Thomas Biesheuvel and Jesse Riseborough
THE biggest names in mining have so far found themselves immune to a rapidly expanding campaign that is seeking to curb the use of the fossil fuel that causes the most pollution.
From Norway’s $900 billion (R11 trillion) sovereign wealth fund to France’s biggest insurer and the Church of England, investors are starting to turn the screw on coal producers by selling down their holdings.
The criteria they use to select candidates for divestment exempts some of the biggest producers, however. That’s because those companies are large, diversified miners and only get a small part of their revenue from coal.
Dodging the divestment bullet, at least for now, are companies such as Glencore, the world’s biggest exporter of coal used in power stations, BHP Billiton, Rio Tinto and Anglo American. Between them they mine more than 350 million tons, about one third of the world’s coal trade.
“There’s a view that if they stop investing in it, or take a stance, that coal will go away,” said Mick Buffier, chairman of the World Coal Association and also an executive at Glencore. “Our view is different. Coal will continue to be needed. It’s going to be used by these developing nations.”
Starting point
Norwegian lawmakers last week agreed to ban the country’s fund from investing in companies that make 30 percent of their sales from coal, while Axa said it would divest mining companies that get more than 50 percent of their revenue from coal. The Church of England has vowed not to invest in any business that gets more than 10 percent of its revenue from the carbonised plant matter.
“I definitely think that’s a valid starting point,” said Philip Ripman, an environmental, government and social analyst at Storebrand, referring to the 30 percent benchmark.
The Norwegian fund manager started divesting from coal, power utilities and oil-sands companies in 2013.
Storebrand, which has $64bn under management and does not set a revenue metric for coal investments, has so far excluded 41 companies including mining houses, utilities and oil-sands producers.
The pragmatic approach from investors has allowed them to land a symbolic blow against coal without having to risk dropping companies that make up a significant part of investment indices. The four miners have a combined market value of about $280bn.
The Church of England said it was able to engage with the biggest mining companies as they were not so dependent on coal for their future.
Constructive role
The major mining companies “have the possibility of playing a constructive role in public policy on climate change in a way that is more clearly against the interests of pure play or less diversified companies,” the church said.
The addition of mainstream investors such as Axa has added fresh impetus to the coal divestment campaign that’s been dominated by churches, universities and socially conscious funds such as the Rockefeller Brothers. Last month Oxford University joined Stanford in saying it would halt investments in coal. Key to the movement is the concern that rising temperatures caused by the burning of fossil fuels makes holding coal company shares a risky investment.
Glencore, led by billionaire and former coal trader Ivan Glasenberg, mines coal from Australia to Colombia producing almost 150 million tons a year. Its revenues from the fuel are dwarfed by its commodity-trading operations that shift wheat, cotton, oil and zinc across the globe.
Glencore is bullish on the longer-term outlook for the fuel and sees rising demand for decades to come.
Glasenberg is a vocal proponent of coal and sitting atop 4.3 billion tons of reserves of the fuel he has said he expected efforts to keep its fossil fuels in the ground to fail in the face of world energy demand. –
Bloomberg