MAC: Mines and Communities

Stop the coal boom destroying Borneo rainforests - groups

Published by MAC on 2013-10-03
Source: Statements (2013-10-01)

Below we publish two statements relating to  countering the impacts of coal mining in Kalimantan (the Indonesian part of Borneo).

First, the World Development Movement backs local opposition by calling on UK banks to cease  financing the destruction. A short video be viewed at: http://www.wdm.org.uk/exposed-how-our-banks-finance-climate-change

Second, an alliance of Central Kalimantaion organisations demands the cancellation of plans for a rail network in Central Kalimantan to support an increase in coal production.

UK banks financing coal boom destroying Borneo rainforests

World Development Press release

1 October 2013

London - The top 5 UK banks (HSBC, Barclays, Standard Chartered, RBS and Lloyds) are complicit in fuelling climate change and destroying communities and the environment in the rainforests of Indonesian Borneo through their financing of an Indonesian coal boom, according to a new report released today.

UK banks have lent more money for Indonesian coal than banks from any other country since 2009, while Standard Chartered, the UK's second biggest bank, has lent more than any other bank in the world. 83 per cent of coal produced in Indonesia's top coal province on the island of Borneo is mined by companies part-financed by UK banks [1].

The report by the World Development Movement follows the Intergovernmental Panel on Climate Change's landmark assessment of the state of the world's climate, and comes on the first day of new rules requiring all UK companies to make their carbon emissions public [2]. Campaigners say the UK rules will let banks off the hook by failing to include emissions from fossil fuel projects they finance.

Standard Chartered loaned US$1 billion (£640 million) to Indonesian company Borneo Lumbung in 2012 [3]. Borneo Lumbung's coal mine has polluted the river that the people of Maruwei village rely on [4].

Yesmaida, a woman from Maruwei, told the World Development Movement: "The river is now dark and dirty. Sometimes when we wash, it feels itchy. More importantly, we can't drink the water anymore. The water used to be clean and clear, not like it is now."

Barclays has loaned £127 million to Bumi Resources, owner of Indonesia's biggest coal mine [5]. Bumi Resources is 29 per cent owned by the disgraced London-listed company Bumi plc created by Nat Rothschild. Its Kaltim Prima Coal project has resulted in many people losing their land, with one indigenous village, Segading, having been displaced three times [6].

Gagay, leader of the Dayak Basap tribe in Segading, told the World Development Movement: "The Dayak Basap tribe depend on the forest but the company destroys it. We used to be hunters in the forest. We cannot hunt any more but we cannot work for the company either as we don't have enough education."

London-listed mining giant BHP Billiton has received a total of £6.3 billion since 2009 from Barclays, Standard Chartered, RBS and Lloyds, and as it is a FTSE 100 company, almost every pension fund in the UK invests in it. BHP Billiton plans to open coal mines across a vast area of Borneo threatening to destroy large areas of rainforest on which indigenous people depend [7].

The World Development Movement is calling for rules to stop UK banks and pension funds bankrolling climate change and creating a carbon bubble which threatens to cause a new financial crisis [8].

Alex Scrivener, campaigner at the World Development Movement, said today: "The coal boom is leaving a trail of destruction across Indonesian Borneo, wrecking the rainforest and wrecking people's lives. Here as in so many fossil fuel projects across the world, the invisible hand of UK finance is at work. We have to stop our banks pouring billions into dirty energy that fuels climate change and ruins local people's environments and livelihoods. And we have to stop destructive fossil fuel companies accessing UK investors' money by listing on the London Stock Exchange."

The top five UK banks HSBC, Barclays, Standard Chartered, RBS and Lloyds underwrote bonds and shares in fossil fuel companies worth £170 billion between 2010 and 2012 [9]. The London Stock Exchange holds more coal reserves than any other stock exchange, and total fossil fuel shares worth £900 billion [10], giving dirty coal, oil and gas companies access to money from UK pension funds and investors. The value of shares in renewable energy companies on the exchange is only £5 billion, or 0.56 per cent of the value of fossil fuel shares [11].

