The Awyu tribe, whose roughly 20,000 members rely on the land for their subsistence, had sought to freeze the operations of PT Indo Asiana Lestari (PT IAL) in the eastern Indonesian province of West Papua.
But on Thursday, a Papuan court upheld the firm’s concession permit, which allows for the potential clearance of more than 39,000 hectares (96,000 acres) of indigenous forest land.
“The decision … is bad news for Awyu Indigenous People who are struggling to defend their customary land,” the Coalition to Save Papuan Customary Forests, made up of 10 environmental NGOs, said in a statement on Thursday.
The company’s general manager did not respond to an AFP request for comment.
Palm oil is a billion-dollar industry in Indonesia, which is the world’s largest producer and exporter of the commodity used in everything from chocolate spreads to cosmetics.
The environmental coalition claimed that PT IAL’s maps did not acknowledge local clans and environmental assessments did not involve Indigenous communities.
The coalition also claimed opponents of the firm’s plans faced intimidation.
“I am extremely sad and disappointed because our legal struggle appears to have been in vain. But I’ll never back down,” plaintiff Hendrikus Woro, an environmental activist from the tribe, said in a statement.
His lawyer Tigor Hutapea of the environmental NGO Bentala Rakyat Heritage Foundation said the court had made the “worst ruling” he had ever read on the enforcement of environmental law.
“The judges ignored the presented evidence. The judges did not have an environmental law perspective, and the judges narrowed their reasoning,” he said on Friday.
The court ruled PT IAL’s permit was valid, rejecting the tribe’s argument that the concession had been granted based on a flawed environmental impact analysis, said Hutapea.
Hutapea said his client will appeal against the decision.
Indonesia produces about 60 per cent of the world’s palm oil, with one-third consumed by its domestic market.
The European Union agreed last year to ban palm oil imports linked to deforestation.