4

Jul

2017

After Glencore’s huge coal mine bid, is it time for the Church of England to divest?

 

The mining giant Glencore has made a £2.7 billion bid for a massive coalfield in Australia, leading to questions about the Church of England’s future investment in the company.

Glencore is the world’s largest exporter of sea-traded thermal coal, which is burned in power stations. In 2016, the company reported revenues from its coal mining business of $6.9 billion (£5.6 billion) (Annual Report 2016, p.70).

Following the news, it was reported that the Church Commissioners were reviewing the bid. A spokesman for the Church Commissioners said that ‘if Glencore did not engage with the Commissioners to manage the transition away from fossil fuels, the Commissioners might end up disinvesting entirely’.

After its bid for the coal mines was rejected by owner Rio Tinto in favour of a bid from Chinese company Yancoal, Glencore increased its bid by a further $130 million (£100 million), suggesting that it is paying little attention to engagement efforts. Rio Tinto shareholders eventually approved an increased bid from Yancoal, yet the statement of intent from Glencore to increase its coal mining operations is clear.

Rio Tinto’s coal mines in the Hunter Valley, New South Wales (Photo credit: Jeremy Buckingham)

In 2015, the Church of England published a new climate change policy committing to divest from companies deriving more than 10 per cent of revenues from thermal coal and tar sands. The Methodist Church has already divested from Glencore due to its high exposure to coal.

Carbon Tracker recently stated that Glencore ‘fails to reflect fundamental supply and demand changes’ with its belief that global coal production will continue to grow into the 2030s. Such practice is also completely incompatible with protecting humanity from the most severe impacts of climate change.

A mining analyst was quoted by Bloomberg highlighting the financial risks of the strategy: ‘The fact that they [Glencore] are obviously choosing to grow [its coal] business while everyone else is running in the opposite direction – either they are geniuses or they are buying into stranded assets for the longer term, which will incur hefty costs’.

Whether Glencore succeeds in generating increased profits from the most heavily polluting fossil fuel or risks being left with stranded assets, there are now questions over whether the Church of England is comfortable to continue investing in Glencore from an ethical or financial point of view.

Since Glencore is clearly seeking to expand its coal mining operations at a time when coal production needs to fall rapidly to meet the Paris Agreement targets, surely the time has come for the Church of England to join the Methodist Church in divesting from Glencore.