Home > More than 20% of Whitehaven shareholders reject climate-wrecking new coal plans

More than 20% of Whitehaven shareholders reject climate-wrecking new coal plans

26 October 2022

26 October 2022

Whitehaven Coal faced backlash from big investors and community members both inside and outside its annual general meeting, held in Sydney today.

Despite record coal prices and company profits, more than a fifth of Whitehaven’s shareholders demanded the company stop expanding and start managing down coal mining in line with a net zero emissions by 2050 pathway.

The company and its shareholders were met with a rally outside and questions inside the AGM, highlighting Whitehaven’s failure to align its business with global climate goals.

Doubling support for coal wind up plans

This is the third year now that Market Forces has coordinated a shareholder resolution calling on Whitehaven to manage down coal production, with support more than doubling each year, from 4% in 2020, to 9% in 2021 and 21% today.

Over that time, the geopolitical and market conditions have changed significantly. Russia’s invasion in Ukraine has contributed to record breaking coal prices, enabling Whitehaven to pay back all of its outstanding debt to its lenders and net $2 billion in profits.

However, the impacts of the climate crisis Whitehaven’s coal is fuelling continue to be felt by more and more people. Since last October, thousands of Australians have experienced the devastating impacts of flooding, which is causing food prices for all Australians to increase. Even Whitehaven’s own operations were impacted by flooding in December 2021 and the September quarter of 2022.

As shown by today’s significant resolution vote, many investors don’t want to see Whitehaven spend its windfall on making the climate crisis worse, and instead want the company to return capital to shareholders while ensuring a just transition for workers and the community.

While Whitehaven is currently enjoying huge profits, and with so many investors demanding the company not pursue expansion projects, there has never been a better time for Whitehaven’s lenders to finally cut ties with the company. Banks like NAB and Westpac must seize the moment to walk away from Whitehaven, especially as the continued mining and burning of coal will only make the climate crisis worse and further impact the banks’ other customers.

Use the form on this page to tell Whitehaven’s bankers the time to cut ties is NOW!

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Tell Whitehaven’s financiers to walk away!

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I am very concerned that your bank has been a major lender to Whitehaven Coal, whose business plans are consistent with the failure of the Paris Agreement. I am also concerned that your institution may soon be asked to provide further finance to Whitehaven, as it pursues several new coal projects. I want you to confirm that your bank will not fund any of these coal projects and confirm you will not provide any more financial support to Whitehaven Coal generally, or any other companies expanding the coal industry and therefore relying on the failure of the Paris Agreement. Any expansion of the coal industry is incompatible with the climate goals of the Paris Agreement, which aims to limit global warming to 1.5˚C above pre-industrial levels. It is also incompatible with the International Energy Agency’s (IEA) Net Zero Emissions by 2050 modelling, which requires “no new coal mines or mine extensions”. Yet Whitehaven Coal is pursuing massive new coal mining projects – like the Vickery and Winchester South mines – when the world desperately needs to transition to clean, renewable energy sources. Whitehaven has repeatedly justified its expansion plans by referring to coal demand projections that are consistent with the failure of the Paris Agreement. Even 2ºC of warming would expose 37% of the world’s population to extreme heat, destroy 99% of the world’s coral reefs (including the Great Barrier Reef) and result in massive biodiversity loss. At 3ºC of warming, global GDP losses could be more than 25% by 2100. Put simply, Whitehaven’s business model depends on catastrophic ecological, social and economic collapse. In September 2022, Whitehaven’s Vickery coal mine – a major new coal expansion – obtained its federal regulatory approval. The company has stated its intention to raise AU$600 million to finance this development, though the final cost estimates are yet to be disclosed. The Vickery mine would be a climate disaster, unleashing almost 370 million tonnes of carbon dioxide equivalent (CO2-e) between now and 2047, when emissions from mining and burning the coal are considered. Meanwhile, Whitehaven’s proposed Winchester South mine would unleash almost 550 million tonnes of CO2-e over its 30 year lifespan. These new mines are estimated to produce at least 40% thermal coal. They are completely inconsistent with the climate goals of the Paris Agreement and the target of net zero emissions by 2050. Not only is Whitehaven wrecking our climate, it also has a long history of destroying the local environment and communities that it operates in. Whitehaven has repeatedly breached environmental conditions put in place to govern its operations, including by contaminating nearby streams and excessive air pollution. In December 2020, Whitehaven pleaded guilty to 19 charges brought against it by the New South Wales resources regulator for unauthorised vegetation clearing, unauthorised drilling of bores and failing to rehabilitate drill sites. For years, local farmers have raised concerns that Whitehaven’s coal mines have been unlawfully taking water without a licence, including during severe drought. In July 2021, Whitehaven pleaded guilty to unlawfully taking one billion litres of water at its Maules Creek coal mine. Even where Whitehaven has lawfully obtained its water, it has sometimes done so at the expense of local farmers by outbidding them on the water trading market. As I stated above, I want you to publicly commit to not provide any more financial support to Whitehaven Coal, or other companies pursuing fossil fuel expansion plans, which are consistent with the failure of the Paris Agreement. Further information about Whitehaven Coal can be found on the Market Forces website: www.marketforces.org.au/whitehaven-coal Sincerely,
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Community members keeping the heat on Whitehaven

