Adaro Energy Indonesia (Adaro) is a thermal coal mining company with no plans to reduce its dependency on polluting coal.
The financial institutions propping up Adaro are exiting the company, with recent examples Singaporean banks DBS and OCBC and UK’s Standard Chartered Bank both advising that they would no longer be funding Adaro. The remaining financial institutions must commit to providing no further financial support to Adaro unless Adaro produces time-bound plans to transition away from coal, consistent with the Paris Agreement goals.
Adaro’s business plan bets on catastrophic climate change
Adaro is a pure-play coal company without any plans to reduce coal reliance anytime soon. Adaro increased its coal production by 20%, from 52.7 million tonnes in 2021 to 62.8 million tonnes in 2022, and ramped up its 2023 coal production target to 62 – 64 million tonnes. Adaro derived 98% of its 2022 revenue from coal. Despite evidence from the International Energy Agency (IEA) and other experts that the decline and eventual phase-out of coal by 2050 are necessary to meet climate goals, and a recent IEA study which cast doubt on the long-term prospects of Indonesian coal exports, Adaro insists that global coal demand will be sustained at least until 2050.
Adaro’s mining destroys local communities
The Wonorejo village, which was once occupied by transmigrants from Java, has now become part of Adaro’s mining complex. Since 2006, Adaro has systematically bought up the land to support its mining area expansion. Some villagers willingly sold their land, there were others who resisted and finally relented after they were intimidated into selling their land to Adaro. These villagers were eventually evicted to accommodate Adaro’s mining area expansion.
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’s mining activities are linked with deadly flooding in Kalimantan. In January 2021, South Kalimantan region of Indonesia was hit by a massive flood that killed 21 people, displaced 63,000 people from their homes and affected at least 340,000 people. Apart from extreme rainfall, the floods have been linked with degraded land due to coal mining in the water catchment area.
Adaro operates the largest single-site coal mine in South Kalimantan and is one of the mining companies that has caused the degradation of the Barito river’s water catchment areas. There are nine flooded areas around Adaro’s concession.
How Adaro is driving climate change
Adaro increased its coal production by 20%, from 52.7 million tonnes in 2021 to 62.8 million tonnes in 2022. It ramped up its coal production target to 62 – 64 million tonnes in 2023.
Adaro has 1 billion of coal reserves. Burning all of the thermal and metallurgical coal would result in 2.2Gt CO2-eq, almost equivalent to India’s annual emission. [1]
Adaro is building a new 1.1 GW coal-fired power plant, even though the International Energy Agency has made clear that there can be no new coal-fired power plants approved if we want to achieve net zero emissions by 2050.
[1] Potential emissions from coal use are estimated using Australian National Greenhouse Accounts Factors
“The mining company came to our village in 2006. We had a peaceful life before 2006. Back then I believed that our village would become prosperous. But our life was shattered when the miners came. The land that we owned, without us knowing, was sold to Adaro. It suddenly belonged to them.”
“Yeah, it was forced eviction. I wasn’t compensated. Not even for a nail. Some of us stayed in the rubber plantation that had not been demolished. But Adaro could come at us at any time. Adaro evicted us, they evicted everyone.”
Company details
Adaro plans to ramp up its coal production and has no intention to reduce its coal business in the future. It has set a production target of 62 – 64 million tonnes for 2023, an increase from 2022 production at 62.8 million tonnes.
Despite Adaro’s green initiatives, it has no time-bound plans and targets to reduce its coal business.
Adaro has greenfield coal mining areas covering around 34,000 hectares with estimated coal resources of 3.3 billion tonnes, “making it one of the largest undeveloped deposits of low calorific value coal” according to its 2022 Annual Report.
The Indonesian Ministry of Environment and Mineral Resources official concession map shows that Adaro’s mines exceed its official license area, as indicated by the red outline in the screenshot of this map.
These are the financial institutions propping up Adaro:
Banks that have provided loans to Adaro
In April 2021, a group of 14 banks loaned a total US$400 million to Adaro’s largest subsidiary in thermal coal mining, Adaro Indonesia.
In July 2022, a group of 7 banks – CIMB, UOB, Mandiri, Permata, Bank of China, CTBC, and Qatar National Bank – continues to support Adaro and provided a US$350 million loan for a unit of Adaro Energy Indonesia, Saptaindra Sejati.
In May 2023, a group of five Indonesian domestic banks – Mandiri Bank, Bank Negara Indonesia (BNI), Bank Central Asia (BCA), Bank Rakyat Indonesia (BRI), Permata Bank – provided a total of IDR2.5 trillion and US$1.5 billion loans to Adaro’s smelter and coal power plant subsidiaries. Kalimantan Aluminium Industry (KAI), and Kaltara Power Indonesia (KPI).
