Today, a new investigation by Bloomberg revealed that banks may be in violation of their existing coal policies by financing companies that mine metallurgical coal (coal for steelmaking). In the last year, companies including Australia’s Whitehaven Coal and the US coal company Peabody Energy have sold coal labelled as “metallurgical” to coal-fired power plants. This means their financiers may be supporting thermal coal without knowing it.

Coal mining companies have had trouble attracting finance from commercial banks in the wake of the Paris Agreement. 150 financial institutions have policies that restrict finance for thermal coal, however just 13 of those policies include metallurgical coal in scope. Taking advantage of these loopholes, the coal industry has been increasingly insisting that “steelmaking coal” and “metallurgical” are entirely different materials, and increasing their build out & acquisitions of “metallurgical” mines. However, as the Bloomberg investigation shows, regardless of how the mine is labelled, the coal may be ending up in a power plant anyway. 

This could prove particularly problematic for banks including Deutsche Bank, a recent financier of Peabody Energy, as well as HSBC, Standard Chartered and Barclays, which all have policies to exclude financing for thermal coal mine developers, and yet continue to finance Glencore despite its plants to expand metallurgical coal mines. 

Julia Hovenier, Banks and Steel Campaigner at BankTrack says: “It doesn’t matter what you call it, or where it’s burned, coal is coal. Nearly 10 years out from the Paris Agreement, it’s high time for banks to end ALL coal finance.” 

In light of this investigation, BankTrack is calling on commercial banks to: 

• Use Urgewald’s Metallurgical Coal Exit List and Global Coal Exit List to understand real exposure to all coal mining, and end all financial services for companies expanding new coal capacity,

• Adopt policies to immediately end finance for companies building new or expanding existing coal mines, including ALL coal grades in scope, and

• Require ALL coal mining clients to adopt a credible transition plan, that includes coal phase-out dates by 2030 in OECD countries, and 2040 in non-OECD countries.