Westpac’s dirty big secret: cash not climate is the real concern

Westpac’s dramatic climate-change-friendly announcement that it would effectively refuse to finance the Adani Carmichael coalmine in Queensland seems to be little more than “virtue signalling” designed to hide the bank’s own dirty little secret. Or, rather, its dirty big coal secret and an apparent conflict of interest in the public debate.

Westpac said last week it would limit finance for thermal coal to existing projects in the interest of “supporting climate- change solutions that will drive the transition to a more sustainable economic model”.

Although Westpac had not been asked to finance the Adani project, and had not made a commercial assessment, its decision was used as proof the Galilee basin project was not commercially viable.

GetUp! said it was evidence it was not viable, while opposition climate change spokesman Mark Butler said he trusted Westpac’s commercial judgment and thought it would be a “miracle” if it got up.

Then Port of Newcastle Investments said, in an Australian Financial Review article, that Adani with its rail and port facilities would adversely affect Newcastle as the world’s biggest coal port.

“While these politicians have been quick to talk about the benefits to North Queensland of this taxpayer support, they have been silent about the costs it would impose on other coal-producing regions, other asset owners and, of course, to employment in other parts of the country,” it said. “ ... The opening of such a large new coal project in Queensland will lead to a reduction in both the world price of coal and the volume of coal moving through Australia’s other coal ports.”

So, Adani is a commercial threat to Newcastle port, which is shared by an Australian consortium and China Merchants, ultimately owned by the Chinese government.

China Merchants and their Australian partners paid the NSW government $1.75 billion for a 98-year lease of the port in April 2014 when coal shipping in the port was expected to return $69 million that year alone.

The NSW Treasury announced China Merchants and its Australian partner were equal shareholders and, as a representative of the Australian partners, the then chief executive of Westpac, Gail Kelly, signed the contract.

That’s right, Westpac. Through its wholly owned investment banking arm Hastings Funds management, Westpac was a leading partner in the world’s biggest coal port.

What’s more, Westpac put Hastings Funds on sale last year, asking half a billion dollars for the investment arm. Not getting that price, it withdrew Hastings from sale but said it would still seek developments as plans to expand the port continued.

Westpac has allowed Adani critics to use its climate-change declaration to continue to question the commercial viability of the mine and others in the area. It appears the bank did a commercial assessment on Newcastle port, was prepared to be party to a $1.75bn deal and wanted to sell its Hastings and its management interest in the world’s biggest coal-export port for $500m.