Exclusive: How three men stopped China funding Adani
When Geoff Cousins got wind of moves by Adani to finance its giant Carmichael coalmine through Chinese banks, his immediate response was to begin planning a campaign
to lobby government against it.
Not the Australian government. He knew that would be of no use. Instead, he set his sights on a government that might actually do something.
“I just rang the Chinese embassy,” the then president of the Australian Conservation Foundation says.
He sought an urgent meeting because Adani appeared close to stitching a deal. The embassy agreed, but told him the ambassador could not be present because he had a prior engagement. Another senior official, the embassy’s “minister counsellor” for trade and economy, would attend.
Cousins rang investment banker Mark Burrows, an expert in finance, particularly green finance. Burrows agreed to come with him. He also undertook to work his own contacts in China.
Next Cousins called Australia’s former Foreign minister, Bob Carr, who had strong relations with the Chinese, seeking advice on how to approach the meeting. “And Bob said, ‘The reason the ambassador won’t be there is because he’s having lunch with me. Send me the material and I will raise it with him.’ ”
Carr wrote a long letter, comprehensively footnoted and dated November 22, 2017, and sent it to ambassador Cheng Jingye, detailing concerns about the Carmichael mine: the global environmental consequences of its 4.7 billion tonnes of greenhouse gas emissions; the opposition of a majority of Australians, including local farmers and Indigenous owners; and Adani’s record of poor corporate behaviour.
The letter noted that Australia’s Big Four banks, “and many international banks (including BNP Paribas, Societe Generale, Credit Agricole, Deutsche Bank, HSBC, Barclays, Royal Bank of Scotland, Morgan Stanley, JP Morgan Chase, Goldman Sachs and Citi) have ruled out financial investment in the mine”. It also detailed financial analyses suggesting it would become a stranded asset.
Carr had advised Cousins that when he and Burrows met with Chinese officials, they would likely listen politely, take lots of notes and be noncommittal, and that he should not be discouraged by that.
“But in fact,” Cousins recalls, “the minister came into the meeting, straight across the room, up to me, and said, ‘Mr Cousins, you are a winner.’ And I said, ‘Am I?’ And he said, ‘Yes, you won on Gunns, you won in the Kimberley, and now you will win on Adani.’
“That was before we even made our case.”
Clearly, the official had done his homework. He knew about Cousins’ previous successes using unorthodox means to fight environmental battles.
Cousins is not your typical activist. He is originally an ad man and has been an adviser to John Howard. He has sat on boards most of his life, among them Optus, PBL and Telstra. In the process he has amassed a lot of money and a lot of powerful contacts. He knows how to run a public campaign and also an inside campaign.
A decade earlier he used both strategies when he took on Gunns, then the biggest company in Tasmania, over its plans to build a $2.3 billion pulp mill. A combination of public and boardroom pressure saw the ANZ bank cut off Gunns’ finance. By the time it was over, the company was insolvent and its chairman, John Gay, was convicted of insider trading.
In the Kimberley, Australia’s largest oil and gas company, Woodside, along with industrial giants Shell, BP and PetroChina, proposed to build a huge gas hub at James Price Point just north of Broome. In 2013, following a similar campaign in the media and in boardrooms, Cousins succeeded in having the $45 billion plan abandoned.
In 2017, as Cousins made his case to the Chinese embassy, he and Burrows indicated their willingness to travel to China if necessary. Cousins had led a similar delegation to India earlier that year.
But according to the businessman, the Chinese did not need that level of convincing. The minister counsellor “had a brief discussion with his people and then said, ‘I promise you every word you say will be in Beijing tonight. And maybe you don’t need to go to China.’
“And we left thinking, ‘Well, we’ve either been conned, or they are actually going to do something.’ And sure enough, about a week later came an email to me, saying that no Chinese bank would fund that project. Bob got a similar email. Then, in succession, Chinese banks, including the Bank of China, came out publicly and said that they wouldn’t fund Adani. It was a most extraordinary event.”
About the same time, in late 2017, The Australia Institute also learnt that Adani was in China trying to arrange funding. It sought a meeting with the embassy.
While it lacked the heavyweight business credentials of the other group, the institute’s research director, economist Rod Campbell, had lived for some years in China and spoke fluent Mandarin. He set up for himself and a few colleagues to meet the minister counsellor.
He also invited the minister “and any colleagues from the embassy” to attend a function the night before, where the ACT chief minister was launching a new book by the institute’s chief economist, Richard Denniss.
The minister counsellor went, with a colleague, and chatted amiably with Campbell in both Mandarin and English.
The following day, he assured the institute its concerns about Adani were being taken seriously. The institute assured him it would try to dissuade other conservation groups from protesting at Chinese embassies and consulates, which officials seemed keen to avoid.
So Adani didn’t get its loan. But the story doesn’t end there. Almost three years later, last November, word filtered to Cousins that Adani was again in China, this time looking for someone to insure their mega-mine project.
“So I rang the same phone number of the minister that I had been given in 2017,” he says. “And to my absolute amazement, the same man answered the phone.”
Once again, he made representations to the minister. He again enlisted Carr to write to his friend the ambassador.
