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UPDATE 1-Mitsubishi pulls out of Vinh Tan 3 coal project in Vietnam, sources say

Aaron Sheldrick
·2-min read

(Adds graphic, renewables target; paragraph 11)

By Aaron Sheldrick

TOKYO, Feb 26 (Reuters) - Mitsubishi Corp has decided to pull out of the Vinh Tan 3 power plant in Vietnam, two sources familiar with the company's thinking on the matter told Reuters, as it shifts away from carbon intensive businesses in the face of climate change.

Mitsubishi's move to exit the estimated $2-billion project shows how willing Japanese companies and financiers are to drop once-strong support for coal, under pressure from shareholders and activists.

Japan's big banks regularly topped lending league tables for coal mines and power stations. But, in a little over a year, they have committed to ending their financing for the dirtiest fossil fuel, albeit over decades.

The Japanese trading house will pull out of the 2-GigaWatt Vinh Tan 3 project in the southern province of Binh Thuan, because of climate targets, said the sources, who spoke on condition of anonymity.

Mitsubishi has committed to cutting coal power investment in line with international climate goals, it said in its environmental statement, which a company spokesman pointed to in response to questions on Vinh Tan 3.

He declined to comment on the project.

The Japanese trading house also has a stake in the Vung Ang 2 coal station being built in the central province of Ha Tinh, a project spotlighted by green groups and investors, among others.

Mitsubishi is a project sponsor through a joint venture with Hong Kong's CLP Holdings where they have a 49% stake. Electricity of Vietnam Group has a 29% stake with Thai Bin Duong Group holding the remainder, according to Market Forces.

Operations were due to start around 2024.

Vietnam is likely to shift away from a planned large rollout of coal power as renewables investments get cheaper, analysts have said.

In September, Vietnam said it planned to ramp up solar and wind power generation capacity, to boost the share of renewables in its power mix to 15% to 20% by 2030, and to 25% to 30% by 2045, from a tenth now.

(Reporting by Aaron Sheldrick; Additional reporting by Khanh Vu in Hanai; Editing by Christian Schmollinger and Clarence Fernandez)