Japanese traders accelerate reduction of coal assets as part of global decarbonization push
TOKYO, Feb.5 (Reuters) – Japanese trading houses accelerate efforts to move away from coal and other fossil fuel-related assets as part of growing global decarbonization drive and to meet pledge government’s ambition 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 announced Thursday that 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 is also withdrawing from a coal mine in Mozambique after impairment losses reduced the book value of the stake to zero.
Others are also speeding up divestment, with Sojitz pushing forward with its plan to halve its thermal coal assets by 2030, CFO Seiichi Tanaka said.
Japanese trading companies have already stopped investing in new coal-fired power plants, but Marubeni is accelerating its plan to 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 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 and Mitsui, which have greater exposure to energy and metals, are reshuffling 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 move decarbonization forward 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 placing more emphasis on quality, rather than quantity, in exploration and production, said CFO Takakazu Uchida.
Japanese companies’ upstream oil and gas assets are valued at more than US $ 70 billion, with trading houses accounting for nearly 30% of the total, according to Wood Mackenzie’s Thompson.
“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 many companies, beyond the existing positions in LNG which are likely to remain intact, everything else can disappear. This is the brutal end of the energy transition, ”he said.
Reporting by Yuka Obayashi, additional reporting by Aaron Sheldrick; Edited by Christian Schmollinger