GLOBAL COAL FINANCE
About this content
The following is a literature review of key studies on global coal finance. Additional information and findings of many more studies can be found in the full report and bibliography. The research is current to 30 November 2017.
Scale of the coal industry
Coal mining
Coal power
Who owns the coal industry?
Coal mining
The IEA estimate 15% of global coal production to be coking coal and the remaining 85% thermal coal.
Influence Map provides information about the ownership of 1/2 of the total global thermal coal production, constituting 117 listed companies, with the ownership of the remaining 1/2 unknown.
Influence map divides investors into "Strategic" investors (e.g. governments, power companies) that have a reason to be invested beyond a financial return, and "Non-Strategic" investors (e.g. fund managers) who are primarily seeking a return on equity.
Non-strategic Investors in coal mining companies by coal reserves (M Tons)
Source: Influence Map, 2017
Investor | Type | Country | Coal reserves (m tons) | |
---|---|---|---|---|
1. | Life Insurance Corporation of India | State | India | 1,279 |
2. | Fude Sino Life Insurance | Private | China | 702 |
3. | The Vanguard Group | Private | United States | 462 |
4. | BlackRock Institutional Trust Company | Private | United States | 344 |
5. | Dimensional Fund Advisors LP | Private | United States | 334 |
6. | HSZ (Hong Kong) Limited | Private | Hong Kong | 288 |
7. | Neuberger Berman LLC | Private | United States | 191 |
8. | Elara Capital Plc | Private | UK | 177 |
9. | Emerging India Fund Management Ltd | Private | Mauritius | 170 |
10. | Accipiter Capital Management Ltd | Private | United States | 122 |
11. | ICICI Prudential Asset Management | Private | India | 107 |
12. | M M Warburg Bank (Schweiz) AG | Private | Switzerland | 99 |
13. | Prosperity Capital Management | State | Russia | 84 |
14. | Templeton Asset Management Ltd | Private | Hong Kong | 84 |
15. | Fidelity Managment & Research | Private | United States | 83 |
16. | BlackRock Investment Management (UK) | Private | UK/US | 79 |
17. | Renaissance Technologies LLC | Private | United States | 75 |
18. | Tontine Asset Management LLC | Private | United States | 72 |
19. | Mangrove Partners | Private | United States | 68 |
20. | Capital World Investors | Private | United States | 54 |
Example of strategic investor: | ||||
Central and local government, India | State | India | 13,878 |
Influence Map provides information on the non-strategic investors. The largest non-strategic investors by coal reserve are listed in the table opposite.
In comparison, listed is an example of a strategic investor, the Central and local Governments in India.
Coal power
Analysis of the companies representing half of global total by coal power expansion plans
Source: Global Coal Exit List, 2017
Graph below: 40 unlisted companies seeking to expand coal power, indicating country of headquarters and ownership status (as identified in the Global Coal Exit List)
Table below: top 20 shareholders of the 17 listed companies seeking to expand coal power (as identified in the Global Coal Exit List, data provided by GSCC)
Investor | Type | Country | Amount (US$ bn) | |
---|---|---|---|---|
1. | Government of India | State | India | $19.63 |
2. | Shanghai Electric Group | Private | China | $ 8.18 |
3. | Korea Development Bank | State | South Korea | $ 7.18 |
4. | CRH Power | Private | China | $ 5.87 |
5. | Khazanah Nasional Bhd | State | Malaysia | $ 5.60 |
6. | Life Insurance Corporation of India | State | India | $ 4.21 |
7. | Ministry of Strategy and Finance Korea | State | South Korea | $ 3.97 |
8. | Poland State Treasury | State | Poland | $ 3.52 |
9. | Lawrencium Mikado Holdings | Private | Hong Kong | $ 2.37 |
10. | Adani Gautam | Private | India | $ 2.26 |
11. | OAK CLP | Private | Hong Kong | $ 2.22 |
12. | Employees Provident Fund | State | Malaysia | $ 2.22 |
13. | Vanguard Group | Private | USA | $ 2.10 |
14. | Government Pension Investment Fund Japan | State | Japan | $ 1.93 |
15. | Roseneftegaz | State | Russia | $ 1.78 |
16. | Lawrencium Holdings | Private | Hong Kong | $ 1.73 |
17. | Blackrock Fund Advisors | Private | USA | $ 1.53 |
18. | National Pension Service Korea | State | South Korea | $ 1.42 |
19. | INTER RAO Capital | State | Russia | $ 1.35 |
20. | Skim Amanah Saham Bumiputera | State | Malaysia | $ 1.32 |
The role of corporate v project finance
Coal mining
Fossil fuel supply finance 2011 (IEA)
Fossil fuel supply finance 2016 (IEA)
According to International Energy Agency, World Energy Investment (2017), most coal mining investment takes the form of balance sheet (corporate) finance.
Coal power
International Energy Agency, World Energy Investment,
2017
Thermal power generation finance 2011
Thermal power generation finance 2016
Note the contrasting conclusions in these two sources of information, indicating the difficulty in quantifying the split between project and balance sheet finance. However, both point to the dominant role of corporate finance in coal power.
Public and private debt finance
Coal mining
Commercial bank lending to coal mining, 2014-2016
Source: RAN, BankTrack, Oil Change, Sierra Club, Banking on Climate Change, 2017


