UK Banks Finance Destruction of Borneo’s Forests

Samarinda is the capital city of East Kalimantan, a province on the Island of Borneo. 30 years ago it was a quiet village situated in deep equatorial forestland, but today it boasts a population of almost one million people, and is at the heart of the regions booming coal industry, surrounded by more than 1,000 mines, according to the Guardian.

Where once there existed lush forests, there now lies opencast mines, dug down into the earth to access the buried coal, which is then transported along the river Mahakam in giant barges to be shipped to India, Japan, Shout Korea, and other countries.

The coal industry in Borneo is growing quickly, up from a production level of just 1 million tonnes in 2005 to 8.5 million tonnes in 2012, and onto an estimated 20 million tonnes by 2020.

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Money raised in the UK is now going to be used to expand this booming coal industry to such an extent that it could overwhelm the Indonesian island and its precious forests and tribal cultures. BHP Billiton is just one of the companies that plans to exploit ‘coal’s last frontier’ and mine some of the largest deposits in the world.

Mining rights to about 25% of Borneo have been handed over in the form of 449 exploration contracts that cover 15,313 square miles. The World Development Movement (WDM), in conjunction with the East Kalimantan Mining Advocacy Network, released a report to warn that the infrastructure needed to develop the coal deposits in the heart to Borneo will ruin much of the precious forests, ruining the lives of many tribal people that depend on the environment for their sustenance.

A coal mine scarring the Bornean landscape.

Yesmaidfa, a mother from the village of Maruwai, said that waste from a mine operated by Borneo Lumbung, has leaked into rivers. “The water is dark and dirty and makes your skin itch. We don't drink it now. The new mine is not operating but the company already has our land. We feel afraid.”

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The Guardian estimates that BHP Billiton has so far used about £110 million, financed by London based institutions, to develop its coal mining assets in Kalimantan, and Adaro Energy, the second largest coal producer in Indonesia, has used £245 million of loans from various UK banks.

Alex Scrivener, the author of the WDM report, said that “with the financial sector shrouded in secrecy, it will be very hard to do anything more than estimate the true extent of involvement that UK financial and investment institutions have in fossil fuel projects in places such as Indonesia. The sector and its institutions must be held to account for their bankrolling of climate change and environmental destruction.”

By. Joao Peixe of Oilprice.com