US banks opt out of Abbot Point, as UNSW commits to coal

Print Friendly, PDF & Email

Citigroup and Morgan Stanley say no to Queensland coal mines and ports, but UNSW says yes to fossil fuel future.

share
Print Friendly, PDF & Email

Further doubt has been cast over the viability of what would be one of the world’s biggest coal mining and export operations in Queensland, after two more global banking giants said they would not back the development of the huge Carmichael coal deposit or the expansion of the nearby coal port.

US-based banking and financial services multinationals Citigroup and Morgan Stanley confirmed this week that they would avoid investment in the proposed Abbot Point port expansion, located near the Great Barrier Reef, and the adjoining coal mines in the Galilee Basin.

Two other US banks, JPMorgan Chase and Goldman Sachs, have also committed to steering clear of the projects. And Deutsche Bank, Royal Bank of Scotland, HSBC and Barclays publicly ruled out investments in the coal port earlier this year.

The banks’ statements come less than a week after an industry briefing from the Institute for Energy Economics and Financial Analysis (IEEFA) described the Queensland coal projects’ huge scale, greenfield nature and foreign ownership as carrying “an almost unprecedented level of financial complexity and risk.”

The Galilee Basin includes a prospective mine owned by India’s Adani and GVK companies and also Clive Palmer, head of the Palmer United Party.

MDM_22-03-2013_ROP_09_MWT070313NEabbotpoint_fct848x522x70_t460-300x184
Abbot Point coal terminal

IEEFA analyst Tom Sanzillo says the projects are commercially unviable, “reflective of the enormous capital investments required, the relatively low quality thermal coal involved, globally depressed seaborne coal prices and the lack of any of the necessary infrastructure required.”

Sanzillo said the Galilee coal project proposals are highly unlikely to proceed without the support of the four Australian bank majors, plus some of the nine leading global investment banks.

Gaining this support is looking increasingly unlikely, though, especially in light of the stance taken by Morgan Stanley, which it turns out has been hired by Adani to sell part of its stake in the Abbot Point coal port.

Adani disclosed Morgan Stanley’s role after the bank sent a letter to US-based environmental group Rainforest Action Network saying it doesn’t knowingly finance extractive activities in World Heritage sites.

“Morgan Stanley will not lend to or invest in the expansion of Abbot Point,” said the letter, which has been viewed by The Wall Street Journal.

This was reiterated by a Morgan Stanley spokesman in Australia who, according to The Australian stressed that the bank was only involved in the existing terminal, and was “not in the business of providing greenfield project financing in Australia.”

“Therefore, as we have stated, we will not lend to, or invest in, these projects,” the spokesman said. “We take environmental issues very seriously and in financing any project we always examine the potential environmental impacts.”

And the environmental issues are many – such as the need to dredge at least 3 million tonnes to expand the coal port, and dump the spoils on the nearby World Heritage-listed Great Barrier Reef. Not to mention the increased shipping traffic in the area, to cater to mines with the potential to export as much as 330 million tonnes of coal a year.

Despite the federal environment minister’s assurances that this all was nothing to worry about, it seems to be pricking the consciences of the international banks.

As the letter from Citi’s director of corporate sustainability, Valerie Smith, notes, the bank’s internal rules generally prevent finance for “new mining projects within the boundaries of a World Heritage Site.”

Meanwhile, in Australia, one of the world’s top solar R&D hubs, the University of New South Wales (UNSW), has decided against joining the Australian National University (ANU) in a shift towards fossil fuel divestment.

Earlier this month, the ANU Council agreed to a proposal by Vice-Chancellor Professor Ian Young to begin divestment of stocks in seven fossil fuel-linked companies following an independent review of the university’s domestic equities.

But in a meeting last week, the UNSW Council resolved “overwhelmingly” not to withdraw from fossil fuel investments, despite its stated position of taking the issue of greenhouse gas emissions and global warming “very seriously”.

In a statement on Monday, UNSW said it currently held investments of about $50 million in a portfolio of $309 million in companies involved in fossil fuels. The investments are held indirectly, through unit trusts whose managers decide on specific stock allocation.

In an email to staff, UNSW President and Vice Chancellor, Fred Hilmer said the university council felt it could contribute more to climate action through partnerships than through “token political actions.”

Taking a line currently popular with the federal Abbott government, Hilmer said the UNSW recognised that fossil fuels would be needed for many years to come “to provide the energy and materials on which millions of lives depend.”

And he quoted Drew Faust, President of America’s Harvard University, who warned against using investment funds in ways “that would appear to position the University as a political actor rather than an academic institution”.

Said Hilmer: “Conceiving of the endowment not as an economic resource, but as a tool to inject the University into the political process or as a lever to exert economic pressure for social purposes, can entail serious risks to the independence of the academic enterprise. The endowment is a resource, not an instrument to impel social or political change.”

Hilmer was once chairman of NSW government’s former coal generator Pacific Power. Other members of the UNSW council include ANZ chairman David Gonski, NAB director and former environmental lawyer Jillian Segal, Origin Energy director Maxine Brenner, UBS country head Matthew Grounds, and Warwick Negus, the founder of funds manager 452 Capital.

