Roundtable on Sustainable Palm Oil - TÜV Rheinland · 3.1 Description of Supply Chain Management System The following is a description of the findings pertaining to the company’s

Roundtable on Sustainable Palm Oil

Supply Chain Certification Report Report no.: SCCS-14008

Assessment against RSPO Supply Chain Certification Systems 2011

PT LDC Indonesia Refinery and Storage

Lampung Province

Indonesia

Date of assessment: September 30 to 1st October 2014

Report prepared by:

Mhd Fundy Cholis Kurniawan (RSPO Lead Auditor)

Certification decision by:

M. Basharul Asana (Head of Certification Body of PT TUV Rheinland Ind onesia)

Certification Body: PT TUV Rheinland Indonesia

Menara Karya, 10th Floor Jl. H.R. Rasuna Said Block X-5 Kav.1-2

Jakarta 12950,Indonesia Tel: +62 21 57944579 Fax: +62 21 57944575

www.tuv.com/id

TABLE OF CONTENTS

TABLE OF CONTENTS ................................. .............................................................. 2

1.0 SCOPE OF SUPPLY CHAIN CERTIFICATION ASSESSMENT ........................... 3

1.1 Executive Summary and Scope of Assessment ........................................................................... 3 1.2 Certification Details ....................................................................................................................... 3 1.3 Organisational Information / Contact Person ................................................................................ 3 1.4 Actual production volumes and projected outputs. ....................................................................... 4 1.5 Summary of Previous Assessment ............................................................................................... 4

2.0 ASSESSMENT PROCESS .................................................................................... 5

2.1 Certification Body .......................................................................................................................... 5 2.2 Qualifications of Lead Assessor and Assessment Team ............................................................. 5 2.3 Assessment Methodology & Agenda ............................................................................................ 5

3.0 ASSESSMENT FINDINGS ..................................................................................... 6

3.1 Description of Supply Chain Management System ................................................................. 6 Section 1: General Chain of Custody System Requirements for the Supply Chain ........................... 6 Section 2: Modular Requirements: Module B – Segregation............................................................10 Section 3: Modular Requirements: Module C – Mass Balance ........................................................13 3.2 Identified Non-conformances against RSPO SCCS Requirements, Corrective Actions Taken and Auditors Conclusions .........................................................................................................................16 3.3 Conclusion and Recommendation for RSPO Supply Chain Certification ..................................18

4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INT ERNAL

RESPONSIBILITY .................................... ........................................................... 19

4.1 Date of Next Surveillance Visit 19 4.2 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client 19

APPENDIX ................................................................................................................. 20

Appendix 1: Details of Supply Chain Certification Certificate 20 Appendix 2: List of Abbreviations 20 Appendix 3: Observations and Opportunities for Improvement 20 Appendix 4: Supply Chain Certification Audit Closing Meeting Summary 20 Appendix 5: List of Certified Product and Projection for year 2014 20 Appendix 6: List of Certified Suplier and Buyer 21

RSPO Certification Assessment Report

-PT LDC Indonesia – Lampung, Indonesia-

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QMF: RSPO-007c-13 rev.2

1.0 SCOPE OF SUPPLY CHAIN CERTIFICATION ASSESSMENT

1.1 Executive Summary and Scope of Assessment

The operations of PT LDC Indonesia were assessed against General Module, Module B and Module C of the RSPO Supply Chain Certification (SCC) document (November 2011). The scope of the Supply Chain Certifica-tion assessment covers the implementation of the Segregation and Mass Balance supply chain model of PT LDC Indonesia (LDC). This is a single site certification. According to information stated on Foreign Investment Principle license (”Ijin Prinsip perluasan Penanaman Modal Asing”) No. 21/1/IP/II/PMA/2013 dated January 29, 2013, the mill has capacity has:

Product Type Capacity (tonnes)/year

Cooking oil 10,000

RBDPO 600,000

Olein 440,000

Stearin 124,000

PFAD 30,000

Biofuel 161,700

Oleo-Chemical 120,000

The assessment was carried out on September 30 to October 1st, 2014 and a total of 5 non-conformities were found.

1.2 Certification Details The details of RSPO certification of PT LDC Indonesia are as per the table below Table 1: RSPO Supply Chain Certification details of PT LDC Indonesia Refer to Appendix 1 for further details of the RSPO Supply Chain certificate.

RSPO Membership no.: 2-0383-12-000-00

RSPO Supply Chain Certificate no.: 824 503 14008

Date of RSPO Supply Chain certificate & validity:

09-12-2014 to 08-12-2019

1.3 Organisational Information / Contact Person

Contacts details of the company are as follows:

Company Name: PT LDC Indonesia

Address: Jl. Soekarno Hatta, Km 10 RT 23 LK 2 Kelurahan Way Lunik, Kecamatan Panjang, Bandar Lampung, 35133 Lampung Province - Indonesia

Contact Person: Mr. Arie Rizki

Position: Management Representative

Telephone: Office: 08117238822 Ext :129/ 0811845520 0

Email: [email protected]



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1.4 Actual production volumes and projected outputs .

