Isra-Mart srl : Banks come under fire for mountain top removal ties

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Big banks accused of backing high risk and environmentally damaging mining practices
UBS, Citi, and PNC banks are the biggest financiers of mountaintop removal (MTR) mining in the USA's Appalachian mountain region, according to a new report issued this week. Only Credit Suisse came away unscathed in the report, which suggested that the controversial mining practice is incurring an increasing level of regulatory risk.

The report, entitled Policy and Practice: 2011 Report Card on Banks and Mountaintop Renewal, was produced by the Rainforest Action Network. It evaluated the stated policies of 10 banks, and compared them to the number and significance of Appalachian MTR-related deals that they had participated in.
The report said PNC contributed funds to 38.6 per cent of Appalachian MTR production, putting it in the most exposed spot in the table. Second was Citi, with 37.4 per cent, while UBS followed in third place with funding support for 36.4 per cent of production.

The report separately graded each bank based on the strength of its policy on MTR, along with its delivery on that policy. Credit Suisse got the top score, thanks to its refusal to finance any MTR-related activity.

UBS had committed to assess the extent of MTR activity in companies that it financed, and looked for a commitment to reduce such activities over time.

"Immediately after this policy announcement at UBS, the bank acted as an advisor on the Massey-Alpha combination deal, which created the largest single mountaintop remover in the country, responsible for fully 25 per cent of coal production from MTR mines," the report said.

Deutsche Bank and GE Capital both received F scores in the report card, due to theire failure to produce any policy with regard to MTR mining.

MTR coal mining has come under fire in recent years for its adverse environmental effects. The practice, which involves the explosive removal of mountain tops to expose coal seams, leaves large amounts of residue in valleys, where it buries and contaminates water sources.

Groups of activists have protested against the practice, particularly in the US's Appalachian mountains, where it is accused of contaminating residential water supplies.

The report pointed out that the EPA has taken a more aggressive stance of late on MTR, publishing research on the negative environmental effects and vetoing some efforts at MTR.

As such, investments in MTR projects are expected to face growing levels of regulatory and reputational risk.