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Shareholder activists call for answers at Thungela AGM

‘We need shareholders to be alive to these risks and, in terms of ESG, challenge Thungela on [its] misleading and inaccurate claims’: Robyn Hugo of Just Share.

DUDU RAMELA: The first annual report published by Thungela, a coal spinoff from Anglo American, has come under fire from shareholder activist group Just Share. According to the activist group, the annual report contains a multitude of misleading claims relating to climate science, energy, security, and poverty alleviation, the viability and affordability of the so-called ‘clean coal’, and carbon capture and storage as well as the company’s impact on people and the environment.

We speak more on this with Robyn Hugo, director of climate change engagement at Just Share, on their concerns. Robyn, thank you so much for availing yourself this evening. I think let’s start here – how did we get here?

ROBYN HUGO: Today was Thungela’s first AGM and, as you say, [the company was]  created as a spinoff of Anglo American’s coal assets last year. From June 2021 at the demerger Thungela took over all of Anglo American’s liability – so they are referred to as a pure-play thermal coal company. In other words, the only product they produce is thermal coal that is used to generate electricity – and most of that coal is exported to overseas markets.

DUDU RAMELA: You’ve raised a number of red flags, aiming to assist many South Africans whose savings are invested in Thungela to understand the dangers posed by its cavalier approach to climate risk. What are those dangers?

ROBYN HUGO: Certainly. Over the past few months Thungela’s share price, you would’ve seen, has soared on the back of the global commodity boom, and asset managers who say they’re integrating ESG [environmental, social and governance] factors into their decision-making and taking climate risk seriously have bought up stakes in this company – despite the really severe ESG risks that it represents.

Thungela share price

The fact that coal is currently at record highs doesn’t, of course, alter climate science.

So, apart from the climate risks that a coal company operating in 2022 faces, Thungela has got a stack of serious environmental liabilities from those unrehabilitated coal mines it inherited from Anglo American.

Although it says it has comprehensive mine-closure and rehab programmes to return previously mined land to its original condition, you would’ve seen from the numerous media reports over the past few months that there are actually severe environmental and health impacts from these unrehabilitated mines, including more than one toxic acid mine-drainage spill [and] toxic air pollution. This all really casts doubt on its claims that it’s managing its rehabilitation responsibly.

DUDU RAMELA: You’ve also since made a call to shareholders to be responsible and challenge Thungela on the misleading and inaccurate claims. What happens now, what options are available to you?

ROBYN HUGO: Instead of Thungela having what it needs to have – which is a robust science-based climate strategy – it needs clear plans to wind down its mines responsibly, support its workers.

It’s using these misleading arguments about coal being required for energy security and poverty alleviation, and [it’s] inaccurately interpreting climate science, and it shows that we need to very speedily decommission coal. They say we need more coal for longer, and say there’s some kind of future feasible tech that’s going to be able to pull all the carbon dioxide out of the air and have coal clean enough to be acceptable.

So what we need is shareholders to be alive to these actual risks – and many of them are set out in our briefing – and actually show that they are responsible in terms of ESG, and challenge Thungela on these misleading and inaccurate claims, and then apply pressure for the company to take climate risk seriously, develop this science-based climate strategy [and] meaningful emission-reduction targets.

I think what’s also important is for Anglo to have a comprehensive audit of its liabilities. We’re not only talking about major environmental liabilities; it’s also air, water- and soil-pollution risks and health impacts. Then make provision not only for these, but also for potential litigation that is quite likely to arise from some of these impacts.

DUDU RAMELA: You also note that Thungela does not have a Paris-aligned emission-reduction strategy.

ROBYN HUGO: That is so. They don’t have any climate strategy at all – and such targets as they have, they inherited from Anglo American.

In fact, they’re not true targets, because they’ve already been achieved – and not through any positive action of Thungela’s own. It was just Covid that resulted in less demand for their product.

So they need to be aligned with a 1.5°C world and the IPCC [Intergovernmental Panel on Climate Change] reports tell us that if we want to have any hope of limiting global warming to 1.5 degrees, we need rapid, deep, and in most cases immediate cuts to carbon emissions in all sectors.

But coal, of course, is the most carbon-intensive fossil fuel; it’s the biggest contributor to global climate change, and luckily coal power is also the easiest and the cheapest fossil fuel to decarbonise.

So really these are the sorts of things that need to be addressed by a responsible coal company winding down its as assets, setting meaningful emission-reduction targets.

DUDU RAMELA: Just a note, Robyn, to yourself and to our listeners that we did reach out to Thungela to give them the right to reply. By the time of going on air we didn’t get feedback from them. So we’ll continue to try and hear from them how some of these red flags that you have highlighted will be addressed.

Robyn Hugo is the director of climate change engagement at Just Share. Thank you so much.

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