Guest contribution by Eric Worrall
Market Forces, a subsidiary of Friends of the Earth, wants regulators to condemn New Hope Mining for claiming coal will stay here. But New Hope has quietly questioned the viability of the entire renewable energy industry in an official corporate document. If that goes to court, buy lots of popcorn.
Mining company New Hope pointed to Asic, which is accused of misleading investors about the future of coal
Investor action group Market Forces says the coal company is “building a financial house of cards” by telling shareholders that coal will remain “significant” in the energy mix
Ben Smee @BenSmee
Wed 21 Jul 2021 14.20 AEST
Shareholder activist group Market Forces has asked the corporate guard to investigate whether coal company New Hope has misled investors by claiming coal “would remain a significant part of the energy mix.”
In letters to the New Hope Corporation and the Australian Securities and Investments Commission, Market Forces attorneys alleged that statements by the company’s chief executive, Reinhold Schmidt, could constitute “misleading and fraudulent conduct” under the Corporations Act.
In September last year, Schmidt told the Australian Financial Review that “thermal coal is part of the long-term energy mix, it will always be there”.
At the company’s general meeting the following month, Schmidt was asked whether he would stand by this statement. He responded by referring to the “current policies” and “stated policies” scenarios forecast by the International Energy Agency.
“If you look at it [those scenarios] Coal will … remain a significant part of the energy mix. Australia has a very strong advantage over other coal producers; our coal is of better quality and my statements remain unchanged. “
In its letters, Market Forces says that these statements omitted that the IEA had curtailed its forecasts, citing “significant uncertainties, including faster measures to phase out coal.”
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Read more: https://www.theguardian.com/australia-news/2021/jul/21/new-hope-mining-company-refered-to-asic-accused-of-misleading-investors-over-future- of -coal
From the Market Forces website;
ASIC investigation requested on New Hope statements
July 21, 2021
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Gambling if the Paris Agreement fails
The energy demand scenarios New Hope relies on to justify its future business prospects are consistent with global warming of about 3 ° C. This would lead to catastrophic environmental, social and economic consequences and jeopardize the total failure of the Paris Agreement, which aims to limit global warming to 1.5 ° C.
By July of this year, 191 countries had ratified the Paris Agreement, while countries that account for over 50% of the global economy have pledged to produce zero net emissions by 2050 [3]. According to the most recent report by the IEA (Net Zero by 2050: A Roadmap for the Global Energy Sector), no new coal mines or expansions can be undertaken and coal demand must fall in order to achieve net zero emissions by 2050 [4].
Active expansion of the coal industry
At a time when coal companies are about to cease operations, New Hope is actively expanding the coal industry through the proposed $ 900 million New Acland Stage 3 coal mine – a 12-year extension of the existing mine that produces over 170 million tons of carbon would emissions [5] and see three huge open coal pits dug on prime agricultural land of Darling Downs.
Additionally, media reports suggest that New Hope may have an offer to purchase the Mt Arthur coal mine from BHP, one of the largest thermal coal mines in Australia [6]. New Hope recently raised $ 200 million in bonds “for general corporate purposes that may include further growth expansions and opportunistic mergers and acquisitions.” [(merger & acquisition)] Activity” [7].
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Read more: https://www.marketforces.org.au/asic-investigation-requested-into-new-hope-statements/
Should New Hope have said more about the state risks to its business model?
Since even France is not meeting its obligations under the Paris Agreement, it could certainly be argued in any future court case after a French court ruling that the Paris Agreement is a political fantasy.
There are government risks that New Hope recognizes; According to New Hope Coal Annual Shareholders Report 2020 … A major headwind for the company is the Queensland government’s continued reluctance to approve the New Acland Stage 3 project, despite the overwhelming community support and economic damage caused to the state by COVID. is added -19. New Hope first applied for Level 3 approval in 2007 and has since been included in the process by anti-coal activist groups …
But New Hope also challenged the entire renewable energy industry in the same annual shareholder report.
… Once again we see activists in a period of low coal prices taking the opportunity to predict the end of the industry and pushing for their preferred solution Renewable energies, which are currently unable to displace fossil fuels either economically or practically. According to the BP Statistical Review 2020, coal consumption decreased in 2019 but still accounted for 27% of primary energy supply. Despite significant growth, renewable energies only made up 5% of the supply. In electricity generation, the share of coal fell, but it was still 36% and was thus well above the second most popular fuel, gas, with 23%. Renewable energies grew from 9% of electricity generation in 2018 to 10% in 2019. The decline in coal in 2019 was not only due to an increase in renewable energies, but also to the increasing competitiveness of gas in the fuel mix. Coal consumption fell sharply in the US and Western Europe, but was largely offset by growth in Asia. The current policies scenario of the International Energy Agency World Energy Outlook 2019 envisages a significant increase in steam coal consumption from the current level by 2040, while the scenario of the stated policies remains relatively unchanged until 2040, with over 80% of steam coal demand in the Asia-Pacific region …
Read more: New Hope Coal Annual Report 2020
I strongly suspect that friends of the earth will realize that they bit off more than they can chew, and that when they come to their senses, they will quietly slide back into their hole.
But maybe we’re lucky and Friends of the Earth will continue their self-destructive attack.
New Hope Mining did what we’ve all been waiting for – they quietly challenged the entire renewable energy industry by explicitly pointing out in an official corporate document the falsity of claims that renewable energy is a viable substitute for fossil fuels .
If Australia’s ASIC regulator tries to prosecute New Hope, the matter becomes a lawsuit that could drag other companies out as New Hope defends its claim that renewable energy is not a viable substitute for coal.
If New Hope wins, it could turn the entire Australian renewable energy industry upside down by opening the door to a stream of counterclaims, official complaints to ASIC about wild allegations in official corporate documents from green power companies.
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