By Hans Nicholas Jong
JAKARTA — South Korean automobile giant Hyundai has ended an agreement with Adaro Minerals, a subsidiary of Indonesia’s second-largest coal miner, PT Adaro Energy, to procure aluminum for its electric vehicle (EV) production.
Hyundai and Adaro Minerals signed the agreement in November 2022, and at the end of 2023, both agreed not to renew the agreement and “to explore other opportunities independently,” Hyundai said in a statement.
The decision came on the heels of campaigns by K-pop fans who urged Hyundai to back out of the agreement and to avoid sourcing aluminum from Adaro since it will be produced using coal power.
Upon signing the agreement, Hyundai described the aluminum as “green and low-carbon” because it would be produced using hydroelectric power. This, Hyundai said, would “accelerate” the transition to sustainable energy and help the company meet its net-zero emissions goal by 2045.
However, Adaro would only start producing aluminum using hydroelectric power in 2030. Before that, Adaro will build 2.2 gigawatts of coal-fired power plants to power its aluminum smelter in an industrial park, itself branded as “green,” in Indonesia’s North Kalimantan province.
The aluminum smelter and the industrial park, touted as the largest of its kind in the world, are a part of Indonesia’s bid to become a global production hub for EVs.
Since the smelter will rely on coal during at least the first five years of its operation, any purchase of aluminum from the company will be a violation of Hyundai’s Carbon Neutrality Principles.
Those principles require Hyundai to cut not just its own emissions, but also those emissions associated with assets it doesn’t own, such as the aluminum it plans to buy from Adaro, also known as Scope 3 emissions.
Climate group Market Forces estimated the coal plants would emit 5.2 million metric tons of CO2 equivalent per year, and if Hyundai continues the plan to purchase aluminum from this smelter, Hyundai’s Scope 3 emissions would increase by 3-6%.
This would push Hyundai further from achieving its target to achieve carbon neutrality by 2045.
Activists from Kpop4Planet staged a protest against Hyundai’s agreement to purchase aluminum from Adaro in Jakarta in May 2023. Image courtesy of Kpop4Planet.
Both Hyundai and Adaro didn’t explain the reason behind the decision to not renew the agreement, but Hyundai mentioned in its statement that it remains dedicated to the responsible and sustainable sourcing of materials.
Adaro Minerals director Wito Krisnahadi, meanwhile, said the company had signed agreements with other companies to buy up to 70% of Adaro’s aluminum production.
“This is in line with our commitment to participate in the government’s mineral downstream program to reduce Indonesia’s reliance on aluminum imports,” he said as quoted by Bloomberg Technoz.
The decision was welcomed by Kpop4Planet, a climate movement led by K-pop fans, which coordinated the campaign against Hyundai’s business with Adaro.
The campaign has managed to collect more than 11,000 petition signatures from K-pop fans in more than 68 countries.
However, there’s still more work to be done, said Nurul Sarifah, Kpop4Planet’s campaigner in Indonesia.
“We, along with K-pop fans who care about our climate and future, will closely monitor Hyundai’s sourcing to see if the company continues on the right path towards its commitment to carbon neutrality,” she said. “Dropping coal and using clean renewable energy, particularly solar and wind, is the only option to secure future customers.
The Indonesian fans of the popular K-Pop boy band BTS, known as ARMY, also threw in their support for the campaign since BTS is the brand ambassador for Hyundai’s EV brand, Ioniq.
“We are profoundly grateful for the solidarity shown by ARMY in supporting the people of Indonesia, particularly supporting those in North Kalimantan,” said Shifra Lushka, community leader of BTS ARMY Indonesia Amino. “We hope Hyundai will continue its collaboration with BTS, advocating for truly sustainable EVs that don’t use fossil fuels harming our Earth.”
With the decision, Hyundai joined the growing list of companies and financiers who refused to conduct business with Adaro.
Adaro has reportedly struggled to raise money from international banks to finance the project.
In 2023, Adaro managed to secure 2.5 trillion rupiah ($155 million) and $1.5 billion in loans for the project from a group of five Indonesian domestic banks: Bank Mandiri, Bank Negara Indonesia (BNI), Bank Central Asia (BCA), Bank Rakyat Indonesia (BRI), Permata Bank.
But several global banks that had previously done business with Adaro now say they won’t finance the smelter. This includes Singapore’s DBS and OCBC, and the U.K.’s Standard Chartered.
These international banks and Hyundai’s decision send a clear signal that coal has no place in the transition from fossil fuels to renewable energy, said Nabilla Gunawan, a campaigner at Market Forces.
“The continuation of the smelter project that’s powered by coal-fired power plants is problematic,” she said. “All banks that are still considering to fund Adaro have to reassess the increasingly high climate and financial risks [that come from funding Adaro].”
Banner image: Activists from Kpop4Planet staged a protest against Hyundai’s agreement to purchase aluminum from Adaro in Jakarta in May 2023. Image courtesy of Kpop4Planet.
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This article was originally published on Mongabay