Certified tonnages claimed, certified tonnages purc hased or sold, total and projected CPO and PK produ c-tion from PT Louis Dreyfus Indonesia

Table 3: Records of Certified Material Recived/ Pu rchased *

Supplier RSPO Certificate Number

Product UTZ Number Volume

- - - - -

Table 5: Records of Palm Oil Product Sold*

Buyer RSPO Certificate Number

Product UTZ Number Volume

- - - - - Note: This is 1st certification audit, PT LDC is not purchase yet certified material and not claim yet certified product.

1.5 Summary of Previous Assessment

This is 1st certification audit.



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2.0 ASSESSMENT PROCESS

2.1 Certification Body PT TUV Rheinland Indonesia is member of Group TÜV Rheinland Group, a global leader in independent test-ing and assessment services. The TÜV Rheinland Group was established in 1872 with offices located in over 490 locations in 62 countries on all five continents. PT TUV Rheinland Indonesia offers certification for a wide range of management systems according to established international standards including ISO 9001, ISO 14001, OHSAS 18001, SA 8000, RSPO, ISPO (Indonesian Sustainable Palm Oil Certification), ISCC, Timber Legality Verivication (SVLK), as well as CDM Validations and Verifications. PT TUV Rheinland Indonesia’s office is lo-cated in Jakarta, Indonesia.

2.2 Qualifications of Lead Assessor and Assessment Team

Name Position Qualifications / Experience

M. Fundy Cholis Lead Auditor

Education: Master Degree in Natural Reseource and Environ-mental Management, Bogor Agriculture University

Trainings attended: Environmental Impact Assessment (EIA), Ecological Risk Assessment (ERA), Internal Quality Audit Training for Quality Management System, IRQA-QMS ISO 9001:2000, High Conservation Value (HCV), Timber Legality Verification (SVLK), RSPO Lead Auditor Course, ISPO Auditor Course, RSPO SCCS training by BM Trada Working experience: Experienced in Environmental Impact As-sessment, Environmental Health Safety Senior Officer (EHS-Officer) in Wilmar International Plantation, Internal Auditor for Wilmar International Plantation, Auditor for Rountable on Sustain-able Palm Oil (RSPO), Indonesian Sustainable Palm Oil (ISPO), Certification for Timber Legality Verification (SVLK) in PT TUV Rheinland Indonesia since June 2012 – present.

2.3 Assessment Methodology & Agenda The supply chain certification assessment was conducted between September 30 to October 1st, 2014 in PT LDC Indonesia as per the assessment program below. The assessment was carried out in accordance PT TUV Rheinland Indonesia’s RSPO audit procedure as well as the RSPO Supply Chain Certification document through the method is sampling, interview, field visit, document check such as procedure and record of process. An on-site assessment was conducted and the assessment team carried out field (seaport, storage, and refin-ery) and document assessments of compliance to RSPO Supply Chain Certification System requirements. The company proposed the correction and corrective action for all identified non conformities raised to the cer-tification body 30 days after the closing meeting. Verification of closure of non-conformances was conducted 30 days after the closing meeting of the main assessment. The certification assessment agenda is as explained below.



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Main Assessment Agenda

3.0 ASSESSMENT FINDINGS

3.1 Description of Supply Chain Management System

The following is a description of the findings pertaining to the company’s supply chain management system according to the RSPO SCCS requirements, including status of compliance of the company and their out-sourced third parties to RSPO SCCS requirements:

Section 1: General Chain of Custody System Requirem ents for the Supply Chain

1. Applicability of the General Chain of Custody Sy stem Requirements for the supply chain

Findings: PT LDC Indonesia is a member of Louis Dreyfus Commodities Asia. It is strategically located adjacent to Port of Lampung, Indonesia. It is a bulk oil facility to refine and fractionate palm oil, and palm kernel oil. Management PT LDC Indonesia has commitment to implement RSPO SCCS. The company’s supply chain management system integrated with the implementation of quality management systems at ISO 22000. Following the nature of company’s material purchased availability for production facilities. PT LDC management decided to implement Mass Balance and Segregation system supply chain model (Module B and C), as stated on company’s quality manual to include all RSPO SCCS requirements. A set of standard operation procedure has been established for RSPO SCCS implementation. During certification audit the company has demonstrate their implementation to SCCS system and rele-vant requirement through the simulation process. PT LDC Indonesia is RSPO member under LDC Asia (Louis Dreyfus Commodities Asia) with member-ship number 2-0383-12-000-00. Compliance status: Full Compliance

Date Location/ Main sites

Main activities

September 30, 2014 PT LDC pro-duction facility process

1.Opening Meeting 2. Plant Tour - Incoming material at Jetty for MN B and SG - Storage tank for MB and SG - Production process for MB and SG 3. System management documentation 4. Purchasing activity 5. Outsourcing Activity for MB and SG

October 1st, 2014 PT LDC facility 1. Mass Balance and Segregation 2. Training 3. Sales and outgoing product 4. Production Process 5. Preparing for closing meeting 6.Closing Meeting and Present Finding



