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.
“Money 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.
As 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.
“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 US.
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.
Notes to Editors
To see all of the bank’s MTR policies:
For data on banks and coal financing: http://www.banktrack.org/show/dodgydeals/mountain_top_removal_coal_mining
For past coverage of the RAN coal finance campaign:
For RAN and Sierra Club’s May 2010 scorecard on bank’s MTR policies:
Rainforest Action Network runs hard-hitting campaigns to break North America’s fossil fuels addiction, protect endangered forests and Indigenous rights, and stop destructive investments around the world through education, grassroots organizing, and non-violent direct action. For more information, please visit: www.ran.org