On cheese-eating surrender monkeys - and coal

NOTHING annoys the French more than to call them “cheese-eating surrender monkeys”, but as Hogsback weighed up the events which affected the coal industry last week it really was a case of the French surrendering while everyone else fought on.

Staff Reporter

Norwegians, Japanese, Australians and South Africans were fighting for coal as a critical source of power for the world, while a big French bank behaved in a way first described in an episode of that classic US cartoon series, The Simpsons.

Societe Generale used protests in Paris over its possible participation in a syndicate funding the Alpha mine of GVK Hancock in Queensland to toss in the towel or, to be slightly more correct, “withdraw from its advisory mandate” for the big coal project.

Opponents of the proposed Alpha mine, and its rival Carmichael project in the Galilee Basin, where delighted with the French retreat while others could not think of a better description for the action than the “cheese-eating surrender monkeys” from The Simpsons.

Fortunately, if anyone was keeping score last week it was a case of one cheese-eating monkey for the anti-coal brigade and four heroes for The Hog and his pro-coal friends because even as Societe Generale’s bugler was sounding retreat other events were occurring, including:

  • Japan’s Mitsui plonking $US1 billion on the table to acquire a stake in the Moatize coal project and associated rail and port infrastructure in Mozambique;
  • Norway’s big sovereign wealth fund rejecting calls that it abandon investment in fossil fuels, including coal;
  • Australia’s coal industry being boosted by a briefing for financial analysts from Rio Tinto into how heavy cost-cutting had made the industry more competitive, and
  • South Africa admitting that its failure to encourage coal production was starting to damage the country’s fragile economy.

Mitsui’s decision to invest $1 billion in Mozambique’s coal industry was the most tangible example of how worldwide demand for coal continues to grow despite the protests of its opponents.

What the big Japanese company gets for its investment is a 15% stake in the Moatize mine which is being developed by Brazil’s Vale group, an the obligation to provide funds for mine expansion work, and a 50% stake in rail and port infrastructure.

The deal has been praised by the governments of both Japan and Mozambique as an important example of how Asian capital is being applied to help with the development of poor African countries.

The same argument could be applied to what happened in South Africa last week as that country’s critically important electricity system started to show fresh signs of collapsing thanks to a lack of investment in its coal-fired generating system.

Power outages across the country were the worst since 2008 when South Africa was acutely embarrassed by international news reports about tourists trapped on top of Cape Town’s famous Table Mountain.

This time around, the power outages were sufficient for Fitch, a credit ratings agency, to warn the South African government that it was in danger of having its debt downgraded towards junk status.

Like the rest of Africa there is a debate underway about whether industrial development can be achieved without active encouragement of a viable electricity system and, if that’s to happen, what will power the system?

Coal is the obvious answer and the more frequent the power outages in Africa’s biggest economy the more obvious the answer will become.

In Australia, Rio Tinto’s coal boss Harry Kenyan-Slaney, briefed financial market analysts on the progress being made in cutting costs at the company’s mines, and how those cuts would ensure that the business remained competitive even in the current low-price environment.

Norway, however, produced the biggest win for coal when a government appointed panel rejected calls for the country’s $870 billion wealth fund to sell out of coal and other fossil fuels, arguing that active involvement was a better way to seek action over climate change.

“Climate is a serious question, and it deserves more than symbolic acts,” the panel reported, a comment which pleased both sides of the coal debate, but which was particularly pleasing for coal miners who have been frustrated by the slogans and gimmicks of protesters.

What the Norwegians did was add a mature note to a serious debate which demands more than the tricks and stunts of Green protestors, or the meek surrender of banks such as Societe Generale at the first sound of a few angry words.

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