Page 4 - AsiaElec Week 47

AsiaElec COAL AsiaElec

Sumitomo posts losses as it

keeps coal interests

JAPAN JAPAN’S Sumitomo faces worsening financial contribute to the need for larger taxpayer-funded
performance as it maintains its commitment to bail-outs of state-owned power utilities and
coal across Asia. higher consumer tariffs. This is a poor outcome
The trading house released figures recently for developing nations,” says Nicholas.
that showed a first-half loss of JPY60bn “Sumitomo is lagging behind its peers, and
($450mn), while forecasting a full-year loss of the government, by continuing to invest in
JPY150bn ($1.4bn) for 2020. problematic coal power projects in developing
The company has also raised its thermal coal nations.”
output, according to a new report from the Insti- Other Japanese investors such as Mitsubishi,
tute for Energy Economics and Financial Anal- Marubeni and Mitsui, have divested from coal
ysis (IEEFA). production across Asia.
The company wrote down JPY26bn On the other hand, Sumitomo’s equity share
($251mn) at its Bluewaters coal power invest- of thermal coal production rose in 2019 after
ment in Australia following an unsuccessful it acquired Mitsubishi’s stake in the Clermont
attempt to refinance. as banks continue to pull mine in Australia as part of the GS Coal joint
away from coal lending. venture with Glencore.
IEEFA energy finance analyst Simon Nicho- The Japanese government is now pursuing an
las said that the losses at the Bluewaters project anti-coal policy. It said that old, inefficient coal
raise important questions for investors and the plants in Japan would be shut down by 2030,
company. which would mean around 100 coal power units
“The Japanese government took the initiative closed by that year.
on coal policy by announcing a net-zero pathway Since then both JERA – Japan’s biggest power
to 2050 in October 2020, which has left Sumi- generator – and J-Power have stated that they
tomo and its coal projects behind,” says Nicholas. will fall into line with this policy and close all
“Its trading house peers have also made more inefficient coal power plants by 2030.
progress on shifting away from coal, and this has The Japanese government went a step further
accelerated lately. in October 2020, announcing it would target net-
“Marubeni pulled out of a South African coal zero emissions for the nation by 2050. This is the
power project in November 2020, the third over- most significant shift in Japanese energy policy
seas power project it has pulled out of over the yet and will see a further, long-term move away
last two years.” from coal towards renewables.
Sumitomo is continuing to invest in coal in Yet is it abroad that some Japanese firms
Indonesia, Vietnam and Bangladesh. It is also such as Sumitomo are maintaining their inter-
intending to develop a second coal power pro- est in coal, despite criticism from environmental
ject in Bangladesh. investors. They are failing to follow the lead of
“Sumitomo’s coal power projects in Bangla- soft lenders such as the Asian Development Bank
desh and Indonesia will lead to further, inflexi- (ADB) that have already abandoned the fuel.™
ble and unaffordable capacity payments which

P4 www. NEWSBASE .com Week 47 25•November•2020