Insurance Firms Won’t Provide Financial Backing for Cumbrian Coal Mine

Major insurance firms have said that they will not provide financial backing to the UK’s first deep coal mine in more than 30 years in west Cumbria.

It comes amid a series of actions aimed at such firms across Britain, as climate campaigners target organisations involved with the financing of fossil fuels worldwide.

Four companies – AEGIS Managing Agency, Argenta Syndicate Management, Hannover Re, and Talanx – have so far ruled out underwriting the controversial plans for a deep mine off the coast at St Bees, Cumbria.

They cite a number of reasons – from environmental, social, and corporate governance (ESG) policies to risk appetite – as their primary motivations not to back West Cumbria Mining (WCM) Ltd’s plans.

A spokesperson for AEGIS wrote to the Coal Action Network, which campaigns against UK coal mining projects, saying: “AEGIS London has no direct involvement in the insurance of the West Cumbrian Coalmine. All prospective insurance transactions or facilities with relevant ESG characteristics presented to AEGIS London are considered in the context of AEGIS London’s ESG Policy, following which a decision is made on the appropriateness of any transaction.

“In this instance, we are not considering any current proposals to insure the West Cumbria coal mine project.”

A spokesperson for Talanx wrote: “We are able to confirm that providing insurance for this project, its construction, contractors, infrastructure or operation is not currently within our risk appetite. Therefore, we have not and do not intend to provide insurance services associated with this project.”

Cumbria Coal Mine: ‘A Subterranean White Elephant’ in the Works

Stuart Spray reports on the reaction by politicians, environmental groups and climate activists to the Government’s go-ahead for the country’s first coal mine in 30 years

Stuart Spray

Campaigners are today targeting HSBC branches across Britain since it has previously financed EMR Capital, the private equity firm behind the West Cumbria mine. Having faced sustained campaign pressure over recent years, the bank has committed to phasing-out finance for coal mines.

Andrew Taylor, of the Coal Action Network, described it as “just the start”, adding that he believes there is a groundswell of public opinion pushing “insurers and banks like HSBC to turn their backs on this climate-wrecking project”.

WCM’s plans would see approximately 2.78 million tonnes of coking coal extracted from underneath the Irish Sea bed every year.

The controversial proposals were subject to a public inquiry in 2021 and Levelling-Up Secretary  Michael Gove greenlit the project last December. The scheme has since become mired in a number of legal challenges, which are now likely to run into 2024.

News of insurers refusing to back the plans raises the prospect of something similar to the ‘Stop Adani’ campaigning drive developing in the UK, environmentalists say. That campaign saw 45 major insurance companies, including 28 that manage Lloyd’s of London syndicates, pull out of backing the Adani Carmichael coal mining project in Australia.

Along with HSBC, Lloyd’s is due to be targeted in a series of demonstrations in cities including London, Manchester, Leeds, Sheffield, Birmingham, York, Wrexham and Cardiff. The firm’s fossil fuel premiums in 2022 were estimated at $1.6-2.2 billion, out of a total market of $21.25 billion – around 10% of the global fossil fuel market.

The actions form part of 400 taking place worldwide between 15 and 17 September, coordinated by more than 780 organisations and expected to draw millions of participants.

WCM has already been hit by financial withdrawal when the Singapore-based EMR Capital, after having invested around £30 million in the project, carried out a “cost-saving programme” on the eve of the 2021 public inquiry, which saw Cumbrian offices vacated and staff made redundant. WCM was contacted for comment.

A spokesperson for Money Rebellion, which is supporting today’s actions, said: “The West Cumbria mine is incompatible with the UK’s climate commitments and will fuel climate breakdown. The City of London needs to stop funding and insuring new fossil fuels now.”

Coal companies have in recent years found it increasingly hard to find insurance for new and existing mines through traditional routes, leading some firms to take on additional costs and risks.

Campaigners are urging financial organisations not to fund coal extraction of any kind, pointing out that around 85% of the coal extracted off the Cumbrian coast will be exported.

“Burning coal to make steel needs to be rapidly phased out,” said the Coal Action Network’s Anne Harris. “If mining were to start at Whitehaven, the vast majority of the coal would be exported as it is high in sulphur and would breach UK air quality regulations if burned in large amounts.

“The UK’s two blast furnaces are the country’s second and third biggest carbon emitters. Investment in new technology and increased reuse and recycling of steel is needed to green the industry, not new mines.”

AEGIS Managing Agency, Argenta Syndicate Management, Hannover Re, and Talanx were contacted for comment.