No public environmental impact assessments are yet available for the project, although land-clearing operations have already commenced. The project's location within an industrial park does not preclude impacts on nearby communities, given the range of developments associated with transporting the coal and aluminium to and from the park. Aside from the land- and forest-clearing necessitated by the plant, there will also be extensive construction for worker accommodation and a jetty at the coast for transporting materials.

Displacement The Mentarang Hydropower project, which will power the smelter in later years, is also likely to have severe impacts on communities throughout North and East Kalimantan, including the inundation of Long Lejuh and Long Peleban villages, which will force 160 households or around 2000 people to relocate and jeopardise the livelihoods of local fisherpeople. This is in addition to its impacts on nature, set out below.

Loss of livelihood The local communities rely mostly on the fishing industry. Since the development of the industrial park has begun, they have lamented a decrease in fish along the coast, as the increase in ship traffic delivering supplies to this remote area is driving fish away. Local fishermen on small wooden boats are forced to fish further away from the coast to keep making an income. Although the industrial park may bring job opportunities for some local residents, communities fear that it will mostly threaten the traditional streams of income: fishing, farming, and, growingly, eco-tourism, as water and air pollution, coal-fired power plant fly ash, noise pollution, coal and fuel sea spills are real threats to these industries.

Carbon emissions With a generation capacity of 1.1 gigawatts (GW), the emissions from the captive coal plant would emit 5.2 megatonnes of carbon dioxide-equivalent greenhouse gas emissions (Mt CO2-e) per year, the equivalent of the annual emissions of 1.13 million cars. Details on the exact size and capacity of the plant have yet to be confirmed. Given that the project will progressively increase its aluminium output each year, the energy demand from (and therefore the climate impact of) the coal plant will also ratchet up over time. This is until the envisioned hydropower project replaces coal as the smelter’s energy source.

Greenwashing The KIPI park and its coal-fired aluminium smelter have been repeatedly criticised as a massive greenwashing exercise. Activists have argued that international finance for the project risks accepting the tenuous “green” credentials of the project, and thereby condoning broader development of Indonesia’s less populated islands. At a time when international support is flowing simultaneously to Indonesia's renewable energy transition, international companies and investors must recognise that this project and the climate burden it poses runs counter to Indonesia's ambitions to reach net zero emissions.

Soil and freshwater pollution There are significant potential risks to local soil and freshwater resources from the park and the smelter. Media reports emphasise the remote, pristine nature in which the massive park will be located, describing it as on "the road to nowhere", a two-hour boat journey from the capital, and in which construction activity has already begun. 

Deforestation and destruction of habitats Significant land-clearing has been undertaken at the industrial park site; President Joko Widodo initially estimated 16,400 hectares of land will be used, but the park could ultimately expand to 30,000 hectares, roughly half the size of Jakarta. This is happening on an island with few human settlements and vastly covered by luscious tropical rainforest, the habitat of numerous native endangered species, such as the Bornean orangutan, the Bornean bay cat, and the Bornean white-bearded gibbon. The coastal area where the industrial park is being developed is also a conservation and migration area for green turtles (endangered), hawksbill turtles (critically endangered) and killer whales.
The industrial park will require the construction of large jetties to accommodate the transport of materials to and from the plants. Its developers have sought USD 1 billion for two jetties on the nearby coast for this purpose. It is unclear how increased maritime activity associated with the massive industrial park will impact nearby marine life. Similarly, the massive hydroelectric project noted above is being developed on 5,000 hectares of forest land, and is expected to cause large-scale environmental damage through that greenfield development.