Market Forces worked with our friends at Lock the Gate to facilitate community members impacted by Whitehaven mines to ask questions at the meeting, as well as a litigant from the federal court case Sharma v the Minister for the Environment.

Concerns about Whitehaven’s role in fuelling climate change and its push to expand coal production were raised, as well as its direct impacts on the local environment and its prosecution for environmental breaches.

Move Beyond Coal organised a rally out the front of the AGM, with speakers, flyers, banners and drum crew, all culminating in a procession down to the Martin Place NAB head office with Coal Blockaders, as NAB is one of Whitehaven’s bankers.

Huge news: more than a fifth of @WhitehavenCoal‘s shareholders just rejected the company’s climate-wrecking coal expansion plans, instead demanding $WHC manage down coal production and deliver a just transition in line with a net zero emissions by 2050 pathway pic.twitter.com/Tdaa8neIYW
— Market Forces (@market_forces) October 26, 2022

Whitehaven’s ongoing failure to assess the risks posed by the transition

Even though investors have asked Whitehaven’s leadership for years now to stress test Whitehaven’s business against a 1.5°C warming scenario, yet again in its 2022 Annual Report and Sustainability Report, Whitehaven refers to scenarios outlined by the International Energy Agency (IEA) that fail to meet the Paris Agreement’s 1.5°C warming goal or net zero emissions by 2050. These are the Stated Policies Scenario (2.7°C) and Sustainable Development Scenario (SDS; 1.65°C, net zero by 2070).

The company claims all its operating assets would have “positive valuations and economic lives” under the inadequate SDS scenario, but leaves out any assessment whatsoever of the three new or expanded mines that the company is looking to develop. These planned new projects are the ones most at risk of becoming stranded assets. Whitehaven’s deficient scenario analysis leaves investors none the wiser as to the financial risks facing the company under a 1.5°C pathway.

Useful scenario analysis must quantify the impacts – including on cash flows, useful asset lives, rehabilitation liabilities, and asset valuations – in a way that allows for useful comparison against alternative scenarios.

Such analysis of a net-zero by 2050 scenario is essential given the proliferation of policy and financial market commitments to this goal, and would reveal the immense and unacceptable transition risk facing Whitehaven’s current coal expansion plans. Indeed, 79% of Whitehaven’s FY22 revenue is derived from sales to countries committed to achieving net-zero emissions by 2050 (Japan, Korea, Taiwan).

When recently asked about modelling under the IEA’s Net Zero by 2050 scenario or another 1.5°C aligned scenario, Whitehaven CEO Paul Flynn deflected by hypocritically attacking the IEA’s importance and credibility, claiming the IEA “has moved away from its core objectives and I see it more as an advocacy body for renewable energy”. Whitehaven has not expressed this concern previously when referencing many of the outdated IEA scenarios that provide a more favourable outlook for coal, despite their alignment with the failure of the Paris Agreement.

With this context, a shareholder asked the board about this inadequate modelling and whether Whitehaven Chair Mark Vaile felt he’d met his director’s duties to manage risks to the company. Despite promising in 2021 to look at the company’s resilience to a net zero by 2050 scenario (which the IEA says cannot include new coal mines), Mr Vaile’s answer indicated the company has no intention of providing this analysis to shareholders.

Later in the AGM, the CEO added that the board didn’t want to “constrain the company to one scenario” when referring to net zero by 2050, despite Australia and around 80% of Whitehaven’s markets having committed to that goal.

Whitehaven’s leadership have abdicated their responsibility to consider the very real risk that the transition to a decarbonised economy poses to the company’s very existence. Going by the presentations and answers provided by Whitehaven’s leadership at the AGM, the company is placing its faith in the failure of global climate action, or unviable carbon capture and storage technology, or both.

Tell Whitehaven’s lenders to rule out further financial support!!