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The end of Adani? Investment giant says coal miner has revealed Carmichael closure plan

Business

Investment manager Vanguard says coal giant Adani has revealed that its Carmichael mine would be closed in order for the company to “fit within the parameters of a 1.5 degree warming scenario”.

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The annual report from the investment manager, which holds $11 trillion globally, said it had also raised serious concerns about Brisbane-based coal company New Hope Group relating to climate change, the independence of its board and remuneration and was ignored.

The controversial Adani mine in the Galilee Basin of central Queensland has been a lightning rod for activism against coal companies. New Hope has also been the target of legal action that has gone all the way to the High Court over the planned expansion of its coal project at Acland.

In its 2021 annual report Vanguard said it had sought to understand from Adani how the Carmichael mine aligned with the company’s transition plans and its strategy to reduce its exposure to thermal coal. Adani is a massive conglomerate in India with interests in agriculture, ports, power stations and solar energy.

“Company leaders said they have capped the size of the mine and intended to set an end date for operations to fit within the parameters of a 1.5 degree warming scenario,” Vanguard said in its annual report.

No date or any specifics were given to indicate when the mine may be closed, however it is the first indication that Adani would consider closing the mine prematurely.

“We plan to monitor developments at the company as it begins exporting coal from the Carmichael mine. We also plan to engage with the company leaders to gauge the progress it makes on its energy transition plans that could make the business more resilient in the long term.”

In response, Adani did not dispute the comment.

It said Carmichael had a long mine-life and would play an important role in both meeting demand for affordable and reliable energy in Asia and Southeast Asia as populations grow, and in reducing emissions intensity by replacing burning wood and biomass with a sustainable mix of high-quality coal-fired and renewable power.

“The Carmichael mine has been built and production rates are ramping up in readiness for the end of testing and commissioning to move into full operation at a time of record coal prices,” the company said.

“All of the product coal from Carmichael will be exported, and we have secured the market for it.

“The Adani Group has a balanced portfolio including both renewable and thermal energy.

“As a Group, we are the world’s largest multi-national solar company and have more than 20 gigawatts of renewable generation in operation, under construction, or planned.

“Our Rugby Run Solar Farm near Moranbah is included in this portfolio and was Queensland’s best performing solar PV asset in 2021.

In relation to New Hope, Vanguard said that it attempted to raise concerns with the company about its alignment with the Paris Agreement on climate change.

“We were disappointed that we did not have the opportunity to engage with New Hope’s representatives, despite repeated requests for a meeting,” Vanguard said in the report.

Instead, the fund manager said it provided detailed feedback on what it described as “the low level and quality of climate disclosures”.

“We noted that given the materiality of climate risks to New Hope’s business it was concerning that its reporting had significant gaps, fell short of addressing some important elements and was not updated and released in a timely manner. We stated that we expected substantial improvements to disclosure practices.”

It also said it did not support the re-election of two directors because of independence concerns and to hold the board accountable for the lack of responsiveness to shareholder feedback.

“We considered this to be a signifcant shortcoming in upholding good governance standards,” it said.

It voted against the approval of a remuneration report for both New Hope and fellow coal company Whitehaven.

“At New Hope, our research flagged various concerns about remuneration structures and practices that we believed did not incentivise long-term shareholder value. We also found the disclosure insufficient for shareholders to assess the outcomes.”

New Hope sad it wrote to Vanguard Asset Management in April, 2022, to provide information regarding climate risk governance and remuneration structures, in response to their questions.

The company said it appreciated Vanguard’s observations on these issues and offered to meet and discuss them in more detail.

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