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2. Documented procedures

Findings: PT LDC Indonesia has a set written procedures and working instruction to ensure implementation of all elements stated on RSPO SCCS year 2011. The procedures were updated and covering all activities in PT LDC Indonesia including their subcontractor. As stated on master list documents and records, there are : 1. QM001 Quality manual of ISO 9001:2008 and Sustainability (RSPO SCCS and ISCC) 2. QP001 Control of Document 3. QP001 Control of Record 4. QP008 Product Identification and Traceability 5. SMR001 Mass Balance Calculation 6. SMR004 Product Segregation 7. SOK001 Raw Material Transfer from Land 2 to Refinery Tank 8. SQC001 Incoming Material and Finish Product Out Spec 9. SQC001 Handling Non Conforming Product Raw Material and Finished Product 10. WOK002 Transfer Material 11. WOK003 Transfer Product 12. WOK004 Incoming Liquid Material from Truck 13. WOK005 Dispatch Liquid Material use Truck Specifically for Mass Balance and Segregation Model will be implemented , PT LDC Indonesia has set the procedure both of SCCS Model, i.e.: 1. Mass Balance Calculation Procedure number SMR002 Rev 0, Effective date on 15/04/2014. On

this procedure, has explained about receiving material with Mass Balance Model, with Notes: - Contract number/Delivery Order - Origin of material - Quantity

2. Segregation Product Handling Procedure number SMR004 Rev 0, Effective date on 15/04/2014. On this procedure, has explained about ensure the incoming and out going material from bulk-ing/refinery, pipe through wich material shall be blowing or pigging. And if the material MB and SG mixed, the volume mixed not allowed more than 5%, with original SG will be maintained in 95%.

The name of the person having overal responsibility for and authority for the implementation of all RSPO SCCS requirement has bees assigned, i.e. the quallity assurance/control manager (Mr. Arie Rizki) is apointed as RSPO SCCS management representative. During the audit time, Mr. Arie Rizki has good knowledge and able to demonstrate awareness of the fa-cility’s procedures and process. Compliance status: Full Compliance

3. Purchasing and goods in

Findings: The procedure number QP014 Rev 01 Effective date on 15/04/2014 about Control of Pruchasing Com-mercial Bulk, mentioned trading for purchase order, information on the document shall consist of:

- Name of product - Product price - Spesification - Time for receive - Payment term - Stamp SG for SG product and MB for MB product

On the procedure also mentioned about product purchase shall ensure for SG, shall not contaminated by others product non-SG since transportation, shipment, and discharge. The supply chain/logistic sec-tion has responsibility for dealing with supplier, transporter and tank rental (outsource process) for order, keeping and incoming raw material together with trading departement for CPO procurement. Logistic section provide Information to another department or section for CPO incoming schedule, prepare & en-sure all sustainable documents such as Contract, shipment schedule CPO, Requested for Surveying



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Service, Fixture Note, Delivery Note and etc for Sustainability purpose. Logistic section with Sustainable person incharge to be verify sustainable certificate model IP; SG or MB on website and requested for surveying service and distribute to surveyor, verify & ensure delivery notes from Supplier for Sustainabil-ity purpose. The facility also has mechanism to ensure validity of the Supply Chain Certification of suppliers through checked via the list of RSPO Supply Chain Certified facilities on the RSPO website www.rspo.org. But the facility no mechanism in place for handling of non-conforming material/documents. This mecha-nism should also be used to take appropriate steps when the Supply Chain certification of a supplier is found to be invalid, so this is is non conformance. Compliance status: Non Compliance SCCS Non-conformance 2014 – 01 of 05: There is no mechanism in place for handling of non-conforming material/documents. This mechanism should also be used to take appropriate steps when the Supply Chain certification of a supplier is found to be invalid.

4. Outsourcing activities

Findings: There are several outsouced serviced in PT LDC Indonesia, such as: 1. CPO Storage tank for raw material located in same location with refinery, because the CPO stor-

age tank company is also member of LT LDC Indonesia with the name is PT Intisentosa Alambahtera (PT ISAB), accordance to agreement number 010/IA-TF/VII/2011 on July 6, 2011 about the storage tank rent for capcity 48.800 MT, with number of storage tank is:

- A1 2500 MT - A2 2500 MT - A3 2500 MT - B1 1250 MT - B2 1250 MT - B3 1250 MT - C1 940 MT - C2 940 MT - D1 380 MT - D2 380 MT - D3 940 MT - E1 6250 MT - E2 6250 MT - E3 6250 MT - F1 5100 MT - F2 5100 MT - F3 5100 MT

2. Transporter for material from supplier location and for product to buyer location. There are three outsourcing company i.e.: 1. PT Samudra Mulia Karsa, agreement number 03/SMK/VIII/2014 for tanker rent to transport raw ma-

terial from supplier to storage tank with amount of raw material is 2,000 MT 2. PT Sutomo Agriindomas Lampung, agreement number 084/LDC-INDONESIA/EXT/VIII/2014 to tra-

nasport raw material from port to storage tank with amount of raw material is 2,000 MT 3. PT Kurnia Pratama Sejahtera, agreement number 001-TC/KPS-LDCI/2013 for tugboat rent for

product transport such as CPO, CPKO, Olein from loading port to the discharging port. For outsourcing activity PT LDC Indonesia does not relinquish legal ownership of the materials during outsourced processing, and have fully control for all activity. But, there are several requirement related to the outsourcing activity still not fulfill by the facility, i.e.:

1. The facility has no mechanism to ensure the independent third parties (subcontractors) com-plies with the intent and requirements of the RSPO Supply Chain Standard.

2. There is no evidence that facility has documented control system with explicit procedures for the outsourced process which are shared with the relevant contractor.



