When the large US coal company Peabody Energy Corp declared bankruptcy last week, Norway’s huge state pension fund that’s fueled by oil revenues didn’t take any losses. It sold out of Peabody even before the Norwegian Parliament ordered the fund to dump coal stock.
Norway’s oil fund had already, at its own initiative, sold out of several coal companies because it believed the financial risk tied to them was simply too great. Newspaper Dagens Næringsliv (DN) reported that Peabody was allegedly worth as much as USD 10 billion just four years ago. Its stock price has fallen sharply since, along with coal prices.
DN reported that Peabody tried to get Norway’s oil fund, one of the largest sovereign wealth funds in the world, to reconsider, with some of its executives even traveling to Oslo along with the World Coal Association to ward off a blacklisting. It didn’t help and now the oil fund has shown foresight and sound investment management in dumping Peabody well before it had to seek protection from creditors under Chapter 11 of the US Bankruptcy Code.
The oil fund has also dumped or banned 52 other coal companies to date, both on its own initiative or as a result of Parliament banning its investment in companies in which coal makes up more than 30 percent of operations.