Who owns the Coal? A detailed analysis of who has effective control of the world’s listed coal companies January 2017 21
Who Owns the Coal?
A detailed analysis of who has effective control of the world's listed coal companies
Contents
Summary ...... 2
The Carbon Ownership Chain ...... 3
InfluenceMap's Finance Project ...... 4
Coal Ownership Trends ...... 5
Focus on the Listed Funds ...... 6
Asset Owners: Who's Divested ...... 8
The Japanese Connection ...... 9
Appendix A - Which Funds Own the Coal ...... 10
Appendix B - The Coal Top 100 ...... 11
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Summary
n A recent
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The Carbon Ownership Chain
The effective or beneficial owners of all of society's financial assets must be individuals, as opposed to legal entities who may be the registered owners. On this basis an ownership/investment chain can be constructed tracing various types of individuals on one side of the chain with the physical assets, like coal reserves and associated infrastructure on the other. In the middle lie a variety of operating companies, financial intermediaries and public sector institutions. The following info-graphic shows the range of actors in the chain. The nature of the chain will vary with geography and changes with time. For example in China, the majority of Registered Owners of coal assets are government entities. In the US currently, a large chunk of the coal sector is registered in the name of Private Equity and High Net Worth Individuals. This general analysis is universally applicable and is a useful starting point in understanding how the investment and finance system can alter the manner in which the carbon assets are managed.
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InfluenceMap's Finance Project
In theory, the beneficial owners in the chain above should be able to exert their rights and interests through the chain to ensure their values and interests are reflected. A major underpinning of the theory of change of sustainable finance as it applies to climate change hinges on the beneficial owners like pension and insurance beneficiaries and individual savers having their collective voice heard when it comes to management of the carbon assets by the operating companies like Shell and BHP Billiton. There are two major barriers.
n The two sides of the chain above contain numerous intermediaries and the positions of the beneficiaries are dispersed and not efficiently communicated through the chain. n Information on who owns precisely what in the chain is not well disclosed and what is disclosed is not aggregated in a publicly available manner allowing the beneficial owners to communicate their values.
InfluenceMap's Finance Project aims to shed light on the second of these two barriers by forensically tracking and aggregating the data that is available in the entire chain, globally from legal disclosures and making this available to the investment and campaign communities and the general public. Some very important information issues should be noted.
n The ability to track registered owners of coal and other stocks is limited by disclosure requirements. In general asset owners (as opposed to asset managers or listed funds) are not required to disclose their holdings.1 n Asset managers (who charge fees to manage external money) are required to declare their holdings on a quarterly basis, as are listed funds in most countries.2 n Tracing ownership to asset owners is difficult as they often award mandates to manage their assets to investment managers (like Blackrock, in whose name the shares are registered) or buy listed funds rather than individual stocks. n A concern of the climate community is that monies divested from coal production equities may be reinvested elsewhere in the coal value chain, such as utilities or transport. Our data will expand to these sectors analysing the coal exposure in each company and ownership trends as relevant.
With these caveats in mind, we initiate our project on the coal production sector. Our full interactive table can be found online whereby users may filter for region, value metric and size of investor.
1 The SEC requires insiders and individuals with 5% or more of a company to declare holdings (13-D, 13-G, 14-A). 2 The SEC, for example, requires asset managers with over $100m AUM to declare, via the 13-F process.
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Coal Ownership Trends
Divest/Invest has been a major theme of the climate movement in the past decade with numerous asset owners pledging to divest from the coal and other fossil fuel sectors in various ways and according to a range of time scales. A key objective of InfluenceMap's Finance Project is to create objective metrics to measure these divest pledges, with an initial focus on coal.
We examine 100 of the largest listed coal companies responsible for over 50% of the production of thermal coal globally (6.62 billion tonnes)3. To put this in perspective the production from these 100 companies represents roughly 20% of annual global CO2 equivalent GHG emissions from man's activities when it is combusted for energy generation.4
World Thermal Coal Produc on
100 Listed Companies
Private Russian Companies
Other Chinese companies
State Owned European and Asian Companies
Private and Small US Coal Companies
Other
In this report, we merge two data sets using smoothing and querying algorithms to ensure consistency and remove spurious data points.5
n Financial disclosures in 20 legal jurisdictions relating to the holdings of listed funds (ETFs, mutual funds, investment trusts etc.). n The annual reports and regulatory submissions of the 100 coal companies providing data on revenue, coal production, coal reserves and the proportion of sales the companies derive from thermal coal production.