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3. On the contract agreement still not include requirement about RSPO SCCS section (5.4.2.e) “that independent third parties engaged, provide un restricted access to their respective opera-tions, systems, and any and all information to certification bodies that are duly approved by the RSPO when this is announced in advance”. Also, the facility does not ensure that the contractor has compliance to SCCS RSPO systems. This is raised as non conformity.

Furthemore, transport activities from palm oil mill to the storage tank, the supplier using they own truck for transport of raw material. During the main audit, there is no plan for added new supplier, but if the facility have plan for that, the facility will be informed to certification body according the to Quality Procedure RSPO SCCS QP015 Rev 00 Effective Date 15/04/2014. Compliance status: Non Compliance SCCS Non-conformance 2014 – 02 and 03 of 05:

1. The facility has no mechanism to ensure the independent third parties (subcontractors) com-plies with the intent and requirements of the RSPO Supply Chain Standard.

2. There is no evidence that facility has documented control system with explicit procedures for the outsourced process which are shared with the relevant contractor.

3. On the contract agreement still not include requirement about RSPO SCCS section (5.4.2.e) “that independent third parties engaged, provide un restricted access to their respective opera-tions, systems, and any and all information to certification bodies that are duly approved by the RSPO when this is announced in advance”. Also, the facility does not ensure that the contractor has compliance to SCCS RSPO systems. This is raised as non conformity.

5. Sales and goods out

Findings: The procedure related to outgoing product/ certified product sales clearly determined on Export/Oil Dis-patch regulated in procedure number WOK003 about transfer product and WOK005 transfer liquid prod-uct using truck. Based on record of simulation process, logistic section received sales product and tender for Shipment from trading department, logistic will prepare outgoing product as basic information to make Shipping In-struction for shipping agent as shipping transporter. Logistic section making shipping schedule to be in-formed to QA, PPIC and other relevant section for product loading. Product will be weighing using flow meter. Spesifically for SG product, before the product discharge to be tanker, all off pipe will be use to flow the product shall be blowing or pigging, to reduce and minimize the others product non-SG. After blow-ing/pigging person incharge will be checked to ensure all of pipe was clear and reporting to operator. Several records issued for outgoing product depend on the transfer method used such as: - Vessel: Shipping Instruction (SI); Bill of lading (B/L); Certificate of Analysis , Cargo Manifest, State-

ment of Fact, and others - Container or ISO Tank: Packing list, Bill of Lading (B/L), Certificate of Analysis, Manifest, Statement

of Fact, and others In every document will stamp with SCCS system i.e. MB and SG. Where the person responsible for this have been getting training and simulation on the purchase and sale of the product certified MB and SG, also the facility will distinguish the stamp. Trading departement issue invoice to customer after product loaded, the information on the invoice are: - Contract number - Invoice number - Delivery order - Buyer address - Description of product - Statement/or information about RSPO SCCS selection model with stamp All information stated above can be verified during onsite audit through RSPO SCCS product simulation process.



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Compliance status: Full Compliance

6. Registration

Findings: PT LDC Indonesia is producing Edible and Non Edible Oil from supplied CPO and PK, the company has not established SOP for registration every transaction to RSPO IT System as required by RSPO-SCC standard and the control of IT system, implementation of this requireent will be chekced during next au-dit after certificate awarded. Compliance status: Not Applicable for this time

7. Training

Findings: The facility has program for training in 2014. Especially for RSPO-SCCS refreshment will be conducted in the end of this year and will be attendad as 49 person from all related departement. During the audit the training already conducted on August 28, 2014 attanded from all related departe-ment as 59 person, i.e.: (Production, Utility, Quality, Finance, HRGA, Mechanical, Purchasing, SHE, Storage), this training was include from PT ISAB as a storage tank outsourcing. The facility has kept record of training well done, and also the facility has a procedure for control of rec-ord number QP002 Rev 1 Effective date on 01/07/2014, mentioned “all document relating to ISCC and SCCS system shall be stored for 10 years”. Compliance status: Full Compliance

8. Claims

Findings: The company has an SOP for making claims certified product according RSPO communication and claims. However company not claim the product diretly, only require in relevant certified product, due-company only produce intermediate product not finsihed good consumer product Compliance status: Not Aplicable for this time

Section 2: Modular Requirements: Module B – Segrega tion

B.1. Processing

Findings: To ensure that all standard operation procedure can be implemented in PT LDC Indonesia, the company conduct RSPO production process simulation from incoming material until product dispatch on October 23, 2014 as observed on RSPO SCCS production simulation. Incoming material in Jetty will be trans-fered using pipe line to storage tanks. PT LDC Indonesia has 6 pipe lines, with 4 pipe line in active con-dition. When the pipe line located in port A until B is for product and pipe line located in port C until D is for raw material. After raw material transport using pipe line, then will be storage in tank. PT LDC Indo-nesia has 4 tanks for storage the raw material, i.e.: storage tank number E1, E2, E3 and F5.



