Michelin now sole owner of Indonesian sustainable plantation project

Michelin now sole owner of Indonesian sustainable plantation project

French tyre maker Michelin, which previously held 49% shares, has bought a further 51% of the capital of Royal Lestari Utama (RLU), a joint venture with Indonesian energy company Barito Pacific Group, thus becoming the sole owner of RLU.

The project, which was launched in 2015, aims at creating the right conditions for the production of sustainable natural rubber over a wide area of 70,000 ha in Sumatra, in the Jambi province, and 18,000 ha in Borneo, in the East Kalimantan province. These territories suffered great damage and deforestation before Michelin and its Indonesian partner got involved.

With the takeover, the group reasserts its trust in the project and the long-term vision it requires. The substantial work carried out since 2015, which has been widely documented, has led to a number of social and environmental improvements.

For nearly six years, after significant preparation work, rubber trees were planted over more than 23,000 ha, and 39,000 ha were preserved notably to develop agroforestry activities and subsistence agriculture. The project also includes a social dimension, consistently aiming at improving living standards for 50,000 inhabitants, by creating approximately 4,000 jobs, training farmers to rubber tree growing and diversifying crops.

The group has invested over a EUR1 billion in its various business since 2015 in Indonesia. For Michelin, this project is a significant long-term opportunity to actively contribute to making the natural rubber sector more sustainable.

Beyond these major improvements, Michelin is fully aware of the difficulties faced by a project of this magnitude. The natural rubber value chain is highly complex and fragmented and there is still much to be done on the commercial, environmental, and social fronts.

“Becoming the sole owner of RLU means Michelin will continue investing in a demanding but remarkable long-term project which combines social dimension, environmental protection and economic performance. We are proud of the actions taken with our Indonesian partner Barito Pacific, whom we thank for their contribution to the project since its launch in 2015. We are also confident in RLU’s future ability to support the transformation of the natural rubber sector in Indonesia while improving living standards and preserving forests and ecosystems,” says Vincent Rousset-Rouvière, Purchasing Director of the Michelin Group.