Under fire Australian miners look to repair their image

Last updated: June 1, 2014 8:41 am

Under fire Australian miners look to repair their image

By Jamie Smyth in Bulga, Australia

Tony Brown typically spends his days ferrying tourists to and from the Great Barrier Reef. But last month, the charter boat operator flew to Europe where he helped persuade Deutsche Bank and HSBC not to fund the expansion of a coal port that green groups claim could destroy the Unesco World Heritage-listed site.

“The dredging required to build the port is a risk to the reef and the A$6bn tourist industry that depends on it,” says Mr Brown, who has vowed to continue the fight to block what would become the world’s largest coal port at Abbot Point in Queensland.

The decision by the banks is the latest victory in a global campaign being waged against the funding of fossil fuel projects and companies by green groups, which allege they are causing catastrophic global warming.

In Australia the threat posed by increasing activism is prompting “Big Coal” to hit back via television and social media campaigns plus the funding of community projects aimed at bolstering the mineral industry’s reputation.

Pioneered by Bill McKibben, founder of the US environmental group 350.org, the “divest from fossil fuel” campaign is chalking up successes with companies such as Storebrand and Rabobank agreeing not to fund coal or shale gas projects. Under pressure from campaigners Norway is reviewing whether its $840bn sovereign wealth fund should stop investing in coal, oil and gas.

“We target the financiers for fossil fuel projects because they can’t proceed without money,” says Ben Pearson of Greenpeace Australia. “When a bank such as Deutsche says it won’t fund a project it also pressurises politicians, who must grant approvals.”

report by the University of Oxford’s Smith School of Enterprise and the Environment has found the “divest campaign” is growing faster than any other previous attempt to force companies to pull funding from resource projects.

“Divestment is not the main problem,” says Ben Caldecott, co-author of the report. “The risk is it pressurises politicians to introduce tougher regulations and stigmatises companies.”

In Australia the “Save the Reef” campaign is alarming Australia’s resources sector, which has traditionally enjoyed strong government, corporate and public support but is facing rising levels of environmental and local opposition.

The Great Barrier Reef is the largest natural feature on earth, an ecosystem created by living organisms. Billions of tiny creatures known as coral polyps have built the reef over the past 600,000 years. Its ecological importance and key position in the Australian psyche has attracted a diverse group of opponents against a port expansion that is needed to develop huge coal mines in the Galilee Basin.

Unesco has warned it may place the reef on its endangered list as a result of the port expansion, which has been approved by the Queensland and Australian federal governments.

The resources industry says campaign groups are peddling misinformation.

“This is the sort of campaign we’ve come to expect against our industry – choose an iconic symbol and claim it is under threat,” says Stephen Galilee, chief executive of the Minerals Council of New South Wales, an industry trade body. “There is no scientific evidence whatsoever to suggest that it is harming the reef.”

Environmental campaigners and some scientists disagree, saying dumping 3m tonnes of dredged mud 40km away from the reef poses a risk to the fragile ecosystem.

Research conducted by JWS Research for the Minerals Council of Australia, before Deutsche and HSBC’s decision, concluded professional investors in Australia were resistant to anti-coal rhetoric.

But the coal industry has stepped up lobbying and advertising activities in response to a rise in local activism against resource projects and concerns that campaigners are beginning to exert influence over politicians.

It has set up a website Australians for Coal, which urges mine workers and their families to contact their politicians to show their support for the industry. It is running TV adverts supporting the expansion of Abbot Point port and a children’s character Hector the Lump of Coal is urging children to enter a writing competition.

The charm offensive is the biggest since the mining industry spent an estimated A$22m in 2010 in a nationwide lobbying and advertising campaign aimed at defeating the mining tax.

“It’s a big risk to our industry and to any industry that noisy minority groups can pressure and bully weak governments into making regulatory responses to perceived political problems,” Mr Galilee says.

Opponents of mine expansions counter that the lobbying power of the minerals industry and the donations it makes to political parties often overrides local concerns. In 2012 the Minerals Council of Australia, the largest of several mining advocacy groups, collected A$35.4m revenue and spent A$12.7m on advertising and promotions.

“These types of campaigns can be very effective. It’s all about repositioning the public debate and highlighting the positives of coal, such as providing heat and power,” says Rohan Miller, senior marketing lecturer at the University ofSydney. “Think of the free toys in kids’ meals at McDonald’s and Joe Camel in tobacco.”

In the village of Bulga in the Hunter Valley, John Krey of the Bulga Milbrodale Progress Association won two court cases blocking expansion of a Rio Tinto coal mine, which he says would annihilate the area. In response the New South Wales government has tweaked its planning laws to prioritise economics – Rio Tinto is preparing a new application.

“The government and the mine are on the same side. Both of them are our enemy because we are now fighting for our survival against two very big players,” Mr Krey says.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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