Displacement and loss of livelihood

Wonorejo village is one of many areas impacted by the expanding concessions of Adaro's open-cut mining operations. With the help of police, Adaro began in 2010 to evict residents of land that fell within concessions that Adaro had bought to develop its mines in South Kalimantan. With the village being converted into a coal settling basin for mine drainage, people lost both their homes and their livelihoods. They were forced to leave the area that they had relied on for rubber tree cultivation, moving into unstable and poor working conditions elsewhere in Indonesia. This process was carried out with intimidation, little consultation, and little compensation, according to people whose land was sold and homes torn down. While information is limited, these impacts are multiplied potentially across many more of Adaro's concessions.

Adaro's annual coal production of over 54 million tonnes makes the company responsible for the emissions of an estimated 108 million tonnes of CO2 annually. In total, Adaro has over 1.1bn tonnes of coal reserves, equivalent to over 2.18 gigatonnes of carbon dioxide equivalent (Gt CO2e) emissions, almost equivalent to India's entire carbon footprint. Recent financial reports confirm that the vast majority of its revenue comes from coal mining. This directly contradicts the imperatives of the Paris Agreement and efforts to limit global warming to 1.5ºC. It is noteworthy that, counter to its stated ambitions to diversify into renewables, the company is counting on sustained global and regional coal demand, and its plans rely on the continued exploitation of these reserves.

Importantly, Adaro also plans to develop and supply "captive coal plants". These off-grid energy generators are used for specific industrial installations, such as nickel or aluminium smelters. For example, Adaro's proposed captive coal plant for a North Kalimantan aluminium smelter will be one of the largest coal power plants in Indonesia by capacity, around 2.2GW. This has relevance for Adaro's climate impact because the projects are touted as having renewable credentials (supplying metals to renewable energy industries or being powered by hydropower, for example, despite still involving a 2.2GW coal plant), which Indonesian and international campaigners criticise as deliberate greenwashing.

Massive flood in South Kalimantan In January 2021, South Kalimantan was affected by massive flooding that killed at least 21 people and displaced more than 110,000 people away from their homes. According to LAPAN (National Institute of Aeronautics and Space of Indonesia), up to 200,000 hectares of area in South Kalimantan was flooded. The effects of extreme rainfall were exacerbated by degraded land and deforestation in the water catchment area caused by mining operations. Trees are essential to retain water and prevent soil erosion that could result in heavy silting of rivers during rains.

Tax avoidance The 2019 Global Witness report, Taxing Times for Adaro, found that Adaro Energy’s use of subsidiaries in low-tax countries could have the effect of reducing the amount of tax paid in Indonesia. The report argues Adaro Energy’s use of its Singapore coal trading arm, Coaltrade Services International, may have allowed the company to pay USD 125 million less in tax between 2009 and 2017. The report argues a further USD 45 million could have been paid in Indonesian taxes if Adaro Energy didn’t operate subsidiaries in Malaysia and Mauritius. This follows earlier reports of Adaro selling coal at below-market price to avoid tax.