BofA Cutting Off Financing for Mine Operator; UBS Remains Large Lender
Massey Energy, owners of the West Virginia mine that exploded Monday, has drawn criticism for an array of safety violations and environmental issues over the years -- so much so that even some big Wall Street banks refuse to finance the Richmond, Va.-based company.
Pressured by environmental groups and shareholder activists, Bank of America recently adopted a formal policy against financing coal mining companies that engage in mountaintop removal of coal, or strip mining. Massey is one of a handful of companies that extracts coal by strip mining. Bank of America says it is concerned about environmental issues, chiefly the contamination of ground water. The bank is now in the process of ending its relationship with Massey, sources in the environmental community and on Wall Street said, although a spokeswoman for the bank declined comment.
JPMorgan Chase stopped providing financing to Massey in 2008, an energy industry source said, although it is not clear what prompted that decision. A JPMorgan Chase spokeswoman declined comment. Last year, Citigroup also adopted its own policy to address concerns over mountaintop removal. A Citigroup spokeswoman declined comment on whether the bank currently finances Massey.
UBS appears to be Massey's sole primary investment banker at present.
Massey, like many large corporations, borrows from banks to finance operations. It currently has more than $1 billion in debt on its books.
The company's CEO, Don Blankenship, has over the years justified the controversial practice of mountaintop removal, calling it crucial to America's economy and global competiveness. He debated the issue earlier this year with environmental activist Robert Kennedy Jr.
Blankenship has also said he considers mountaintop removal operatons safer than underground mines such as Upper Big Branch south of Charleston, W.Va., where Monday's explosion killed at least two dozen miners. A Massey spokeswoman, reached in Richmond by phone, said the company was not able to comment on the incident.
Several institutional investors, including the New York City and New York State comptrollers' offices, have pushed Massey, through shareholder resolutions, to adopt carbon emissions reduction strategies as well as improved corporate governance policies.
Safety issues have not been part of the shareholder activists' agenda, though Massey has been criticized by some groups as being something less than a model corporate citizen.
"While we don't know what caused the explosion, here we have another tragic indicator of the costs associated with coal," said Dan Bakal, a spokesman for Ceres, a Boston-based nonprofit group that has led efforts to push coal companies toward more environmentally sound practices. "Coal seems cheap, but it's not. The costs to society need to be addressed."
Some of Massey's largest shareholders include the money manager BlackRock and the hedge fund Duquesne Capital, run by Stanley Druckenmiller, formerly right hand man to George Soros. Last year, Ceres and the government of New York City put forth a shareholder resolution to get Massey to commit to cleaner energy, and Bakal said 46 percent of those who voted were in favor of it.
Meanwhile, environmental groups such as the Rainforest Action Network have applauded the banks' decisions to stop financing Massey's activities, and want shareholders to weigh in as well.
"Investors need to get on the right side of history and fund companies that produce energy sources that are clean, safe and renewable," said Nell Greenberg, a spokeswoman for RAN.
"As shareholders, the question becomes how many violations on safety and environment are they going to put up with?" said Kevin Grandia of desmogblog.com, a Vancouver-based nonprofit aimed at promoting clean energy awareness.
"There are plenty of companies that turn a profit without blasting the tops off mountains."
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