"Transitioning" mining giants look to divest coal assets

Three giants of the mining sector - Anglo-American, Glencore and BHP - are coming under increased pressure to address the climate emergency and the fall in demand amid the coronavirus outbreak.

Swiss-based Glencore has already made a pledge that it would provide details of projections for emissions reductions. Earlier this week, it announced its annual profits of US$11.6-billion (€10.75-billion) for 2019, nearly a third lower than the previous year.

Norway's sovereign wealth fund, which stands at over US$1-trillion, has said that it will end its investments in companies which mine over 20 million tonnes of thermal coal annually. The fund owns around 1.4% of all listed shares worldwide.

Fund manager BlackRock announced last month that it was to sell off its shares in firms which generate more than 25% of sales from coal.

However the approach taken by Norway's sovereign wealth fund will not affect holdings in some giant producers.

Glencore only makes 6% of its revenue from coal but approximately 25% of its profits.

BHP profits have reached approximately US$5.2-billion (€4.82-billion), about a third higher than the previous year. The company says is aiming for net-zero carbon emissions by 2050 and has indicated it will sell off assets in thermal coal from Australia and Colombia.

Anglo-American said it would end thermal coal mining while it is forecast to report an 8% increase in annual profits. The firm made a £400-million (€477-million) offer to salvage the struggling UK fertiliser extractor, Sirius Minerals.

“We are in a transition and we will end up without material thermal coal,” Anglo-American CEO Mark Cutifani told the media. “You’re not talking five years, it’ll be earlier than that.”

Anglo-American has been trying to build a reputation as an environmentally and socially responsible company, with treatment plans for HIV+ staff, and those with tuberculosis, as well as by developing mining techniques that use less water. The firm now risks being left behind on thermal coal by rivals who are abandoning the dirtiest fossil fuel.

“We would like to put more clarity around the transition as it goes forward,” Cutifani added. “If it’s done in my tenure, I’ve given my successor a running start.”

Most of Anglo-American’s thermal coal assets are in South Africa and the firm said any withdrawal may adversely effect impoverished communities.

“A transition in thermal coal is as much about those impacted on the downside as it is about climate changes,” Cutifani added. “You have to look at both sides.”

Rio Tinto sold off its final coal mines in 2018. Anglo-American and Glencore are attracting increasing attention as major western mining companies with thermal coal assets.

An Investec analyst Hunter Hillcoat said: “It doesn’t mean the coal is not going to get burned, it just means the listed companies aren’t exposed to it.”

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