The World Development Movement is calling for the new carbon reporting rules to force banks and pension funds to report the carbon emissions from the fossil fuel extraction they finance, and for regulation requiring them to make public details of their fossil fuel investments. The campaign group is also calling on the Financial Conduct Authority (FCA) to reform the listing criteria for the London Stock Exchange so that companies with poor social, environmental and climate records are unable to list.

ENDS

News video available for embed or in a variety of formats on request http://www.youtube.com/watch?v=Dk6AcoLq9J0&feature=youtu.be

Read the World Development Movement's report, 'Banking while Borneo burns'

--

Notes to editors
[1] World Development Movement research
[2] From 1 October 2013 the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 will require all UK quoted companies to report on their greenhouse gas emissions as part of their annual Directors' Report. That requirement affects all UK incorporated companies listed on the main market of the London Stock Exchange, a European Economic Area market or whose shares are dealing on the New York Stock Exchange or NASDAQ.
[3] Mock, W (2012). http://www.bloomberg.com/news/2012-01-26/standard-chartered-said-to-fully-fund-1-billion-borneo-loan-1-.html
[4] Testimony received from villagers from the Maruwei village during a research trip by campaigners from the World Development Movement during June 2013.
[5] Reuters, 1 November 2011 http://www.reuters.com/article/2011/11/01/bumi-barclays-idAFL4E7M129220111101
[6] Testimony received from villagers from the Segading village during a research trip by campaigners from the World Development Movement during June 2013.
[7] World Development Movement research
[8] Carbon Tracker Initiative (2012), Unburnable Carbon - Are the world's financial markets
carrying a carbon bubble?
[9] World Development Movement (2012). Web of power - The UK government and the energy-finance complex fuelling climate change.
[10] London Stock Exchange, ‘Companies and Issuers', 31 December 2012, http://www.londonstockexchange.com/statistics/companies-and-issuers/companies-and-issuers.htm . Own calculations.
[11] World Development Movement (2012). Web of power - The UK government and the energy-finance complex fuelling climate change.

Further information and interviews
Miriam Ross:
T (+44) (0)20 7820 4913 or (+44) (0)7711 875 345.
W http://www.wdm.org.uk/


Coal railway plan in Indonesian Borneo receives protest

Alliance for Rejection of Coal Railways in Central Kalimantan

[The alliance is a joint force of different organizations in Central Kalimantan including WALHI, AMAN Central Kalimantan, SOB, BEM UNPAR, MITRA LH Central Kalimantan, FMN, GMNI, LMMDD-KT, TDU Central Kalimantan, BPAN Central Kalimantan, JPIC Kalimantan, YBB Central Kalimantan]

This press statement has been released on 30th September 2013 as part of a peaceful protest that has taken place in Palangka Raya, Central Kalimantan

VIEWS AND OPINIONS

Indonesian Government in its ambitious Master Plan for the Acceleration and Expansion of Indonesia's Economic Development (MP3EI) has established Kalimantan Island as the economic corridor for the Centre for Production and Processing of National Mining and Energy Reserves. In the document, a coal railway plan (a 424 km rail line Puruk Cahu-Bangkuang-Bantanjung) to support the increased production of coal in Central Kalimantan has been delineated. This plan to develop railroad and rail networks for transporting coal in Central Kalimantan deserves to be questioned before the negative things occur. Many big questions arise ranging from environmental issues, economics, funding sources, legality, human resources, benefits to local communities and local readiness, local energy stocks and various other aspects.

Within the Environmental Aspect of the coal railway construction which is now prepared by the government, some very important issues that may have impacts at a later date and will be difficult to restore are as follows:
1. A high potency to create an ecological disaster due to the construction of railroads to transport coal resources from the upper Barito River which is the catchment area for Barito and Mahakam river basin;
2. The ecological disaster will include flooding, sedimentation and abrasion of the small and large rivers within the Barito River watershed which will be accompanied by droughts and landslides;
3. The destruction of the landscape and breaking of ecosystem chain within the mining development areas and along the rail network lines;
4. Increased cost for ecological restoration and disaster management which will put extra burden to government budget.
5. A high need to extract timbers from the forest for the coal railway construction which in turn will furthermore accelerate deforestation. Moreover, this will damage international perception on Central Kalimantan image as a REDD+ pilot province. Governor of Central Kalimantan has made a commitment to forest conservation and sustainability in Central Kalimantan. Therefore, the coal railway development is a big contradiction with the commitment to support REDD+ and develop green province policy.
6. The coal railway development plan does not have environmental impact assessment (EIA) and environmental permit.

