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A global group of 67 organisations led by BankTrack and Reclaim Finance is calling on 50 of the world’s largest banks to end all financial support for new metallurgical coal production and expansion. Metallurgical coal represents 14% of the world’s coal. Unlike thermal coal, it is predominately used for steelmaking and is refined into coke, a material combined with iron ore in a blast furnace to produce primary steel [1].
“The green steel transition is already underway, but financial institutions continue to invest in metallurgical coal—a dead end for the global steel industry and for the climate,” said Julia Hovenier, Banks and Steel Campaigner at BankTrack. "To prevent stranded assets and avoid deepening the climate emergency with their dollars, banks must swiftly adopt policies that halt the expansion of metallurgical coal."
According to a recent report by Reclaim Finance, while thermal coal investments face scrutiny for health and climate risks, metallurgical coal investments persist with less attention from banks. Despite 250 financial institutions adopting policies against thermal coal since the 2015 Paris Agreement, only 9 have similar policies for metallurgical coal.
Since 2016, the world’s biggest banks have provided US $557 billion in finance to the 50 biggest developers in the metallurgical coal sector. In 2021, the International Energy Agency said existing mines were sufficient to meet coking coal demand through 2050. Despite this, there are plans for new production capacities of 406 Mt per year, corresponding to more than a third of total consumption in 2021.
Due to its continued reliance on coal, the steel sector is responsible for an estimated 11% of global CO2 emissions and almost 30% of all industrial emissions. From mining to processing to transportation to combustion, metallurgical coal unleashes massive amounts of greenhouse gas emissions. If the banking industry continues to allow “business as usual” practices to continue, coal-based steelmaking is projected to consume nearly 25% of the world's remaining carbon budget by 2050.
The letters sent to 50 banks today call on them to end financial support for projects and companies that are investing in new metallurgical coal production and expansion. Of the 9 banks that have policies restricting finance for metallurgical coal, including BNP Paribas, Société Générale, HSBC, Westpac, and Caixa Bank, only three have corporate level exclusions [2]. This is despite the fact that only 1.4% of financing for met coal was direct project-financing since 2016.
“The world must urgently move away from coal-based steel production, and financial institutions bear a crucial responsibility in accommodating this transition,” emphasised Cynthia Rocamora, Industry Campaigner at Reclaim Finance. “It’s time to stop all types of finance for all types of new coal projects—thermal and metallurgical included.”
You can access the letter here.
Notes
[1] Primary steel is steel made from iron ore. It’s differentiated from secondary steel, which is made by recycling scrap steel.[2] Reclaim Finance’s Coal Policy Tracker was updated in November 2023 to reflect the metallurgical coal policies of banks. They found that only nine banks have any policies regarding metallurgical coal: La Banque Postale, Societe Generale, BNP Paribas, CaxiaBank, Cathay United Bank, Lloyds Banking Group, Macquarie, HSBC, and Westpac. Of those nine, only the following three have corporate exclusions: Lloyds Banking Group, Societe Generale, and Macquarie. However, Reclaim Finance has analysed them all as “weak” exclusions because they do not directly target developers of new metallurgical coal projects.
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Julia Hovenier is Banks and Steel Campaigner, BankTrack; Helen Burley is with International Media, Reclaim Finance
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