Guest essay by Eric Worrall
According to Bloomberg, mining giants are pimping every last penny out of their divestment coal asset sales, sweetening the deal by arranging long term operating permits for the new buyers.
Investors Pushed Mining Giants to Quit Coal. Now It’s Backfiring
There’s growing unease that the divestment campaign could lead to more coal being produced for longer.By Thomas Biesheuvel +Follow9 November 2021, 10:01 GMT+10
It was supposed to be a big win for climate activists: another of the world’s most powerful mining companies had caved to investor demands that it stop digging up coal.
Instead, Anglo American Plc’s exit from coal has become a case study for unintended consequences, transforming mines that were scheduled for eventual closure into the engine room for a growth-hungry coal business.
And while it’s a particularly stark example, it’s not the only one. When rival BHP Group was struggling to sell an Australian colliery this year, the company surprised investors by applying to extend mining at the site by another two decades — an apparent attempt to sweeten its appeal to potential buyers.
Now, after years of lobbying blue-chip companies to stop mining the most-polluting fuel, there’s a growing unease among climate activists and some investors that the policy many of them championed could lead to more coal being produced for longer. Senior mining executives say the message from their shareholders is evolving to acknowledge that risk, and they’re no longer pushing as hard for blanket withdrawals.
Pimping coal mines this way in my opinion is a form of greenwashing.
The value of a mine is based on its potential future earnings. By attaching long term operating permits to the sale, mining companies are boosting the sale price by boosting confidence in long term operation, and in doing so are indirectly profiting from future coal extraction.
This grossly hypocritical position allows mining groups which publicly proclaim their divestment of coal holdings to effectively claim a share of the profit from future coal extraction at the mine they just sold, when the new long term operating permit elevates the sale price.
If companies with coal holdings genuinely wanted to shut down coal, they could simply gift ownership of the mines to Greenpeace or the WWF. But this would mean writing off all the profit they could have made from future coal sales, rather than sneaking future profits from coal onto their books via a clever accounting trick.
via Watts Up With That?
November 12, 2021 at 12:22AM