"Yes, we have stopped processing a licence and the company will have to look for an alternative," Mutagamba told AFP by telephone.

Bidco managers in Uganda, however, denied that they were seeking to use the land on Bugala Island where the rainforest is located. They said they had simply applied for land for the plantation and that they were still waiting for a government response.

"We are not interested in a forest reserves," Kody Rao, manager of Bidco subsidiary Palm Oil Uganda told the government-owned New Vision newspaper's Saturday edition.

"What we need from the Government is land and we are still waiting for that land."

President Yoweri Museveni has faced opposition, including violent protests, over proposals to give private firms the right to bulldoze protected forests.

The government recently suspended a separate proposal to turn another forest into a sugar plantation after violent public protests in which three people were killed.

In December, Norwegian environmentalist Olav Bjella quit as National Forestry Authority chief after refusing to implement Museveni's order to approve the clearance of that forest, saying it was against his conscience and the laws of Uganda. Environmentalists say Bugala Island is home to rare species of animals and plants.

earlier related report
Indonesian hardwood on brink of extinction: activists
Jakarta (AFP) May 25 - Activists urged the Indonesian government Friday to crackdown on exports of rare merbau, warning soaring global demand was pushing the tropical hardwood to the brink of extinction.

Greenpeace said merbau would be extinct within three decades unless Indonesia strictly controlled shipments to Europe, China, Australia and New Zealand, where it is popular for decking and flooring.

"The Indonesian government should set up an international control mechanism to protect the species from extinction," Greenpeace campaigner Hapsoro told a press conference here.

Greenpeace said its research showed 83 percent of the forests containing merbau in Papua had already been logged or had been earmarked for logging, leaving just 17 percent untouched.

Once common in Asia and eastern Africa, merbau is now only found in significant quantities in Indonesia's Papua and Papua New Guinea, it says.

"Illegal and destructive logging, as well as continued trading of merbau, is still rampant. The international community must question Indonesia's seriousness on this matter," said Hapsoro.

He said the government should list merbau on CITES, the Convention on International Trade in Endangered Species, as a first step to controlling the trade. Traders would then need to gain permits for exports with strict quotas introduced, he said.

Indonesia currently bans export of complete merbau logs, but allows roughly sawn merbau to be shipped.

However Hapsoro said traders managed to get around the partial ban by hiding logs in containers falsely labelled as sawn timber. Thousands of logs were smuggled from Indonesia to China last year, he added.

"You can hardly find the wood domestically, most of the demand comes from outside the country, mainly because the wood is very expensive, reaching up to 600 dollars per cubic metre," said Hapsoro.

"We also call for companies that buy merbau to trace back the origins of the wood (to check) whether it is legally harvested," said Hapsoro.

The Swiss-based World Conservation Union (IUCN) lists merbau as "vulnerable and facing extinction in the wild in the medium-term future."

Greenpeace says Indonesia has lost more than 72 percent of its intact ancient forests and much of the rest is threatened by commercial logging and clearance for palm oil plantations.

Ten countries account for 80 percent of the world's primary forests, of which Indonesia, Mexico, Papua New Guinea and Brazil saw the highest losses in primary forest in the five years from 2000 to 2005, the UN Food and Agriculture Organisation said.

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