Hyundai Motor Company and PT Adaro Minerals Indonesia Tbk’s memorandum of understanding received a backlash from environmental organizations from both countries over the South Korean carmaker’s planned annual purchase of 100,000 tons of aluminum from Indonesia’s second-biggest coal firm.
Adaro Minerals – whose president commissioner is Garibaldi Thohir, Minister of State Owned Enterprises Erick Thohir’s brother – plans to develop a 1.1 gigawatts new coal-fired power plant as a source of energy for its aluminum smelter.
By signing the MoU, environmentalists doubted Hyundai’s pledge to become carbon neutral by 2045, as the company claimed on its website.
Hyundai has disowned its commitment to environmentally friendly vehicles by using aluminum produced by a coal-fired power plant, Market Force campaigner Nabila Gunawan said on March 8, 2023.
“The International Energy Agency (IEA) says there should be no more new coal-fired power plants if the world intends to stop the increasing rate in the earth’s temperature which will cause major disasters, such as floods and rising sea levels,” she said.
Read also: Global banks decline to finance Adaro’s smelter project
Adaro Minerals have labeled its aluminum smelter project as an environmentally friendly project. In reality, the smelter will use electricity from a new coal-fired power plant in its early stage.
“On average, coal-fired power plants in the world can operate for 46 years. It is difficult for Hyundai to achieve the neutral carbon target in 2045 if the company relies on aluminum produced by Adaro’s coal-fired power plant. Consumers of electric vehicles are increasingly skeptical that the energy transition goal is still polluted by the massive use of coal,” said Bhima Yudhistira from the Center of Economic and Law Studies (CELIOS).
Indonesia does not need new coal-fired power plants that will pollute and damage the environment, said Melky Nahar, coordinator of the non-governmental organization Mining Advocacy Network (JATAM). A company like Adaro has a history of destroying the people’s livelihood and has contributed to environmental disasters like floods and landslides in Kalimantan, he added.
“We are worried that Hyundai sticks to the MoU to purchase aluminum from Adaro when it is clear that the production will be supported by a new coal-fired power plant. Hyundai should not support Adaro’s dirty aluminum products and encourage low-carbon investment in Indonesia,“ Nahar explained.
Ten environmental groups from Indonesia and South Korea stated their objection to Hyundai on January 24, 2023.
”We have delivered our concerns and sent a letter to Hyundai in January. However, until now, Hyundai does not respond to our letter,” said Gunawan.
A spokeswoman for Adaro has not responded yet to a request for comment.
Adaro Minerals, through its subsidiary PT Adaro Indo Aluminum, plans to develop an aluminum smelter at the Kalimantan Industrial Park Indonesia (KIPI). The US$ 1.1 billion investment is to build the first phase of an aluminum smelter with a capacity of 500,000 tons/year and a jetty. The first phase of the smelter will commercially operate in 2025. The company will use a coal-fired power plant in the early phase of the project and will use a hydropower plant in the final phase.