Pressure mounts on investors in coalPublished by MAC on 2014-05-10
Source: Mining.com, statement (2014-05-10)
There is mounting pressure on those who continue to invest in coal.
Stanford University has succumbed to a student campaign, joining a growing number of US colleges which have divested from coal companies.
Shareholders at the Bank of America AGM considered a resolution requesting the bank to report carbon emissions stemming from financing of carbon-intensive industries. The resolution focussed on the potential for "stranded assets" resulting from a changing climate, but the more direct environmental impacts were also raised.
Australia is set to close yet more mines as coking coal prices have slumped to six-year lows.
However, none of this has affected the take-home pay of major coal company CEOs. On average, they received US$4.3 million in compensations last year, up more than US$100,000 each when compared to 2012 figures.
Stanford University waves its coal mining shares good-bye
7 May 2014
Stanford University became Wednesday the largest and most prestigious US educational institution to join the growing number of colleges divesting from fossil fuels because of concerns about climate change, by announcing it is selling its shares in coal mining companies held by its almost $19 billion endowment fund.
The university's trustees voted late Tuesday to stop investing in approximately 100 publicly traded firms whose main business is mining coal for power generation, following a campaign by students and a review by its advisory panel on investment responsibility.
Seven students at Washington University in St. Louis were arrested last week during a demonstration demanding Peabody Energy's chief executive Gregory H. Boyce to resign from the university's board of trustees. Another student was detained at Harvard University for trying along with half a dozen other students to blockade the office of president Drew Faust. More than 100 faculty members have signed a letter to Faust urging the institution, which is the world's richest university, to divest.
"Moving away from coal in the investment context is a small but constructive step while work continues at Stanford and elsewhere to develop broadly viable sustainable energy solutions for the future," Stanford's president John Hennessy said in a statement. Stanford doesn't disclose its holdings, but as of Aug. 31, 2013, its endowment was worth $18.7 billion.
The university warned it would not sell its holdings in oil and gas companies, on the grounds that suitable alternatives to those fuels are not readily available.
The divestment movement has convinced Seattle, San Francisco, Portland and other cities to shed fossil fuel firms. Other colleges that have divested include Hampshire College, Pitzer College, and College of the Atlantic.
Coal prices slump didn't affect mining CEOs pockets last year: report
7 May 2014
While thermal coal prices slump close to four-year lows and coking-coal prices near their lowest level since 2007, most chief executive officers at main producers of the fossil fuel have seen their pockets getting heavier.
In average, CEO of major coal companies received $4.3 million in compensations last year, up more than $100,000 each when compared 2012 figures, reveals a study published by SNL Energy.
Seven of the 11 top executives at coal producers and coal-landholding companies analyzed in the report, received a double-digit percentage increase in option-adjusted compensation last year.
Pittsburgh-based CONSOL Energy retiring Chairman and CEO, J. Brett Harvey, remained the highest-paid coal company executive in 2013, receiving much of his compensation in the form of restricted stock awards, reveals the report.
He received almost $1.8 million in benefits under the company's retirement plans and about $2.4 million in non-equity incentive plan compensation, which includes cash incentives for meeting relevant performance measures during the year. This, not counting personal benefits, such as vehicle allowance and country club memberships among others.
The leader of Peabody Energy, the world's largest private-sector coal miner, figures as the coal executive receiving the second-highest compensation last year. According to SNL, Chairman and CEO Gregory Boyce got paid nearly 14% more last year ($10.8 million), up from the $9.5 million received in 2012.
In third place came Kevin Crutchfield, the head of Alpha Natural Resources, who was paid $8 million in 2013, up 28.4% from the $6.2 million he received the previous year.
Since 2011 declining coal prices have forced miners such as BHP Billiton, Anglo American and Glencore Xstrata to review their operations, resulting in staff cutbacks, mine closures, shelved expansion plans and asset sales.
Shareholders Press Bank of America for Coal and Climate Finance
Rainforest Action Network, Investors and Community Leaders Take Stage at ‘Bank of Coal' Meeting
Rainforest Action Network press release
7 May 2014
Charlotte, North Carolina, United States - An international coalition of shareholders and community leaders from as far away as Bogota, Colombia, testified to the grave impacts resulting from Bank of America's financing of the coal industry at the bank's Annual General Meeting today in downtown Charlotte. Shareholders also considered a resolution requesting the bank to report carbon emissions stemming from financing of carbon-intensive industries. Coal is the top contributor to greenhouse gas emissions (GHG) that cause climate change.
The proposed resolution voted on today requested that Bank of America provide an assessment and report on its financing of GHG emissions and was introduced by members of the Interfaith Center for Corporate Responsibility (ICCR), and endorsed by a coalition of institutional investors with nearly $35 billion in managed assets.
"Coal is still a big problem for Bank of America, as it continues to finance billions of dollars each year to the dirtiest companies in the business," said Ben Collins, Policy Campaigner for Rainforest Action Network. "Shareholders proposed a resolution that the bank come clean on its accounting - and report the climate consequences of its financing decisions in the light of day."
In addition to potential "stranded assets" resulting from a changing climate, delegation members in today's shareholder meeting testified to the impacts and liabilities for the bank. Santiago Piñeros, an attorney with Social Thought and Action, a Non-Governmental Organization (NGO) based in Bogota, Colombia, traveled to North Carolina to report on the risks the bank may face related to its financing of Drummond Coal.