These banks are enabling Adaro’s expansionary coal business, construction of a new coal-fired power plant, and backing a company whose plans undermine the 1.5°C goal of the Paris Agreement.
| wdt_ID | Name | Amount loaned since 2021 | Ruled out Adaro? | Explanation |
|---|---|---|---|---|
| 1 | Bank Mandiri | 781 | No | Able to finance Adaro under its current policy. |
| 2 | CIMB Bank | 153 | No | CIMB has not made any commitment to stop providing support to Adaro. In December 2020, CIMB committed to phasing out coal from its portfolio by 2040 and will prohibit asset-level or general corporate financing for new thermal coal mines as well as expansions. CIMB’s latest coal policy in 2022 states that it will not engage with clients involved in coal, specifically in project financing and any forms of asset-level or general corporate financing as well as capital raising that are specified as being for greenfield thermal coal mines. |
| 3 | United Overseas Bank | 103 | No | UOB has not made any commitment to stop providing support to Adaro. UOB’s policy states that UOB will not knowingly provide financing to companies for the development of greenfield thermal coal mines or thermal coal mine expansion projects. The policy also states that UOB will not knowingly provide financing to companies in the thermal coal mining sector, other than anchor clients approved by the Bank with well established diversification strategies, as well as their subsidiaries, affiliates, suppliers, contractors and traders. |
| 4 | Maybank | 75 | No | Maybank has not made any commitment to stop providing support to Adaro. Maybank’s latest policy in September 2022 states that it is committed to not financing any new greenfield coal activity and no new borrowers engaged in thermal coal-related activities or derive >25% of annual revenue from thermal coal. This policy currently includes corporate lending, project financing as well as advisory services such as arranging, syndicating, fundraising and underwriting. |
| 5 | Bank Negara Indonesia (BNI) | 399 | No | Able to finance Adaro under its current policy. |
| 6 | Standard Chartered Bank | 33 | Yes | Standard Chartered Bank advised that they would no longer be funding Adaro. Standard Chartered also confirmed that it will not be involved in Adaro’s new smelter projects that would enable a new coal-fired power plant. |
| 7 | Bank Permata | 133 | No | Able to finance Adaro under its current policy |
| 8 | Qatar National Bank | 33 | No | Able to finance Adaro under its current policy |
| 9 | Sumitomo Mitsui Banking Corporation | 20 | No | SMBC has not made any commitment to stop providing support to Adaro. SMBC’s policy states it will not provide support for new or expansion of existing thermal coal mining projects. |
| 10 | CTBC Bank | 20 | No | Able to finance Adaro under its current policy |
| 11 | Bank of China | 15 | No | Bank of China has not made any commitment to stop providing support to Adaro. In 2020, Bank of China stated it would no longer provide financing for new coal mining and coal power projects overseas. |
| 12 | Bank Rakyat Indonesia | 465 | No | Able to finance Adaro under its current policy. |
| 13 | HSBC | 10 | Yes | Under HSBC’s latest thermal coal policy, HSBC is restricted from providing any financial support to new coal-fired power plants, including captive coal-fired power plants. In the policy, HSBC states that “For the avoidance of doubt, the Policy does apply to clients engaged in new captive coal-fired power plants and new captive thermal coal mines”. HSBC will not provide any new financing to any client where the client declines to engage sufficiently on its transition plan or HSBC determines that the plan is not compatible with HSBC’s Net Zero by 2050 target. |
| 14 | Citibank | 8 | No | Citibank has not made any commitment to stop providing support to Adaro. Citibank will not provide project-related financial services for the new thermal coal mines or significant expansion of existing mines. |
| 15 | Bank Danamon | 8 | No | Able to finance Adaro under its current policy |
| 16 | Bank Central Asia (BCA) | 270 | No | Able to finance Adaro under its current policy. |
Adaro’s international shareholders and bondholders
Adaro issued a US$750 million bond in 2019. This bond will mature on 31 October 2024.
| wdt_ID | Asset Manager | Bondholder | Shareholder |
|---|---|---|---|
| 1 | AllianceBernstein L.P. | Yes | Yes |
| 2 | BlackRock | Yes | Yes |
| 3 | Credit Suisse | Yes | Yes |
| 4 | Dimensional Fund Advisors, L.P. | No | Yes |
| 5 | Fidelity International | Yes | Yes |
| 6 | Goldman Sachs Asset Management | No | Yes |
| 7 | HSBC Global Asset Management | Yes | Yes |
| 8 | Invesco | Yes | Yes |
| 9 | JP Morgan Asset Management | Yes | Yes |
| 10 | Manulife | Yes | Yes |
| 11 | Maybank Asset Management Singapore | Yes | No |
| 12 | Mitsubishi UFJ Kokusai Asset Management | No | Yes |
| 13 | UBS Asset Management | Yes | Yes |
| 14 | Vanguard | No | Yes |
Banks and institutional investors must commit to providing no further financial support to Adaro unless Adaro produces time-bound plans to transition away from coal, consistent with the climate goals of the Paris Agreement and IEA Net Zero 2050 pathway.
Disclaimer
This webpage is intended to convey factual information about Adaro Energy Indonesia group.
Information comes from the companies’ available annual reports and websites, Refinitiv Eikon, Bloomberg and various news reports.
Occasionally where information is incomplete, assumptions must be made about data and these were made in a consistent manner and in good faith. Whilst we have endeavoured to gather and include all relevant deals, we cannot guarantee the completeness of the information presented.