Coal mine disaster sharpens focus on utilities

The Turkish mine disaster has put mining companies and utilities in the spotlight for the way they source coal – with coal mine workers also killed in the US and Australia the past month.


A coal mine explosion and fire that has killed over 200 people in Turkey coincides with increased pressure on miners and utilities to drastically improve safety and environmental standards for miners risking their lives.

Coal mining is responsible for more fatalities than the production of any other energy source due to poor working conditions in producing countries such as China, Turkey, South Africa, Indonesia and Colombia. It is also a major world polluter.

The disaster in western Turkey, likely to be the country's deadliest, is still unfolding with hundreds believed to be trapped underground. It's also the worst in a series of incidents in a sector that has seen 30,000 die since 1970.

A coal mine collapse in the US state of West Virginia killed two workers this week at a facility that had "chronic compliance issues" and received numerous citations from inspectors last year.

Last month, two more workers were killed in Australia after a supporting wall in a coal mine about 240km west of Sydney gave way, trapping the two men about 500m below the surface.

This deadly record is putting pressure on utilities from shareholders to source their coal in a more ethical and environmentally friendly way to save thousands of miners and reduce pollution.

Despite its poor record, coal accounts for over 40 per cent of global electricity generation as coal-fired power stations are relatively cheap to build and operate.

Shareholder pressure

Under scrutiny from major shareholders including Norway's sovereign wealth fund, some energy companies have begun to take action, clubbing together to form the Bettercoal group to improve their ethical, social and environmental standards.

"There is increasing awareness of coal's destruction ... and also understanding that alternatives are possible," said Ailun Yang, senior associate at the US World Resources Institute.

The coal mining sector's dismal fatality record since 1970 compares with 20,000 deaths in the oil sector and around 1500 in natural gas, according to estimates from the Paul Scherrer Institute, a Swiss natural and engineering sciences institute.

Other estimates are much higher with Hazardex, a specialist in safety information, saying that China's death toll alone is over 1000 a year.

Meanwhile, the World Health Organisation said last month that air pollution, partly caused by burning coal, killed 7 million people worldwide in 2012, making it the world's single biggest environmental health risk, and the WHO recommended "the movement away from dirtier fuels, such as coal".

Letter to the pope

Environmentalists, religious groups, academics, politicians and scientists say the utilities and the banks which fund the coal mining still have not done enough.

Norway's $US817 billion sovereign wealth fund, the world's biggest, has halved its exposure to coal producers, and chief executive Yngve Slyngstad told Reuters in March it would further review investments in the sector this year.

The fund has investments in mining majors such as BHP Billiton, Vale, Glencore Xstrata, and Anglo American, but has dropped Rio Tinto on ethical grounds. It is also invested in some 160 companies that use coal to generate power, such as French utility GDF Suez, and another 190 companies that use coal to produce steel.

In the United States, Stanford University said this month it will no longer use any of its $US18.7 billion endowment to invest in coal mining companies.

Late last year the United Nations' climate chief urged a radical clean-up of the coal industry, while religious groups in Australia and North America wrote to the Pope in February, urging him to encourage banks to move their money out of coal.

Reacting to public pressure, several large financial institutions like the World Bank and the European Bank for Reconstruction and Development have said they will curb funding for coal projects.

Better coal?

The push for higher coal mining standards follows the success of the fair trade standards for agricultural products such as coffee and chocolate and the campaign against the sale of diamonds mined in conflict areas.

Industry experts say a recent fall in coal prices provides an opportunity to push through a change in mining practices.

"Utilities and investors are in a good position to demand change as there is a global coal oversupply, giving buyers multiple choices to source their coal from," said one mining adviser who did not want to be named.

Coal prices have dropped around 40 per cent in the past three years following a mining investment boom that has clashed with sluggish demand growth.

In Europe, a group of utilities which account for more than half of the region's thermal coal imports has clubbed together to pressure for higher coal mining standards.

The Bettercoal group is made up of DONG Energy, EDF, GDF Suez, E.ON, RWE, Fortum, Gas Natural Fenosa, and Enel and started to assess mining companies for their ethical standards in April.

Coal use still rising

Despite international efforts to shift to cleaner and safer fuels, coal's share of energy generation is still increasing and global carbon dioxide emissions hit a record high last year.

Driven by rising use in emerging economies, coal could even surpass oil as the main fuel for the global economy by 2020, energy consultancy Wood Mackenzie said.

This highlights the need to take urgent action to improve environmental standards, experts say.

In the West, a revolution in shale gas technology in the United States has triggered a switch from coal to cleaner natural gas, but it has also resulted in cheap coal exports to Europe where its share of the power generation mix has risen despite efforts to use more renewable power sources.

Chinese efforts to reduce its pollution from coal, range from pushing its natural gas, renewable and nuclear power generation sectors as well as introducing particle filters and reducing the amount of high sulphur and low quality coal imports especially from Indonesia.

Originally published by Reuters. Reproduced with permission. 

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