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For product storage, PT LDC Indonesia also has tank for each product, i.e.: - Tank number F2, F7 and F1 is for Olein - Tank number F3 and F4 is for RBDPO - Tank number A1, A2, A3 and G1 is for Stearin - Tank number B1, B2, B3, C1, D1, D2 and D3 is for PFAD Pipe line for raw material and product discharged have separated by the facility. Based on procedure number SQC001, mechanism to produce the certified product with SG system, fa-cility has ensured the mechanism well implemented through the document receiving raw material. When on the document, it was cleared the origin of material shall be SG-SCCS certified for palm oil mill and estate. This was compliance with Segregation Product Handling Procedure number SMR004 Rev 0, Ef-fective date on 15/04/2014. On this procedure, has explained about ensure the incoming and out going material from bulking/refinery, pipe through wich material shall be blowing or pigging. And if the material MB and SG mixed, the volume mixed not allowed more than 5%, with original SG will be maintained in 95%. But, on the facility procedure above, there is no explained about “assure and verify through clear procedures and record keeping that the RSPO certified palm product is kept segregated from non-certified material including during transport and storage and be able to demonstrate that has taken all reasonable measures to ensure that contamination is avoided”. So this is as non compliance for the fa-cility, because they are shall ensure the SG raw material and SG product always keep from contaminate non certified product from transportation until storage activity. Before the raw material discharge to storage tank, person in charge will be ensured the quality and quantity through the sounding meter. After that process, person in charge will be sent the data to labora-tory. After that if the quality and quantity raw material is meet with standard, then laboratory (QC/QA) will informed to person in charge to discharge raw material to the storage tank. This is has compliance with the facility procedure number QP008. During the audit, the facility not determine special pipe line for SG product, but the facility will ensure the pipe line before the SG product use the pipe line through the blowing or pigging activites. This is improvement for the facility to determine the pipe line special for SG raw material and product. In process production, Head of Process will instruct the logistic department to prepare the raw material for process accordance to the requested product under QC/QA control. The facility also has separated the certified product for mass balance and non certified product. QA/QC officer take sampling in refinery and fractionation process for product analysis before product transferred to storage tanks after QA issued Daily Analisys Refinery and Daily Analisys Fractionation (QQC-07-002). Before SG product transferred to the storage tank, QC will sampling the product to ensure the quality and quantity product accordance to product request, and record in daily record data analysis. To en-sured the SG certified product will not contaminated with non SG product, the facility will decided the storage tank dedicated to SG product. If the storage tank previously has been used by non SG product, the facility has been set that the storage tank shall be flushing/cleaning and equipped with record of cleasing processing. All documents related sustainability SG product since receiving material until product discharge will be stamped by sustainable stamp with SG code and keep the records for 10 years accordance to facility procedure for control of record number QP002 Rev 1 Effective date on 01/07/2014, mentioned “all doc-ument relating to ISCC and SCCS system shall be stored for 10 years”. Compliance status: Non Compliance SCCS Non-conformance 2014 – 04 of 05: The facility has procedure SMR004 Rev 00 Effective date on 15/04/2014, but on the procedure not men-tion about: shall assure and verify through clear procedures and record keeping that the RSPO certified palm product is kept segregated from non-certified material including during transport and storage and be able to demonstrate that is has taken all reasonable measures to ensure that contamination is avoid-ed.



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B.2. Record keeping

Findings: The company has established a mechanism for control and maintenance of the data and document used in production process as stated on the document control procedure records control procedure, the reten-tion time for all records and reports for certified material and product has been defined for at least for ten (10) years. The storage and maintainance of documents is the responsibility of the respective depart-ments. As mentioned in facility procedure number QP001 Rev 01 Effective date on 01/07/2014 about control of document stated all of document related sustainability (RSPO-SCCS) such as (Bill of Leading, mass balance report, logistic, sales order, contract and delivery note) shall be stored for 10 years. Also proce-dure number QP002 Rev 01 Effective date on 01/07/2014 about control of record mentioned about all of sustainability record and document shall be stored for 10 years. The facility during the audit have not buy certified product, but the facility has been done conducted the simulation for SCCS implementation. On the simulation record for the facility used form for :

1. Sales purchase contract with contained information: - Name of buyer - Addrassed of buyer and seller - Seller name - Quantity product - Price product - Payment terms - Date collection

2. CPO contract, with contained information: - Seller name - Name of buyer - Addrassed oof buyer and seller - PO contract number - Date of issued - Delivery schedule - Payment terms - Description product - Supply chain model - Quantity - Unit price

3. Delivery note, with contained information: - Receiver - Date, time in, time out - Sales purchase contract number - CPO contract number - Delivery number - Date of issuing - Supply chain model - Analysis result product - Vessel name - Bill of Leading - Transporting distance in Km

4. Minutes of receiving, with contained information: - Actual received - Statement of Fact - Contract PO number - Sales purchase contract number - Sustainable certificate number

All of document stamped by the SG SCSS system. This simulation was compliance with facility procedure number QP014 Rev 01 Effective date on 15/04/2014 about Control of Pruchasing Commercial Bulk, mentioned trading for purchase order, infro-



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masion on the document shall consist of: - Name of product - Product price - Spesification - Time for receive - Payment term - Stamp SG for SG product and MB for MB product

On the procedure also mentioned about product purchase shall ensure for SG, shall not conataminated by others product non-SG since transportation, shipment, and discharge. But some of process to keep the SG product not contaminated and can be trace, the facility still no mechanism to traced back to only certified SG material. So this is non conformance for the facility. Compliance status: Non Compliance SCCS Non-conformance 2014 – 05 of 05: The facility shall provide documented proof that the RSPO certified oil palm product can be traced back to only certified segregated material.

