Home > ASIC investigation requested into New Hope statements

ASIC investigation requested into New Hope statements

21 July 2021

21 July 2021

Australian coal company New Hope has a track-record of dodging questions about the material financial risks to its business from climate change. That’s why this week EDO Australia, on behalf of Market Forces, wrote to the Australian Securities and Investments Commission (ASIC) requesting an investigation into potentially misleading or deceptive statements made by New Hope’s CEO [1].

The letter points out that New Hope has consistently cherry-picked International Energy Agency (IEA) scenarios that have a positive outlook for coal demand and omitted modelling that has dire consequences for the coal industry.

We also highlighted that when asked by members of parliament whether there was a reason New Hope refers to outdated IEA scenarios, the CEO replied – “Not really, no. I just haven’t got to it” [2].

This is clearly behaviour that should be ringing alarm bells. We’ve demanded that New Hope immediately stop this practice and update its shareholders with more recent and balanced information about IEA scenarios.

By continuing to rely on selective and favourable coal demand scenarios, New Hope is exposing itself to repercussions from regulators and the rest of us to climate disaster.

Gambling on failure of the Paris Agreement 

The energy demand scenarios New Hope relies upon to justify its future business prospects are consistent with global warming of around 3ºC. This would lead to catastrophic ecological, social and economic consequences, and gambles on the complete failure of the Paris Agreement, which aims to limit global warming as close as possible to 1.5ºC. 

As of July this year, 191 countries have ratified the Paris Agreement, while countries representing over 50% of the global economy have committed to net zero emissions by 2050 [3]. According to the IEA’s most recent report (Net Zero by 2050: A Roadmap for the Global Energy Sector), no new coal mines or expansions can proceed and coal demand must plummet in order to achieve net zero emissions by 2050 [4].

Actively expanding the coal industry

At a time when coal companies should be winding up their operations, New Hope is actively expanding the coal industry via its proposed $900 million New Acland Stage 3 coal mine – a 12 year expansion to the existing mine that would produce over 170 million tonnes of carbon emissions [5] and see three vast open-cut coal pits dug on the prime agricultural land of the Darling Downs.

Additionally, media reports suggest New Hope may be bidding to purchase BHP’s Mt Arthur coal mine, one of the biggest thermal coal mines in Australia [6]. New Hope recently raised $200 million of bonds, “for general corporate purposes, which may include further growth expansion and opportunistic M&A [(merger & acquisition)] activity” [7].

Institutional investment appetite is drying up

Dirty coal companies like New Hope are feeling the heat as finance and insurance companies slowly bring their policies towards alignment with the Paris Agreement. New Hope’s recent bond raising was funded entirely by overseas investors, with no Australian banks willing to participate [8], suggesting the walls are closing in for the ability of climate-wrecking coal companies to access finance.

However, we can’t let companies like New Hope off the hook.

We must keep up the pressure on every company still pursuing and willing to finance the expansion of the coal industry.

[1] Ben Smee,The Guardian Australia, New Hope mining company referred to Asic, accused of misleading investors over future of coal (21 July 2021)

[2] Reinhold Schmidt, Evidence to the Inquiry into the Prudential Regulation of Investment in Australia’s Export Industries (2021) p 38.

[3] United Nations, Race to Zero Campaign (2021).

[4] IEA, Net Zero by 2050, A Roadmap for the Global Energy Sector (2021).

[5] Market Forces, Australia’s pariah projects: the fossil fuel proposals threatening to bust our climate goals (2020).

[6] Melanie Burton (Reuters), Australian coal miners recapitalise, eye BHP assets and other M&A (2021).

[7] New Hope Corporation, Convertible Note Offering (2021).

[8] Reinhold Schmidt, Evidence to the Inquiry into the Prudential Regulation of Investment in Australia’s Export Industries (2021) p 37.

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