Adaro Energy: Betting on the failure of global efforts to stop climate change

Adaro mine in Tabalong Regency, South Kalimantan, Indonesia. Photo credit: WALHI South Kalimantan

Adaro Energy Indonesia (Adaro) held its AGM in April 2022, confirming business plans consistent with the failure of the Paris Agreement. Despite evidence to the contrary from the IEA and other experts, the company stated its view that in the long term, the fundamentals for coal are intact and coal is needed to sustain the economy. 

Adaro’s subsidiary, Saptaindra Sejati, is seeking to refinance a US$350 million loan – a loan which banks that purport to be sustainable, such as SMBC Group, Mizuho, HSBC, CIMB, DBS, OCBC, UOB, Bank of China and Bank Mandiri should not be participating in. Several of Adaro’s investors, similarly, have commitments to have net zero carbon emissions by 2050, but continue to invest in a company with 1.1 billion tonnes of coal reserves. The potential emissions of Adaro’s coal reserves is 2.18 GtCO2-e, almost the equivalent of the annual emissions of India.

Use the form on this page to tell Adaro’s current lenders that they must rule out further financing of Adaro and its subsidiaries.  

Adaro mine in Tabalong Regency, South Kalimantan, Indonesia. Photo credit: WALHI South Kalimantan

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TOOK ACTION: Adaro - Saptaindra Sejati refinancing - May 2022

No plans for phasing out coal

While Adaro has mentioned planning to transition to a ‘green’ business, it has not disclosed any plans with metrics and targets as to how it would shift from being a coal giant with 96% of its revenue from coal mining to a sustainable business.

Adaro is planning to increase its coal production this year to 58-60 Mt, higher than last year’s production at 52.7Mt. Adaro also stated in its 2021 Annual Report that coal remains in the ‘DNA’ of the company. In 2021 Adaro was still exploring new coal in an undeveloped acreage in East Kalimantan through Bhakti Energi Persada, of which Adaro is a part owner. 

Unrealistic coal outlook forecast

Adaro’s coal outlook shows a forecast that sees virtually flat global coal trade over the coming decade, which conflicts with the IEA’s Net Zero by 2050 scenario showing global coal trade falling to less than half of 2020 levels by 2030. Adaro’s coal trade forecast is arguably even incompatible with the IEA’s 2.7°C STEPS scenario, which sees global coal demand falling by 8% to 2030, suggesting the company’s business plans are based on a catastrophic global warming scenario.

Adaro’s coal mining operations impact on communities

Like the fallout of climate change in general, Adaro causes much suffering to communities. The company has deprived villagers of their livelihoods for the sake of the coal that lies beneath their homes. When all the coal has been extracted from a mine, it leaves behind desolate open-mining pits, which coal companies are obliged by law to restore and rehabilitate to the previous ecosystem. Only 18% of Adaro’s post-mining pits have been rehabilitated.

Adaro coal mining operations tear down forests, degrading the land. Last year, at least 24 people were killed, and more than 113,000 people were displaced due to a massive flood in South Kalimantan, on the island of Borneo. The immense suffering from the floods has been linked to degraded land in the water catchment area. Adaro is one of the mining companies that operate its coal mines near the river catchment area.

Kalimantan flood
Image: A woman holds an umbrella as she waits with her family to be evacuated by the rescue team on a bamboo raft in front of her flooded house in South Kalimantan, Indonesia. The flooding has been linked to massive land clearing for palm oil plantations and coal mining activities in South Kalimantan. © Putra / Greenpeace.

Adaro is seeking to refinance its debt for its subsidiary 

Saptaindra Sejati, Adaro’s subsidiary, the pure-play coal contractor, is seeking to refinance its US$350 million credit facility agreement, which is due to mature in July 2022. Last year Saptaindra Sejati produced 43.4 Mt of coal. Tell Adaro’s current lenders that they must rule out further financing of Adaro.  

Adaro loans 

List of Adaro loans since 2006  

 Total aggregate debt (US$ million)Number of dealsYear of most recent deal
OCBC Bank$786182020
DBS Bank$776222020
Sumitomo Mitsui Banking Corporation$713202021
Bank of Tokyo-Mitsubishi UFJ$686182018
Bank Mandiri$540162021
United Overseas Bank$449182021
Standard Chartered Bank$434132021
Australia and New Zealand Banking Group$378142020
HSBC$322152021
CIMB Group$250102021
Mizuho Financial Group$163112020
ABN Amro$9332010
Citigroup$9382021
Malayan Banking Bhd$7512021
CTBC Bank$6262018
Bank of China$6142021
NordLB$5632010
Chinatrust Commercial Bank$5362013
Korea Development Bank$5252018
Bank Negara Indonesia PT$4912021
ING Group$4512014
Credit Agricole Group$4532011
Bangkok Bank$3732010
BNP Paribas$3512009
Bank Permata Tbk PT$3522021
Qatar National Bank$3522021
Indonesia Eximbank$3012008
Bank CIMB Niaga Tbk PT$2712020
Maybank$2012014
Commerzbank$1932010
Bank Resona Perdania$1512006
Export Development Canada$1512006
Bank Rakyat Indonesia$1512021
Bank Lippo$1432010
Societe Generale$1022011
Bank Danamon$812021