Japanese traders accelerate reduction of coal assets as part of global decarbonization push
Band Yuka Obayashi
TOKYO, February 5 (Reuters) – Japanese trading houses are stepping up efforts to move away from coal and other fossil fuel-related assets amid growing decarbonization push around the world and to meet the government’s ambitious commitment to become carbon neutral by 2050.
The move comes as trading houses rethink their long-term upstream investing strategies, Wood Mackenzie Asia Pacific Vice President Gavin Thompson said in a recent memo.
“If 2020 was a year for reassessing future plans, then 2021 appears to be the year for implementation,” he said.
For example, Itochu 8001.T on Thursday said it would divest its stake in a Colombian coal mine, divesting 80% of its thermal coal assets, and sell the remaining stake in two Australian mines “as soon as possible”.
“Even at a high cost, we have decided to show our commitment to tackling global warming by showing concrete actions,” Itochu Chief Financial Officer (CFO) Tsuyoshi Hachimura said this week as companies released their reports. results.
Mitsui 8031.T is also pulling out of a coal mine in Mozambique after write-downs reduced the book value of the stake to zero.
Others are also accelerating divestment, with Sojitz 2768.Tadvance his plan halve its thermal coal assets by 2030, said chief financial officer Seiichi Tanaka.
Japanese trading companies have already stopped investing in new coal-fired power plants, but Marubeni 8002.T is accelerate his plan halve its stakes in coal-fired power plants by 2030.
“We will accelerate as much as possible because helping to fight global warming is a priority,” said Maubeni’s chief financial officer, Takayuki Furuya.
Known as “sogo shosha” in Japanese, trading houses play a key role in importing everything from oil to corn to support the resource-poor economy, but the recent divestment goes beyond coal in a context of accelerating energy transition.
Sumitomo 8053.T left the shale oil business by selling its stake in a US project last year while Sojitz scaled back its oil and gas assets.
Mitsubishi 8058.T and Mitsui, who are more exposed to energy and metals, are restructuring their portfolios and revising their decarbonization strategy in light of the government’s 2050 target and under pressure from investors to go greener.
Mitsubishi has already pulled out of thermal coal mining, but coking coal and liquefied natural gas (LNG) remain the main drivers of profit.
“Power producers use LNG and steelmakers need coking coal, which won’t stop so quickly,” said Mitsubishi CFO Kazuyuki Masu.
“It is a difficult task to advance decarbonization while fulfilling our responsibility to ensure a stable supply,” he said. Mitsubishi will unveil a general policy by March 2022.
Mitsui is streamlining its energy portfolio by focusing more on quality than quantity in exploration and production, said CFO Takakazu Uchida.
Oil and gas assets upstream from the Japanese companies are valued at more than US $ 70 billion, with trading houses accounting for nearly 30% of the total, according to Thompson of Wood Mackenzie.
“We expect the divestment of untapped stakes in smaller oil and other non-core assets to accelerate,” he said, noting the decline in local demand for oil and gas.
“For several companies, beyond the existing positions in LNG which are likely to remain intact, all the rest can disappear. It is the abrupt end of the energy transition”, he declared.
[ Japan’s shrinking demand for oil and gas ]https://tmsnrt.rs/3tsGqzg
GRAPHIC: Trading Houses of Japanhttps://tmsnrt.rs/3oQIVbk
GRAPHIC: Profits of Japanese Trading Houseshttps://tmsnrt.rs/3pSwvkn
(Reporting by Yuka Obayashi, Additional reporting by Aaron Sheldrick; Editing by Christian Schmollinger)
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