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 Energy Indonesia’s activities pose several immediate challenges around ecosystem destruction, endangerment of animals, and heightened risks to people’s lives due to hazards. 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.
Deadly flooding in South Kalimantan
In 2021, heavy flooding affected thousands of households in South Kalimantan. While examining the causes of flooding in South Kalimantan, the National Institute of Aeronautics and Space (Lapan) analysed land cover changes in the Barito watershed. Their Landsat data showed that from 2010 to 2020, there was a reduction in the area of primary forest, secondary forest, rice fields, and shrubs, which decreased by 13 thousand hectares, 116 thousand hectares, 146 thousand hectares, and 47 thousand hectares, respectively. As the largest coal miner in South Kalimantan, Adaro’s activities contributed to a reduction in the catchment area of the Barito river and aided the deadly flooding.
Hawksbill Sea Turtle trapped under “green” ambitions in North Kalimantan
In North Kalimantan, Adaro is helping develop the Indonesian Green Industrial Zone (KIHI), a project of national strategic importance to the government of Indonesia. As one of the largest investors in KIHI, Adaro is building coal-fired power plants to supply electricity to its 580-hectare supposedly “green” aluminium smelter. This standout case of greenwashing has been recognised by Adaro’s major clients, including Hyundai which recently terminated its aluminium supply agreement with Adaro.
Built over the edge of a rainforest and blue seas, the mega industrial project with its centrepiece smelter will not only impact the livelihoods and incomes of people employed in traditional agriculture, livestock, and fisheries, it will also affect a Sustainable Fisheries Zone and Conservation Zone and exacerbate flooding in the region.
According to regulation under Coastal Areas and Small Islands of North Kalimantan, the Bulungan Tanah Kuning coastal area is designated as the site for KIHI. But Bulungan Tanah Kuning coastal area is also identified as both a Sustainable Fisheries Zone and Conservation Zone because it is the migration route of green turtles, whale sharks and the critically-endangered hawksbill sea turtles.
Red alert: Orangutans
Similarly, in Central Kalimantan, Australian mining giant BHP and Adaro plan to build a series of massive coal mines that could destroy Borneo’s mega-diverse and world-renowned forest ecosystems that are home to the Bornean orangutans. The mining concessions are located within the Heart of Borneo area, which is protected under the internationally supported conservation agreement, the ‘Heart of Borneo’ initiative. However, concerns have been raised that the companies have proceeded with mining activity by “interpreting the Contract of Work licence as if it were a land title”. If BHP and Adaro mine for coal in this region, it would destroy the delicate ecosystems, including some of Indonesia’s last remaining rainforests, and harm the orangutan population.