The development of Central Kalimantan coal railway will create social and cultural problem such as:
1. Problems with the land compensation along the railway line which will require extra funding whereas the state budget should be spent on welfare of the surrounding community rather than providing extraordinary incentives to private investors.
2. More and more communities are losing and will lose their lands and will have to bear the impacts of losing their main asset of production. In addition, there will be massive culture aggression which will increasingly erode the communal culture of local people;
3. Without a proper process to obtain Free Prior Informed Consent (FPIC) from the local community, the construction of the coal railway will highly likely bring social conflicts especially if the network paths are in the indigenous/adat regions (Tajahan, Pukung Pahewan, Kaleka Lewu, Petak Keramat, etc.)
4. The more complex and complicated labor issues, clash of cultures, unemployment and rising sosial problems and criminality as more and more coal will be opened. There will be situations that are difficult to predict there will be many layoffs. These will require extra coss from the state in order to mitigate the problems.
5. Currently the indigenous and local people from areas that are supposed to be the main actors in the management of the natural resources (as the main sources of livelihood and energy) in Central Kalimantan are not ready. Only a tiny fraction of indigenous an local people that can participate in the management of mineral resources in their area. Thus the massive natural resources exploitation with the presence of the coal railway will mostly benefit the outsider rather than the indigenous and local people. This certainly will bring up jealousy which could lead to very dangerous social conflicts.

Legal Aspect:
1. According to Government Regulation No. 56 Year 2009 (PP 56/2009) regarding the Railways Provision, there are two types of railways, the public and special railways. Meanwhile the railway networks consist of the general railway network and special railway network. In the regulation it is clear that special railway is a railway line that is specifically used to support the activities of a particular business entity or several business entities in the same area. Therefore, the development plan of coal railway in Central Kalimantan is certainly a type of special train specifically built to the transport of coal from inner Barito Basin to the coast.
2. The coal railway development plan in Central Kalimantan cannot be said as a public railway (public railways are defined in the regulation as railways that are used to serve the transport of people and/or goods with charge). Although here the railways is for transporting goods i.e. coal), but the coals transported are only form mining sites and not for public use therefore it is clear that the railway to be built is not a general, but a special railway. As such, it is not appropriate to use state funding (national budget or provincial budget).
3. Government involvement in the tender process and procurement as well as in land acquisition indicates that the project is funded and owned by the government where by nature coal railways network to built is a special railway project thus the responsibility for the project lies on a business entity needing the railway to support its/their business. In developing a special railway, the government involvement (local and central goverments) should be limited as a facilitator (granting permits) rather than as the "owner" of the project especially during the tender process. This will indicate a misuse of authority.
4. In a special railway network with a special designation, the rail line is used exclusively by certain business entities to support their core activities. Thus there must be a direct relationship between the developer of the coal railway and the coal mining operations in the area. However, the coal railway in Central Kalimantan is not built by coal business entities operating in Central Kalimantan region but by another entity providing rail services to transport coal from mining sites. So the proposed public railway is not in accordance with the definition of either public railways or special railways.

Geopolitical Aspect:
1. The construction of the coal railway network to transport coal out of Central Kalimantan is on the contrary with the current energy crisis that has occured in Central Kalimantan for a long time and certainly will not answer the problem of energy justice for Central Kalimantan people. Before transporting the coal out of the region, it must be ensured beforehand that local energy needs are met in a fair and equitable way.
2. An energy politics and an exploitative development model that rely heavily on the extraction of natural resources especially by directly transporting coal out of the production region is a very unsustainable model of development. It certainly has an emphasis on the resource extraction in order to satisfy regional and global energy needs rather than on meeting local energy demand.
3. A development project with a very large fund (30 trillion rupiah) will be very prone to abuse and exploitation for political purposes, corruption, collusion, nepotism and other kind of conflicts of interests. This will add up to the risks of the project especially the risk of leakage of project fund which in Indonesia is often related to general elections. A national election for members of parliament and presidential election will take place in 2014 and Central Kalimantan governor election in 2015. We cannot rule any possibility that the project will be used to fund the campaigns in the elections.
4. Locally there is also a different opinion between district and provincial governments about the route of the train line. North Barito regency prefers that the coal railway route goes towards East Kalimantan coast (eastbound) whereas provincial government clearly wants a route towards Central Kalimantan coast (southbound). This difference will may become a potential obstacle for the project later on.

