Estate

Harvesting, Spraying, Upkeep, Fertiliser Application, Buffer Zones, Terracing, Stores, Workshop, etc..

Document Observations, in e.g.

Principal 5 (Environment report, HCV area)

Principal 6 (Worker Contracts, Pay & Conditions, External Stakeholders Communications, Labor welfare and facilities, local contributions

Principal 7 (new planting or replanting implementation)

Principal 8 (Continuous Improvement)

All Team

Wednesday, 24 Oktober 2012

08.00 – 17.00

Wednesday, 24 Oktober 2012

08.00 – 17.00

Physical Inspection and interviews at Alur Dumai Estate and POM

Inspect Housing, health facilities, Interview of Residents, Clinic Staff, Office Staff, Interview External Stakeholders, Local Community

Physical Inspection and interviews at Alur Dumai POM

Mill processing, Effluent treatment, chemical storage, Safety and health procedure, interview contractors, etc.

Supply Chain Requirement (Alur Dumai POM)

All Team

Thursday 25 Oktober 2012

08.00 – 11.00 11.00 - 17.00 18.00 – 20.00

Thursday 25 Oktober 2012

08.00 – 11.00 11.00 - 17.00 18.00 – 20.00

Closing Meeting Travelling from PT Lahan Tani Sakti to Pekanbaru Travelling to Jakarta

All Team


ASSESSMENT REPORT


Appendix 3. Glossary

ADE : Alur Dumai Estate

AMDAL : Analisis Mengenai Dampak Lingkungan (Social and Environmental Impact Assessment)

APD / PPE : Alat Pelindungan Diri (Personal Protection Equipment)

ASEAN : Association of South East Asian Nations

B3 : Bahan Beracun dan Berbahaya (Hazardous Material Waste)

BOD : Biological Oxygen Demand

CPO : Crude Palm Oil

CBD : Convention on Biodiversity

HCV : High Conservation Value (Nilai Konservasi Tinggi)

HGU : Hak Guna Usaha. (Land Use Permit)

IUP : Izin Usaha Perkebunan. (Plantation Operation Licence)

IPAL : Instalasi Penyaluran Air Limbah (Installation of Waste Distribution)

JAMSOSTEK : Jaminan Sosial Tenaga Kerja (Social Assurance of Labor)

Jankos / EFB : Janjangan Kosong / Empty Fruit Bunch

K3 / OHS : Keselamatan dan Kesehatan Kerja. (Occupational Health and safety)

KER : Kernel Extarction Rate

LC : Land Clearing

OER : Oil Extarction Rate

PHT / IPM : Pengendalian Hama Terpadu (Integrated Pest Management)

PK : Palm Kernel

PKS / POM : Pabrik Kelapa Sawit / Palm Oil Mill

POME : Palm Oil Mill Effluent

PSD : Plantation Services Departement

PSQM : Plantation Sustainability and Quality Management

RKL/RPL : Rencana Kelola Lingkungan/ Rencana Pemantauan Lingkungan. (Environmental Management Plan/ Environment Monitoring Plan)

SOP : Standart Operating System

S-01 : Surveillance 1

TBS / FFB : Tandan Buah Segar (Fresh Fruit Bunches)

UKL/UPL : Upaya Kelola Lingkungan/ Upaya Pemantauan Lingkungan. (Environmental Management Efforts/ Environmental Monitoring Efforts)