Leading mining companies are looking to offload their coal assets amid the global push for decarbonization, while one industry group tries to rebrand itself green.
Glencore, the Swiss company that made its name mining and trading coal, is now planning to get out, reports Bloomberg. It is buying 77% of Vancouver-based Teck Resources’ coal business for US$6.93 billion, with plans to merge that into a larger business—for sale within two years.
This strategy belies a big-picture issue facing the coal sector—as pressure grows for companies to distance themselves from the environmental impacts of coal mining, ongoing demand for the product still offers high profits, says Bloomberg. By moving ahead to form and sell a larger coal business, Glencore has indicated it expects coal demand to remain high, even as it aims to part ways with the dirty commodity.
“There seems to be a very, very strong appetite in the market, and particularly the United States, for a business of this size, of this scale, of this cash generation,” said CEO Gary Nagle.
Global coal production is a major source of greenhouse gas emissions, and though the International Energy Agency warns against all future fossil fuel expansion, short-term demand for coal is projected to continue rising. On top of its planet-warming effects, pollution from coal burning is linked to a range of harmful health outcomes, like lung and heart disease, cancer, and dementia. A recent study shows that air pollution particles from coal-fired power plants are worse than originally thought and more than twice as likely to contribute to premature deaths.
Analysts suggest the Glencore deal is likely to be welcomed by investors as a way to reduce Teck’s exposure to coal, but environmentalists are raising concerns about the company’s Elk Valley coal mines in British Columbia. They say the mines’ severe water pollution impacts and tens of millions of tonnes of annual carbon dioxide emissions each year are “implicitly at odds with Canada’s own steel decarbonization efforts.”
“Teck’s coal assets have long stood against Ottawa’s policy objectives, and that does not change with the ownership,” writes Eugene Ellmen, a former executive director of the Canadian Social Investment Organization (now the Responsible Investment Association), in the Globe and Mail.
Echoing his argument in a piece for Corporate Knights, Ellmen adds that Teck’s water pollution in the Elk River has already cost the company more than $1 billion to address only part of the issue, with the full cost expected to exceed $8.9 billion. The water pollution was meant to be addressed by the U.S. and Canada by the summer of 2023, but that never happened.
Environmental advocates that the damages from Teck’s coal businesses may worsen under Glencore, a company with a long history of environmental and human rights abuses that have prompted authorities to look at the deal “very, very carefully”—in the words of Prime Minister Justin Trudeau—before giving it a green light.
The federal government has announced several conditions that must be met before the deal can go forward. Finance Minister Chrystia Freeland said Glencore will need to maintain jobs in the area, honour Indigenous rights, protect the environment, and maintain a head office in British Columbia, reports The Globe and Mail.
Canada’s ending-coal policies focus on thermal coal for power generation, and largely exclude Teck’s metallurgical coal, which is used in steelmaking. But in the lead-up to the COP28 climate summit, Reclaim Finance called for tougher regulations to rein in metallurgical coal production and reduce global emissions, especially since low-carbon alternatives are available for steelmaking.
With pressure mounting against coal, rebranding efforts are underway to push back against what the industry conveniently calls a “cancel coal culture.” After operating for 38 years as the World Coal Association, the industry group is renaming itself “FutureCoal—The Global Alliance for Sustainable Coal.”
According to FutureCoal CEO Michelle Manook, coal will continue to be a necessary part of global energy production—making it critical for developing countries and ripe for pollution abatement.
“For too long our global coal value chain has allowed anti-coal sentiment to dominate and fragment us,” Manook said in a statement. That’s “resulted in a lowering of the global coal IQ.”
“Wasn’t sure this was real at first,” sustainability journalist Robin Hicks responded on LinkedIn. “Under its new name, and with the COP28 climate talks just over a week away, the body is pushing for an ‘inclusive’ international policy framework that supports the rights of coal producing and consuming countries as pressure intensifies to phase out the fossil fuel.”
The notion of a coal IQ refers to “the level of understanding of coal’s contribution to society in sectors beyond power, such as steel, fertilizers, critical minerals, chemicals and hydrogen, and that abatement technologies can reduce pollution from burning the fossil fuel,” Hicks adds. “Just try to forget the elephant in the room—that coal is the single biggest contributor to man-made climate change, and pollution from burning it—even from plants with pollution controls—kills millions of people every year.”