New Global Metallurgical Coal Exit List shows Japanese companies contributing to a potential surge in steel emissions worldwide

Tokyo, 23 January 2025 – Financial institutions are under increasing pressure over ongoing financial support for steelmaking with metallurgical coal, with a new global list showing that 160 companies are pursuing 252 met coal mining expansion projects, in 18 countries. If all projects are materialised and added to existing supply, it would represent a 50% jump in production and, totalling an additional 551 million tonnes of met coal per year and associated 976 million tonnes of CO2 emissions per year. [1]

Published by Urgewald and ten partners, the first Metallurgical Coal Exit List (MCEL) [2] shows that Australia is the world’s largest met coal exporter, and Japan a primary recipient of its coal. [3] Nippon Steel, Mitsubishi Corporation and Mitsui & Co., Ltd all have stakes in expanding Australian met coal mines, which will total 57 million tonnes of additional coal capacity each year if plans come to fruition. [4] Nippon Steel also holds a strategic stake in the Australian Blackwater and Bulga coal mines to ensure a steady supply of its raw, polluting material. [5]

“Hundreds of financial institutions are already using our Global Coal Exit List (GCEL) to restrict their financial flows to the thermal coal sector. The MCEL is a new sister database that focuses exclusively on metallurgical coal and highlights which companies are planning new met coal mines or extensions. Financial institutions need to wake up and stop bankrolling the reckless expansion of this industry,” says Heffa Schuecking, director of Urgewald. 

71% of steelmaking is based on coal-fired blast furnace production [6], and as a result, the sector is responsible for 11% of global CO2 emissions. [7] Its pollution growth has not even slowed since the Paris Climate Agreement was signed ten years ago. However, unlike coal procured for the energy sector, met coal producers and users have yet to face real restrictions on finance or insurance, despite met coal being up to three-times more polluting than thermal coal, [8] and solutions to phase it out and clean up production being readily available. [9]

“If successful, expansion projects driven by the demands of steel companies including Nippon Steel and JFE will lead to almost 50% more met coal being dug up and burned in blast furnaces each year, at a time when this sector needs to be rapidly cutting emissions. There is, however, a glimmer of hope, as we saw this movie seven years ago, when the global exit list for thermal coal came out. Banks rushed to the exits, and while it took a while for the show to come to Japan, it led to a wave of new policies here too. With the house lights coming up we expect another race to the exits with met coal,”  said Roger Smith, Asia Lead at SteelWatch.

Mitsui sold its last thermal coal mine stake in 2018, and Mitsubishi Corporation exited thermal coal mining in 2019. [10] However, metallurgical coal remains a major blind spot in the coal policies of financial institutions. To date, 183 out of 386 institutions globally have adopted policies on thermal coal, according to Reclaim Finance. [11] Only 16 have done so for metallurgical coal, despite it representing almost 14% of total coal consumption. [12]

“There is no reason, scientific or otherwise, to deem metallurgical coal less risky or more desirable than thermal coal. From a climate perspective, coal is coal and must be phased out regardless of its end use. The technologies to decarbonise steel production are available and are already being deployed by first-movers in the industry. Financial institutions must support the transition to coal-free steel instead of backing companies, which are developing dirty new met coal mines,” said Cynthia Rocamora from Reclaim Finance.

The MCEL features 160 companies worldwide and can be downloaded at: https://coalexit.org/mcel 

Contact:

Dr. Ognyan Seizov, Urgewald International Communications Director

+49 30 863 2922-61, [email protected]

Roger Smith, SteelWatch Asia Lead

[email protected], +81 80 1850 7958

Notes:

1) If the entire supply of new met coal were to be consumed in blast furnace-based steel plants, based on an average of 770 kg of met coal consumed to produce 1 tonne of crude steel and 2.3 tonnes of CO2 emitted to produce that tonne of crude steel, the 551 million tonnes of met coal annual production would be associated with the production of 424 million tonnes of blast furnace-based steel per year, and the emissions of 976 million tonnes of CO2 per year. Met coal mining also causes methane emissions which can add 27% to the climate impact of the steel industry.

