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Saturday, June 02, 2007

The Role of Jaakko Pöyry

I will be looking at one important partner during the early years. There are a number of other, but this company had an important role in the early stage. I will add more comments to this post.


GLOBALIZATION OF THE PULP AND PAPER INDUSTRY

This is a short presentation of Jaakko Pöyry Group. The company was established in 1958. The first project in Southern Sweden was a success and the rest is history.

Forestry and engineering consultancy firms

King points out that many developing countries cannot afford to even borrow the amounts of capital needed to set up a large capacity pulp and paper mill, but the "international clubs of consultants" continually recommend precisely such large scale developments (King 1977a: 7).

Indeed, Northern forestry consultancy firms have often been the first to investigate the possibilities of industrial plantations in the South. The largest forestry and engineering firm in the world, the Jaakko Poyry Group, has played a key role in encouraging large scale pulp and paper projects in several Southern countries.

Jaakko Poyry Group

The Jaakko Poyry Group was established in 1958 by Dr. Jaakko Poyry, and in 1994 had a turnover of US$300 million. The Group has worked in more than 100 countries including 300 "major pulp and paper mill projects" (Poyry 1994: 2). The company advertises itself as having

The business intelligence for assessing and developing project opportunities. The group has more than 300 experts throughout the world supporting forestry and forest industry management with facts, ideas and solutions. With these resources, we can consider forestry and forest industry from a global perspective (Poyry 1994:3).

Poyry's involvement in Indonesia is typical of the company's role in a country's forestry development. Between 1979 and 1993 the group won over 110 contracts in Indonesia, ranging from industrial forest plantation and pulp mill projects to a contract for overseas training in Brazil. In 1984 Poyry won a contract from the World Bank aimed at "strengthening the structure of the Indonesian pulp and paper industry" (Poyry no date: 1-10(10)). The project leader for this project was Jouko Virta, who had set up Jaakko Poyry's Jakarta office in 1983 (Virta 1996).

A series of lucrative contracts followed for both Jaakko Poyry and Scandinavian pulp and paper machinery manufacturers, as Indonesia's production of pulp grew at an average of 29 per cent per annum between 1980 and 1991. Between 1990 and 2000 production is planned to treble. Poyry has played a significant role in creating this pulp and paper industry, which has displaced thousands of indigenous people and stripped hundreds of thousands of hectares of forest, to be replaced by fast growing monocultures. Meanwhile Finnish exports to Indonesia are booming, jumping from nil in 1990 to over US$95 million in 1993, and consisting largely of machinery for the pulp and paper industry (Lohmann 1994: 3).

One pulp and paper operation which has benefited from the attentions of Jaakko Poyry is the Indah Kiat mill in Riau province in Sumatra. Poyry has carried out 10 contracts for PT Indah Kiat, beginning in 1987 with a mission to produce a preliminary study for a pulp mill in Sumatra. Poyry's involvement continued with a reforestation plan for fast growing species, technical assistance for the pulp mill, assistance with the nursery and plantation establishment, through to technical studies on the machinery utilized at the mill (Poyry no date: 2-7(10)).

Indah Kiat (meaning beautiful and strong) has a 300,000 hectare HTI kayu serat concession (the maximum area for an Industrial Forest Plantation producing wood fibre for pulp and paper (WALHI and YLBHI 1992: 63)). The concession was originally forest and included ancestral lands belonging to the Sakai people, who have been resettled outside the area (Carrere and Lohmann forthcoming). Under the rules of the concession, the land must be replanted after clear cutting, and the forest is being replaced, primarily with Acacia mangium monoculture. Until the plantations reach rotation age (the first were planted in 1987-88, on a seven year cycle) mixed tropical hardwoods were utilized exclusively to run the mill. By 1998 it is planned to run the mill entirely on plantation wood (Pappens 1993: 21). Much of the labour for the clearcutting and plantation was supplied through the Indonesian government's transmigration programme (Carrere and Lohmann forthcoming).

Machinery for the mill came initially from Taiwan - a second hand pulp line from one of Indah Kiat's Taiwanese partners, Chung Hwa. A new line under construction in 1993 was supplied by Kamyr, a woodyard from Kone and power and recovery boilers from Ahlstrom, all Scandinavian-based firms (Pappens 1993: 21-22).

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