3 International Energy Agency data, 2016, includes lignite coal production, which is primarily used in electricity generation. 4 International Energy Agency data, 2015, excludes land use emissions. 5 In the process we analysed over 40 million data points over a period 2010-present.
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Coal ownership may be measured from a variety of viewpoints and we offer users several metrics with which to filter the most coal intensive funds.
n Value of the coal holdings - in our metrics we temper this by multiplying by the % of revenue the company gets from thermal coal6 in order to avoid attributing the entire value of diversified companies to the tally. n Value of the coal holdings as a percentage of total assets under management - we generally consider equity-only funds so this is a straightforward ratio. n Coal production owned - if the fund owns a % of the coal company we in turn attribute this annual coal production to the fund-owner. n Coal reserves owned - if the fund owns a % of the coal company we in turn attribute this yet-to- be-combusted coal to the fund-owner.
The coal-related metrics above are useful as they can easily be converted to greenhouse gas emissions equivalent if the user is interested in this climate perspective. In addition, given the recent collapse in the value of coal companies the coal-metrics may be a more indicative one to judge changes in the coal intensity of an asset owner's holding.
Focus on the Listed Funds
In this initial report we examine a key part of the Registered Owners aspect of the chain - Listed Funds. These funds now control over 50% of the value of stock markets globally and make up the majority of most individuals' savings, pensions and investments. In this study we assessed 50,000 of the world's largest listed funds and linked them to investment management companies like Blackrock and the Vanguard Group to detect common ownership patterns.
Listed funds are generally required to disclose their positions (that is, what they own) to financial regulatory authorities like the Securities and Exchange Commission in the US, each quarter so good data is available in principle. Listed funds are increasingly becoming the core of investment and ownership of assets by individuals. Clearly these funds are in turn owned by other parts of the Ownership Chain and ultimately the individual beneficiaries. Due to the relatively clear disclosure requirements and wide ownership, this presents a useful start to analyse trends and patterns in ownership of the global coal assets.
Our data shows that 60% of the value of the 100 top listed coal companies are owned by listed equity funds. These include a range of funds - passive tracking funds, actively managed, thematic funds etc. Due to hugely varying coal company valuations (most have declined by 50% or more over this time
6 All data taken from annual reports 2011-2015
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period, its helpful to measure ownership in terms of the coal production that the ownership stakes represent.
We slice and dice our data to look at trends in how the funds have divested and invested in the coal stocks over the last five years, by region and type of fund.
Our full interactive table can be found online whereby users may filter for region, value metric and size of fund.
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Asset Owners: Who's Divested
In the investment chain asset owners like pension funds, insurance companies and wealth funds are one step away from the actual individual beneficiaries (i.e. savers, policy holders and citizens). Tracing ownership to asset owners is difficult as they often award mandates to manage their assets to investment managers (like Blackrock, in whose name the shares are registered) or buy listed funds rather than individual stocks. With this in mind, we examine some prominent asset owners that have made divestment pledges over the last few years and assess these claims against our coal equity ownership database.
Coal Coal Coal Coal Asset Owner Production Reserves Production Reserves Owned Owned Change % Change %
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The Japanese Connection
Japanese strategic investors like Mitsubishi Corporation, Mitsui & Co and Itochu now own significant amounts of coal production and reserves. Based on our analysis of minority holdings of public and privately held coal producers by the Japanese trading and investment giants we can compile the following information on recent trends in buying and selling of coal reserves by this key part of the global coal ownership chain. The following data is aggregated from all the holdings in coal ventures these companies have around the world.
< Note these are initial numbers, which will rise substantially once we aggregate all holdings >
Coal Coal Coal Coal Company Production Reserves Production Reserves (tonnes) (tonnes) Change % Change % Idemtitsu 11,274,000 235,000,000
Itochu 6,490,000 672,150,000
Mitsui & Co 1,952,653 65,080,500
Mitsubishi Corporation
Sumitomo Corporation
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Appendix A - Which Funds Own the Coal
By Individual Listed Fund The following is a list of the top listed fund holders of coal stocks sorted by the % of the fund value. Full details can be found on our interactive online tool, via which the Top 50 as expressed in a range of metrics can be generated. All coal data in millions of tonnes.
Coal Coal Fund Fund Value % Coal $Value Production Reserves Blackrock
Vanguard
By Fund Management Company Here we group the funds managed by the same companies and gauge the most coal intensive fund managers by % of the fund value. All coal data in millions of tonnes.
