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Adaro’s destruction and displacement of Indonesian communities

Adaro Energy Indonesia, the country’s second-largest coal mining company, is preparing to refinance a $750 million bond maturing in October 2024. But from North, South to Central Kalimantan, Adaro’s activities have spurred land clearing, destroyed traditional livelihoods and led to displacement of local and Indigenous communities. Here we take a look at some of the reasons why banks and investors are being cautioned not to support Adaro’s capital raising plans.

A ghost village in South Kalimantan

In 1991, Adaro started operating mines in the Paringin pit, which is five kilometres from the village of Wonorejo in South Kalimantan. Conflicts arose from 2009 when villagers reported that “foreigners” arrived, claiming to be land brokers and land owners. Subsequent years witnessed a surge in intimidation, threats, and criminal activities aimed at coercing villagers into selling their land to the company. Reports of fires deliberately set in community-owned rubber gardens also surfaced.

In 2013, the local government along with Adaro decided that the village would be vacated. However, questions of compensation and relocation remain unresolved. On 19 September 2013, Adaro bulldozed the houses of 29 residents as well as the Balangan Regency Government (local government) to the ground. 637 residents were driven away from their homes and agricultural lands. Today, only 8 families remain in one of Wonorejo’s hamlets. The village has shrunk and goes by the epithet of “ghost” village.

Over several decades, Adaro has systematically bought up the land and driven the residents of Wonorejo away. The once-thriving village now lies deserted, replaced by a network of coal settling ponds. Wonorejo has become a “ghost” village with coal ash blanketing a dilapidated school and abandoned health post.

North Kalimantan – a destructive projeict of “strategic importance”

The Indonesian Green Industrial Zone (KIHI) is a project of strategic importance to the Indonesian government. It is currently underway in North Kalimantan, with Adaro playing a significant role in its development.

As one of the largest investors in KIHI, Adaro’s subsidiary, PT Kalimantan Aluminium Industry (KAI), is establishing a 580-hectare aluminium smelter. Adaro is branding and marketing this new aluminium smelter as “green” while one of its subsidiaries, PT Kaltara Power, simultaneously builds a 1.1 GW coal-fired power plant to supply electricity to the smelter. Adaro’s attempts at greenwashing have not gone unnoticed.

Thanks to people-powered pressure and backing by K-pop fans, Hyundai recently terminated its aluminium supply agreement with Adaro and promised to not procure aluminium produced using coal power.

Despite the win, the smelter project and the Green Industrial Zone is progressing with severe consequences for local communities. There is a threat of displacement for local communities to make way for the KIHI project. Similarly, the operation of Adaro’s coal power plant poses health risks for local residents. There are serious concerns of potential respiratory problems arising from exposure to fly ash emitted from the plant’s chimney. While the Green Industrial Zone might bring jobs for a few, the establishment of KIHI is expected to result in adverse economic impacts for the majority. Many might lose their traditional livelihoods as fishermen, farmers and eco-tourism hosts as dust and ash cover their fields.

Among those most profoundly affected will be fisher families. The combined impacts of hot water waste contamination, fly ash from coal-fired power plants, escalating air temperatures, project-related emissions, noise pollution, sea dredging, and coal/fuel spills might cloud the sea and reduce both the quality and quantity of fish catches.

Heart of Borneo under attack

The Upper Barito basin in Indonesia’s Central Kalimantan is home to mega-diverse and world-renowned forest ecosystems that are home to the orangutans. But Australian mining giant BHP Billiton and Adaro plan to build a series of massive coal mines that would destroy the rainforests, displace Indigenous Dayak peoples, and contaminate vital water sources relied upon by up to 1 million individuals.

The IndoMet project (as the Central Kalimantan project is called) has already faced criticism for its human rights violations. Indigenous residents in Maruwei village have been coerced into accepting token payments for their customary forests since they lacked formal title deeds. Now if BHP and Adaro proceed with their plans for open-cut mines, they would destroy some of the last remaining Indonesia’s rainforests and jeopardise the livelihoods of the Indigenous Dayak community, uprooting their traditional way of life in pursuit of the most unsustainable fuel: dirty coal.