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Home › Dodgy Deals ›
Dodgy Deal
Bumi ResourcesIndonesia

Company – On record

This profile is no longer actively maintained, with the information now possibly out of date
Lead organisation:
BankTrack
Last update: 2016-09-12 00:00:00
Photo: //

Company – On record

This profile is no longer actively maintained, with the information now possibly out of date
Lead organisation:
BankTrack
Last update: 2016-09-12 00:00:00
Why this profile?

What must happen

Swiss bank Credit Suisse, along with China Investment Corporation and the China Development Bank, have been heavily involved in bankrolling the corporation. J.P Morgan Chase and Deutsche Bank have also been identified as key underwriters for Bumi Resources, despite the company’s poor financial performance.

We therefore call on all banks, financiers and shareholders of Bumi Resources to use their influence with this company and their subsidiaries. They should cancel their loans and commit to issue no more loans or to purchase no more shares or bonds in Bumi Resources or any company associated with it, and to take steps toward public divestment from these companies.

About
Sectors Coal Mining
Headquarters
Ownership

The top five shareholders are: Credit Suisse, 23.2%, PT Dama Reki Energi, 6.3%, Standard Chartered Bank, 4.8%, Long Haul Holdings, 3.5%, Raiffeisen Bank International, 3.5%. The rest of the shares (58.7%) is owned by other investors, each share lower than 3.5%.

Subsidiaries
Website

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Bumi Resources is currently the most significant coal producer in Indonesia with 2013 production at 80 million tonnes. It owns the Kaltim Prima Coal project in East Kalimantan that produces around 50 million tonnes a year. Bumi operates mines through four companies: PT Arutmin Indonesia, PT Kaltim Prima Coal (KPC), PT Pendopo Energy Batubara and PT Fajar Bumi Sakti. Besides Kaltim Prima it has several subsidiaries: Arutmin, Bumi Resources Minerals, Pendopo Energi Batubara and Fajar Bumi Sakti.

Impacts

Environmental and climate impacts

 


Impact on human rights and communities

The human impact of the KPC project has been stark. Villages such as Segading, Sepaso and Sekerat in the Bengalon mining concession have experienced serious problems as a result of the mining. While families of those directly employed by the mine have benefitted from jobs, the communities as a whole have had to deal with significant water pollution, loss of land and other problems. 

Villagers report serious dust and noise disruptions from blasting, which occurs frequently without any prior announcement. The blasting has shattered window panes and caused cracks in the buildings. Children wake up crying in shock and fear from nighttime blasting.

The village of Segading is home to a community of indigenous people called the Dayak Basap. When the KPC coal mining company first arrived in the region, the members of community decided to agree to move from their ancestral land in order to take advantage of the benefits the mining company promised. Unfortunately for the Dayak Basap, not only did these benefits fail to materialise but, as the mine expanded, the community was then forced to move twice more against their will. Currently, the leader of the village, Gagay, is fighting to prevent the KPC mining company from forcibly displacing them for a fourth time to a plot of land that is much smaller than the land they are being told to leave.

The older Sangatta mine has also caused a lot of damage since it became operational in 1992. For example, in 2001, farmers from the village of Kabojaya near the Sangatta pit protested the fact that they could no longer use the local water supply or grow crops as a result of pollution from the mine. Protests against KPC from farming communities led the company to hire Group 4 Securicor (now G4S) to provide security.

KPC has also been associated with human rights abuses according to a report released in August 2014 by JATAM, Indonesia’s Mining Advocacy Network. According to interviews with local communities and other research undertaken by JATAM, the KPC mine has had the following impacts:

  • KPC has been intimidating people to force them to move, and the local municipality has stopped providing health workers or teachers to the village. Villagers from Keraitan and other relocation sites report having insufficient land to cultivate or hunt.
  • Villagers living around the mining operation have no access to electricity despite the fact that KPC has been mining the area for more than 20 years and have installed 18.9 megawatt of thermal generation capacity.
  • Communities have lost land to the mining pits, and people have been offered meager amounts of compensation for lost land, fruit trees and other resources.
  • Villagers report that there have been no aid or assistance from KPC or the government of East Kutai Regency. “We feel that KPC wants to drive us out of our village, our homeland,” said one interviewee.

One study supported by the KPC mining company and funded by the World Bank found that even the small amount of money received in compensation and jobs has gone almost completely to the men, with local women seeing almost no benefit and, in cases where they lose their farming role, becoming economically dependent on their husbands


Impact on climate

As a low-lying country with a vast coastline, Indonesia is extremely vulnerable to climate change. More than 70 percent of the country’s population - 274 million, in total - lives along the coast, scattered across thousands of islands. This distribution means people will be seriously affected by sea level rise. Jakarta, the capital, already incurs damages of more than $1.5 billion each year from flooding. 

