Josh Frydenberg should revisit reassurances he gave workers at Peabody’s Australian coalmines after the company filed financial statements revealing a “dire financial position”, an environmental lawyer who has studied the documents says.
When the world’s biggest coalminer, Peabody Energy, sought bankruptcy protection in the United States in April, the federal resources minister said he had been reassured none of the company’s 3,500 Australian workers would be losing their jobs.
“My primary concern is with the Australian operations of Peabody. They have 10 mines across Queensland and New South Wales, nearly 3,500 workers if you include the contractors and I spoke to the president of Peabody and they informed me that they will not be reducing their Australian workforce,” Frydenberg told the ABC.
“They have funding to continue with their Australian operations and they see their work in Australia as being core to their operations particularly the proximity their Australian mines have to key demand in Asia.”
But David Barnden, climate and finance lawyer with Environmental Justice Australia, said company’s latest financial statements lodged with the Australian Securities and Investments Commission revealed a “dire financial position”.
“In 2015 Peabody Australia lost $2.7bn … its Australian operations owe $5.7bn in intercompany loans to US subsidiaries named in bankruptcy filings,” Barnden said in a statement. “The holding company has negative equity of $6.5bn … the 2015 financial statements reveal a net current asset deficiency of $4.8bn. Despite this the financial statements say reasonable grounds exist to believe the company is solvent.”
Peabody operates several coalmines in the Queensland marginal seat of Capricornia and the neighbouring seat of Dawson as well as mines in the New South Wales Hunter Valley and near the inland town of Mudgee.
In the accounts, auditors Ernst and Young drew attention to a note in the financial report “which details the principal conditions that raise doubt about the company’s and the consolidated entity’s ability to continue as a going concern”.
“As a result of these matters, there is significant uncertainty whether the company and/or the consolidated entity will continue as a going concern, and therefore whether they will realise their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the financial report.”
“The extreme financial distress faced by Peabody Australia raises questions about just how reassured we can be that the company remains solvent,” Barden said. “Mr Frydenberg needs to revisit the assurance he provided in April in light of the information available in the recently released financial statements.”
It was also revealed on Thursday that multinational mining giant, Glencore, will close its Tahmoor coalmine in New South Wales by early 2019 with the loss of 350 jobs, the latest victims of low prices hurting the sector
The future of coalmining in Australia has become a contested issue in the election campaign.
The mining industry is demanding the resignation of Labor candidates who have signed a 350.org “pledge” supporting a ban on fossil fuel subsidies and an end to political donations from fossil fuel companies – and is lobbying mine workers to vote against parties who “threaten” their jobs.
The Labor member for the northern NSW electorate of Richmond, Justine Elliot, the former member and current candidate for the neighbouring seat of Page, Janelle Saffin and the candidate for the safe Liberal seat of Ryan, Stephen Hegedus, have all signed the 350.org pledge, along with some other retiring MPs.
Labor policy is to retain the diesel fuel rebate for the mining industry, agreeing with the Coalition that it is a “business input cost” rather than a subsidy. And Labor accepts fossil fuel donations.
The Labor leader, Bill Shorten, played down the dissent and said he “wasn’t going to have a giant witch hunt” over it”, playing up his climate policies in favour of renewable energy but saying coalmining would continue for many more years.
But government ministers demanded unequivocal support for an industry they claimed was prospering.
“Will Bill Shorten stand up for Australia’s second-largest export industry, the more than 40,000 jobs and around $38bn in export income it creates, or will he fold to his Green-leaning candidates?” Frydenberg said this week.
And the trade minister, Steve Ciobo, asserted on the ABC’s Q&A program that “global demand for coal is still going through the roof”.
Ahead of the 2104 G20 summit in Brisbane, Peabody launched an online campaign titled the Lights On project to convince leaders that access to coal-fired power was crucial for “empowering” developing countries.
The G20 push, using social media and video, was part of an international campaign the company commissioned with PR firm Burson-Marsteller targeting China, America and Australia, called Advanced Energy for Life.
Frydenberg has been contacted for comment.
