PT Adaro Energy, one of Indonesia’s biggest coal miners, is shifting to renewable energy after making a fortune from surging commodity prices.
The company led by Garibaldi Thohir, the older brother of State Enterprises Minister Erick Thohir, is building solar-powered plants with over 200 megawatt capacity on retired mine sites in Kalimantan, Batam and Bintan provinces. It will also build hydro power plants in a green industrial park being set up by the government in North Kalimantan.
“We want to cease our dependence on coal,” Garibaldi Thohir said in an interview on Tuesday. We want to “move to renewable energy with the final goal of having an entity called Adaro Green Energy.”
Adaro isn’t the only coal miner expanding into clean energy amid a global push to end the use of the dirtiest fossil fuel. Miners globally are also deciding on how to spend their windfall profits at a time when there are few mine developments or expansions in the global pipeline.
Producers including Australia’s Whitehaven Coal Ltd. have resumed dividend payments, while Peabody Energy Corp, the biggest U.S. coal producer, plans to expand into clean energy by developing utility-scale solar projects on land around retired coal mines.
Adaro plans to use the excess profit last year and this year to help fund its 10-year pivot to clean energy, said Thohir. The group’s net income soared more than 500% in 2021 as coal prices surged amid a supply crunch. Profit is forecast to climb further this year as the Ukraine war is pushing prices even higher.
The company’s move bodes well for Indonesia, the world’s largest thermal coal exporter, which needs to double the national renewable energy capacity by 2025 to reduce carbon emissions.
The plan is to have subsidiary PT Adaro Minerals Indonesia hold mainly non-coal minerals in the future. The unit shares have shot up 2,700% since its January debut. Adaro Energy shares, up 7% in early trade on Thursday, have so far gained 54% this year.
Thohir said he wants the group to take part in President Joko Widodo’s ambition to develop an end-to-end electric vehicle battery industry in the country that is also the world’s largest producer of nickel, a key material in battery making. Indonesia could become a world leader of the industry in 20 years’ time, he said.
For a start, new unit Adaro Aluminium Indonesia will develop a facility in Kalimantan Green Industrial Park to produce 500,000 tons of aluminum ingots in 2024. About $1 billion may be spent on the smelter to cater for metal demand for EV components, he said, adding that the company will seek a partner for the project.
“I see cars with eco-labels in the future and we can have those cars built here in Indonesia,” Thohir said.
