The Asia Miner

APR-JUN 2019

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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the asia miner • volume 16 • issue 2 29 AROUND THE REGION Despite announcing a coal exit, Japanese conglomerate Marubeni sঞll has around twelve gigawas of coal- fired power proposals in development, exposing investors to conঞnued risk as the world conঞnues to move away from coal. A new briefing note by the Insঞtute for Energy Economics and Financial Analysis (IEEFA), 'Marubeni Update: Conঞnuing Coal-fired Power Risks' notes the company announced a major change in policy to reduce reliance on coal-fired power in September 2018. In addiঞon to cuমng by half its coal-fired power capacity of around 3 gigawas (GW) by 2030, Marubeni announced it would not enter into any new coal-fired business 'as a general principle' and would be increasing the raঞo of renewable energy generaঞon from 10 per cent to 20 per cent by 2023. Despite this announcement, Marubeni conঞnues to progress exisঞng, outdated coal projects in Japan and across eight developing countries. IEEFA's briefing note finds the company's ongoing coal-fired power projects face a range of difficulঞes including banks withdrawing from projects, reduced access to insurance, cancellaঞon threats, legal headwinds, community opposiঞon, and cheaper and cleaner renewable energy technology. Briefing note author Simon Nicholas says developing naঞons are now leading the transiঞon to clean energy. "The idea that developing naঞons will meet growing electricity demand with expensive imported coal-fired power generaঞon is increasingly outdated," Nicholas said. "Marubeni must adapt quickly in the face of changing condiঞons and reduce their coal exposure. "Given Marubeni's higher focus on power generaঞon development relaঞve to the other Japanese trading houses, there will be increasing opportunity in renewable energy as the world moves away from fossil fuels and towards clean energy." "By acceleraঞng the realignment of its power business towards new clean technology, Marubeni can hope to remain relevant to future power markets and avoid further surprises – such as ever decreasing renewable energy costs – and rising stranded asset risks." Over 100 globally significant financial insঞtuঞons have already exited the coal sector and there's a new announcement on average every two weeks, including from many of Japan's significant insঞtuঞons. In late 2018, two of Marubeni's fellow sōgō shōsha (major Japanese trading houses), Mitsubishi Corp. and Mitsui & Co., divested their last remaining thermal coal mine holdings. In December 2018 it was announced that Marubeni's coal exit announcement a plus but increased commitment needed yet another domesঞc coal-fired power proposal had been cancelled – JFE Steel and Chugoku Electric Power's 1 GW project near Tokyo. This was followed in January 2019 with the announcement that a 2 GW coal-fired power project to be built by Kyushu Power, Idemitsu and Tokyo Gas in Chiba prefecture had been cancelled. The first few months of 2019 has seen two more of the sōgō shōsha start their moves away from thermal coal. In February 2019, Itochu announced that it will no longer develop any new coal-fired power plants or thermal coal mines. Then in March 2019 Sojitz Corp announced the divestment from its Indonesian thermal coal mine investment as part of its own shi[ away from thermal coal. In July 2018 Sumitomo-Mitsui Trust Bank announced it would stop providing project finance for new coal-fired power staঞons and the Standard Chartered Bank – historically a very significant financier of Asian coal-fired power – has also announced an immediate, global cessaঞon of lending to such projects. Co-author of the briefing note Tim Buckley says Japan's export credit and overseas development agencies have also moved towards supporঞng low emissions, deflaঞonary renewable energy developments overseas. "While Japan is moving away from coal, Marubeni's conঞnued interest in coal-fired power creates financial and reputaঞonal risks for the company," Buckley said. "Major global investors have started receiving heightened aenঞon on their coal-related investments. "Marubeni's major shareholders will be increasingly wary of the financial and reputaঞonal risks associated with conঞnuing to be one of world's most significant builders of coal-fired power. "With long construcঞon ঞmes and slow or lile progress on the ground in many cases, Marubeni's ongoing coal- fired power projects are likely to hang over the company's reputaঞon for years to come." "As a leading, diversified conglomerate with a focus on expansion into new technologies and new markets, Marubeni is in a strong posiঞon to more

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