Sunday, 28 September 2014

Coal on Counter-Attack Over Fossil Fuel Divestment

Coal on counter-attack over fossil fuel divestment
Photo: Glen McCurtayne
by Amanda Saunders, Australian Financial Review: http://m.afr.com/Page/Uuid/efc3b036-2e56-11e4-857a-df3799f4dea8

The global anti-coal movement’s latest local target is Australian super fund members, whom it is trying to convince to switch into “clean” funds.

Anglo American chief Mark Cutifani is calling on the Australian coal industry to mount a counter-attack against the global divestment effort urging investors to dump holdings in fossil fuels.

His urgings add to a growing chorus of senior coal executives calling for a concerted response to the increasingly sophisticated divestment movement. The divestment campaign, spawned by ethical investors three years ago, is gaining mainstream traction and looks to be spooking the coal industry.

Cutifani says the divestment movement is “unfortunately very vocal”, and the coal industry has to fight back through its industry bodies “to make sure we don’t let these people back the world into a corner”.

“I think we have a big job to do,” he tells The Australian Financial Review. “I don’t think we are doing enough and we have got to outreach more effectively.” Anglo American is the second-biggest metallurgical coal producer in Australia, with a portfolio of six mines, mainly in Queensland.

Super funds, banks targeted

After a lacklustre start in Australia, backers 350.org and activist investment group Market Forces have notched up a string of wins in the past few months, with local institutions agreeing to freeze or review their investment in fossil fuels. The movement’s chief aim is to stop the progress of fossil fuels by forcing a wedge between the industry and debt and equity investors.

The movement, which enjoyed early success in the United States and northern Europe, claims that 650 global investors controlling over $55 billion in assets have committed to divest their holdings in fossil fuels. Institutional commitments to dump fossil fuel holdings have doubled since January this year, to 168 institutions.

The global movement’s latest local target is Australian super fund members, whom it is trying to convince to switch into “clean” funds.

Future Super, a new fund which does not invest in fossil fuels, was launched this month and has already attracted about $15 million in savings.

It came hot on the heels of 350.org and Market Forces launching a website listing the fossil fuel exposure of 35 of the bigger funds in Australia. But the ultimate local targets are Australia’s big four banks.

The movement has won support from Bendigo and Adelaide Bank, AMP Capital, education industry fund Uni­Super, health and community services fund HESTA, and a collective of smaller Australian deposit takers including bankmecu, Credit Union Australia, Beyond Bank and Defence Bank.

Resources bankers say the divestment movement is spooking banks and other investors on investing in coal projects, particularly thermal coal.

University under pressure

The University of Sydney last month revealed this week it was halting further ­investments in coalmining, becoming the first institution of its type in Australia to do so. The university is a shareholder in Whitehaven Coal, with a stake of about $1 million, and is under pressure to take its commitment a step further by divesting its holding.

Following news of the Sydney University freeze on fossil fuels investments, Whitehaven boss Paul Flynn described the divestment movement as “green imperialism at its worst”.

He said proponents of the global div­estment movement were “very selective” with their case, and the coal industry needed to dedicate more time and money to countering it. “This is green imperialism telling us what to do,” Flynn said.

“I wouldn’t tell people how to invest their money and they shouldn’t purport to be doing that either. Obviously that side is very selective in the facts that they use. It doesn’t suit them to have a broader discussion about all the facts.”

His comments echo those of Greg Boyce, chief of US coal giant Peabody Energy, who said in July that coal producers must spend more time and money fighting ­symbolic movements like the divestment campaign.

“If as an industry if we spent more time educating, if we all spent more money, we would have less of these symbolic moves, which are really done without a full knowledge of the ­equation,” Boyce said in an ­exclusive interview.

A recent Minerals Council of Australia report claimed that the fossil fuel divestment case was based “on false premises and unsubstantiated claims, and may breach ­Australian law”.

Mining executives bullish

Coal bosses are united in their bullishness on the long-term future of fossil fuels. Cutifani, like BHP Billiton boss Andrew ­Mackenzie, Flynn and Boyce, says coal is ­crucial to addressing “energy poverty”.

“For anyone to suggest that the world can turn off, or not invest in, fossil fuels, what you are saying is 50 per cent of the world’s population is going to be denied energy,” Cutifani says.

“I mean, they can’t be serious. You cannot ditch 50 per cent of the world and say, ‘You make it on your own.’ Coal as one of the fossil fuels, the other two [being] gas and oil, are absolutely critical to the energy mix of the future.”

The world will rely on fossil fuels as its dominant source of energy for at least 30 years, he says. “In 30 years’ time, 70 per cent of the world’s energy will come from fossil fuels because we can’t develop enough renew­ables and uranium has still got a fairly flat trajectory,” he adds.

Flynn is scathing of proponents of the movement being from developed countries. “The wealthy people of the world telling the less fortunate in the world that they can’t have access to cheap energy? That is green imperialism at its worst,” he says.

However, Greenpeace countered that the majority of Whitehaven’s coal was exported to Japan, so “they’re just exporting coal to rich people on the other side of the world, which means his argument is misleading at best”.

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