Business Maverick

Business Maverick

A fossil of finance: FirstRand says it will no longer fund new coal-fired power stations

A digger arranges coal stores in the coal yard at the Grootvlei power station, operated by Eskom Holdings SOC Ltd., in Grootvlei, South Africa, on Monday, Nov. 3, 2014. (Photo: Dean Hutton/Bloomberg via Getty Images)

The Department of Mineral Resources and Energy may see new power plants fuelled by coal on the horizon, but finding the money will be no easy task. Banking group FirstRand Limited said this week it will no longer provide finance for new coal power plants.

Mineral Resources Minister Gwede Mantashe envisions an additional 1,500MW of new coal-fired power getting plugged into the national grid by 2030. As is often the case with ANC “planning”, little thought is given to where the money will come from. 

FirstRand is the latest bank to turn off the cash taps for coal. 

“The group will no longer finance new coal-fired power stations and from 2026 will no longer provide direct project finance to new coal mines,” it said in a SENS announcement. 

This forms part of the group’s strategy to reduce its carbon financing footprint and coal exposure as it strives to be “net zero by 2050 across operational and financed emissions”. 

The scientific link between coal-fired emissions and climate change has forced a major rethink among banks globally about the provision of finance for the fossil fuel against the backdrop of growing public and investor demands that companies clean up their environmental, social and governance acts, or ESGs. 

This trend has been gaining traction for some time. A report by accountancy firm PwC found that in 2018, coal accounted for 23% of mining revenue generated by the top 40 global mining companies, but only 15% of capital expenditure, a disconnect explained by the growing aversion of banks to the sector.

Banks that fund new coal projects face reputational risk and blowback from shareholders and the wider public. 

That does not mean that coal is dead and buried. The World Coal Association would point to its estimates showing that global coal capacity rose every year from 2000 to 2019, nearly doubling from 1,066GW to 2,045GW. 

But once a commodity becomes a fossil in the world of finance, extinction looms. OBP/BM


Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted

A South African Hero: You

There’s a 99.8% chance that this isn’t for you. Only 0.2% of our readers have responded to this call for action.

Those 0.2% of our readers are our hidden heroes, who are fuelling our work and impacting the lives of every South African in doing so. They’re the people who contribute to keep Daily Maverick free for all, including you.

The equation is quite simple: the more members we have, the more reporting and investigations we can do, and the greater the impact on the country.

Be part of that 0.2%. Be a Maverick. Be a Maverick Insider.

Support Daily Maverick→
Payment options