Adaro Aluminum Smelter power station

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Adaro Aluminum Smelter power station is a power station in Tanah Kuning, Bulungan, North Kalimantan, Indonesia with multiple units of varying statuses, none of which are currently operating. It is also known as PT Kalimantan Industrial Park Indonesia power station.

Location

Table 1: Project-level location details

Plant name	Location	Coordinates (WGS 84)
Adaro Aluminum Smelter power station	Tanah Kuning, Bulungan, North Kalimantan, Indonesia	2.528, 117.858 (approximate)

The map below shows the approximate location of the power station.

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Project Details

Table 2: Unit-level details

Unit name	Status	Fuel(s)	Capacity (MW)	Technology	Start year
Phase I	pre-permit	coal: unknown	1100	unknown	2025 (planned)
Phase II	announced	coal: unknown	1100	unknown	2026 (planned)

Table 3: Unit-level ownership and operator details

Unit name	Owner	Parent
Phase I	PT Kaltara Power Indonesia [100%]	PT Adaro Power
Phase II	PT Kaltara Power Indonesia [100%]	PT Adaro Power

Project-level captive use details

• Captive industry use (heat or power): power
• Captive industry: Aluminum

Background

Adaro and power

A May 2020 Adaro document noted “2,200 MW power plant in progress” as part of the action plan to “Continue to deepen integration and improve contribution from non-coal mining businesses.”

It also referenced three power stations related to Adaro Power, which together added up to approximately 2,260 MW of coal capacity:

• Makmur Sejahtera Wisesa (MSW), "Operator of 2x30MW mine-mouth power plant in S. Kalimantan" (see Tabalong Wisesa power station),
• Bhimasena Power (BPI), "Partner in 2x1000MW power generation project in Central Java" (see Central Java Power Project), and
• Tanjung Power Indonesia (TPI), "Partner in 2x100MW power plant project in S. Kalimantan" (see Tabalong power station).

In September 2022, company documents still listed those three projects, highlighting again that Adaro Power’s gross power generation capacity stood at 2,260 MW.

In April 2023, Adaro Energy's 2022 Annual Report stated that "PT Adaro Clean Energy Indonesia is leading Adaro’s diversification into renewables as a response to the opportunities in the green business being aggressively developed in Indonesia." In addition, the report stated that Adaro's business ventures were now divided into Adaro Energy, Adaro Minerals, and Adaro Green. Adaro Minerals was the pillar associated with the aluminum smelter at the KIPI zone. Adaro would "keep our eyes on the further details of aluminum smelter’s financial feasibility", which was projected to reach financial close in the second quarter of 2023.

PT Adaro Minerals Indonesia Tbk

In a 2022 company overview of PT Adaro Minerals Indonesia Tbk (AMI), Adaro noted the company was established in 2007 and carries out integrated mining activities through its subsidiaries, which have one of the largest greenfields area in Central Kalimantan for metallurgical coal. The Company’s subsidiaries owned 5 Coal Contract Of Work (“CCoW”) located in East Kalimantan and Central Kalimantan with a total area up to 146,579 ha. The 5 CCoWs were in the operation and production operation development stages: Maruwai Coal was operating and selling metallurgical coal, Lahai Coal was conducting mining optimization, while Kalteng Coal, Sumber Barito Coal, and Juloi Coal were in the development phase. The overview provided a helpful map.

In November 2023, the Director of Adaro Minerals Indonesia stated that the company would not supply coal to Adaro Aluminum Smelter power station, as their focus was on mining metallurgical rather than thermal coal.

PT Kalimantan Industrial Park Indonesia (KIPI)

In late 2021, a consortium of local and foreign companies started developing Indonesia’s first so-called green industrial park in Tanah Kuning, Bulungan regency, North Kalimantan, “hoping to spur industrialization and integrate the country into the growing global supply chain for green products.” News noted the industrial park would draw power from soon-to-be operational hydropower and solar power plants.

