U.S. coal executives grapple with rising ESG concerns, more costly access to financial markets

first_imgU.S. coal executives grapple with rising ESG concerns, more costly access to financial markets FacebookTwitterLinkedInEmailPrint分享S&P Global Market Intelligence ($):Contura Energy Inc. executives said the U.S. coal sector is feeling the pinch of investors’ growing focus on environmental, social and governance (ESG) factors in making investment decisions.Coal producers are struggling as large financial institutions around the world are increasingly severing ties to the sector over climate change concerns. Bankers, insurers and asset managers are exiting their business with the industry at a rapid clip. The movement to divest from coal is “slowly squeezing the entire coal industry like an anaconda,” Benjamin Nelson, lead coal analyst at Moody’s Investors Service, recently said.“ESG issues are very, very real to us right now,” Executive Vice President and CFO Andy Eidson said on a Feb. 11 call discussing preliminary earnings results. In January, BlackRock Inc., the world’s largest asset manager, announced it would not invest in companies deriving more than 25% of their revenue from thermal coal.“I mean, [ESG issues have] been growing in influence over the past couple of years, and now it seems to have really caught fire,” Eidson said. “It’s almost like a pincer movement that is really creating a lot of cost pressure across the board.”Contura Energy CEO David Stetson said it is increasingly difficult for coal operators to go out into financial markets and obtain the capital to build a new mine, expand an existing mine or get equipment financing. “We really don’t see it changing,” Stetson said.Bonding a coal mine, for example, is becoming “harder and harder,” the executive noted. While much of the coal market is currently in a down cycle, even if prices improve, few companies will be able to put together a supply response due to the inability to economically obtain insurance, finance a mining project, or bond an operation, Stetson said.[Taylor Kuykendall]More ($): Coal exec: ESG trend ‘caught fire’ and is pressuring sector across the boardlast_img