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South African banks say they must continue to fund at least some coal projects for the time being because a complete halt would place enormous political and economic stresses on a country that relies on the most polluting of fossil fuels.
The top four banks have begun to withdraw finance, with Nedbank and FirstRand setting 2025 and 2026 deadlines to halt funding for new thermal coal mines, respectively. Both have ceased financing new coal-fired power projects.
However, banks continue to finance existing coal mines and power plants. Absa and Standard Bank, South Africa’s other two major lenders, have indicated an interest in backing new coal mining or power projects.
Despite the fact that coal-related lending accounts for a modest fraction of their loan portfolios, the funding is critical for keeping the lights on and tens of thousands of people employed in Africa’s most industrialized economy.
Eskom, South Africa’s state-owned power company, relies primarily on ageing coal-fired power plants to supply 90 percent of the country’s electricity. In 2020, more than 90,000 people were employed in coal mines.
“The easiest thing would be to say ‘we’re out’,” he said, but he added that such a step would force the already heavily indebted government to step in to prop up the sector.
Story by : Norvisi Mawunyegah