Aluminum smelter & proposed coal

In October 2022, the Baise Aluminum Industry Association's website noted that Adaro was building an aluminum smelter with an annual capacity of 1.5 million tons. The project appeared to have started construction at the end of 2021, and was expected to be built in three phases: Phase I (500,000 tons/year) for operation by Q1 2025, Phase II (500,000 tons/year) for operation by Q4 2026, and Phase III (500,000 tons/year) by Q4 2029. The first and second phases were expected to use electricity from coal power, and the third phase from hydropower.

A September 2022 "Public Expose" by Adaro also described three phases:

• Phase I: "Production Capacity: 500,000 tpa aluminum with man-power up to 1,000. Requires ~1.1 GW of electricity - Adaro Group may potentially take part in the provision of the power source. Estimated COD: Q1 2025"
• Phase II: "Potential replication of Phase I: Additional production capacity of up to 500,000 tpa aluminum. Requires ~1.1 GW of electricity - Adaro Group may potentially take part in the provision of the power source. Estimate COD: Q4 2026"
• Full Phase: "Additional capacity of up to 500,000 tpa of Green Aluminum powered by Hydro Power which will be ready by 2029. Estimated COD: Q4 2029"

On February 5, 2023, other reporting confirmed that PT Adaro Energy Indonesia Tbk (ADRO) was planning to boost mining downstream through the construction of an aluminum smelter with a capacity of 500,000 tons per year in the PT Kalimantan Industrial Park Indonesia (KIPI) industrial area. The proposal would involve subsidiary PT Adaro Minerals Indonesia Tbk (ADMR). The total investment value, including a power plant, was projected to reach US$2 billion in the first phase. One source noted that the project was in the “detailed planning process.” ADRO was aiming to finalize the investment and start construction by the end of 2023 and it was estimated that the construction work would take two years.

On February 6, 2023, the Financial Times reported that Adaro was struggling to raise money from international banks to finance a landmark $2bn aluminum project (more below). Environmental groups were also accusing the company and its partner, South Korea’s Hyundai, of “greenwashing.”

The project was being marketed as a flagship green, renewable development for the south-east Asian economy, even though it appeared to involve building a 2.2 GW coal power plant. Adaro Minerals was planning to expand into aluminum and battery making for electric vehicles, but most of its revenue was still from coal.

Adaro reportedly signed a memorandum of understanding in November 2022 with Hyundai to supply the Korean automaker with aluminum, a deal the companies said would “accelerate” the transition to sustainable energy. Hyundai was reportedly planning to use aluminum from the smelter for electric vehicle production, describing it as “green and low-carbon” because it would be produced using hydroelectric power. However, according to the news, the smelter was only expected to use hydropower starting in 2029, while the planned partnership would give the South Korean company access to supply before then.

The first phase, which would reportedly involve construction of the smelter, a power plant, and a port, was estimated to cost about $2bn, according to data provider Refinitiv. Adaro was aiming to start commercial operations by the first quarter of 2025.

Adaro told the Financial Times that “[t]he main power source for the industrial park will be renewables. However, as it takes longer time to construct, transition to renewables will be powered by fossil fuel.” Hyundai said talks with Adaro were at an early stage and funding for the project had yet to be negotiated. It said Hyundai was interested in securing a stable supply of aluminum from the Indonesian company, but the MOU was not binding.

In late February 2023, an Adaro press release stated that the aluminum smelter would be operated using renewable energy. The KIPI hydropower plant, which was 50% owned by PT Adaro Energy Indonesia Tbk, began construction in March 2023, but it was not slated for operation until 2029.

In March 2023, an article criticizing Hyundai's interest in the coal-fired aluminum plant described the power station as 1.1 GW, likely in reference to Phase I of the project.

As of May 2023, it appeared that only Phase I (1,100 MW) was financed.

