Whitehaven Coal, one of Australia’s largest coal producers, shelved a planned special purpose vehicle originally intended to provide in-house insurance after finding external insurers willing to take on the risk.

The development follows Sydney-based Whitehaven’s $3.2-billion purchase of coking-coal operations from BHP Group, which has added production of raw materials needed for steelmaking to its portfolio of mines largely supplying fuel for power stations.

Acquisitions have created the necessary level of diversification to improve Whitehaven’s access to insurers, according to a spokesperson for the company. That means the SPV project, first announced two years ago, has effectively been put on ice.

Access to insurance is emerging as a key indicator for judging the level of corporate anxiety tied to climate change. Zurich Insurance Group AG walked away from a number of commodities exposures earlier this year, including new metallurgical coal mines after deeming them to be too risky.

As some insurers retreat, the fossil-fuel industry has turned to in-house so-called captive insurance SPVs, with BHP, the world’s biggest mining company by market value, as well as Glencore and Shell, among those to create such vehicles. The global market for captive insurance rose to a record last year, surpassing $200 billion in premiums, according to broker WTW. Companies using captive insurance transfer premiums to an SPV and reinvest any surplus cash. If a coverage need arises, they then tap the SPV.

Whitehaven, which declined to identify the external insurance firms it’s using, says the original need for an SPV is no longer as urgent because metallurgical coal now accounts for a far larger chunk of its total business. Most banks and asset managers treat that commodity as a more acceptable risk than thermal coal, which is used to generate heat and electricity.

That’s largely because of the role that metallurgical coal plays in the production of steel, which is an essential component in the clean-energy transition. Of 60 global banks analyzed by French nonprofit Reclaim Finance, just nine have adopted metallurgical coal policies, compared with 47 for thermal coal.

Whitehaven previously generated almost all of its revenue from thermal coal, though the share fell to 41% in the second quarter, following the addition of BHP’s Blackwater and Daunia mines in Australia. Metallurgical sales are likely to continue to account for a rising share of the total, Whitehaven said in a July filing.

Advocates for climate action insist it’s wrong to treat metallurgical coal as a less environmentally harmful material. Met coal — also called coking coal — can be up to three times more polluting than thermal coal, according to Wood Mackenzie, an energy consultancy. However, global exports of thermal coal are far higher, at about 1.1-billion tons in 2023, compared with 348 million tons for metallurgical coal, according to data compiled by Australia’s government.

“Coal is coal, and it is a major source of carbon emissions, whatever the end use,” said Cynthia Rocamora, an industry campaigner at French climate nonprofit Reclaim Finance.

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In the insurance sector, 46 firms have committed to end or restrict services for coal, according to Insure our Future, a coalition of nonprofits. Zurich is the first to have added restrictions on metallurgical coal mining.

But even Zurich qualifies its restrictions. The company said in an email that steel remains essential for the net zero transition. An immediate phaseout of metallurgical coal isn’t feasible due to technological and economic constraints.

Zurich’s current position restricts underwriting for new metallurgical coal projects because existing mines are expected to meet demand until scalable alternatives are available, the company said.

Whitehaven will continue to explore alternative sources of insurance to make sure it isn’t paying more than it needs to, the company’s spokesperson said. It hasn’t ruled out creating an in-house SPV at a future date, the person said.

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