ITOCHU has announced it will no longer develop new coal-fired power plants and thermal coal mines to address the impact of climate change and will continue to divest its existing thermal coal mine investments in Australia and Indonesia.
The news follows an announcement in May 2018 where the company declared the need to address climate change and the need to promote business activities aimed at contributing to a low-carbon society as a priority.
As part of the new policy, ITOCHU has sold their 12.5 per cent interest in the 13Mtpa Rolleston thermal coal mine, which was held through a wholly-owned subsidiary, ITOCHU Minerals & Energy Australia Pty Ltd.
The company will also continue to review its existing coal mining business and “contribute to the development of a sustainable society while responding to the social demands of stable supply of energy to domestic and overseas customers”.
The Institute for Energy Economics and Financial Analysis (IEEFA) believes this is a major policy pivot for ITOCHU.
IEEFA Director of Energy Finance Studies Tim Buckley explains that ITOCHU is redirecting its capital allocations to thermal coal mining and coal-fired power plants and is instead proposing to prioritise investment in other low-carbon industries.
“Over the last two decades ITOCHU has been one of the top 10 investors in the Australian coal industry,” Buckley said.
“This change in policy direction builds on a number of policy developments by corporate and financial institutions announced in Japan since May 2018 including by Dai-ichi Life, Sumitomo Mitsui Trust Bank, Marubeni Corp, Mitsui & Co as well as Mitsubishi Corp.”
Buckley said these announcements are significant given Japanese financial institutions have been at the top of the list in terms of global financial institutions funding new coal-fired power plant developments globally.
Mr Buckley further stated that this is critically important to the global coal industry, and Australia in particular, given that 44 per cent of all Australian thermal coal is exported to Japan alone.
“With New South Wales’ number one market being Japan, some 44 per cent of the states’ total thermal coal export volumes, the inference is that global markets expecting to export thermal coal to Japan need to review their business models.”