The letter began by complimenting China on its recently announced commitment to a net zero emissions target and noting Australia’s other major east Asian trading partners, Japan and South Korea, had made similar commitments.
“This stands in contrast to Australia’s own reluctance to commit to net zero emissions by 2050,” Carr wrote.
He went on to note that the People’s Insurance Company of China (PICC) was one of the few still prepared to offer cover to non-Chinese mining ventures and asked that the government intervene to stop it – or others – from insuring the Adani project.
“A decision to decline insurance cover would be in keeping with statements by China’s leaders that international projects which could be environmentally damaging would be closely examined. This is the same spirit that you and colleagues bought to bear so admirably on bank finance for Adani,” the letter said.
“The Australians who oppose this mine regard it as emblematic of poor government climate policy and a serious risk to the Great Barrier Reef. It would be at odds with China’s great commitment to becoming carbon neutral by 2060.”
Carr promptly got a text message back: “Your letter has been well received in Beijing and moving ahead. With appreciation.”
Shortly after that came word that no Chinese insurer would cover Adani.
People might speculate about the reason the Chinese acted so quickly and why the anti-Adani group apparently had more diplomatic clout than the Australian government. No doubt the second time around, last November, relations between the two governments had deteriorated to the point where the Chinese were looking for opportunities to embarrass the Morrison government. But that was not the case in 2017.
More likely, according to some of those involved in putting together the case against Chinese investment, they were simply persuaded that the climate, business and reputational risks of financing or insuring Adani made it bad business.
Carr says such considerations are irrelevant, however: “Whatever their motivation, on banking and finance and on insurance cover, they pretty quickly delivered the news we were looking for.”
For Cousins, the result came as further confirmation that in the absence of decisive action by politicians the best way to effect change “is to convince banks, insurance companies, superannuation funds and other big investors not to invest in fossil fuel projects”.
The fact that this seems like a statement of the obvious is a measure of how much the world has changed in the past decade or so.
“When I went after the woodchip company, that was one of the first times that anybody thought of going to a bank and saying, ‘Don’t invest in this, don’t finance this environmentally destructive activity,’ ” Cousins says, referring to his campaign against Gunns in 2007.
“Now, you’d have to say that the whole finance industry around the world is very much opposed to funding environmentally damaging projects, particularly anything to do with fossil fuels.”
He exaggerates only slightly.
“The writing’s on the wall,” says John Hewson, economist, former Liberal Party leader and until recently chairman of General Security Australia Insurance Brokers.
Insurance companies, he says, “used to treat climate risk as sort of a tail risk, you know, out there in the future, but it wasn’t going to be of significance”.
“Now, of course, they’ve recognised the fundamental significance of climate risk, right across the board. So it’s not surprising that they say, ‘We won’t insure new coal projects, we won’t insure new coal-fired power stations’, when in 10 years they could be stranded assets.”
Why would bankers and insurers risk investing in fossil fuels, when renewable energy is not only cleaner but cheaper? Just this week, an international consortium announced plans to build the world’s biggest renewable energy hub along 15,000 square kilometres of the south coast of Western Australia, generating up to 50 gigawatts of energy and producing 3.5 million tonnes of zero carbon green hydrogen, or 20 million tonnes of green ammonia each year, for both domestic consumption and export.
The week before the government of India – a laggard like Australia in setting emissions reductions targets – put 67 of its state-owned coalmines up for auction. Only eight of them, according to a report, received more than two bids, the minimum required. Not one foreign company took part.
Hewson alludes to another example, closer to home. In May, a contractor working on the construction of the 120-kilometre rail line connecting the Adani mine to the coast told a parliamentary committee that a global search for an insurer willing to underwrite its work had failed, despite more than 40 approaches.
Indeed, the very establishment of the parliamentary inquiry speaks volumes about the desperation of the fossil fuel industry and its political servants.
It was set up in February this year under the chairmanship of one of the National Party’s most outspoken coal advocates and climate change deniers, George Christensen, despite the objections of some Liberals.
The committee says it will examine “the domestic and foreign investment opportunities and challenges for Australia’s export industries and their associated businesses, arising from changes in prudential standards and practices across banking, insurance and superannuation institutions, in addition to publicly listed companies”.
Decoded, it is a forum for the fossil fuel lobby to rail against the fact that big companies are increasingly unwilling to give them money.
A submission from the New South Wales Minerals Council gives a sense of the tone: “The policies of financial institutions have largely been developed in response to the pressure of activist groups and shareholders promoting a rapid phase out of fossil fuels. For example, some groups have called for the cessation of thermal coal mining and coal fired power generation by 2030.”
The council condemned such “economically reckless timetables promoted by some activist groups”. Presumably, it counts the International Energy Agency among them.
“As the pool of lenders and insurers decreases, owners of fossil fuel-related assets … will face increasing costs. It may reach a point where in some cases they are not able to secure the finance and insurance they require to continue operating…”
Well, yes. Most of the world understands this, even if Australia doesn’t. Which is why Geoff Cousins rang the Chinese embassy and not the prime minister.
This article was first published in the print edition of The Saturday Paper on Jul 17, 2021 as "Exclusive: How three men stopped China funding Adani".
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