20 November 2017
At last week’s New Hope annual general meeting, protesters from Lock the Gate, Great Sandy Strait Saviours and the Oakey Coal Action Alliance met shareholders out the front to point out that company money was being wasted on public relations and legal battles over the Acland Stage 3 coal mine.
Expansion of the Acland coal mine
New Hope Corporation is an Australian coal mining and energy company that is attempting to expand its Acland coal mine in Queensland’s Darling Downs. The Queensland Land Court in May recommended the expansion plans be scrapped due to the risks posed to groundwater. It is now up to the State Government to decide whether the expansion will go ahead. If the mine is to be extended, the Acland coal mine is projected to operate until 2048, locking in decades of emissions despite the Paris Agreement telling us the world needs to drastically cut emissions to reach net zero by the second half of the century.
Shareholders had plenty of questions for New Hope about the Land Court rejection of stage three of the mine. But the board refused to answer these questions, stating that it would be ‘inappropriate’ to comment on these matter as the company’s application for judicial review of the Land Court decision is due to be heard in March 2018.
It remains uncertain how long stage two of the Acland coal mine will be viable. A shareholder asked ‘How is that [stage two] is viable now when it obviously wasn’t viable before the Land Court rejected stage three, and what is the forecast production life of Stage two? I see on the screen it says a forecast of 2020, is that a guarantee?’
The board commented ‘we are undertaking studies to do whatever we can to extend the life of stage two. Our current advice is around 2021. Is that our guarantee? No it is not, because coal prices and exchange rates change, but that is our best estimate at this point in time. Be aware that this company is committed to doing what it can to prolong the life of stage two.’
Problems with Wiggins Island coal export terminal
Shareholders were also concerned about the proposed Colton Coal Mine, near Maryborough, raising two potential problems with the project and therefore shareholder investment. Firstly, the mine’s coal would have to be shipped from the expensive and struggling Wiggins Island Coal Export Terminal (WICET). New Hope’s exposure to WICET is an issue, with three of the eight original coal miners that collectively own the port having gone into administration. The coal port now poses a potential liability of over $100 million to shareholders. The Colton site is also located upstream of the Great Sandy Strait and World Heritage listed Fraser Island, and public opposition to this mine on conservation grounds has been growing rapidly posig potential financial and reputational risks to this company.
After discussing these issues with the board, a shareholder asked ‘is my financial assessment of the Wiggins Island coal export terminal exposure reasonable, and how does the Board plan to manage these financial and reputational risks? Is Colton Coal mine a bad idea?’
The board responded by saying that ‘the Colton project is not a bad idea. I can’t go into details other than what is in the public domain already about the Wiggins Island coal export terminal documentation… it is important to note that those organisations [that went into administration] were one line operations so they didn’t have alternative cash flows… the commitment we have with the Wiggins Island coal export terminal is not a material issue for this organisation.’
It seems there is a lot for shareholders and institutional investors to be concerned about with New Hope Corporation. The future of the company is uncertain considering the Land Court rejection of Acland stage three, questionable ongoing viability of Acland stage two, and issues associated with WICET. There is also the fact that New Hope’s entire business model is based on a rejection of the science of climate change, which tells us that 90% of Australian coal is unburnable if we are to meet the aims of the Paris Agreement.
Take action
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