Australia’s bushfire inferno fuels attacks on country’s $70-billion coal mining industry
For decades, coal mining has been a cornerstone of the Australian economy worth US$70 billion and employing tens of thousands of people. But as some of the worst bushfires in the country’s history destroy large swathes of countryside and leave at least 15 people dead, its coal industry has come under increasing scrutiny.
Experts say the fires are being exacerbated by climate change. Coal is the most environmentally damaging fossil fuel, producing about a third more carbon dioxide than oil does.
Australia is the biggest net exporter of coal, accounting for almost a third of all shipments, and is the world’s fourth-largest producer. It is deeply entrenched in Australian life. Every state produces coal, providing jobs for 50,000 and employing another 120,000 indirectly, according to the Minerals Council of Australia. More than $5bn in royalties is paid annually by miners to the federal government.
From 2018 to 2019, Australia exported 210 million tons of thermal coal — used to fuel power stations — worth US$26 billion, and 184 million tons of metallurgical coal — used for steelmaking — worth US$44 billion. Most goes to Asia, with some used domestically to produce electricity.
Countries such as China and Japan, both hungry for energy throughout the 2000s, helped fuel a coal-mining boom in Australia. Since 2012, however, investment in new mines has slowed, with firms instead pumping money into sustaining production at current levels.
Some of the firms most involved in the coal sector are big London-listed miners including Glencore and BHP.
Glencore is Australia’s biggest coal miner and produced 130 million tons globally last year. It paid US$1.1 billion for half of Rio Tinto’s Hunter Valley coal operations in 2017 and US$1.7 billion for all of its Hail Creek coal mine and the Valeria project the following year.
London-based Rio has now sold all its coal interests around the world in the wake of investor pressure.
Andrew Grant, a senior analyst at financial think tank Carbon Tracker, said London miners have been reducing their coal exposure over the past five years after recognizing the dangers of investing in an increasingly unpopular fossil fuel.
Investors, lobbyists and activists are increasingly vocal about their distaste for coal, leaning heavily on companies to exit their operations globally. Shareholder pressure last year prompted Glencore to limit production of coal in the future.
The Church of England, which manages nearly £13 billion of assets for its members, has been a long-time critic of companies that mine coal and has put pressure on listed firms to divest from the fossil fuel. Adam Matthews, its ethics and engagement director, said: “It is clear from the devastating news from Australia and elsewhere that climate change even at this level of warming is destroying livelihoods and the environment.
“The global economy has to transition away from coal as quickly as possible to limit its contribution to even greater climate impacts. Investors have been challenging major mining companies to urgently address the lobbying by industry associations of which they are members and funders.”
The Church is not alone. Norway’s US$1-trillion government pension fund — the largest of its type — has stringent rules for the companies in which it invests. Firms may be blacklisted by the fund if they derive 30 per cent or more of their income from thermal coal, base 30 per cent or more of their operations on thermal coal or extract more than 20 million tonnes of thermal coal a year.
Despite the growing outcry over fossil fuels, and amid the fires ravaging Australia, its prime minister has come to the defence of the coal-mining industry.
Scott Morrison said he was not prepared to “write off the jobs of thousands of Australians by walking away from traditional industries” such as coal.
He added that Australia would “maintain the course of responsible management, responsibly addressing the changes of climate change and responsibly ensuring that we can grow our economy in what is a very tough climate at the moment.” He warned that the fires may keep burning for weeks due to the lack of rain.
The conservative politician is a supporter of the new Adani coal mine in Queensland, which has been the subject of controversy and protests for years.
The mine, which was approved last June, could pave the way for an additional six sites in the area, experts claim.