Four of the world’s top five banks supporting metallurgical coal expansion are Japanese
Shiori Matsumoto, Communications, SteelWatch (Japan), +81 70 8411 0256
Cynthia Rocamora, Industry Campaigner, Reclaim Finance (France), +33 7 81 33 61 60
Helen Burley, International Media Relations, Reclaim Finance (UK), +44 7703 731923
Shiori Matsumoto, Communications, SteelWatch (Japan), +81 70 8411 0256
Cynthia Rocamora, Industry Campaigner, Reclaim Finance (France), +33 7 81 33 61 60
Helen Burley, International Media Relations, Reclaim Finance (UK), +44 7703 731923
Japanese banks, including Mitsubishi UFJ Financial, Mizuho Financial, SMBC Group, and Sumitomo Mitsui Trust, have provided more than USD 66 billion to the 50 biggest companies developing metallurgical coal projects for steel production outside of China.
Detailed data in Reclaiming Finance’s new report, Metallurgical Coal Financing: Time to call it off, reveal that Japan is one of the top countries globally still financing the expansion of the highly polluting sector. (1) Japanese banks make up four of the top five financiers of metallurgical coal expansion. Overall, Japanese banks provided more than 29 percent of banking support to companies developing such coal supplies excluding China between January 2016 and June 2023.
At the same time, Japanese investors, including the Government Pension Investment Fund, Mitsubishi UFJ, Nomura and Sumitomo Mitsui trust, held USD 25 billion in met coal developers as of June 2023. This means that they provided 16 percent of investments in the top 50 met coal developers.
The use of metallurgical coal in steelmaking makes it the biggest industrial emitter of CO2 globally. The iron and steel industry accounts for around 7 percent of global greenhouse gas (GHG) emissions, and 11 percent of global carbon dioxide (CO2) emissions. (2) Ending metallurgical coal expansion while developing alternatives requires the active involvement of financial institutions.
“The solutions to decarbonise steel exist, and the transition to new technologies is underway. Banks and investors can help drive the transition by supporting clean solutions, and shunning old coal-based processes. Financial institutions, including the Japanese banks who are currently among the biggest financiers of metallurgical coal, must urgently adopt policies to stop financing any expansion. Investments in coal-based steel are simply fuelling the climate fire,” said Cynthia Rocamora, Industry Campaigner with Reclaim Finance. (3)
According to the International Energy Agency (IEA), demand for coking coal (metallurgical coal) will fall as “existing sources of production are sufficient to cover demand through to 2050”. (4) Despite this projection, banks are seemingly happy to fund unneeded new projects by 118 companies, amounting to a total planned production capacity of 406 Mtpa (million tonnes per annum) of coal.
“Using metallurgical coal to manufacture steel is disastrous for the climate, emitting 2.3 tonnes of CO2 for every tonne of liquid steel. (5) It is clear that Japanese banks, investors and insurers are sadly global leaders in a dirty business – financing expansion of met coal projects. They are prolonging coal usage in the steel industry, exacerbating climate change and at the same time taking huge financial risk, as these mines will become stranded assets when the steel industry tips to clean steel. Japanese financial institutions face a choice: change course and exit met coal, or load their balance sheets and the planet with huge liabilities,” said Caroline Ashley, Executive Director of SteelWatch.
The Reclaim Finance report (in Japanese) can be downloaded here.
Notes:
- Reclaim Finance, Metallurgical coal financing: time to call it off, March 2024. This report analyses the financial support going to the 50 companies with the largest planned metallurgical coal production capacity, excluding Chinese companies.
- Global Efficiency Intelligence, Steel Climate Impact: An International Benchmarking of Energy and CO2 Intensities, April 2022 & SteelWatch, Sunsetting Coal in Steel Production, June 2023.
- Reclaim Finance is a non-governmental research and campaigning organisation. It was founded in March 2020 by Lucie Pinson, winner of the Goldman Environmental Prize in 2020, and aims to make finance work for the climate. Website: reclaimfinance.org.
- IEA, Net Zero by 2050, October 2021.
- SteelWatch, Sunsetting Coal in Steel Production, June 2023.
This item was originally posted on SteelWatch's website here.