Another blow to coal as China’s largest bank says it won’t fund $3bn Zimbabwe plant

The Industrial and Commercial Bank of China (ICBC) is reported to have dropped plans to fund a $3bn coal-fired power station in Zimbabwe.

The bank, presently the largest in the world with assets of $4.2 trillion, was to have financed the Sengwa plant, a 2.8GW project that aimed to exploit coal deposits located between Harare and Bulawayo.

Zimbabwean industrial developer RioZim awarded a contract to build the 700MW first phase of the plant to China Gezhouba Group in April last year. Shortly after, ICBC announced that it had signed a formal expression of interest in funding the scheme, and the following month the China Export and Credit Insurance Corp (Sinosure) agreed to provide risk insurance.

The Bloomberg news agency reported that ICBC has told Go Clean ICBC, a coalition of 32 environmental NGOs, that it would not fund the scheme after all. The bank described the project as a "bad plan due to environmental problems".

Go Clean ICBC was formed in January specifically to persuade the ICBC to switch its funding to renewable energy projects.

Banks and construction companies have come under pressure from shareholders, climate activists and the general public to shun new coal plants.

Last month, four major Korean insurers announced that they will no longer provide any insurance coverage for new coal power projects.

Hyundai Marine & Fire Insurance, Hana Insurance, DB Insurance, and Hanwha General Insurance made the decision after campaigning by groups such as Korea Beyond Coal, a network of civic organisations advocating for a complete coal phase-out by 2030.

This has meant that China is seen as one of the few remaining countries willing to support these schemes, and a number of large-scale projects in Zimbabwe have been associated with Chinese support.

The most notable of these is the 2.1GW Binga plant in Matabeleland. This is being built by China State Engineering Construction Corporation, and is backed by a $2bn loan, also guaranteed by Sinosure.

Lauri Myllyvirta, lead analyst for the Centre for Research on Energy and Clean Air, told Climate Home News: "This is highly significant, obviously for Zimbabwe but also for Chinese overseas energy financing. It is the first time, to my knowledge, that a Chinese bank has proactively walked away from a coal-power project."

He added: "ICBC has been signalling for a number of years that it will strengthen its risk assessment and sustainability standards. In that sense, it does seem likely that this is some kind of a precedent – although that doesn’t mean they are going to drop every single coal project."

Image: For illustration, Xcel Energy’s Sherburne County coal-fired generating station near Becker, Minnesota (Tony Webster/CC BY-SA 2.0) 

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