Investors Pushing Mining Giants to Quit Coal is Backfiring
Bloomberg has an interesting story on how Environmentalists Pushing Mining Giants to Quit Coal has backfired.
It was supposed to be a big win for climate activists: another of the world’s most powerful mining companies had caved to investor demands that it stop digging up coal.
Instead, Anglo American Plc’s exit from coal has become a case study for unintended consequences, transforming mines that were scheduled for eventual closure into the engine room for a growth-hungry coal business.
And while it’s a particularly stark example, it’s not the only one. When rival BHP Group was struggling to sell an Australian colliery this year, the company surprised investors by applying to extend mining at the site by another two decades — an apparent attempt to sweeten its appeal to potential buyers.
Now, after years of lobbying blue-chip companies to stop mining the most-polluting fuel, there’s a growing unease among climate activists and some investors that the policy many of them championed could lead to more coal being produced for longer.
BHP may end up holding on to the Australian mine it was battling to sell, Bloomberg reported last week. Earlier this year, Glencore Plc sounded out a major climate investor group before announcing it would increase its ownership of a big Colombian coal mine, according to people familiar with the matter.
Not Just China
India now burns more coal than Europe and the U.S combined and miners are betting on rising demand over the next decade from countries such as Vietnam, Bangladesh and Indonesia, although pollution concerns and cheaper alternatives threaten to derail those plans.
Tough to Eliminate Coal
The push to abandon coal made selling the mines difficult. So companies chose to extend their life.
Developing countries that invested in coal-powered electrical plants that have many years of useful life want reparations to develop new plants.
New wind and solar plants are cheaper but unreliable. And they are not cheaper than plants already built.
Moreover, wind can die for days and solar has on average 12 hours a day of outages.
This places additional capital investment requirements for countries to build energy storage facilities.
Still Building
China alone is currently building or planning coal power plants that are the equivalent of six times Germany’s entire coal burning capacity.
It’s tough to get rid of coal when you build more coal plants than you retire.
COP26
COP26 has concluded. I will do a separate report a bit later.
There were some alleged successes including a watered down pledge at the last-minute to “phase down” rather than “phase out” coal.
This is considered a “success” because after weeks of bickering no statement at all regarding coal was expected.
Credit India, with backing of China, for the watered down pledge on coal. That alone should tell you what you need to know.
The biggest failure also relates to coal.
Rich countries did not make clear pledges to finance developing nations to the tune of what developing nations demand.
Instead, nations promised to continue talking about funding for “loss and damage associated with the adverse impacts of climate change”.
That means developing nations will not make much if any effort to get off coal.
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‘The question of how India can achieve a balance between meeting demand for electricity from its almost 1.4bn people and the desire to cut its reliance on heavily polluting coal burning power plants has been a major challenge for the government in recent years.
The vast scale of the problem makes a short-term solution unlikely, according to Dr Nandi.’
and more like an energy shortage situation that could lead to economic
collapse.”