Indonesia Now World’s Largest Exporter of Coal for Power Stations, But There Are Costs

October 8, 2014

By Tessa Toumbourou

This post is part of a two-part series.

Flying over Indonesia’s East Kalimantan, the closer we get to the provincial capital of Samarinda, the more bare patches emerge in the island’s lush forest cover. Exposed brown areas dotted with lurid green tailing ponds are telltale signs of the open pit coal mining voraciously consuming Kalimantan’s remaining forests.

Brown patches of earth mark increasing coal mining areas around East Kalimantan’s capital, Samarinda. Photo/Armin Hari

Coal mining is booming in East Kalimantan, home to 28 percent of Indonesia’s total coal reserves. Already, 6.6 million hectares – an area the size of Switzerland – have been allocated for mining across the province. This mining expansion is most pronounced in Samarinda, where the local administration has allocated more than 70 percent of the municipalities’ land for mining.

Giant barges filled with coal travel daily down the Mahakam river en route to Samarinda port where they are unloaded onto ships headed for Surabaya, Indonesia’s second-largest city, across the Java Sea, and further afield to China, India, South Korea, Japan, and Taiwan. Indonesia is now the world’s largest exporter of coal for power stations; currently only around 12 percent of Indonesia’s coal is used domestically.

Giant barges filled with coal travel daily down the Mahakam river en route to Samarinda port where they are unloaded onto ships headed for Surabaya, Indonesia’s second-largest city, across the Java Sea, and further afield to China, India, South Korea, Japan, and Taiwan. Photo/Armin Hari

However, this is set to change to meet increasing domestic energy demands – in the past decade, Indonesia’s coal consumption has tripled and two additional large coal fired power plants are in the pipeline. The environmental impact of coal mining is two-fold: coal mining releases harmful emissions when forests are cleared for open pit mining, and again when it is burned to produce energy. By increasing coal dependency to meet its growing energy needs, Indonesia’s emissions from the power sector are on track to exceed emissions mitigated through initiatives to reduce deforestation.

Poor governance, control of resources by powerful elites, a permit process that doesn’t adequately consider the environmental or social impacts of mining, and lack of monitoring, oversight, and clear requirements for post-mining clean-up has allowed coal mining to operate largely unchecked with a high environmental, social, and economic cost to local communities. Samarinda’s revenue from mining from 2006 to 2010 was only 6.3 percent of the municipalities’ GDP, while only 6.8 percent of the population is employed in mining. NGOs are increasingly concerned that the costs, both direct and indirect, outweigh the benefits from mining.

The local government has allocated few resources for overseeing and managing mining operations and post mining clean up. Samarinda has only five government mining inspectors responsible for managing 58 mining business licenses (IUP) and the five coal mining work contract permits in operation. Meanwhile, there are more than 100 abandoned sites where mining has finished, but clean-up to meet basic requirements for reclamation, such as filling in empty pits and replacing topsoil, has not taken place. As an area prone to flooding, the empty pits frequently fill with water: from 2011 to 2014, 11 people, including eight children, have drowned in these pits left by mining companies.

There are more than 100 abandoned sites such as this one near Samarinda where mining has finished, but clean-up to meet basic requirements for reclamation has not taken place. Photo/Armin Hari

On one of my recent trips to Samarinda, I spoke with Simon Devung, an academic at the Centre for Social Forestry, over the throb of a diesel generator used during one of the frequent power outages. Devung laments the electricity outages in the country’s coal mining capital. “It’s unfortunate that here we have power shortages while we ship coal to Surabaya to supply Java and Bali with energy,” he said.

Not long ago things were different. Devung, who has lived in Samarinda his whole life, remembers when Samarinda’s now murky, brown Mahakam river ran so clear that you could see to the bottom for several meters.

Within the municipality of Samarinda, Makroman village once served as the province’s rice belt and largest producer of forest fruits such as rambutan and durian. This changed in 2007 when the first mining company began coal excavation there. Since then, coal mining has quickly expanded to become a 24-hour operation, dominated by two mining companies with business permits for a total of 1,377 hectares of land. According to reports from local farmers, acids and sulphates from mining are leeching into rivers, contaminating local water catchment areas, fish ponds, and wet rice fields, leading to dramatic reductions in yields, and threatening local food sources.

Siti Maimunah, advisor to the Mining Advocacy Network (JATAM) who is conducting research* on the impacts of mining in Makroman, says that mining has increased land prices up to 10-fold in Makroman. This, combined with a diminishing quality of soil and water, is making farming a far less feasible source of livelihood.

JATAM’s research found that flooding as a result of forest loss in key water catchment areas and swamplands – altering natural drainage function these areas provided – is becoming a more frequent reality for Samarinda residents. Major flooding in 2008-2009 resulted in $9 million in damage to the economy, transportation, employment, and livelihoods, according to a 2012 WWF study. Due to unchecked permit allocations and inadequate spatial planning, only one percent of Samarinda’s total area has been left as forests for water catchments, far short of the 27 percent of urban forests for water catchment the city needs to mitigate flooding. The WWF report estimates that income from coal mining constitutes only 4 percent of the town’s total regional revenue, or $37,000, out of a total $12.4 million. Carolus Tuah, director of an East Kalimantan activist organization Pokja 30, told Mongabay.co.id M that the cost of controlling floods in Samarinda between 2008-2010 reached $9.1 million, a large portion of the costs coming from the province.

For nearly a decade, East Kalimantan NGOs and local communities have pushed through advocacy, lobbying, and protesting to slow the rate of mining expansion and push for more sustainable practices. However, the surging tide of mining expansion continues, and mining practices have made little improvement. In 2012, a citizen coalition, called the Samarinda Lawsuit Movement (Gerakan Samarinda Menggugat, GSM), decided to take the issue to the court. “A law suit was our last hope for change,” said Ocha, an activist with the East Kalimantan branch of JATAM, which has taken a lead role in supporting the GSM.

In the upcoming follow-up post, I will write about how the GSM’s two-year battle to improve mining practices became the first-ever successful environmental civil lawsuit in Indonesia.

*Siti Maimunah’s research project on the impacts of mining in Makroman is made possible through an Asia Foundation-funded research fellowship program in partnership with the Sajogyo Institute.

Tessa Toumbourou is a researcher for SETAPAK, The Asia Foundation’s environmental governance program in Indonesia. She can be reached at [email protected]. The views and opinions expressed here are those of the individual author and not those of The Asia Foundation.

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