2)  The Metallurgical Coal Exit List (MCEL) is the world’s most comprehensive public database of met coal developers. It was designed to bring transparency to a sector that is often overlooked in the decarbonisation process. As a sister database to the Global Coal Exit List (GCEL), MCEL enables financial institutions to better understand their exposure to this high-emissions industry and to develop new met coal exclusion policies. To ensure that our data creates lasting added value, MCEL will be updated annually.

https://coalexit.org/mcel

The Metallurgical Coal Exit List is co-published by Urgewald and Reclaim Finance, BankTrack, SteelWatch, Global Energy Monitor (GEM), Coal Action Network, Coal-free Finland, Nordic Center for Sustainable Finance, Ecodefense, Rainforest Action Network and The Sunrise Project

3) Australian met coal exports to Japan: https://gmk.center/en/news/australia-lowers-forecast-for-coking-coal-exports-for-fy2024-2025 

4) Japanese company stakes in met coal mine expansion:

The listed capacities above relate to the entire projects and ignore the percentage of shares owned by the mentioned Japanese companies in these projects.

Nippon Steel consumes approximately 25 million tonnes of coal per year (https://www.nipponsteel.com/en/ir/library/pdf/nsc_en_ir_2024_all_interactive.pdf – p. 10, p. 93 – minority-owned associates are not included), and owns stakes in coal mines with a total capacity of 69 million tonnes per year (+ 10 million tonnes per year thanks to the Blackwater coal mine in Australia, which is not yet listed in the 2024 Integrated Report). At 79 million tonnes per year, Nippon Steel’s total coal production capacity (ignoring the proportion of Nippon Steel shares in assets) is bigger than some pure player met coal mining companies like BHP Mitsubishi Alliance (approx. 60 million tonnes per year).

5) https://www.glencore.com.au/operations-and-projects/coal/current-operations/bulga-coal 

According to the International Energy Agency (IEA), existing production sources can cover the demand for met coal through 2050: https://iea.blob.core.windows.net/assets/deebef5d-0c34-4539-9d0c-10b13d840027/NetZeroby2050-ARoadmapfortheGlobalEnergySector_CORR.pdf

Even the Critical Raw Material Alliance acknowledges that global met coal production already surpasses demand by 37%: https://www.crmalliance.eu/coking-coal

6) worldsteel, World Steel in Figures 2024: https://worldsteel.org/data/world-steel-in-figures-2024/

7) Steel’s climate impact: https://static1.squarespace.com/static/5877e86f9de4bb8bce72105c/t/624ebc5e1f5e2f3078c53a07/1649327229553/Steel+climate+impact-benchmarking+report+7April2022.pdf

8) Coal used by the steel industry is referred to as metallurgical (met) coal and includes coking coal, which is needed to produce coke, a key ingredient in blast furnace steel production. It is often mined deep underground with greater emissions associated with methane than thermal coal.

https://www.woodmac.com/news/opinion/putting-coal-mine-emissions-under-the-microscope

9) While steel was long considered to be a hard-to-abate sector, new technologies, such as H2-DRI, now enable the shift to coal-free steel production methods: https://www.agora-industry.org/data-tools/global-steel-transformation-tracker#c425

10) Mitsubishi exits thermal coal stakes: https://www.reuters.com/article/markets/asia/mitsubishi-exits-thermal-coal-sector-sells-stakes-in-australia-mines-idUSKBN1OH0QJ/ 

Mitsui sold its last stake in a dedicated thermal coal mine in 2018: https://ieefa.org/articles/ieefa-japan-itochu-corporation-announces-coal-exit ) 

11) Out of the 16 financial institutions with adopted policies on met coal, 10 are banks, 5 are asset managers and one is an insurer. Three of these financial institutions are from Australia and the rest are headquartered in Europe. While the scope of most met coal policies is limited to direct project finance, research by Reclaim Finance indicates that project level financing represents only a tiny proportion of financing received by companies with met coal expansion plans. The Swiss insurer Zurich has adopted one of the best policies as it excludes new metallurgical coal mines as well as the companies, which are developing them. https://reclaimfinance.org/site/wp-content/uploads/2023/11/Reclaim_Finance_Metallurgical_Coal_November_2023.pdf

https://reclaimfinance.org/site/en/2024/12/10/insurance-scorecard-2024-cut-emissions-today-to-insure-tomorrow/

12) Global Efficiency Intelligence, Steel and Coal, January 2025 – https://www.globalefficiencyintel.com/steel-and-coal

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