May 11, 2016 Read More →

Mitsui Joins Japanese Financiers Fleeing Coal

Like each of the Japanese trading houses, Mitsui & Co has this week reported a net loss for the year on the back of massive write-downs on its resource holdings.

As per the excerpts below from a Reuters article on the development below, the CEO has announced near term plans to sell a third of Mitsui’s total thermal coal exposure within three years, acknowledging this is driven by the inevitable changes that result from the climate summit last year in Paris.

Even though Japan imports 100 percent of its fossil fuel requirements, this move is a clear acknowledge that the world is changing, rapidly. Stranded assets are clearly the result when almost all major owners globally are running for the exit and buyers are few and massively undercapitalized.

From the Reuters article:

“Japanese trading house Mitsui & Co plans to trim its thermal coal investments amid growing pressure worldwide for companies to cut reliance on the fossil fuel after last year’s landmark climate pact in Paris, its president said on Wednesday.

Mitsui owns mine stakes that had an equivalent annual output of about 13.5Mt in the year ended March 31, and it expects that figure to drop to 9Mt in three years.

“Considering the result of the global climate summit, we basically plan to reduce thermal coal assets,” Mitsui CEO Tatsuo Yasunaga told an analyst meeting.

Global leaders clinched a climate-protection deal in Paris in December to transform the world’s fossil-fuel driven economy, and calls have grown since for the global power sector and other industries to reduce coal use.

Under the pact, Japan, the world’s No.5 emitter of carbon dioxide, has agreed to cut greenhouse emissions by 26% from 2013 levels by 2030, but it has come under pressure for not doing more to reduce its dependence on coal.

Mitsui on Tuesday posted its first annual loss since being established in 1947, booking massive writedowns for the year ended March 31 after iron ore, copper and oil prices plunged.

The company plans to step up selling assets, include some metal holdings, Yasunaga said without further elaboration.”

Tim Buckley is IEEFA’s director of energy finance studies, Australasia.