Resources sector in focus

BNP Paribas combines historic strength in the resources sector with its position as a leader in sustainable finance. The bank is aware of the challenges the sector faces in low-carbon transition but also identifies investment opportunities from Australia’s unique position.

To some extent, financing the resources industry in an era of emissions reduction should and does involve exiting some parts of the sector. In 2020, for instance, BNP Paribas published an exit timetable for coal investments that means all its customers will have to stop using coal by 2040, with EU and OECD customers accelerated to 2030. It said at the time that it expected to phase out half its clients in the utilities sector as a result.

On the other hand, the bank also believes the need for ongoing use of gas during the global energy transition period means it has a role to play in supporting best practice across the parts of the industry it is not exiting.

BNP Paribas sees strong momentum among corporates in the resources sector wishing to embrace the energy transition. More and more clients are genuinely committing to reducing their carbon footprint and addressing wider societal questions including supporting their local community or diversity. “There are really exciting opportunities to support clients across the resources sector with a role to play in energy transition,” says Chris Ruffa, BNP Paribas’s head of capital markets. “By this I mean how we can support and encourage better means of production in an increasingly carbon-constrained world.”

KARINE DELVALLÉE

Resources are critical in a lot of positive aspects of energy transition. Hydrogen is one example, while the critical role metals of the future play in electrification is also often overlooked.

KARINE DELVALLÉE BNP PARIBAS

Worley’s sustainability-linked bond (SLB) is a prime example. Worley is a leading global provider of professional project and asset services in the energy, chemicals and resources sectors, and is committed to the transition to a low-carbon economy via decarbonisation of its own business and solutions for those it services. Worley is targeting net-zero scope-one and scope-two emissions by 2030, and its SLB target is a 50 per cent reduction by 2025.

The resources sector also shows how sustainable finance can be deployed beyond environmental considerations. Ruffa explains: “Inclusivity – gender in particular – is an interesting area for sustainable finance in the resources sector. This is an opportunity to address female underrepresentation in the sector and augment the pool of talent available to solve some of the challenges confronting the sector.”

Karine Delvallée, Sydney-based CEO at BNP Paribas Australia and New Zealand, says the bank is focusing on accompanying its clients in their ESG journey and energy transition in all these sectors.

She says: “Resources are critical in a lot of positive aspects of energy transition. Hydrogen is one example, while the critical role metals of the future play in electrification is also often overlooked.”

Hydrogen in particular is a massive opportunity in Australia, given the space that will be needed to accommodate renewable energy generation and green hydrogen. “There are not many places in the world that offer what Australia can to the hydrogen energy industry,” Delvallée continues. “This means radiance and wind, of course, but also the sheer landmass. This is not to mention being a safe and dependable jurisdiction, with a rich history as a resource exporter and longstanding trade relationships that result from this.”

She adds: “The bank is seeking to leverage its global presence and focus on this emerging technology across the value chain, to support the development of this tremendous opportunity in Australia.”

The global economy, meanwhile, will require increased production of metals like lithium, copper and nickel, to the tune of thousands of per cent by 2040, to meet the needs of a renewable energy ecosystem.

Delvallée tells KangaNews Sustainable Finance: “Being committed to energy transition also means we have to look at the entire value chain supporting it. Australia provides a classic example of why. One area – renewable generation – has pushed ahead, but the network infrastructure and storage capacity to support it is lagging. We need everything to push forward in tandem.”