Economic Aspect:
1. The energy crisis in Kalimantan must be answered with energy justice. Coal railway will not answer that problem. In fact, it will increase energy inequality even more.
2. There will be unequal contribution of wealth with high imperialism and capitalism interests. In the long run, the massive exploitation of the natural resources is very dangerous for the producing region as the profit-sharing scheme and pattern of income distribution in mining sector until now do not provide sufficient benefits and values for the producing region and the communities around the mine sites.
3. It is highly likely that the guarantee fund is provided by loan from the World Bank. This will add a new pressure for a nation that has heavily burdened by debt.
4. The railway construction will lead to a further depletion of Central Kalimantan coal resources. It has been delineated in the Master Plan for the Acceleration and Expansion of Indonesia's Economic Development (MP3EI) document that with a coal railway construction the production of coal in Central Kalimantan can be increased by 7-fold. However, there is no scheme and technology that have been prepared in Central Kalimantan in order to reduce and mitigate the effects of ecological disasters, destruction of forests and degradation of land, water and rivers ecosystem due to mining. Moreover there has been no successful experience in conducting post-mining rehabilitation/revegetation so far. Clearly, while this railway plan is ready with its economic calculation of the coal extraction, it is not ready in terms of strategic plan, budget and technology for mitigating the direct and indirect impacts. Furthermore, an economic plan in conducting post-mining rehabilitation/revegetation is missing from the plan.
5. Assuming that the coal production in Central Kalimantan Province in 2012 is 13.87 million tonnes, accelerating the coal production to 7-fold which will be enabled by presence of the railway network will result in the production of 97 million tonnes of coal per year. With an estimated coal resources of 5,475,312,835 tonnes then within a period of 50-70 years coal resources in Central Kalimantan will be depleted. It is now imperative to question "is there any plan after the depletion?"
6. Another thing that is never taken into account by the government is the direct and indirect impacts the railway in supporting the exploitation of coal which is often said for the welfare of the society. This special coal railway is not a free offer as it will be used to transport non-renewable capitals (assets) that are borrowed from future generations. Therefore, the coal resources are assets and means of production as well as the source of livelihood for the indigenous and local people as such the results of the natural resources exploitation (resource-based economy) should be transferred to other forms of assets including improved quality of human resource, basic infrastructure and technology-based industries (technology-based economy). On the other hand, the results of land compensation will not last long while the impacts are significant due to the lost of lands as a means of production.
7. The coal railway development in Central Kalimantan should be reassessed as there are many other potential sources of livelihood for the people (rattan, rubber etc.) that can be developed as sources of income for the region. They are also environmentally friendly and have been long part of the local people's economy.

Corruption and Potential Losses of Public (State) Money Aspect:

1. The use of provincial and districts budgets especially for land acquisition, land compensation and regulation making warrants a need to investigate whether this budget allocation has been planned since the start and approved by parliament or just a government policy.
2. The use of the state budget in this special railway project creates uncertainty in the auction scheme and the ownership of the railway tracks.

Spatial Planning and Climate Change Aspect:
1. After 5 years the Provincial Spatial Plan (RTRWP) still has not been approved by Central Government. The coal railway development plan in Central Kalimantan will add more chaos to the currently problematic provincial spatial plan.
2. So far the reduction commitment on the greenhouse effects is only shown by European countries and China which have real programs and policies towards it. For example China has committed to reduce coal consumption from 70% to 60%. Meanwhile Indonesia seems to be still confused. Many programs are unclear and even often contradictory in practice. Massive exploitation of coal resources with the support of coal railway is a contradiction to Indonesia President's commitment on the reduction of greenhouse gas emission. Indonesia will still be regarded as a major emitter country.

Human Resources Aspect:
While the government has to fix some aspects mentioned above, the government is required to prepare local human resources to participate in managing natural resources in their area. This can be achieved by setting up vocational schools and polytechnics in mining, agriculture and natural resources processing as part of the efforts to improve quality of human resources in Central Kalimantan.

