While tensions between Australia’s four major banks and the Morrison Government intensified in the last 12 months over their fading support for the coal industry, disgruntled coalition MPs were stone silent about the foreign lenders stepping in to fill the sector’s funding holes.
As local banks such as ANZ and NAB lightened their exposures to domestic coal projects, a raft of China’s biggest banks kept coal miners in business with billions worth of loans.
Leading the way was the corporate banking arm of the Bank of China which operates in Australia through its Sydney branch.
BoC’s large and growing exposure to local coal producers and carbon-emitting power assets is not a surprise given that the bank is the world’s third largest lender to the coal industry.
Globally, the BOC has lent more than US$12.2 billion to coal producers in the last five years.
The two other largest lenders to coal miners in the same period were also Chinese banks – the Industrial and Commercial Bank of China (US$17.4 billion) and China Construction Bank (US$12.4 billion).
BoC’s support for coal extraction creates something of a reputational challenge for the high profile chairman of its local retail banking arm, Professor Stephen Martin.
When he was chief executive of the Committee for Economic Development of Australia, Martin led the way on climate change, arguing in 2014 for the Australian government and businesses to take a serious approach to climate change and emission reduction.
“Australia needs to ensure it keeps in step with international developments on this front, both by business and governments, and has the options available to move to less carbon intensive industries and energy sources to ensure we remain globally competitive,” Martin wrote in an opinion piece published by CEDA.
“That means investing in research and development to drive technological breakthroughs and having in place regulatory regimes for all energy sources, including nuclear, so that options can be taken up swiftly as technological breakthroughs occur.”
In the last 12 months the Bank of China (BoC) has backed funding programs for a swathe of Australian coal projects, including a A$1 billion syndicated revolving facility for controversial NSW miner, Whitehaven Coal.
Chinese banks account for more than 40 per cent of the Whitehaven facility, with the BoC’s $195 million contribution making it the largest participant in the syndicate.
Other Chinese banks supporting Whitehaven include the Bank of Communications, China Everbright Group and ICBC.
Throughout 2020 BoC and other Chinese banks stumped up funding for other billion-dollar funding programs to support coal haulage operator Aurizon and local miner Yancoal.
This year BoC has been deepening its exposure to local coal-fired generation.
Earlier this month, BoC was a lead arranger and bookrunner for a A$440 million facility to refinance Alinta Energy’s Loy Yang B power plant in Victoria.
It is also expected to back a refinancing program for Intergen’s coal fired plant at Millmerran in Queensland.
The BoC’s deep involvement with local coal industries seems inconsistent with Martin’s 2014 clarion call for climate action.
“What Australia requires is a framework for assessing climate risks and considering possible actions that may lower them,” he