Singapore Banks Face Scrutiny Over Financing Harita Nickel’s Coal-Powered Operations
Singapore’s three major banks—OCBC, UOB, and DBS—are under scrutiny for their financing of Indonesia's Harita Nickel, a mining company whose smelting and refining operations rely heavily on coal-powered captive plants. Environmental advocacy group Market Forces flagged the banks for providing loans to Harita despite their pledges not to finance new coal-fired power plants. OCBC tops the list with $635 million in loans since 2018, followed by UOB with $201 million and DBS with $87 million.
Harita Nickel operates on Obi Island, Indonesia, where its energy needs are met through 890 megawatts (MW) of coal-fired power plants, with an additional 1.2 gigawatts (GW) under construction. The company has pledged to reduce greenhouse gas emissions by 30% from 2022 levels by 2030, but its emissions more than doubled in 2023 to 7.98 million tonnes of CO2 equivalent (MtCO2e), up from 3.01 MtCO2e in 2022. Critics argue that Harita’s plans to build more coal plants undermine its decarbonization targets.
The banks defend their financing decisions by highlighting the critical role of nickel in electrification and the global energy transition. However, environmental groups question whether Harita’s reliance on coal aligns with sustainability commitments. While Harita has made progress in reducing emissions intensity per tonne of output, its overall decarbonization strategy lacks credibility due to its continued expansion of coal-fired power facilities.
Market analysts note that Harita’s power mix includes only one unit of solar power for every two units of coal-fired power, raising concerns about the company's ambition to transition to renewable energy. Despite achieving a profit of approximately $512 million in 2024, critics argue that Harita could afford to invest more in sustainable energy solutions.
The implications extend beyond Harita’s operations. Cheap nickel produced using coal-fired power plants is reportedly undermining higher-cost, low-carbon nickel production in regions like Western Australia and New Caledonia, where mines have shut down or scaled back due to competition from Indonesia’s high-carbon nickel. A study led by MIT researchers highlights how such practices systematically discourage investment in sustainable nickel production globally.
Singapore’s banks have emphasized their commitment to enabling a just energy transition while managing environmental risks through responsible banking policies. However, questions remain about how effectively they hold clients like Harita accountable for their sustainability commitments and whether stricter conditions should be tied to financing agreements.