Section 3: Modular Requirements: Module C – Mass Ba lance

C.1. Processing

Findings: Mechanism processing for MB SCCS system, is also same with SG. To ensure that all standard opera-tion procedure can implemented in PT LDC Indonesia, the company conduct RSPO production process simulation from incoming material until product dispatch on October 23, 2014 as observed on RSPO SCCS production simulation. Incoming material in Jetty will be transfer using pipe line to storage tanks. PT LDC Indonesia has 6 pipe lines, with 4 pipe line in actived condition. When the pipe line located in port A until B is for product and pipe line located in port C until D is for raw material. After raw material transport using pipe line, then will be storage in tank. PT LDC Indonesia has 4 tanks for storage the raw material, i.e.: storage tank number E1, E2, E3 and F5. For product storage, PT LDC Indonesia also has tank for each product, i.e.: - Tank number F2, F7 and F1 is for Olein - Tank number F3 and F4 is for RBDPO - Tank number A1, A2, A3 and G1 is for Stearin - Tank number B1, B2, B3, C1, D1, D2 and D3 is for PFAD Pipe line for raw material and product discharged have separated by the facility. Mass Balance Calculation Procedure number SMR002 Rev 0, Effective date on 15/04/2014. On this procedure, has explained about receiving material with Mass Balance Model, with Notes:

- Contract number/Delivery Order - Origin of material - Quantity

All of activity for mass balance since receive raw material and processing until to finish product, relative same with SG, the different is only the origin of material, when the MB, is still allowed mixing with non certified raw material or product, but shall be control with mass balance calculation. Before the raw material discharge to storage tank, person in charge will be ensure the quality and quan-tity through the sounding meter. After that process, person in charge will be sent the data to laboratory. After that if the quality and quantity raw material is meet with standard, then laboratory (QC/QA) will in-formed to person in charge to discharge raw material to the storage tank. This is has compliance with the facility procedure number QP008. During the audit, the facility not determine special pipe line for SG product, but the facility will ensure the pipe line before the SG product use the pipe line through the blowing or pigging activites. This is improvement for the facility to determine the pipe line special for SG raw material and product.



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In process production, Head of Process will instruct the logistic department to prepare the raw material for process accordance to the requested product under QC/QA control. The facility also has separated the certified product for mass balance and non certified product. QA/QC officer take sampling in refinery and fractionation process for product analysis before product transferred to storage tanks after QA issued Daily Analisys Refinery and Daily Analisys Fractionation (QQC-07-002). Before MB product transferred to the storage tank, QC will sampling the product to ensure the quality and quantity product accordance to product request, and record in daily record data analysis. The facility also All documents related sustainability MB product since receiving material until product discharge will be stamped by sustainable stamp with MB code and keep the records for 10 years accordance to facility procedure for control of record number QP002 Rev 1 Effective date on 01/07/2014, mentioned “all doc-ument relating to ISCC and SCCS system shall be stored for 10 years”. Compliance status: Full Compliance

C.2. Record keeping

Findings: The company has established a mechanism for control and maintenance of the data and document used in production process as stated on the document control procedure records control procedure, the reten-tion time for all records and reports for certified material and product has been defined for at least for ten (10) years. The storage and maintainance of documents is the responsibility of the respective depart-ments. As mentioned in facility procedure number QP001 Rev 01 Effective date on 01/07/2014 about control of document stated all of document related sustainability (RSPO-SCCS) such as (Bill of Leading, mass balance report, logistic, sales order, contract and delivery note) shall be stored for 10 years. Also proce-dure number QP002 Rev 01 Effective date on 01/07/2014 about control of record mentioned about all of sustainability record and document shall be stored for 10 years. Record keeping activty for all process for MB SCCS system, is same with SG, the different is only for mixing product, when the MB is allowed for mixxing product with non-certified product but shall control through the mass balance calculation. The facility has prepare the mass balance calcultion form with consist information such as: Opening stock; CPO incoming; CPO process refinery, product refine, tank farm, refinery, and fractination, consist of:

- ISCC certifed - Non ISCC certified - RSPO SCCS SG certified - Non RSPO SCCS SG certified - RSPO SCCS MB certified - Non RSPO SCCS MB certified

The facility during the audit have not buy certified product, but the facility has been done conducted the simulation for SCCS implementation. On the simulation record for the facility used form for :

1. Sales purchase contract with contained information: - Name of buyer - Addrassed of buyer and seller - Seller name - Quantity product - Price product - Payment terms - Date collection

2. CPO contract, with contained information: - Seller name



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- Name of buyer - Addrassed oof buyer and seller - PO contract number - Date of issued - Delivery schedule - Payment terms - Description product - Supply chain model - Quantity - Unit price

3. Delivery note, with contained information: - Receiver - Date, time in, time out - Sales purchase contract number - CPO contract number - Delivery number - Date of issuing - Supply chain model - Analysis result product - Vessel name - Bill of Leading - Transporting distance in Km

4. Minutes of receiving, with contained information: - Actual received - Statement of Fact - Contract PO number - Sales purchase contract number - Sustainable certificate number

