Page 9 - AsiaElec Week 20 2022

AsiaElec COAL AsiaElec

Banks still lend to

Indonesian coal as

prices rise

INDONESIA MAJOR global banks such as Citigroup, BNP In Indonesia, the boom in lending is espe-
Paribas and Standard Chartered are continuing cially pronounced in the province of East Kali-
to lend to Indonesian coal projects as prices rise mantan, the country’s coal-mining heartland.
and miners look to invest in new equipment, a According to official data, bank loans to the
think tank has warned. provincial mining industry grew by 74.36% year-
By continuing to finance the fossil fuel indus- on-year in February 2022, compared to 18.87%
try, the banks are making it harder for Indonesia growth in overall lending.
to transition to clean, renewable energy. Made Yoga Sudharma, who heads the East
“Now that there’s a surge in commodity Kalimantan office of banking regulator OJK,
prices, banks are rushing to channel loans to said this is because the province’s economy is still
mining companies [to procure] heavy equip- dominated by the mining industry.
ment or capital,” Bhima Yudhistira Adinegara, He said financial institutions are bullish on
director of the Center of Economic and Law the industry due to rising global coal prices.
Studies (CELIOS), a Jakarta-based think tank, “In 2022, this sector has become a prima
said in a recent online press conference. donna once again, and even enjoying its high-
Data from Indonesia’s financial regulator, the est price in the past few years,” Sudharma said
OJK, show that lenders channeled 26.83% more as quoted by local media. “That’s why the credit
money to the country’s mining industry in Jan- also improves.”
uary 2022 compared to the same period in 2021. Non-bank lenders are also tapping into
The increase is much higher than the year-on- the growing demand for credit from miners,
year growth in overall loans of 5.79%, local news channelling 56.61% more in loans, usually for
outlet Mongabay reported. financing the purchase of heavy equipment, in
It comes as global coal prices are hitting February 2022 compared to the same period of
record highs, more than $400 per tonne, as a time in 2021, according to the OJK data.
result of global uncertainty over energy supplies Indonesian producers are looking to take
owing to the Ukraine conflict and sanctions on advantage of high coal prices after a temporary
Russia, which accounts for around 20% of global ban on exports by the government in January.
thermal coal exports. By investing in Indonesian mines, bank are
Between 2016 and 2021, about $16 billion in going against many recent policy decisions to
credit went to mining companies in Southeast defund coal by both governments and invest-
Asia, according to data from finance monitoring ment funds.
platform Forests & Finance. Blackrock led the way by ending investment
The top five lenders identified in the data in coal, while many G7 governments have also
set are Citigroup, BNP Paribas, SMBC Group, called for an end of coal financing abroad. ™
MUFG, and Standard Chartered.

Week 20 18•May•2022 www. NEWSBASE .com P9