2022-02-24 Market Forces
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Climate-wrecking coal company Whitehaven Coal received a $1 billion loan in February 2020 from a group of major banks, including European investment bank Credit Suisse. Late last year, Credit Suisse updated its policy on thermal coal mining, clearly excluding Whitehaven from any further funding.
This makes Credit Suisse the first bank in Whitehaven’s recent lending group to rule out further funding to the company, raising the question of when other banks like Deutsche Bank, NAB and Westpac will follow suit.
Whitehaven Coal is the largest undiversified coal mining company on the Australian Securities Exchange (ASX). The company currently operates four mines in New South Wales, and plans to invest around $2 billion developing three new coal mines and expansions: Narrabri South, Winchester South and Vickery.
If constructed, these three mines would unleash almost 1.1 billion tonnes of carbon emissions over their lifetimes, the equivalent of almost twice Australia’s annual emissions. At the company’s 2021 AGM, CEO Paul Flynn confirmed Whitehaven could more than double its coal production by 2030 through these new coal projects.
In February 2020, a group of 12 Australian and international banks provided a $1 billion loan to Whitehaven, set to mature in July 2023. Whitehaven has indicated in its recent financial reports that the company will seek to refinance the loan later this year.
Credit Suisse is one of two European banks in the lending group (the other being Deutsche Bank). Until recently, Credit Suisse’s investment policies did not expressly prevent the bank from providing further finance to Whitehaven. However, an update to Credit Suisse’s lending policies in late 2021 means the bank now cannot provide further finance to Whitehaven. This means Credit Suisse will not participate in any refinancing this year, making it the first bank in Whitehaven’s recent lending group to step away.
Credit Suisse’s new coal mining policy states:
(F)rom 2022, Credit Suisse will not provide lending or capital markets underwriting to companies developing new greenfield thermal coal mines after 2021 (unless supporting energy transition).
This commitment clearly rules out Whitehaven – an undiversified coal mining company developing three new or expanded coal mines at Narrabri South, Winchester South and Vickery. Combined, these mines could more than double the company’s coal production by 2030, adding many millions of tonnes of thermal coal production each year.
Credit Suisse’s policy also includes lending restrictions on companies that “derive more than 25% of revenue from thermal coal extraction”. Whitehaven – which currently derives over 80% of its revenue from thermal coal extraction – is clearly well above this threshold.
While the policy spells the impending end of Credit Suisse’s relationship with Whitehaven, its application to other coal companies is less clear, as explained by Reclaim Finance. For instance, Credit Suisse could continue funding companies developing new greenfield thermal coal mines, or those deriving more than 25% revenue from thermal coal, if those companies have a “credible transition strategy” to which the funds make a “material contribution”. Given Whitehaven’s plans are clearly consistent with the failure of 1.5°C and net zero by 2050, this loophole doesn’t apply in Whitehaven’s case.
Send Credit Suisse an email to say thanks for ruling out Whitehaven on the website of MarketForces!