Print Friendly, PDF & Email

19 Comments
  1. adam 4 years ago

    Pretty funny how when the banks follow their own investment criteria nobody bats an eyelid, then a private investor like ANU does it and everyone goes spastic.

    Also ANU’s was triple bottom line based not just fossil fuel driven.

  2. Harry Verberne 4 years ago

    If Abbot point is commercially unviable does it mean that the Abbott government is politically unviable?

    • john 4 years ago

      The banks know that if coal from Abbott Point is going into the Indian market and price there is $34 to $54 a tonne for inferior coal then at a landed price in the $90 $100 range for far better quality; that the business case does not hold up

  3. Rob G 4 years ago

    UNSW can expect some pretty heavy pressure shortly. Green peace and organisations like the sum of us, get-up etc have already had success here and in the US by publically exposing and shaming these institutes and big banks. You cannot sell a positive future if you invest in destructive investments. UNSW ought to know better, I’m betting ‘the old men’ made the decision to keep dirty investments.

    • Bob_Wallace 4 years ago

      What happens as those dirty investments start to crater? Do ‘the old men’ get fired for poor investment decisions?

      Aren’t they at least smart enough to see how coal stocks have already dropped in value?

      • Rob G 4 years ago

        The ‘old men’ will eventually ‘die off’, one way or other (fired is an option). In the case of QLD premier Newman, he’ll be run out of office. Murdoch will drop off soon and the Fox network will admit climate change is real…

        Pardon the generalisation, but most opponents/climate deniers are old men in powerful positions and persons in the fossil fuel industries (probably old men too – e.g. Koch Bros). These are the people standing in the way.

        • lin 4 years ago

          However, we do not have time to wait for this die off to occur naturally. There are plenty of young “old men” waiting to take their place. Our federal government for example. Heavy pressure (like asking politicians hard questions, and pointing out sloppy, fact-free mainstream media reporting) is needed urgently. Kudos to ANU and the financial institutions that do not bend before the Abbott Government’s bully tactics.

          • Rob G 4 years ago

            Agree, people power must drive politicians towards better policies. Media is just terrible and this is hurting our people power. Abbott’s attempts to silence the ABC, Gina Rhinehart’s Fairfax ambitions (to silence the SMH) and the continual babble the comes from the Murdoch press is hiding the truth from the general public. In the end I hope, however, that Abbott is seen as soooooo bad on ALL fronts that he will be booted out next election.

          • lin 4 years ago

            Unfortunately there is no guarantee some gutless spiv will not be leader of the ALP, and continue to give us more of the same. What we need is some direct democracy mechanism to remove incompetent governments and block bad legislation. With that as a threat, we might get half decent government from whoever is in charge.

          • Rob G 4 years ago

            Labor believes in climate action and backs the RET. That alone is defining them as a party of choice over this current lot of clowns. Labor’s past record is good (apart from the home insulation which was still a good idea but was poorly executed). Climate action will certainly be one of the triumph cards. And while Bill Shorten isn’t a pitbull (like Abbott), he is Mr. Sensible and he’s going up against Mr Lying, dangerously unpredictable. I for one don’t agree in putting similar Labor should fight the Libs on their terms. Instead, I like Labor quietly giving Abbott as much rope as possible strategy, it gives no fuel to the Murdoch press because all the attention is on Abbott. The election will be about Abbott the person and trusting him. So far it’s not looking to good for him.

          • lin 4 years ago

            I agree that Labor is better than the Libs on climate action, but suspect that they would have continued to delay and put forward crap legislation had the greens and independents not twisted their arms. Disagree re home insulation. I think it was a fantastic policy, with a few teething problems like any hastily implemented scheme, but on all independent measures it was a great success – great energy savings, fewer house fires per installation, lots of jobs per dollar spent etc. A few dodgy operators cost their employees their lives, and they should have been prosecuted for OH&S breaches, but the whole thing got politicised thanks to Rupert and Abbott types. Re current Labor, there seems to be little difference WRT refugee policy, and labor continues to support the introduction of repressive laws, so until they grow a pair and find another Gough, my vote will go elsewhere.

        • wideEyedPupil 4 years ago

          problem is they all tend to be breeders and have sons who are just as ideologically blinkered and who are just as greedy and lust for power just as much.

  4. Michel Syna Rahme 4 years ago

    [email protected]

    Send the moron an email

    • Michel Syna Rahme 4 years ago

      Cc those people into your letter to this so called vice-chancellor so they are aware of the calls for his resignation

      [email protected]
      [email protected]
      [email protected]

      • Rob G 4 years ago

        Greenpeace might like these names and emails…

      • wideEyedPupil 4 years ago

        will do as soon as I get into the office.

  5. wideEyedPupil 4 years ago

    African and Australian Aboriginal slaves were once considered a resource too, Fred.

  6. Miles Harding 4 years ago

    Can we take it that UNSW is fearful of the Abbott government? Divesting from assets that are in the process of beaching themselves is not a political act, but in act of sound financial management. I am surprised that UNSW can’t see where the coal industry is headed.

    • Giles 4 years ago

      My view is that Hilmer likes to be part of the “establishment”. when he joined Fairfax as CEO he was proud to say he didn’t read newspapers. So i can’t imagine he did much research into energy..

Comments are closed.