For Immediate Release
Wall Street Backs Away From Mountaintop Removal Coal Mining
Top 4 US Banks Curb Loans for Destructive Practice; Cut Financing for Massey Energy
SAN FRANCISCO - Within the last two years, Bank of America, Citi, JPMorgan Chase, and
Wells Fargo along with Credit Suisse and Morgan Stanley have
successively passed public policies limiting their financial
relationships with coal operators that practice mountaintop removal
(MTR) coal mining. These banks were the lead financiers of the practice
prior to their policy shifts. Last month, Wells Fargo became the fourth
top US bank to adopt a position limiting MTR financing. These policies
signal a sector-wide shift away from a mining practice that has become
increasingly controversial and a move toward more environmentally
conscious fossil fuels financing.
The move comes as a response
to more than three years of national pressure spearheaded by the
environmental action group Rainforest Action Network (RAN). In 2007, RAN
began with a campaign focused on Bank of America, the lead financier of
MTR coal mining companies at the time. The group has gone on to work
with all of the largest banks in the country to encourage the entire
industry to shift its policies. This shift in the banking sector is
consistent with a national move away from the mining practice, which
recently both scientists and the federal government have confirmed
causes irrevocable harm to landscape and water quality.
talks - and it is saying loud and clear that mountaintop removal coal
mining is a bad investment. With the move away from mountaintop removal
coal mining, our country's top banks are showing that they know they can
do well while doing good for our environment and our public health,"
said Rebecca Tarbotton, executive director of the Rainforest Action
Network. "We are seeing a sector-wide shift away from an increasingly
controversial practice that is devastating Appalachian communities and
the mountains and streams they depend on."
One of the major
impacts of these mountaintop mining policies is that the banks are no
longer financing Massey Energy, the leading MTR coal company in the
country that was involved in the April 5 Upper Big Branch mine explosion
where 29 miners tragically died. In particular, JPMorgan Chase, Bank of
America and Wells Fargo, all of which have had substantial financing
relationships (underwriting bonds or providing loans) with Massey Energy
since January 2005, no longer finance the notorious company.
examples: Based on Bloomberg data, Bank of America, which was one of
the ‘syndication agents' on a $175 million revolver loan to Massey in
March 2008, is no longer on the deal or any others with the company.
JPMorgan, similarly, underwrote $180 million in debt securities in 2008
to Massey and was also the lead manager on a $233 million share deal
(joint with UBS) that same year. JPMorgan no longer has any financial
ties to the company.
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"When the top four banks in the country back away from Massey Energy
and other leading mountaintop mining operators, it sends a clear signal
that these companies have a high risk profile and that other banks
should beware," continued Tarbotton. "Bottom-line, as access to capital
becomes more constrained it will be harder for mining companies to
finance the blowing up of America's mountains."
Bank of America was the first bank to issue a public policy limiting
its MTR financing back in December 2008. They were followed by Citi in
August 2009, Credit Suisse in September 2009, Morgan Stanley and
JPMorgan in May of this year and Wells Fargo just last month. While each
banks' policies differ, they all demonstrate concern about the
environmental and investment risks associated with mountaintop mining,
and all of the banks have made clear moves away from companies who
primarily focus on this form of extraction.
With the nation's leading banks moving away from MTR, coal operators
are looking toward new banks for financing. Currently, PNC and UBS are
the lead financiers of the practice. PNC finances mining companies
responsible for almost half of all mountaintop removal coal mined in the
Mountaintop removal coal makes up 7 percent of the nation's total
coal use, but many argue the practice, which requires blowing the tops
off of mountains and dumping the debris into nearby streams and valleys,
has an outsized impact on Appalachia's environmental and public health.
Since 1992, nearly 2,000 miles of Appalachian streams have been filled
at a rate of 120 miles per year with toxic surface mining waste. The
estimated scale of deforestation from existing Appalachian surface
mining operations is equivalent in size to the state of Delaware.
In the coming months, RAN will continue to monitor the impacts of
these bank policies on curbing mountaintop removal mining.
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