BHP's rainforest-swallowing coal venture

November 26, 2013
Pius Ginting, energy and mining campaigner with WALHI addressed meetings in Australia about BHP's coal venture.

Australian environmentalists welcomed the October announcement that mining giant BHP was abandoning its plans for a coal export rail and port development at Abbot Point in Queensland.

However, the company is simultaneously involved in a giant new coal export development on Kalimantan in Indonesia.

Pius Ginting, energy and mining campaigner with WALHI (Friends of the Earth Indonesia), told an audience at Melbourne University on November 14 that Kalimantan has had coalmining for many years in the east and south, but “now it goes to the central area. It will overlap with the conservation area named Heart of Borneo”.

Heart of Borneo is a 2007 conservation initiative by the World Wide Fund for Nature (WWF) and the governments of the three nations that share the island: Indonesia, Malaysia and Brunei-Darussalam.

Last year, the Jakarta Post reported WWF concerns that “lowland forest in the 220,000-square-kilometre zone stretching across the island is under threat and needs immediate rescuing”.

According to Friends of the Earth Sydney spokesperson Nick McClean, the island's endangered orangutan population is likely to be threatened by the mines.

McClean said many orangutans have been relocated from areas cleared for palm oil production, and “some of the BHP concessions are in areas they have been relocating orangutans to. You could look at it as one of the last refuges for the orangutans.”

BHP's project in Kalimantan is called Indomet, a joint venture with Indonesian company Adaro Energy, largely in the region of the upper Barito river basin. A BHP briefing document released in May indicates the Indomet project has 83 million tonnes of measured coal resource, and a further 691 million tonnes “indicated and inferred”.

The Jakarta Post reported in May that Indomet was expected to begin production in the third quarter of 2013, although a BHP spokesperson told the Guardian in November that the first small project, Haju, “is not yet operational and won’t produce coal this calendar year”.

Arie Rompas, executive director of the Central Kalimantan branch of WALHI, told the Melbourne meeting that Australia has been involved in two conflicting investments in Kalimantan: protection of forests through the REDD+ international framework for carbon offsets, and coalmining.

The Kalimantan Forest Carbon Project, part of a larger Australia-backed project, was abandoned in July. WALHI at the time reported that “over five years the project has produced no significant environmental outcomes, it created conflict in local communities and confusion about the status of their land.”

Rompas told the meeting that mining for coal “is in contradiction with central Kalimantan pilot projects for reduced emissions”.

He said the coal industry has a negative impact, causing land clearing, water contamination from transport of the coal on rivers, and displacing local communities.

The Central Kalimantan Railway project is planned to carry coal from the upper Barito Basin to port. Ginting said it has been backed by a World Bank loan.

“There will be two disasters: the ecological disaster, and the loan that has to be repaid,” Ginting said.

The railway, which would be exclusively for coal, not for the public, would be built as a public-private partnership. Ginting said it would be the first railway in Kalimantan.

A September 30 statement released at a protest by the Alliance for Rejection of Coal Railways in Central Kalimantan, of which WALHI is one member, explains “the coal railway development plan does not have environmental impact assessment and environmental permit,” and that “with a coal railway construction the production of coal in Central Kalimantan can be increased by seven-fold.”

The statement expressed concern that there is no plan “to reduce and mitigate the effects of ecological disasters, destruction of forests and degradation of land, water and rivers ecosystem due to mining.”

In a recent letter to environmental group Oil Change International, a World Bank official has said that the Indonesia Infrastructure Guarantee Fund, which is supported by World Bank finance, “has already decided not to support the central Kalimantan coal railway”. Whether this prevents construction of the railway remains to be seen.

Ginting said the big profits made from mining don't benefit Indonesia very much. “The mining sector doesn't contribute much income to Indonesian government. According to the Bank of Indonesia, the mining sector contributed just 5% in 2011 and 6% in 2012.”

“We heard many times about the resources curse, it is there in Indonesia. Indonesia is a top coal exporter, but this doesn't contribute much to our human development index."

BHP is not the only Australian-connected company involved in the central Kalimantan mining boom.

One other Australian coal company with projects in Kalimantan is Brisbane-based Cokal Ltd. Friends of the Earth has also highlighted the presence of Leighton Holdings, who received a $150 million loan from the Australian government's Export Finance and Insurance Corporation.

Subsequently, Leighton has been embroiled in a scandal relating to bribery by its overseas operations, including in Indonesia.

Aid organisation Jubilee Australia pointed out in an October media release regarding the allegations that “Leighton is one of EFIC’s largest corporate clients. In 2010-11 the company received almost one-third of Australia’s export support to big companies. Yet we know very little about how this money has been spent.”

Rompas finished his presentation at Melbourne University with an appeal. “We came to Australia because of the Australian companies involved, and I appeal for solidarity.

“This is the message from the locals: the forest is the source of life, so if you clear the forest, the customs will disappear and the future will be grim.”

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