"Bank of America invests in a coal company that does not respect environmental standards or human rights in Colombia," said Santiago Piñeros, Staff Attorney at Social Thought and Action in Colombia. "The money from Bank of America is used by Drummond Company to threaten the right to a healthy life and environment in the communities where they operate. Drummond is a company that operates with no due diligence to protect and respect the human, economic and cultural rights of its workers and the people living near coal mines."
After publicly resolving to phase out financing for companies engaged primarily in mountaintop removal (MTR) coal mining companies and after Wells Fargo and JPMorgan Chase phased out financing for the largest MTR producers, Bank of America financed 8.9% of the MTR market share, with $393 million in 2013.
"Bank of America needs to stop financing the destruction of our mountains, our water and my community," said Elise Keaton, Executive Director of Keeper of the Mountains, a member of today's delegation from West Virginia. "The minuscule profits the bank received as a result of mountaintop removal mining is incomparable to the catastrophic damage caused by the practice. It is killing us."
Members of the coalition also focused on Bank of America's exposure to Coal-fired power producers, including Duke Energy in North Carolina. Bank of America has maintained longstanding financial ties with Duke Energy and participated in numerous transactions with the energy giant. Duke is responsible for a recent massive coal ash spill in the Dan River where 39,000 tons of coal ash and 24 million gallons of coal ash wastewater was dumped into the river, as well as an intentional and illegal 61 million gallon coal ash wastewater dump in the Cape Fear River upstream from 840,000 people's drinking water supply.
"Bank of America must take some responsibility for contaminating North Carolina's waterways by financing irresponsible power companies like Duke Energy, who owns the most high hazard coal ash waste dumps in the country," said Kemp Burdette, the Cape Fear Riverkeeper. "Bank of America engaged in extremely risky business by pursuing deals with companies like Duke, who illegally dumped 85 million gallons of toxic coal ash in North Carolina waterways in 2014."
2014 marks the fourth consecutive year that Bank of America heard from impacted community members reporting on the effects of coal financing and the first year that shareholders voted on a resolution to measure and report on the greenhouse gas footprint of its financing portfolio.
Further information and interviews
Kerul Dyer, kdyer[at]ran.org, +1 (415) 866-0005+1 (415) 866-0005
Todd Zimmer, tzimmer[at]ran.org, +1 (704) 502-8521+1 (704) 502-8521
Mines to shut as coal woes deepen
28 April 2014
Coking coal prices have slumped to six-year lows, many Australian mines are not making money and the industry is set to close more of the mines that produce the nation's second most valuable export.
A dramatic fall in quarterly contract prices for the steelmaking raw ingredient has caught industry players by surprise and led coal giant Peabody Energy to declare it is considering the closure of Australian mines it recently indicated were safe.
As boom-time-approved expansions continue to increase supply, the June quarter coking coal contract price has fallen from $US143 a tonne to $US120 a tonne, which is close to typical cash costs for the east coast coking coal industry, according to Credit Suisse analysts.
This means when things such as corporate, financing and sustaining capital are added in, most producers would be losing money.
Peabody chief Greg Boyce revealed the St Louis-based company, which has already cut jobs and shut down some mines here in recent years to stay profitable, was considering closing more Australian mines.
"With the change in the metallurgical coal environment in the last quarter, we're having some pretty serious looks at a couple of operations," Mr Boyce told US investors after the release of the company's first-quarter earnings last week.
"These operations are getting significant scrutiny because at this lower price horizon, they're much more challenged," he said when asked if more mine closures were coming.
In January, Peabody told investors that a decision to close its Wilkie Creek thermal coal mine should not be taken as any indication that closures of the rest of its operations were being considered.
Coking coal, mainly from Queensland, is the nation's second-highest export earner after iron ore and brought in $22.4 billion of export revenue last financial year. Thermal coal, used primarily in power stations and mainly from NSW, raised $16.1bn.
Contract coking coal prices that peaked at $US330 per tonne in late 2011 have fallen steadily since then as the US and Australia exported more.
Despite the price drop, BHP Billiton (whose Queensland mines make it the world's biggest coking coal exporter), Anglo American, Whitehaven and Peabody have all brought on or are bringing on new mines that were approved when nobody saw prices plummeting as low as they have.
As well as the new supply, Chinese steel mills have recently stepped away from buying imported coking coal as uncertainty continues around the Asian powerhouse's economic growth.
Spot prices have fallen further than contract prices, with the Platts price index slipping as low as $US105 per tonne earlier this month before recovering to about $US110.
"For the second quarter, we have assumed that $US120 will become the benchmark and this will mean that most Australian metallurgical coal producers will be loss-making at the profit and loss level, with FOB (free on board) cash costs typically in the range of $US110 to $US115 per tonne," Credit Suisse said in a client note.
The second-quarter settlement for Queensland coal, which was reportedly signed by Anglo American last month, has led Credit Suisse to cut its 2014 coking coal forecast by $US20 a tonne to $US133.
Most Australian miners have been on a year-long campaign to cut costs, meaning there may not be too much more that can save mines that are losing money.
Even BHP, one of the world's lowest-cost miners, is making little if any money from coking coal at these prices.
"While costs might be squeezed a little lower, we think the majority of cost-saves have now been made in Australia," Credit Suisse said.
The bank said BHP generated $US17 per tonne of earnings before interest and tax from its coking coal operations in the first half of 2013-14.