SAN FRANCISCO (Reuters) - Bank of America Corp will sharply cut lending to coal mining companies that take the tops off mountains, following pressure from groups that call the practice an environmental hazard. The move by the top U.S. bank represents a financial blow to the industry just as the Bush administration this week made it easier for coal companies to dump debris from mountaintop mining into nearby valleys and streams.
SAN FRANCISCO (Reuters) - Bank of America Corp will sharply cut lending to coal mining companies that take the tops off mountains, following pressure from groups that call the practice an environmental hazard.
The move by the top U.S. bank represents a financial blow to the industry just as the Bush administration this week made it easier for coal companies to dump debris from mountaintop mining into nearby valleys and streams.
The coal industry dismissed the idea that Bank of America's action would mean major changes for its operations, but environmental groups foresee other banks considering their practices and mining companies scrambling for funds.
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"I think it will send a shock wave through the coal industry, because they've been able to do this for a long time on the cheap," said National Resources Defense Council campaign director Robert Perks.
Coal is abundant in the United States but also a relatively dirty fuel that contributes to global warming, making it central to debates on energy independence and the environment. In the steep mountains of Appalachia, across Virginia, West Virginia, Tennessee and Kentucky, mountaintops are literally destroyed to expose coal.
The practice has become a target for environmentalists, who pushed Bank of America and other financial institutions to stop lending to companies involved in such mining.
"Bank of America is particularly concerned about surface mining conducted through mountain top removal in locations such as central Appalachia," the bank said in a recent statement on its website.
"We therefore will phase out financing of companies whose predominant method of extracting coal is through mountain top removal. While we acknowledge that surface mining is economically efficient and creates jobs, it can be conducted in a way that minimizes environmental impacts in certain geographies," the bank added.
TEN PERCENT OF PRODUCTION
Rainforest Action Network, a major critic of mountaintop removal, had targeted Bank of America and Citigroup Inc for their financing of coal energy, from extraction to power plants. Citigroup was not immediately available for comment.
The possibility of carbon taxes that would make coal more expensive to burn and a weak economy have helped shelve plans for many U.S. coal-run power plants, the network said.
National Mining Association spokesman Luke Popovich said U.S. coal production, stoked by overseas demand, had been set to hit a record in 2008, before the economy soured. Mountaintop mining accounts for about 10 percent of U.S. coal production.
He doubted the Bank of America move would seriously crimp the industry and argued that if it did, markets would be in turmoil and miners would suffer.
"It would be hard for me to believe the bank fully appreciates the employment that depends on mountaintop mining in Appalachia," he said.
The industry was pleased when the Environmental Protection Agency on Tuesday approved the repeal of a 1983 law that prohibited surface coal mining within 100 feet of flowing streams. The industry sees that cutting the risks of lawsuits by clarifying the process.
Massey Energy Co, International Coal Group, Alpha Natural Resources and Patriot Coal Corp are among those with Appalachian surface mines.
(Reporting by Peter Henderson; Editing by Peter Cooney)
