Take action
Underwriters cannot support Adaro without enabling a new coal plant
Underwriting comprises nearly two thirds of overall fossil fuel financing in 2016-2022. It is critical that banks do not underwrite climate-wrecking companies like Adaro.
Adaro fails to demonstrate any serious effort in aligning with net zero by 2050. In the face of rising temperatures and the climate crisis, in 2023 Adaro began the construction of a new 1.1 GW coal-fired power plant to power its new aluminium smelter and continue to ramp up its coal production.
The Decarbonization Journey plan that Adaro puts out is not credible or Paris agreement-aligned.
However, many banks are seeing the writing on the wall and disassociating themselves from Adaro. Even when Adaro closed a loan deal in May 2023 to enable the construction of the smelter and coal power plant project, the loan failed to secure any financing from global or regional banks, especially those with net zero by 2050 commitments.
We need more banks to commit to rule out any future support – including underwriting – to a pure-play coal company like Adaro.
Adaro has a US$750 million bond that will mature in October 2024. The underwriters of this bond were MUFG, DBS, OCBC, Citibank and UBS Asset Management. Other banks that have supported Adaro’s previous bond issued in 2009 also included Deutsche Bank. All these banks now commit to achieving net zero by 2050.
Tell the banks! Any banks with serious plans to align with net zero and manage its risks must disassociate and rule out any forms of support to Adaro, including underwriting. Unless Adaro aligns with net zero by 2050.
Take Action
Banks with net zero by 2050 commitments must steer clear from supporting Adaro in any manner
Adaro has a host of problematic and risky business practices. Chief among them are:
- continuing to ramp up its coal production;
- preparing the mining readiness of the greenfield thermal and metallurgical coal mines as recent as 2022;
- building a new 1.1 GW coal-fired power plant in North Kalimantan.
Adaro chose to carry out a project that carries a serious financial risk. The new coal-fired power plant would be attached to an aluminium smelter. The phase I of the aluminium smelter is projected to operate under losses with the current aluminium price of US$2,200/tonne.
Adaro struggles to secure global partners
Hyundai – a major EV manufacturer that signed a memorandum of understanding to purchase Adaro’s aluminium in 2022 – indicated signs of backing away from the project due to the new coal-fired power plant component. Hyundai reiterated its plan to only purchase aluminium produced by green energy.
Adaro was not able to secure any regional or global banks to finance its latest loan intended for smelter and new coal-plant construction.
Adaro does not have a credible transition plan. Adaro’s Decarbonization Journey plan involves the construction of a new smelter attached to a new coal plant and expansion of its metallurgical (coking) coal – coal used for steel production.
Tell the banks! Any banks with serious plans to align with net zero and manage its risks must disassociate and rule out any forms of support to Adaro, including underwriting. Unless Adaro aligns with net zero by 2050.
Join us
Subscribe for email updates: be part of the movement taking action to protect our climate.