All of document stamped by the MB SCSS system. This simulation was compliance with facility procedure number QP014 Rev 01 Effective date on 15/04/2014 about Control of Pruchasing Commercial Bulk, mentioned trading for purchase order, infro-masion on the document shall consist of:

- Name of product - Product price - Spesification - Time for receive - Payment term - Stamp SG for SG product and MB for MB product

Compliance status: Full Compliance

C.3. Mass balancing system

Findings: PT LDC Indonesia has establish a meachism to ensure that the quantity of physical CSPO and CSPK RSPO mass balance material inputs and outputs (volume or weight) at the physical site are monitored on a real-time basis and recorded on facility procedure number SMR002 Rev 00 Effective date on 15/04/2014 about mass balance calculation. All volumes of palm oil that are delivered are deducted from the material accounting system according to actual daily conversion ratios. On the procedure also men-tione every certified product shall be recorded in mass balance report and the information on mass bal-ance report consist of:

- Own of product - Name of product (CPO, RPO, PFAD, Olein and Stearin) - Origin of product - Quantity - Opening stock - Receiving - Dispatch



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- Production - Final stock

In mass balance report the minimum stock shall be zero (nul) or positive stock in every quartal and also ensure the raw material and product certified is in positive, not allowed for negative stock. Facility also recording the volume condition through the phisically checked in storage tank every day and record on form of daily sounding tank record and report to stock daily for each product. This is men-tioned in facility procedure number WOK001 Rev 00 date issued on 15/04/2014. Officer from Quality Assurance section has been assign to monitor daily report regarding Internal mate-rial accounting system will be complies with the RSPO requirement such as can only deliver Mass Bal-ance sales from a positive stock. The company will inform CB if facing condition to make sell short. The implementation of certified prod-uct accounting system will be started after PT LDC Indonesia getting certified approval from RSPO CB. Compliance status: Full compliance

3.2 Identified Non-conformances against RSPO SCCS R equirements, Corrective Actions Taken and Auditors Conclusions

SCCS Non-conformance 2014 – 01 of 05: There is no mechanism in place for handling of non-conforming material/documents. This mechanism should also be used to take appropriate steps when the Supply Chain certification of a supplier is found to be invalid. Correction: Prepare the mechanism in standard operating procedure (SOP) about handling of non-conforming materi-al/documents for RSPO SCCS SG Model system, through the diclasification from SG product to MB product. The procedure is number SRS004 Rev 00 Date Issued on 15/04/2014. Corrective Action: Ensure all of document since contract until receiving raw material is complie with facility procedure, and also ensure the supplier or raw material is supplier certified by RSPO specially for SG, MB supplier through checked in RSPO website. Auditor Conclusions: Closed Date of closure: November 22, 2014 SCCS Non-conformance 2014 – 02 and 03 of 05: 1. The facility has no mechanism to ensure the independent third parties (subcontractors) complies with

the intent and requirements of the RSPO Supply Chain Standard. 2. There is no evidence that facility has documented control system with explicit procedures for the out-

sourced process which are shared with the relevant contractor. 3. On the contract agreement still not include requirement about RSPO SCCS section (5.4.2.e) “that in-

dependent third parties engaged, provide un restricted access to their respective operations, systems, and any and all information to certification bodies that are duly approved by the RSPO when this is announced in advance”. Also, the facility does not ensure that the contractor has compliance to SCCS RSPO systems.

Correction: 1. Prepare mechanism such as SOP, work instruction for all subcontractor and brief all about handling

RSPO certified product specially for MB and SG.



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2. Prepare mechanism for PT LDC Indonesia to monitored and control all of subcontractor related transportation, and storage of certified product specially for MB and SG, through the make some pro-cedure and work instruction for all subcontractor and added several item in work agreement and al-ways notes about RSPO SCCS certief product specially for SG system shall be store in separate.

3. Renew all of subcontractor work agreement through the addendum or internal memo for independent third parties will allowed and provide information related RSPO SCCS implementation to certification body.

Corrective Action: 1. Ensure the all of subcontractor understood with procedure about handling certified product through

the brief all contractor. 2. Added in work agreement for subcontractor that the all of SG product shall store in separate, and

keep record in 10 years, also ensure the contractor agree and understood with the work agreement. 3. Ensure in every subcontractor work agreement has state about “independent third parties will al-

lowed and provide information related RSPO SCCS implementation to certification body” and they are will provide the information.

Auditor Conclusions: Closed Date of closure: November 22, 2014 SCCS Non-conformance 2014 – 04 of 05: The facility has procedure SMR004 Rev 00 Effective date on 15/04/2014, but on the procedure not men-tion about: shall assure and verify through clear procedures and record keeping that the RSPO certified palm product is kept segregated from non-certified material including during transport and storage and be able to demonstrate that is has taken all reasonable measures to ensure that contamination is avoided. Correction: Prepare mechanism such as standard operating procedure/SOP about receiving, storage, proses and dispatch and shall evidence by documentation that the mechanism has been verified. The procedure is SRS001 Rev 00 Date Issued 15/04/2014. Corrective Action: Ensure the procedure about receiving, storage, proses and dispatch has been understood by all person in charge in every dapartement who implemented of SCCS, and ensure that certified product SG will sepa-rate from transportation until storage through the ensure all document related and verified . Auditor Conclusions: Closed Date of closure: November 22, 2014 SCCS Non-conformance 2014 – 05 of 05: The facility shall provide documented proof that the RSPO certified oil palm product can be traced back to only certified segregated material. Correction: Prepare standard operating procedure/SOP for tracebility product for RSPO SG certified product. The procedure is SRS003 about tracebility RSPO SCCS. Corrective Action: Ensure the procedure will be implemented through the brief all related department/person incharge to monitoring all of document specially for SG certified document from purchase until receiving product and also ensure the supplier registered in RSPO SG supplier in RSPO website so that the supplier will trace until palm oil mill and estate source. Auditor Conclusions: Closed



