Dalrymple of Queensland and the Mighty Greenwash

8 minute read

The world's third-largest coal port is being sold by Canadian real asset house Brookfield to potentially the Government of Queensland. We believe that this is a negative development and consideration should be given for Brookfield to shut the thermal coal capacity (20% of total) of the Dalrymple terminal prior to a sale, making the asset more digestible to other investors.

It can be argued that Brookfield made a mistake when acquiring Dalrymple. Shutting thermal capacity with questionable value anyhow should be within the scope of their investments in ESG activities and impact investing.

The estimated value of the terminal asset is about AUD3bn. There are indications that funding for the purchase would be taken from shaving off a significant amount of the State’s defined benefits pension scheme. This comes at the same time as Queensland suffers financial pressures, with state debt expected to top AUD102bn this year. On a diversification basis, more exposure for Queenslanders to coal terminal operations seems reckless.

Queensland already is the home to four out of the ten biggest coal ports in the world and given a population of 5mn in Queensland, the average export capacity is 37 tonnes per capita. From a macro-economic stand point, recent moves in the coal market do underline downside risks in such concentrated coal exposure.

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