Farmers across the country are experiencing delays in crop harvesting, declining crop yields and quality of produce, increasing incidence of pests and diseases, and widespread livestock mortality. Indonesia’s fishing industry, one of the world’s largest producers, also faces serious challenges as rising sea temperatures decimate fisheries. 

Nonetheless, Bumi Resources continues to develop new mining resources. Staying true to its corporate coals, which include expanding “mine exploration, especially in coal,” Bumi continues to produce nearly one hundred million tons of coal annually. 

Bumi’s sustainability strategy and reports do not address scope 3 emissions - emissions for which the company is indirectly responsible for, up and down its value chain. To cut its carbon footprint, Bumi has focused strictly on in-house emissions, rather than ramping down coal production. The company’s financial statements rarely even mention climate change.


Impact on nature and environment

The KPC concession areas cover a vast 90,000 hectares, encompassing several villages, and border on the East Kutai National Park, which has been compromised by the presence of the mines. By 2008, an estimated 75 percent of the forest area supposedly "protected" as part of the national park had already been destroyed, a process exacerbated by the presence of mining companies.

KPC has also been associated with massive environmental contamination, according to a new report released in August 2014 by JATAM, Indonesia’s Mining Advocacy Network. According to interviews with local communities and other research undertaken by JATAM the KPC mine has had the following impacts:

  • Wastewater from KPC’s mines is frequently discharged untreated into the Sangatta and Bengalon Rivers, contaminating river water that is used by villages downstream and killing fish and other aquatic organisms. Rivers are contaminated with heavy metals and suspended solids, and mine drainage have caused water to become either acid or alkaline.
  • Studies have shown that the Sangatta River is especially contaminated with heavy metals, with lead concentration reaching 18 times the regulated level. According to a researcher from the Agricultural University of Sangatta, the river water is no longer safe to be consumed or used due to the risk of skin disease and carcinogenicity. Communities living along the Keraitan River now have to buy water for their daily needs as the river water is contaminated.
  • The mine has destroyed wetlands, forests and agricultural soils with high water retention capacity, leading to exacerbated flooding downstream. KPC’s mining operation has destroyed the soil over an area of 90,000 hectares, which has radically altered the hydrology of the entire Sangatta River system. Villagers report frequent flood events affecting at least three villages and a main road thoroughfare in the region. Villagers report that flooding can persist for a week and that they have received no aid or compensation from the government or KPC.
  • Indigenous Basap Dayak people have also reported massive fish kills in the Keraitan River due to contamination by KPC pit B. The dead fish used to be edible species traditionally caught by the community, and their depletion has resulted in economic and nutritional losses.

Other impacts

Bumi plc and the London Stock Exchange.

The firm was established by the billionaire Bakrie brothers. In 2010, Nat Rothschild, heir to the international Rothschild banking dynasty, created Bumi plc, then called Vallar, and listed the shell company on the basis that investors would be attracted by the proposition of investing in Indonesian coal through a 'safe' investment vehicle listed in London. The experiment was initially a great success as it raised GBP707 million, money that ended up financing the two big Indonesian coal companies: Bumi Resources and Berau Coal. The deal also gave the Indonesian Bakrie family's coal empire access to UK investment.
A boardroom falling out between Rothschild and the Bakrie family, ostensibly over a lack of corporate governance standards at the Indonesian firms revealed how lax the listing criteria had been allowed to become. Angry exchanges at the company's AGM and exchanges of allegations of corruption and misconduct eventually led to the freezing of Bumi's shares and a collapse in Bumi plc's share price, making a mockery of the supposed "safe" status of Bumi plc as a FTSE 250 company holding a premium listing in London. But all the chatter about this actually misses the real, far bigger scandal of Bumi plc, the GBP707 million that ended up financing highly damaging coal in East Kalimantan.

Financiers
Institution type
Finance type
Year
Projects

Dairi Prima Mineral zinc mine

Indonesia
Project
Active
Mining

Dairi Prima Mineral zinc mine

Indonesia
There are no active project profiles for Bumi Resources now.

Kaltim Prima Coal mine

Indonesia
Project
On record
Coal Mining

Kaltim Prima Coal mine

Indonesia
News
BankTrack
Partners
Blog
External
BankTrack news BankTrack blog Partner news Partner blog

Coal’s Recovery Too Good to Resist for World’s Biggest Exporter

2017-01-12 | American Journal of Transportation
BankTrack news BankTrack blog Partner news Partner blog

RESTRUCTURING: Bumi misses coupon on US$700m 2017s

2014-10-08 | International Financing Review
BankTrack news BankTrack blog Partner news Partner blog

Bumi seeks to settle debts as rights issue is slashed

2014-10-07 | The Jakarta Post
BankTrack news BankTrack blog Partner news Partner blog

BUMI RESOURCES: Demand Under Subscription, Rights Issue Canceled

2014-10-05 | Indonesia Business Daily
Blog
BankTrack news BankTrack blog Partner news Partner blog