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Date of closure: November 22, 2014

3.3 Conclusion and Recommendation for RSPO Supply C hain Certification The audit team has confirmed through the audit process that PT LDC Indonesia has established and maintains an effective system to ensure compliance with the RSPO Supply Chain Certification requirements (dated No-vember 2011). PT TUV Rheinland Indonesia recommends that PT LDC Indonesia be approved for certification of compliance to the RSPO Supply Chain Certification requirements.



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4.0 CERTIFIED ORGANISATION’S ACKNOWLEDGEMENT OF INT ERNAL RESPONSIBILITY

4.1 Date of Next Surveillance Visit

The next surveillance visit is planned for September 2015

4.2 Acknowledgements of Internal Responsibility and Formal Sign-Off by Client

It is acknowledged that the assessment visit was carried out as described in this report and we accept the as-sessment findings and report content.

Signed on behalf of PT LDC Indonesia …………………………………………. Name Management Representative 2014

Signed on behalf of PT TUV Rheinland Indonesia

Mhd Fundy Cholis Kurniawan Lead Auditor Date: November 22, 2014



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APPENDICES

Appendix 1: Details of Supply Chain Certification C ertificate

Appendix 2: List of Abbreviations CPO Crude Palm Oil P&C Principles & Criteria PKO Palm Kernel Oil SCC Supply Chain Certification

Appendix 3: Observations and Opportunities for Impr ovement

No. Observations / Opportunities for Improvement Positif Observation 1 Company has good and complete RSPO SCCS management system to fulfill RSPO SCCS re-

quirement

2 Company has conduct simulation to produce RSPO SCCS product since incoming material until product discharge and the simulation documentation are well maintained.

3 Good staff cooperation during audit process

Opportunities for Improvement

1 Company should be immediately to identification all of RSPO SCCS MB and SG as a company supplier with include the supplier certificate number, and SCCS model implemented.

2 Company should be conduct the RSPO SCCS MB and SG simulation from purchase order un-til dispatch the certified product.

3 Company should be ensure in procedure of mass balance calculation number SMR002 added “if negative stock, does the facility still deliver the product or wating until positive stock” for MB.

Appendix 4: Supply Chain Certification Audit Closin g Meeting Summary

Appendix 5: List of Certified Product and Project ion for year 2014

No. Product Output (tones)

1. Cooking oil Cooking Oil=Olein

2. RBDPO 245,830

3. Olein 162,000

4. Stearin 43,060

5. PFAD 14,410

6. Biofuel -

7. Oleo-Chemical -



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Appendix 6: List of Certified Suplier and Buyer

No. Name of certi-

fied Supplier

Volume

incoming

material*

Date of

Incoming

material*

Certifi-

cate No.

Supply

chain

model

Expiry

Date remarks

1 - - - - - - -

2 - - - - - - -

*) still not applicable because the facility has not made a purchase the certified product The facility also has list of non supplier certified, for periode of Augustus – September 2014. In list of supplier also mentioned contract number , with quantity contract, list of supplier non certified, example of non certified supplier presented below:

No. Name non certified

Supplier

Contract

number

Quantity

Contract

Date of

contract

1 PT Sampoerna Agro Tbk P00140.000 750

2 PT Telaga Hikmah P00141.000 750

3 PT Mutiara Bunda Jaya P00142.000 500

4 PT Aek Tarum P00143.000 1,000

5 PT Kalirejo Lestari P00144.000 750

6 PT Anaktuha Sawit Mandiri P00145.000 750

7 PT Sampoerna Agro Tbk P00146.000 1,000

8 PT Aek Tarum P00147.000 500

9 PT Surya Utama Nabati P00148.000 1,000

10 PT Sampoerna Agro Tbk P00149.000 500

11 PT Telaga Hikmah P00150.000 500

12 PT Aek Tarum P00151.000 500

13 PT Agricinal P00152.000 2,000

14 PT Tunas Baru Lampung

Tbk P00153.000 3,000

15 PT Palm Mas Asri P00154.000 2,000

16 PT Multi Guna Gas P00155.000 1,600

17 PT Sahabat Mewah dan

Makmur P00156.000 3,200

18 PT Garuda Bumi Perkasa P00157.000 1,000

19 PT Menggala Sawitindo P00158.000 1,000

20 PT Way Kanan Sawitindo

Mas P00159.000 500

21 PT Multi Prima Agro P00160.000 1,000

And others

Documents

Roundtable on Sustainable Palm Oil - TÜV Rheinland · 3.1 Description of Supply Chain Management System The following is a description of the findings pertaining to the company’s