BHP to exit thermal coal mining within two years
The world's largest mining company BHP has unveiled plans to sell off its thermal coal mines by the end of 2022, after developing new climate targets last year.
In a full-year update delivered late on Tuesday (18 August), the firm’s chief executive Mike Henry confirmed that it will divest from all assets that produce coal for electricity generation within 24 months. BHP currently operates thermal coal mines in Australia and Colombia and is part of joint thermal coal venture with Japanese mining giant Mitsui.
Henry stopped short, however, of confirming a complete exit from coal mining. BHP will retain its stake in a venture that produces coal used to make steel. "Exiting [thermal coal] assets would simplify BHP's coal portfolio, with the retained assets largely hard coking coal, long-life, low-cost, well-positioned for decarbonisation upside and competitive for capital within BHP," he argued.
BHP’s decision to exit thermal coal builds on an updated climate approach, introduced last year. The firm is in the process of developing approved science-based targets and has until July 2021 to do so. In the meantime, it is striving to cap its absolute carbon emissions at 2017 levels through to 2022.
BHP will additionally begin linking emission reductions to executive pay from 2021 – a move which has already been taken by the likes of Sandvik and Royal Dutch Shell – and undertake 2C scenario analysis ahead of its inaugural climate portfolio analysis report, due to be published later this year.
Plans to exit thermal coal also come after Norway’s sovereign wealth fund, a major investor in BHP, registered its objection to the company’s coal operations. In April, the fund placed BHP on an “observation” list – a step which precedes sales of shares, unless the company changes its ways.
At the coalface
A report from Unfriend Coal concluded that, even before the Covid-19 pandemic, the thermal coal sector was “becoming uninsurable” amid a backdrop of stronger green legislation and changing investor demands. According to the IEA, the world has seen the largest decline in coal consumption since World War Two as a result of coronavirus.
It is to be expected, then, that BHP’s announcement is not the only corporate coal commitment to be made this week.
Monday (17 August) saw waste management giant Veolia publish an updated sustainability strategy – Impact 2023. The strategy includes a commitment to convert all of the firm’s coal-fired cogeneration plans in Europe by 2030 to run on “sustainable” energy, defined as either biomass or refuse derived fuel (RDF).
At present, these facilities account for around 3% of Veolia’s annual revenues. The firm is allocating €400m to convert them and will spend this pot over the next three years.