Michelin acquires full ownership of NR sustainability project

CLERMONT-FERRAND, France—Michelin has stepped up its environmental efforts with the full acquisition of a sustainable natural rubber pilot project in Indonesia.

Launched in 2015, the Royal Lestari Utama (RLU) project was previously owned 49 percent by Michelin and 51 percent by joint venture partner Barito Pacific Group.

In a June 21 statement, Michelin said with the acquisition, it is now the sole owner of the project, which operates three licenses covering nearly 70,000 hectares (nearly 173,000 acres) in Sumatra, in the Jambi province, and 18,000 hectares (about 44,500 acres) in Borneo, in the East Kalimantan province.

The move, said the French group, is a "long-term commitment" from Michelin to produce sustainable natural rubber and toward improving the living standards for local communities.

According to Michelin, the territories covered by the project had suffered "great damage and deforestation" before the involvement of Michelin and its Indonesian partner.

"With the takeover, the group reasserts its trust in the project and the long-term vision it requires," said the tire maker.

Since 2015, Michelin said "substantial work" had been carried out, leading to several social and environmental improvements.

"After significant preparation work, rubber trees were planted over more than 23,000 hectares, and 39,000 hectares were preserved notably to develop agroforestry activities and subsistence agriculture," it added.

Socially, the project has created 4,000 jobs, offered training services to farmers and helped to improve living standards for 50,000 inhabitants.

Michelin said it had invested over $1.05 billion (€1 billion) in its various businesses in Indonesia over the past seven years.

This project, it stressed, is "a significant long-term opportunity" to actively contribute to NR sustainability.

"Beyond these major improvements, Michelin is fully aware of the difficulties faced by a project of this magnitude," the company said.

"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," it added.

As the sole owner of RLU, Michelin said it will continue investing in the "demanding but remarkable" project.