More than 200 of the world’s largest financiers, including 87 banks, have announced policies restricting investments in coal mining or coal-fired power plants. Yet King Coal looks brawnier than ever
are piled beneath azure skies at the port of Newcastle, Australia. Giant shovels chip away at them, scooping the fuel onto conveyor belts, which whizz it to cargo ships that can be as long as three football pitches. The harbour’s terminals handle 200m tonnes of the stuff a year, making Newcastle the world’s biggest coal port. Throughput is roaring back after floods hurt supply last year.
Now the storm has abated. After a mild winter, European utility firms retain good stocks of gas and coal. But as the need to power cooling units rises in the summer, coal imports will accelerate. China’s economy has emerged from zero-covid; India’s is going gangbusters. Traders expect global use to grow by another 3-4% this year.
Commodity merchants retain access to generous sources of liquidity to finance coal purchases. One is corporate borrowing, via multi-year bank loans or bonds, which gives firms a lump sum they can use however they want. Traders can also draw on short-term, revolving credit facilities, provided by clubs of banks. Many such lines have been expanded since the start of 2022—their limits often reach several billion dollars—to help traders cope with volatile prices.
Financing more digging at existing mines—the second link in the supply chain—is no problem either. Last year coal production hit a record 8bn tonnes. It is not quite business as usual. Since 2018 many mining “majors” have sold some or all of their coal assets. Yet rather than being decommissioned, disposed assets have been picked up by private miners, emerging-market rivals and private-equity groups. New owners have no qualms about making full use of mines.
Some policies are vaguely worded to allow for exemptions. Although Goldman Sachs, a bank, promises to stop financing thermal-coal mining companies that do not have a diversification strategy “within a reasonable timeframe”, it has reportedly continued to lend to Peabody, a huge Australian miner that derived 78% of its revenue from coal sales in 2022 .
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