Company – ActiveThis profile is actively maintained
Company – ActiveThis profile is actively maintained
Why this profile?
Adaro Energy is Indonesia's largest coal miner by market capitalisation, operating a number of massive coal mines around the country that contribute to massive annual greenhouse gas emissions and damage the wellbeing of communities surrounding the projects. The company also attracts financing from scores of major multinational banks.
What must happen
Adaro must immediately cease its plans for developing coal mines and transition to renewable energy generation. Financiers of proposed Adaro coal mines and its subsidiaries seeking refinancing should pull out of the climate-damaging investments.
|Sectors||Coal Mining , Coal Electric Power Generation|
listed on Indonesia Stock Exchange
Adaro Energy's major share holders are Adaro Strategic Investment (43.91%) and Garibaldi Thohir (6.18%).
Adaro Energy, established in 2004, is a large Indonesian coal mining company. It is a vertically integrated energy producer with businesses in coal, energy, utilities and supporting infrastructure. Adaro Energy consists of eight business units: Adaro Mining, Adaro Services, Adaro Logistics, Adaro Power, Adaro Land, Adaro Water, Adaro Capital and Adaro Foundation. Adaro also operates in Australia, where it owns the Kestrel coal mine. The company annually produces over 54 million tonnes of coal. The company is a major supplier to the global thermal coal market. Its coal is used throughout Europe, Asia, and the Americas.
Adaro Energy has an installed coal power capacity of 60 MW via its subsidiary MSW and 200 MW via joint venture TPI. As of August 2022, the "Central Java Power Project", its 2,000 MW coal power capacity in the Batang region of Indonesia developed by Adaro's joint venture BPI, was operational.
Adaro operates the largest single-site coal mine in South Kalimantan under a Coal Cooperation Agreement with the Government of Indonesia. The company owns around 31,379 hectares of land, the equivalent of 58,640 football fields.
Impact on human rights and communities
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.
Impact on climate
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.
Impact on nature and environment
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.
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 catchment. Nine areas were flooded around Adaro’s concession. The Indonesian National Police is currently considering opening an investigation into whether mining activities caused the massive flood.
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.
Between 2016 and 2022, four commercial banks financed Adaro totalling USD 581.3 million via corporate lending and underwriting services. See below for more details on banks involved.
In April 2021, Adaro signed a five year loan agreement of USD 400 million with a consortium of 13 banks. See below for more details.
In Nov 2019 PT Adaro Indonesia (a subsidiary of Adaro Energy) issued a USD 750 million bond, which was underwritten by BNY Mellon, DBC, Citi, UBS, MUFG and OCBC. See below for more details.
Between 2016 and 2018, 23 financial institutions financed a total of USD 3.813 billion in corporate loans to Adaro Energy. See below for a specified overview.
2021-12-14 00:00:00 | Adaro subsidiary seeks up to US$ 58 million from IPO
PT Adaro Minerals Indonesia prospectus states it wants to raise up to 831.67 billion rupiah (US$ 57.83 million) through an IPO in December 2021 to cover the maintenance costs of its mining equipment. (The Jakarta Post)
2021-04-23 00:00:00 | Adaro signs USD 400 million loan agreement with consortium of 13 banks
On April 23, 2021, PT Adaro Indonesia, signed a Loan Facility Agreement in the amount of USD 400 million with several banks. The proceeds from this Loan Facility will be used to make early repayments of all Adaro Indonesia’s outstanding loans (Adaro press release).
2020-10-20 00:00:00 | 2,000 MW coal power plant expected to be completed end of 2021
PT Adaro Energy expects the coal power plant (PLTU) in Batang, Central Java with a capacity of 2x1,000 mega watts (MW) to start operating by the end of 2021. Adaro's Managing Director Garibaldi Thohir admitted that there were a number of technical obstacles in the completion of the Batang PLTU project (CNBC Indonesia).
2016-02-23 00:00:00 | Adaro Energy in talks with Shenhua to develop coal-to-gas project
PT Adaro Energy is in talks with its partner Shenhua Overseas Development and Investment Ltd of China, to develop coal-to-gas and coal-to-liquid projects in Indonesia. Further information read here.
2015-11-12 00:00:00 | Adaro Energy to reach deal on two power plants
Major coal miner Adaro Energy is set to conclude deals for two power plant projects this year worth around USD 4.55 billion in total. Adaro Energy's legal director Syah Indra Aman said that his company would source syndicated loans to finance a 2x100 megawatt coal-fired power plant project in South Kalimantan (The Jakarta Post).