Total Equity Coal Coal Fund Company % Coal $Value Fund AUM Production Reserves Blackrock
Vanguard
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Appendix B - The Coal Top 100
Annual Coal Production Company (tonnes) Coal India 494,238,000 China Shenhua Energy 280,900,000 Peabody Energy 209,550,000 Arch Coal 133,796,000 Glencore 122,000,000 Shaanxi Coal Industry 110,016,825 RWE 95,200,000 Anglo American 94,900,000 Bumi Resources 84,200,000 Alpha Natural Resources 83,538,000 Cloud Peak Energy 75,100,000 Yanzhou Coal Mining 64,480,000 Yangquan Coal Industry Group 54,574,598 Westmoreland Coal 53,530,000 Beijing Haohua Energy Resource 52,506,119 Banpu 50,600,000 Adaro Energy 50,350,000 PGE Polska Grupa Energetyczna 49,400,000 Huolinhe Opencut Coal Industry Corp 46,600,000 Itochu Corporation 46,000,000 Public Power Corporation 43,800,000 Vinacomin Coc Sau Coal 42,000,000 Alliance Holdings 41,200,000 Sasol 41,200,000 BHP Billiton 41,012,000 Exxaro Resources 39,953,000 Datang International Power Generation 38,480,000 Datong Coal Industry 34,872,300 Inner Mongolia Yitai Coal 34,340,000 Natural Resource Partners 34,312,120 Shanxi LuAn Environmental Energy Development 32,447,847 South32 31,681,000 Indika Energy 30,900,000 NACCO Industries 30,600,000
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Indo Tambangraya Megah 28,500,000 Tata Power 26,600,000 NLC India 25,451,000 CONSOL Energy 24,742,000 Berau Coal Energy 24,200,000 Pingdingshan Tianan Coal Mining 20,284,763 Foresight Energy 20,100,000 Shanxi Coal International Energy Group 19,530,000 Bukit Asam 19,282,951 Rio Tinto 18,638,000 Jizhong Energy Resources 18,609,900 Energy Australia 18,000,000 Shanxi Xishan Coal and Electricity Power 16,140,000 SDIC Xinji Energy 14,808,538 Anhui Hengyuan Coal Industry and Electricity Power 14,296,400 Mitsui & Co 12,916,750 Whitehaven Coal 11,972,000 Yancoal Australia 11,855,600 Bayan Resources 11,300,000 Idemitsu Kosan 11,274,000 Adani Enterprise 11,000,000 Kuzbasskaya Toplivnaya Company 11,000,000 Gansu Jingyuan Coal Industry and Electricity Power 10,850,000 Henan Dayou Energy 10,483,869 Zhengzhou Coal Industry & Electric Power 10,420,000 LG International 10,000,000 China Coal Energy 9,547,000 Inner Mongolia PingZhuang Energy Resources 9,412,400 Golden Energy Mines 8,700,000 Westmoreland Resource Partners 8,481,000 Lubelski Wegiel Bogdanka SA 8,457,000 African Rainbow Minerals 8,340,000 Semirara Mining Corporation 7,980,000 PTT 7,900,000 Baramulti Suksessarana 7,750,000 Berkshire Hathaway 7,449,000 Hallador Energy 7,447,000 Wesfarmers 6,977,000
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Gujarat Mineral Development Corporation 6,968,000 Toba Bara Sejahtra 6,100,000 Lanna Resources 6,000,000 New Hope Corporation 5,700,000 Capital Power 5,500,000 Mechel 5,200,000 United Tractors 4,600,000 CNX Coal Resources 4,558,000 Southern Kuzbass Coal Company OJSC 4,200,000 Mitrabara Adiperdana 4,143,080 Black Hills Corporation 4,100,000 New World Resources 4,010,000 Agritrade Resources 4,000,000 ALLETE 4,000,000 Kinetic Mines and Energy 3,800,000 CESC 3,500,000 Severstal 3,377,000 Shanxi Lanhua Sci-Tech Venture 3,152,900 Sundiro Holding 2,746,900 Anyuan Coal Industry Group 2,690,100 Jindal Steel And Power 2,263,238 Rhino Resource Partners 2,100,000 Wescoal Holdings 1,920,000 Shanghai U9 Game 1,660,958 Vale 1,560,000 China Qinfa Group 1,442,000 Mongolian Mining Corporation 1,350,000 Blackgold International Holdings 1,052,774
13 WHO OWNS THE COAL OCTOBER 2016 About InfluenceMap
We are a neutral and independent UK-based non-profit whose remit is to map, analyze and score the extent to which corporations are influencing climate change policy. Our knowledge platform is used by investors, climate engagers and a range of concerned stakeholders globally.
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