‘Worst of Worst’ Coal Project in Kalimantan in Doubt After Snub

 Jenny Denton, 24th December 2014, Jakarta Globe


One fifth, or 3 million hectares, of Central Kalimantan’s land is currently used for coal mining activities, according to the Energy Ministry. (JG Photo/David Fogarty)

Jakarta. Australian miner BHP Billiton’s controversial Indomet coal project in Kalimantan is in doubt following a reported decision by the minister for national development planning to withdraw support for the construction of a railway that would transport coal from the remote mine sites to port.

The Indonesian Forum for the Environment, or Walhi, says Minister Andrinof Chaniago told members of the group at a meeting this month that the rail project, an initiative of the previous government of Susilo Bambang Yudhoyono, will not be included in the national 2015-2019 Medium-Term Development Plan and will not receive public-private partnership status or government guarantees.

The decision follows an inquiry by the National Development Planning Agency, or Bappenas, into the Central Kalimantan railway project, and comments by the agency’s deputy head of Infrastructure, Dedy Priatna, that it was aimed only at exploiting natural resources and had the potential to be “devastating” to people in the area.

According to Walhi, the policy of the current administration of President Joko Widodo is to prioritize the use of coal and gas to benefit domestic households and industry.

The Central Kalimantan “coal railway” was part of a planned increase in coal exports from Kalimantan that a report by Greenpeace last year labeled one of “the worst of the worst” fossil fuel projects around the globe, which together would push the global climate change beyond the point of no return.

Walhi has welcomed the reported shelving of the railway plan, claiming the decision casts doubt on the viability of Indomet — a joint venture between BHP Billiton and its Indonesian partner Adaro Energy to mine an estimated 1.3 billion metric tons of coking and thermal coal from a series of seven coal contracts of work across Central and East Kalimantan provinces.

The 350,000-hectare project area falls within the Heart of Borneo conservation zone.

BHP Billiton declined to comment on the implications of the reported rejection to its plans, but the company is believed to be considering transport alternatives.

The rail project, worth tens of trillions of rupiah, was written into the Yudhoyono administration’s Masterplan for the Acceleration and Expansion of Indonesia’s Economic Development (MP3EI) and was awarded to a Chinese-led consortium earlier this year but had not been finalized.

Bastary Panji Indra, the public-private partnership director at Bappenas, would neither confirm nor deny that the rail project had been scrapped, saying his agency was discussing the matter with the Central Kalimantan administration.

The central government’s qualms, he said, were over the coal mining plans and not the railway as such.

“There is already approval for a railway line from the Forestry Ministry [in December 2012],” he told the Jakarta Globe. He added that the Transportation Ministry had also signed off on the project in March 2013, but stressed that the approval was for a general rail line and not a coal freight line specifically.

Asked whether the Joko administration planned to continue the project, Bastary said he did not know. He said the government, through the Energy and Mineral Resources Ministry, should focus on limiting coal exports, including building coal-fired power plants in Kalimantan, “so that what comes out of Kalimantan is electricity” rather than coal.

Additional reporting by Basten Gokkon