In a recent Business Times (BT) article, Singapore’s three major local banks—OCBC, UOB, and DBS—have been named in a report by environmental group Market Forces for financing Indonesia’s Harita Group, whose nickel smelting operations are powered primarily by coal. OCBC led with US$635 million in loans since 2018, followed by UOB (US$201 million) and DBS (US$87 million). Even though all three Singapore banks have committed to cease the financing of new coal-fired power plants, financing the production of nickel does not fall under this remit even if the extraction activities are powered by coal.
Given the dominance of coal in Indonesia’s energy supply, banks are arguably caught between a rock and a hard place as their financing are limited by the constraints of the external environment they operate in. Associate Professor Zhang Weina, Deputy Director of SGFIN, offers her comments on the matter: While terminating financing for all carbon-intensive projects may not be practical, especially for transition-critical sectors like nickel mining, banks can take measured steps.
This article sheds lights on some recommendations on how to address the sustainable issues arisen from Asian EV battery producers.