Alpha Natural Resources Climate Risk 2013
|Company||Alpha Natural Resources, Inc.|
|Filer||Unitarian Universalist Association of Congregations|
|Sector||Mining & Resources|
|Subject(s)||Climate Change; Greenhouse Gas Emissions|
|Resolved Clause Summary||Climate risk report|
Alpha Natural Resources, Inc. is the nation’s third largest producer of coal and the largest metallurgical coal supplier, with 2.3 billion tons of proven and recoverable coal reserves.
In recognition of the need to combat climate change and minimize global temperature rise, most developed nations signed the Copenhagen Accord finding that “deep cuts in greenhouse gas emissions are required” and that “the increase in global temperature should be below 2 degrees Celsius.”
In this year’s World Energy Outlook, the International Energy Agency states, “No more than one-third of proven reserves of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2 degree Celsius goal” and, “Almost two-thirds of these carbon reserves are related to coal...” A recent HSBC report analyzing certain large mining companies found that, if constraints on carbon emissions were imposed after 2020, they could reduce coal asset valuations by as much as 44 percent.
It is of concern to investors that a portion of Alpha’s coal reserves and/or related infrastructure may become unusable, unmarketable, or otherwise not economically viable as a result of greenhouse gas restrictions.
Company disclosure and analysis of this challenge is very limited. Its February 2012 Form 10-K states that “ coal may become a less attractive fuel source for our customers if federal, state or local emissions rates or caps on greenhouse gases are enacted, or a tax on carbon is imposed, such as those that may result from climate change legislation or regulations. As a result, future legislation, regulations, interpretations or enforcement may adversely affect our mining or other operations, or our cost structure or may adversely impact the ability or economic desire of our customers to use coal.”
Given the increasing likelihood of material impact, shareholders need additional disclosure of the company’s action plans, and risk scenarios, associated with likely greenhouse gas regulation.
Shareholders request Alpha to prepare a report on the company’s goals and plans to address global concerns regarding fossil fuels and their contribution to climate change, including analysis of long- and short-term financial and operational risks to the company and society. The report should omit proprietary information, be prepared at reasonable cost, and be made available to shareholders by September 30, 2013.
In analyzing long and short term risks, proponent suggests that Alpha perform an analysis of various scenarios the company deems likely or reasonably possible, such as restrictions on carbon emissions allocated by geographic regions or fuel types. Such analysis should describe a range of scenarios in which a portion of its reserves or infrastructure are at risk of becoming stranded assets due to carbon regulation, and the impact of those scenarios on any plans to continue to explore or further develop new coal or gas reserves.