A group of activist investors say shares in a major coal company will go down as the miner expands its coal operations \u2013 putting the superannuation investments of 3.6 million Australians at risk.<\/p>\n
Modelling from clean energy finance organisation Market Forces concludes Whitehaven Coal starting up new coal mines will lead to lower share prices under the various international climate agreements and targets.<\/p>\n
\u201cOur modelling demonstrates that Whitehaven becomes less valuable the more it expands coal production, raising serious concerns for investors including AustralianSuper about how the company plans to spend their capital,\u201d Market Forces campaigns manager Brett Morgan said.<\/p>\n
AustralianSuper is the country\u2019s largest super fund and the largest shareholder in Whitehaven, parking the super funds of some 3.6 million Australians in the coal mining company.<\/p>\n
AustralianSuper fully divested from Whitehaven in 2020 \u2013 only to romp back into the fold as the miner\u2019s largest shareholder when Whitehaven bought BHP\u2019s metallurgical coal assets.<\/p>\n
The super fund snapped up another nine million shares in February, taking its stake to 11.8 per cent, worth a little more than $752m.<\/p>\n
Market Forces argues coal investment is becoming less and less attractive as pollution targets take effect.<\/p>\n
\u201cWhitehaven\u2019s financial resilience is on a knife\u2019s edge, with lower coal prices and higher operational costs making growth projects uneconomic,\u201d Mr Morgan said.<\/p>\n
\u201cAs Whitehaven\u2019s largest shareholder, AustralianSuper must challenge the company\u2019s risky growth strategy, demanding an end to new coal and protecting its members\u2019 retirement savings.\u201d<\/p>\n
The analysis finds Whitehaven cashing out its shareholders via buybacks would be of better value to shareholders than new coal projects.<\/p>\n
Both the miner and AustralianSuper declined comment.<\/p>\n
Market Forces commissioned an external consultant to run the numbers on Whitehaven\u2019s business, analysing status quo operations, \u2018brownfield\u2019 coal mine extensions, and new \u2018greenfield\u2019 mines.<\/p>\n
These operational scenarios were measured against global temperatures increasing 2.4C as per the Energy Agency\u2019s Stated Policies scenario, and Australia\u2019s legislated target of less than a 1.5C increase under the Net Zero Emissions by 2050 scenario.<\/p>\n
If Whitehaven pursues \u201cmost expansionary\u201d greenfield targets, the company will be forced to buy 1.5-2 million tonnes of carbon credits each year from the mid-2030s, the modelling finds. Whitehaven\u2019s pre-tax earnings would fall between 6-10 per cent.<\/p>\n
The analysis also takes aim at Whitehaven\u2019s \u201cown bullish\u201d long-term coal price projections, which are higher than investment banks and the Australian government\u2019s forecasts, and \u201cconsistent with catastrophic warming levels well above 2.4C\u201d.<\/p>\n
\u201cWhitehaven\u2019s proposed coal developments only create value for shareholders in a world that fails to meet its climate goals, which would be catastrophic for the global economy,\u201d Mr Morgan said.<\/p>\n
Market Forces are calling for Whitehaven to disclose its \u201cresilience testing\u201d for development projects under low coal price, low coal demand scenarios, and want to see a justification for allocating company capital to \u201crisky\u201d growth projects.<\/p>\n
Whitehaven will present its annual results to the ASX on Wednesday. <\/p>\n
Whitehaven is wrestling with supply issues at the Narrabri mine in NSW, and has come under fire from a major buyer in state-owned Taiwan Power Company, known as Taipower.<\/p>\n
Taipower is one of Asia\u2019s largest thermal coal buyers and typically takes about 13 per cent of Whitehaven\u2019s NSW coal; but Narrabi has been plagued with inconsistent output for the past six years.<\/p>\n
In March, the NSW government ruled it will allow coalmine expansions and permit extensions; the move banned exploration and mining on untouched greenfield sites though.<\/p>\n
Most of Whitehaven\u2019s mines are in NSW, but Queensland as a whole produces most of Australia\u2019s coal.<\/p>\n
In Queensland, new coal mines need a comprehensive environmental impact statement to be filed if production will be over 2 million tonnes per year.<\/p>\n
A mine expansion which produces 5 million tonnes is also subject to the heightened environmental regulation.<\/p>\n","protected":false},"excerpt":{"rendered":"A group of activist investors say shares in a major coal company will go down as the 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