Banks no longer want to lend to Australian miners
(Bloomberg) – Funding options for Australia’s coal operators continued to dwindle after another of the country’s largest banks announced it would end almost all investments in thermal mines and power plants by 2030.
The move by Australia and New Zealand Banking Group Ltd. will exacerbate miners’ growing difficulty in funding new operations or expanding their existing facilities in the country, the world’s second largest exporter of steam coal.
Financial institutions around the world are bowing to pressure from shareholders and lobby groups to avoid investing in the fuel. Meanwhile, Australia’s mining lobby predicted a booming market and said on Tuesday that it was Asian. expected demand increase by 35% over the next ten years.
As of now, ANZ will not accept any new business customers with an exposure to thermal coal of more than 10% of total sales and will work with existing customers with an exposure of over 50% to support their diversification plans, the bank said in its statement with Climate Statement 2020 published on Thursday. In addition, funding for power generation will be limited to natural gas and renewable projects until 2030.
“There’s no question that people who invest capital, be it equity or debt, are looking for companies that are more carbon-focused to help reduce that carbon footprint,” said Mark Whelan, ANZ Group Executive , Institutional, in a telephone interview. The bank’s direct exposure to thermal coal mines and coal-fired power generation has already been reduced to 0.1% of the portfolio, or around A $ 500 million, he said.
Steam coal remains a major exporter to Australia, with sales of A $ 20 billion (US $ 14 billion) in the year to June. ANZ is the last of Australia’s four major banks to set a date to phase out direct thermal coal investments after Westpac Banking Corp. and Commonwealth Bank of Australia announced that they would be leaving by 2030, and National Australia Bank Ltd.
Meanwhile, Japanese banks, some of the world’s largest lenders to coal-fired power plant developers, are scaling back their exposure and leaving the industry to look elsewhere for funding.
The fossil fuel government was disappointed with ANZ’s move to limit lending to the coal sector.
“At a time when the rest of Australia is focused on economic recovery and getting back to work, it is extraordinary that ANZ’s priority is to play environmental activist,” said Resource Secretary Keith Pitt in a media statement. “It highlights industrial sectors that continue to make significant contributions to the Australian economy – and to the prosperity of ANZ.”
ANZ made no commitments to reduce its exposure to metallurgical coal, an even more valuable export product for Australia, and Whelan said alternative raw materials for steelmaking were not yet commercially viable. The bank said it will support the transition to a net zero emissions economy by offering its customers at least 50 billion date by 2025.
Climate activist group Market Forces said ANZ’s new policy was “not overwhelming”. While it did align the bank with its competitors on steam coal, there was no clear plan to reduce ANZ’s exposure to the oil and gas sector in line with the Paris Agreement climate goals.
“ANZ’s ‘diversification strategy’ is a reward for companies building the fossil fuel industry as it gives the most climate-damaging coal companies an additional five years to formulate transition plans without affecting oil and gas companies,” the group said in a news release .