Ahead Of The Drop In Bonds, Climate Activists Ask To Bank Stop Financing Coal Adaro Companies

Photo: Special

JAKARTA - BankTrack, Ek Total, Artivist Network, Market Forces, Enter Nusantara, and Toxic Bonds Network urge banks in Southeast Asia, including Indonesian national banks, not to facilitate the issuance of new bonds by a coal company from Indonesia, PT Adaro Energy Indonesia Tbk.

For information, Adaro's $750 million bond will mature on October 31, 2024. The company is likely to issue new bonds to restructure its debt and continue its fossil fuel business expansion.

DBS and OCBC are previous bond emission guarantors and there is a chance that they will again provide emission guarantee services for future bonds and facilitate the expansion of Adaro's fossil fuel business.

In 2023, Adaro's aluminum smelting project will be criticized as greenwashing, although Indonesian banks will continue to provide financing for the project.

Adaro is currently building a coal steam power plant (PLTU) with a capacity of 1.1 gigawatts (GW) in Indonesia's Green Industrial Estate, North Kalimantan. This step clearly contradicts the company's claim regarding the green transition. If Adaro plans to issue bonds, we urge financial institutions committed to the climate agenda to refuse to provide support as long as Adaro is still building a new coal PLTU," said Aray of the Lestari Forest Circle, an environmental organization based in North Kalimantan in a written statement, Friday, September 27.

Previously, Adaro said he would stop dependence on coal.

Last week, Adaro announced plans to release 99.9 percent of its shares in its subsidiaries that hold the coal business, namely PT Adaro Andalan Indonesia (AAI).

However, he said, until now the company has not announced the coal production limit or when to completely exit the coal business.

In fact, they plan to strengthen metalurgy coal production by expanding operations in coal mines in Indonesia and Australia.

According to him, the release of AAI's shares could be an effort to get more funding for metalurgical coal operations.

The lack of commitment from banks will continue to allow coal miners such as Adaro to receive sustainable financial support to continue climate-destructing coal expansion.

Adaro plans to open a new metallurgical coal mine in three concessions, an increase from two concessions that have been active. Metallurgical coal also contributes significantly to the climate crisis, which shows the inconsistency of Adaro's transition towards a green commitment. Any financial institution that supports Adaro means participating in exacerbating the climate crisis and endangering the survival of future generations," said Enter Nusantara coordinator Reka Maharwati.

He added, amid the increasing extreme disasters due to the climate crisis in Indonesia and around the world, Indonesian national banks are still financing coal projects, the fault is the Adaro PLTU project.

He considered that this step was clearly against the commitment of the Indonesian government to accelerate early retirement of coal power plants.

"The commitment to the national banking climate is also far behind the global trend, where more and more financial institutions are leaving coal financing," added the Asia Energy Finance Campaign Market Forces, Binbin Mariana.

Not only that, Binbin said Adaro was also in a vortex of controversy due to allegations of illegal mining, destruction of biodiversity, pollution of water sources, and human rights violations, disclosed by the corporate supervisory agency Eko and WALHI South Kalimantan.

The report entitled "In Coal Blood - How Adaro Destroyed Indonesian Biodiversity" revealed that Adaro's mining activities extend far beyond the permit area in South Kalimantan, Indonesia.

Adaro could illegally mine coal by destroying Indonesia's rainforests and exacerbating climate damage.

Adaro's main business is coal, that simple. Although Adaro claims to be making a green transition, there is no evidence to support the statement. Banks supporting Adaro will not be able to believe that investment flows to Adaro will be used for renewable energy, and will not be used for coal expansion. This could increase reputation and legal risks, banks should avoid funding for each subsidiary of Adaro's group, concluded the Climate Finance Campaign at Eko, ApeKista Vashney.