An October 2023 report by the Institute for Energy Economics and Financial Analysis (IEEFA) casted doubt on the financial viability of the aluminum smelter project. IEEFA estimated that for Adaro to recover the project's US$2 billion capital cost, it would require a 30% increase in the price of aluminum to US$2800 per tonne and prices would need to remain at that level for 8 to 11 years.

In November 2023, a representative of Adaro reportedly reiterated that a 1,000 MW coal-fired power station would be moving forward to power the smelter project on the short term. Noting that construction of the hydropower plant would take several years, he stated: "PLTU is the only economically viable source of electricity" (Google translate). Foundational piling works were already underway.

Reporting from March and April 2024 indicated that Hyundai had decided not to renew the memorandum of understanding it had with PT Adaro to source aluminum from the coal-fired aluminum smelter.

A May 2024 Adaro Energy presentation stated: "Adaro may invest in the smelter’s power generation. Power generation will likely be a hybrid of coal and renewables". The uncertainty was referring to the potential Phase II. A September 2024 Adaro Energy presentation included the same statements.

Opposition

In June 2023, an article revealed that K-POP fans in Indonesia were organizing against the Adaro Aluminum Smelter power station, because popular group BTS had a sponsorship/ambassador relationship with Hyundai. The lead campaigner of KPOP4PLANET stated: "Through the Hyundai Drop Coal campaign, a play on the song titled "Mic Drop" by BTS, we demand that Hyundai not use the dirty aluminum from Adaro so long as they are using coal, and instead, they should source their aluminum from sustainable alternatives like solar and wind." A Hyundai Drop Coal petition had over 11,000 signatures as of September 2023, and the website featured slogans such as "no KPOP on a dead planet". Hyundai reportedly responded to the BTS fans' messages and opened the door for further conversation.

KPOP4PLANET also held an in-person action at a Hyundai motor studio in Jakarta. Protesters held signs, performed BTS songs, and read an open letter to Hyundai urging them to end their relationship with coal-fired generation and uphold their 2045 net-zero commitment.

Following years of pressure on Hyundai to end its relationship with PT Adaro, climate activists welcomed the automaker's March 2024 announcement that it had withdrawn from its agreement to source aluminum from the Adaro Aluminum Smelter.

Financing

Phase 1: As noted above, the Financial Times reported in February 2023 that Indonesia’s Adaro was struggling to raise money from international banks to finance a landmark $2bn aluminum project: “Adaro Minerals said it planned to raise $1.1bn in bank loans for the smelter, being developed in partnership with Chinese investment group Legend Holdings. Global banks that have previously lent to the Adaro group, including Singapore’s DBS, told the Financial Times they were not involved in financing the smelter project. A person familiar with the situation said the UK’s Standard Chartered, which continues to work with Adaro, was also not participating. An executive at one global bank, speaking anonymously because of commercial sensitivities, said: ‘Adaro discussed financing with us, but we have pledged to stop funding coal-related businesses. [This project] would fall under that.’ DBS and other banks had already pledged to stop funding parent Adaro Energy as part of climate change commitments. Adaro has also approached European banks BNP Paribas, ING and Commerzbank for loans, according to two people with knowledge of the situation. The banks all declined to comment.”

In May 2023, Kalimantan Aluminum Industry, a subsidiary of ADMR, received a loan of US$ 981.4 million and Rp. 1.5 trillion for the aluminum smelter. Kaltara Power Indonesia (KPI) received a loan of US$ 603 million and Rp. 192.1 billion for construction of a coal-fired power plant. Five Indonesia banks were involved: Bank Mandiri, Bank Central Asia (BCA), Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI), and Bank Permata.

Financing for the project closed in May 2023. According to official Adaro's information disclosure document, financing for the power plant consists of a loan of US$603.6 million and Rp 925.1 billion, to mature in 10 years' time.

Articles and Resources

Additional data

To access additional data, including an interactive map of coal-fired power stations, a downloadable dataset, and summary data, please visit the Global Coal Plant Tracker on the Global Energy Monitor website.