Maturity of Loans and Bonds
Maturity Profiles of Bonds and Loans to Coal Mining Companies from 2017 to 2022
Source: Data provided by GSCC, 2017

Equity raising
Companies will often turn to the equity market to raise capital before seeking more debt finance, as the equity can be leveraged many times over. While equity is often sourced from existing shareholders, companies will seek additional investment through further share issuances. There is no comprehensive study on the role of equity raising in coal finance at this stage.
Trends: China, Japan and Korea's new coal race
Study of 21 new coal-fired power stations in Indonesia financed since 2010
Trends: Corporate restructuring
Bankruptcies are clearly a sign of distress for coal mining companies, but do not mean the end of the companies or their operations.
Rather, bankruptcies are often part of corporate restructuring during which operations can continue. The intention of a company emerging from bankruptcy is to be in a more secure and healthier financial state.
Shenhua Group and China Guodian have merged, creating a company with a combined capacity portfolio of 221 to 225GW, and 500 million tons of coal per year.
Other major M&A activity includes:
- Arclight acquisition of AEP’s power plants in US.
- Vale sale of Mozambique coal mines to Mitsui.
- Yancoal acquisition of Coal & Allied Industries.
- Enel’s 10% stake in Bayan Resources acquired by the company’s founder.
Trends: Project bonds
At this stage, this debt instrument does not seem significant to global coal finance at present. However, companies may use more project bonds to raise debt
- in Asia;
- in refinancings; and
- following the Basel III regulations coming into effect.
Anatomy of a Project Bond: Paiton Energy, US$2bn, August 2017
Source: Project Finance International, 2017
The breakdown of the investors in the 2010 loan:


The breakdown of the investors in the 2017 bond:
Could coal projects be financed by green bonds?
- Voluntary Green Bonds Principles (which include renewable energy and pollution prevention and control) recommend external review.
- ASEAN framework of green bonds standards specifically exclude funding of fossil fuels.
- However, Chinese coal power plant producer Tianjin SDIC Jinneng Electric Power registered short-term "green bonds" on interbank market for $USD150M to finance a 2,000MW coal-fired power plant in Tianjin.
Country by country
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Key takeaways
- The nature of coal finance varies wildly between countries.
- Importance of China and Chinese finance.
- Importance of corporate or balance sheet finance.
- In several key coal power growth markets, public finance unlocks commercial debt.
- In areas like India, Turkey, Australia, domestic banks are key.
Key studies
- Investigates investment in fossil fuel sector selecting 17 fossil fuel companies and to 12 nuclear sector companies.
- Looked at which financial institutions provided loans and underwriting to the fossil fuel sector, with Mizuho, Sumitomo Mitsui Financial and Mitsubishi UFJ Financial providing the largest percentage of finance.
- Available online.
- Provides information on a country-by-country basis on the proven reserves, production and consumption.
- Provides analysis of reserve to production ratios, production and consumption by region.
- Maps coal prices in the region.
- Available online.