Bumi’s Deadly Coal

New report reveals extensive water contamination and human rights violations by Bumi’s KPC coal mine
2014-08-21 | Jakarta | JATAM and Greenpeace
BankTrack news BankTrack blog Partner news Partner blog

S&P says Bumi Resources in 'selective default'

2014-08-13 | International Financing Review
BankTrack news BankTrack blog Partner news Partner blog

Bumi Makes Second Attempt to Avert $375 Million Bond Default

2014-08-11 | Bloomberg
BankTrack news BankTrack blog Partner news Partner blog

Bumi Hopes to Reach Bond-Restructuring Deal on Aug. 22

2014-08-08 | The Wall Street Journal
BankTrack news BankTrack blog Partner news Partner blog

Moody’s Says Bumi ‘Most Vulnerable’ Coal Miner on Debt Load

2014-08-04 | Bloomberg
BankTrack news BankTrack blog Partner news Partner blog

Bumi Resources Sweetens Debt-Exchange Offer as Default Looms

2014-08-01 | Bloomberg
BankTrack news BankTrack blog Partner news Partner blog

Bumi Shares Rebound After Heavy Sell-Off

2014-06-24 | Jakarta Globe
BankTrack news BankTrack blog Partner news Partner blog

Bumi Warns of Default If Restructuring Consent Not Won

2014-06-12 | Bloomberg
BankTrack news BankTrack blog Partner news Partner blog

Bumi Resources Avoids Default After Paying Coupon on Notes

2014-06-11 | Bloomberg
Blog
BankTrack news BankTrack blog Partner news Partner blog

Barclays AGM: Protestors to target Barclays for bankrolling coal

2014-04-23 | London | World Development Movement
BankTrack news BankTrack blog Partner news Partner blog

Bumi Resources Seeks to Reduce Debt as It Reports 2nd Annual Loss

2014-04-14 | The Jakarta Globe
BankTrack news BankTrack blog Partner news Partner blog

Norway Rejects Ban on Coal Investments for Biggest Wealth Fund

2014-03-20 | Bloomburg BusinessWeek
BankTrack news BankTrack blog Partner news Partner blog

Indonesia’s $6 Billion of Coal Mine Thefts Said to Widen

2014-03-05 | Bloomberg
BankTrack news BankTrack blog Partner news Partner blog

Chief defuses bomb in Bumi’s backyard

2013-12-28 | Telegraph
BankTrack news BankTrack blog Partner news Partner blog

Bumi Transactions probed by the UK Financial conduct Authority

2013-11-08 | Financial Times
BankTrack news BankTrack blog Partner news Partner blog

Financial Conduct Authority investigates Bumi founders

2013-11-08 | Telegraph
Blog
BankTrack news BankTrack blog Partner news Partner blog

UK banks financing coal boom destroying Borneo rainforests

2013-10-01 | London | World Development Movement
BankTrack news BankTrack blog Partner news Partner blog

The dynasty that charmed the City

2012-07-17 | The Financial Times
BankTrack news BankTrack blog Partner news Partner blog

Rothschild Plays Strongest Suit With Coal Mining Deal

2010-12-01 | Bloomberg
Resources
Documents
Videos
Links
2015-01-01 00:00:00

Annual report 2014

Annual report
2015-01-01 00:00:00
2014-08-21 00:00:00

PT KPC/Bumi Resources Deadly Coal

Ecological and Social Crisis caused by KPC/Bumi Resources’ Coal Production
NGO document
2014-08-21 00:00:00 | JATAM
2013-09-30 00:00:00

Banking while Borneo burns

How the UK financial sector is bankrolling Indonesia's fossil fuel boom
NGO document
2013-09-30 00:00:00 | World Development Movement
2010-01-01 00:00:00

Impacts of Mining on Women and Youth in Indonesia: Two Mining Locations

Other document
2010-01-01 00:00:00 | Dr Kuntala Lahiri-Dutt and Ms Petra Mahy

Video links

http://streamstudio.world-television.com/CCUIv3/frameset.aspx?ticket=61-65-15645&target=en-default-&status=ondemand&browser=ns-0-0-0-17-0&stream=flash-video-500
Watch questions asked at the 2015 Credit Suisse AGM on APRIL and Bumi: 01:24:20 Question from Lukas Straumann from the Bruno Manser Fund; 01:29:50 Question from Woro Supartinah from Jikalahari; 01:35:15 Woro and Isnadi give a peat sample gift to the Chair of the Board of Credit Suisse; 01:35:31 Question from Merel van der Mark, from BankTrack. 01:36:44 Question from Katya Nikitenko from Greenpeace, on Bumi Resources.

Company profile

Company profile by Indonesia-investment.com.

Market Forces - Bumi Resources profile

Updates

2015

2015-01-01 00:00:00 | Coal production 2014

In 2014 Bumi resources produced 84 million tonnes of coal, according to its annual report 2014.

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