Whitehaven blasts wind-up proposal
Pure-play coal company Whitehaven Coal has locked horns with activist group Market Forces.
Pure-play coal company Whitehaven Coal has locked horns with activist group Market Forces, accusing it of “misrepresentation” over its claim that the Paris Agreement requires the company to wind up its operations.
The Whitehaven board unanimously recommended a “no” vote against the shareholder resolution, which will be considered at the October 22 annual meeting.
“The suggestion that the Paris Agreement requires Whitehaven to wind up its production assets and operations is a misrepresentation,” the company said in a statement to the ASX. “The Paris Agreement does not dictate how emissions reductions should be achieved.”
The Paris Agreement, which deals with mitigation of greenhouse gas emissions, as well as adaptation and finance, has been ratified by 185 nations, and aims to restrict global warming to less than 2C above pre-industrial levels.
In a statement accompanying its resolution, Market Forces, an affiliate of Friends of the Earth, argued against further capital expenditure on coal development because of the risk of stranded assets.
While Whitehaven claimed its business was resilient under three International Energy Agency scenarios, Market Forces said a Paris-aligned phase-out scenario demonstrated that the company’s major export markets were “on a path to complete elimination”.
“We request disclosure of a plan to limit capital expenditure to only support production that is demonstrably viable in a Paris-aligned scenario, and meet the company’s obligations for mine site rehabilitation, employee entitlements and an employee transition plan,” the statement said.
Whitehaven hit back, saying a group of shareholders with only 32,000 shares, representing 0.003 per cent of issued capital, was behind the resolution.
Market Forces, it said, had asserted that Whitehaven, along with certain other companies, had no place in a decarbonised economy, yet the company produced “some of the highest-quality coal available in the seaborne market.
“The use of this coal, along with much of the coal produced and exported from Australia, in modern highly efficient low-emission power stations, helps to lower emissions,” Whitehaven said.
“The company reports against the voluntary framework of the Financial Stability Board’s task-force on climate-related financial disclosures and undertakes resilience testing of its operating asset portfolio on an annual basis.
“As the first pure-play coal company to report against this framework, we remain committed to meaningful disclosure on climate risks and opportunities for our shareholders.”
The company said it did not intend to produce plans to close down its mining operations — to do so would be “completely against the interests of shareholders”.
“The board, unlike the requisitioning shareholders, has duties to act in good faith in the best interests of Whitehaven Coal,” it said.
“Given ongoing demand for the company’s products, the board does not consider the best interests of shareholders would be served by developing closure plans for the company’s assets and operations.”
As to the long-term future, Whitehaven said there would continue to be global demand for coal beyond 2040 under the IEA’s world energy outlook scenarios.
It said the company’s business was leveraged to continuing forecast demand in Asian export markets, where rapid electrification and the relatively new installed power generation meant coal would generate value for Whitehaven shareholders “for decades to come”.
Whitehaven was also responding to growing demand for metallurgical coal products in India, and had a positive role to play in the transition to a lower-carbon economy.
