Thermal coal’s days are numbered: It’s a major climate offender, alternatives are cheap and the world’s biggest diggers want to rid themselves of the fuel. The greenest among them can afford to go one step further, grouping the grimiest mines and promising even eco-friendly investors shiny dividends alongside cutting-edge rehabilitation and an orderly retreat. It’s a gamble that could well benefit investors as well as the planet.
Miners have been moving away from coal for some time. Rio Tinto Group was among the first off the blocks, selling its last mine in 2018. Under pressure from investors who want to cleanse their portfolios, other diversified players from Anglo American Plc to BHP Group are now scrambling to sell or spin off theirs. Even Glencore Plc, long the largest producer of seaborne thermal coal, plans to run down those assets by 2050, a shift the company says will get it to net zero emissions in time to hit Paris Agreement targets.
An ESG halo for any coal venture would require strict ground rules. Miners would need to pay generously into a sinking fund, of the kind that Tim Buckley at the Institute for Energy Economics and Financial Analysis laid out last year, to cover rehabilitation and even legal risk. A credible board set up from the start by the parents — who would retain reputational ties, if not ownership — and aligned performance indicators focused on conservative spending, limited or zero expansion and a commitment to progressive rehabilitation, including protection for workers, would also be necessary. Green guarantees, in short, alongside sparkling dividends.
[Clara Ferreira Marques]