How campaigners used HSBC’s AGM to clamp down on the Carmichael carbon bomb
April 20, 2016
This month, the Queensland government approved leases for the Carmichael mine in Australia’s Galilee Basin. This mine, which Indian multinational Adani are desperate to develop, is an essential battleground in the fight for climate justice because it represents a test case for the entire Galilee Basin. It is also one whose success (or failure) is underpinned by the availability of international finance from banks like HSBC.
If Adani are successful in their bid, and the infrastructure necessary for what would be Australia’s largest mine comes online, then the exploitation of the entire region, its land, and its people, is just a matter of inertia:
“Other companies plan to develop mines in the same basin […] Analysts say those planned mines will probably depend on Adani’s project going ahead, as it will provide the requisite rail and port infrastructure.” Financial Times
In fact, the Guardian has identified the Galilee Basin as a ‘carbon bomb’ in their series on mega-emission projects in the pipeline, alongside existing extractive projects like the notorious Alberta tar sands. They estimate it locks up about 27bn tonnes of coal, or more than four years worth of current global demand. Burning it would further condemn not only the climate, but the millions of people most vulnerable to its ravages. So as everyone keeps saying, we have to keep it in the ground!
Fortunately, this is a battle we are winning. Adani and the Queensland government (who are keen due to the A$21bn they expect the mine to produce in tax revenue) are being beaten back by a series of factors: failure to find financing, indigenous resistance, legal challenges from conservation groups, and coal’s structural downturn. The forces arrayed against new coal came together recently to demand that Queensland prioritise the sanctity of the Great Barrier Reef, which is suffering its most extreme bleaching event in history (in some reefs, 50% of coral is dead), over this regressive mining project.
What’s key to understand is that when it comes to Carmichael, Adani have taken the plunge in every possible respect. They boast of a ‘vertically integrated’ approach, which essentially means they control every stage of the supply chain. Their dominion stretches from the Carmichael leases, to the Abbot Point export terminal, and all the way to Mundra, India’s largest private port. This might once have been a strength, but in the current context is a fundamental weakness. They are massively exposed. They have irrevocably tied themselves to a project that is doomed to fail, and seem to see no option but to plow blindly on:
“We have invested $1.2bn in the mine so far, and we have bought Abbot Point for $1.8bn. Without seriousness of developing these projects, we wouldn’t be investing that kind of cash.” Adani Australia CEO, Jeyakumar Janakaraj
Which brings us to Abbot Point, the gateway to Galilee’s bounty for all corporate coal-enthusiasts. It is the expansion of this deep-sea port, which exclusively exports coal, on which the entire success of the Carmichael project hinges. Right now, it is simply not equipped to deal with the 60mn tonnes of coal Carmichael would produce every year. And crucially, the port’s expansion could only go ahead with financial support from commercial banks.
This is usual for such projects. For example, HSBC was already supporting development of other coal and gas export terminals along the Great Barrier Reef. To be precise, they threw AU$600 million in this direction in 2013! So in 2014, activists responded. They knew Abbot Point must not get the financing it wanted, so campaigners visited HSBC’s AGM to embarrass them in front of their shareholders and demand they stop financing coal mining.
It was there that CEO Stuart Gulliver, on being challenged, declared that it was “extraordinarily unlikely” that HSBC would finance Abbot Point. This was a signature success, hot on the heels of a similar pledge from Deutsche Bank, also at their AGM!
Since then, despite the expansion getting the go ahead just weeks after governments apparently decided to crack down on climate change at COP21, Moody’s downgraded Abbot Point‘s rating, identifying it as a “substantial credit risk”. Adani, cast aside by commercial banks thanks to campaigners’ efforts, have had to appeal to private financiers, who will now be avoiding this deal like the plague.
Forcing big banks like HSBC to rule out new coal, which is oh-so-reliant on their generous corporate loans and underwriting services, can have powerful repercussions, and that’s why we’re going to HSBC’s AGM this Friday. Because rejecting one project isn’t enough: we want them all gone, and the companies behind them!
In case anyone’s in any doubt, this is a completely reasonable demand. If financing Abbot Point is off the cards, so too should be any material support for Adani and their climate-wrecking bid to monopolise Australian coal exports. And yet, as recently as 2013, HSBC owned 1.5% of the company. The lack of banks’ transparency means we don’t know whether they have increased or decreased their shares, but nothing short of full divestment can be considered satisfactory!
Meanwhile, HSBC have nothing in their Mining Policy to rule out financing for any sort of coal mining, not even mountaintop removal, which literally involves lopping the top of mountains with dynamite. Without a formal pledge to #QuitCoal, enshrined in their new Mining Policy, we can have no guarantees that they won’t suddenly decide to refinance Adani when the debt collectors come a-calling, just as they did for Peabody in 2006 and 2010, only for that coal giant to go hopelessly bankrupt last week. HSBC should not be helping keep coal afloat, but rather financing a just transition to a democratically organised renewable world.
If that wasn’t reason enough, the very real threat of coordinated, international campaigns of direct action are an additional investment risk for banks. That is the line of Germany’s anti-coal movement:
“We are the investment risk.” Ende Gelaende
They are invading a lignite mine en masse as part of a global moment to #BreakFree from fossil fuels, at the same time as Pacific Warriors and their allies blockade coal ships at the Newcastle coal terminal in Australia, just as they have shown themselves willing to do in the past, in defence of their homes. Their message:
“We are fighting! We are not dying!” Pacific Climate Warriors
There is no longer any profit to be had from coal, only pain. For the communities on the frontlines of its extraction, for the people increasingly subject to the wrath of a rapidly changing climate, and even for the banks like HSBC who are foolishly financing the stuff.
If you want to go one step further, drop a Tweet. Choose your weapon:
Solidarity with communities resisting coal all over the world! #QuitCoal