Various things discussed above are only some of the issues and problems that should be answered and analyzed carefully and deeply. The plan to construct an exclusive coal railway network to transport and exploit the coal resources in Central Kalimantan is not a logical plan. It puts natural resources exploitation above justice for the people and shows various contradictions.

Looking at the persistence of certain parties who have been "foolhardy" to build a coal railway network in order to significantly increase the coal resource extraction in Central Kalimantan, the Alliance (WALHI, AMAN Central Kalimantan, SOB, BEM UNPAR, MITRA LH Central Kalimantan, FMN, GMNI, LMMDD-KT, TDU Central Kalimantan, BPAN Central Kalimantan, JPIC KALIMANTAN, YBB Central Kalimantan) hereby states that :

IT IS VERY ILLOGICAL TO BUILD THE COAL RAILWAY NETWORK IN CENTRAL KALIMANTAN ESPECIALLY WHEN IT USES STATE BUDGET, CAUSES ENVIRONMENTAL DAMAGES, AGAINST THE REGULATION, AND POSES HIGH POTENTIAL FOR SOCIAL CONFLICTS, INCREASES GAP IN THE QUALITY OF LOCAL HUMAN RESOURCES, ADDS PROBLEMS TO THE PROVINCIAL SPATIAL PLAN CHAOS AND POSES HIGH RISKS FOR CORRUPTION.

THEREFORE, THE ALLIANCE HEREBY DECLARES:

AS LONG AS NO CLEAR ANSWERS GIVEN TO THE ISSUES RAISED ABOVE THEN WE STRONGLY REJECT THE COAL RAILWAYS TO BE BUILT IN CENTRAL KALIMANTAN

CONTACT PERSONS:
1. - Nordin (SOB, Save Our Borneo), Mobile: 081352752775
2. - Rio (WALHI Kalteng, Friends of Earth Central Kalimantan), Mobile: 081388446422
3. - Itan (Mitra LH Kalteng), Mobile: 085234916666
4. - Marcos (LMMDD-KT, Lembaga Musyawarah Masyarakat Dayak dan Daerah-Kalimantan Tengah), Mobile: 085387246333


HSBC shuts down City branch in face of climate protest

World Development Movement Press release

10 October 2013

London - HSBC shut its flagship branch in the City of London today in the face of protests against its investment in fossil fuels. HSBC is the UK's largest underwriter of fossil fuels bonds and shares.

The protestors from the World Development Movement dressed as coal miners and cordoned off the area outside the bank using ‘climate crime scene' hazard tape and eviction notices.

The protest took place to kick-start a global month of action against dirty energy. During the next four weeks there will be protests throughout the City of London and across the country targeting HSBC and other financial institutions for their financing of fossil fuels.

World Development Movement activist Kirsty Wright said:

"We set up an extraction zone outside HSBC to bring the reality of what the banks are financing back to the City. By pouring billions of pounds worth of finance into fossil fuels each year, HSBC is destroying people's homes, lives and the climate. For example, HSBC is financing companies mining coal in Indonesia, which are pushing people off their land and polluting their water. HSBC must stop this reckless investment."

The activists also attempted to hand in a giant cheque for seven pence, to represent the amount of compensation people in Indonesian Borneo have been offered for land taken for coal mining by BHP Billiton, which has raised over £1.8 billion since 2009 from bonds underwritten by HSBC.

Notes to editors:
- Photos available at http://www.wdm.org.uk/imagelibrary/?c=98&k=bc18e89041 and videos at http://wdm.org.uk/climate-change/hsbcs-climate-criminality
- HSBC underwrote £75 billion pounds of fossil fuel bonds and shares between 2010 and 2012.
- Dirty Energy Month takes place from 11 October - 11 November. See http://reclaimpower.net/ for more information.
- The World Development Movement's new report 'Banking while Borneo Burns' details the UK finance sector's financing of coal mining in Indonesian Borneo: http://www.wdm.org.uk/sites/default/files/banking_while_borneo_burns.pdf

Further information and interviews
Miriam Ross:
T (+44) (0)20 7820 4913 or (+44) (0)7711 875 345.
W http://www.wdm.org.uk/

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