Coal miners forced to save for a rainy day by insurance snub
By Clara Denina and Sarah McFarlane
LONDON (Reuters) — Some coal producers are having to set aside tens of millions of dollars to cover their own risks as they are cut adrift by insurers, making it more difficult and costly to do business amid a surge in demand for the fossil fuel.
Dozens of insurers have announced restrictions on their cover for the coal industry, particularly for new projects, in response to pressure from shareholders, governments and environmental groups who want to limit coal's contribution to global warming. This follows similar moves by banks to restrict their coal financing activities.
Coal miners need extensive insurance including for operations, property, equipment, and environmental liability. Three insurance brokers said it can now take months and dozens of enquiries to find such coverage for a coal client.
Reuters spoke to five coal mining executives who said that the industry is increasingly moving towards self-insurance and self-finance, as the difficulty of securing coverage from insurers makes loans more expensive or unavailable.
Some miners, including South Africa's Seriti Resources and Thungela Resources, are already setting aside capital to self-insure and only buying insurance to protect against larger and less frequent losses.
While Seriti has said it is not struggling to get funding from banks, securing insurance cover has become more challenging, according to its chief financial officer Doug Gain.
«In recognition of ESG and related factors shrinking the availability of thermal coal insurance capacity globally, Seriti has embarked on a journey toward increased self-insurance,» Gain told Reuters via email.
He did not elaborate on the cost for Seriti, which supplies many of
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