Adaro Energy Indonesia, a company backed by Indonesian billionaire Garibaldi “Boy” Thohir, plans to spin off thermal coal unit Adaro Andalan Indonesia, which is valued at nearly $2.5 billion. The purpose is to support Adaro Energy’s expansion into minerals and renewable energy.
By separating its core coal operations from its growing minerals and renewable energy divisions, the company believes it can find additional financing sources. According to a filing with the Indonesia Stock Exchange this week, the company will seek approval for the sale at a shareholders’ meeting on October 18th.
The majority of the Adaro’s revenue comes from coal but by 2030, it wants to generate more than half from non-coal businesses. To achieve this ambitious goal, Adaro’s mineral division (Adaro Minerals) and renewable energy unit (Adaro Green) are pursuing multiple projects.
Adaro Energy is developing the Kaltara Industrial Park, which it claims will be the world’s largest green industrial park, spanning 16,000 hectares in North Kalimantan. To support this project, Adaro is constructing a hydropower plant that will operate one of the world’s tallest dams, standing 235 meters high. The power plant will have an installed capacity of 1,375 megawatts and require an investment of around $2.6 billion, according to an announcement in March 2023.
An aluminum smelter project with a capacity of 1.5 to 2 million tons per year will be constructed in the industrial park in three phases. The first phase, slated for completion in 2025, will produce 500,000 tons of aluminum.
According to a recent DBS report, Adaro is transforming itself from a coal mining company into an integrated energy holding firm. This move is expected to give Adaro greater access to financing and investor support for its renewable energy initiatives. Adaro’s controlling shareholders are trying to unlock value that has been obscured by the company’s coal-focused business model, according to DBS.
Thohir and his family have an estimated net worth of $3.3 billion, ranking 17th on the Forbes Indonesia’s 50 Richest list released last December. As the current CEO of Adaro, one of the world’s top coal exporters, Thohir holds a significant stake in the company. Additionally, Thohir owns a stake in Merdeka Battery Materials, a company that manufactures EV battery materials. It went public last year in a $620 million IPO.
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