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From Coal to Koalas

29 June 2022

Local protesters win against coal giant 
Protests against the coal mine lasted almost fifteen years, but eventually led to success.

In 2006, the Chinese state-owned mining giant Shenhua purchased pieces of land in the Liverpool Plains, a scenic and fertile area almost 500 km north of Sydney in southeastern Australia. Shenhua’s plan was to extract 290 million tonnes of coal from the ground over a period of 30 years.

When local residents heard this, they started to protest as fears that the mines and excavations would pollute the water resources in the region increased. Not only that, but the Koala population would be threatened by the long-term work. Koalas, those iconic natives of Australia, had been virtually wiped out by the beginning of the 20th century in Australia, but thanks to a long-term relocation programme in the eastern states, the population had finally begun to grow again. It had to stay that way.

Despite the many protests, Shenhua was awarded an exploration licence by the state of New South Wales. The protests then grew in intensity, continued over years and environmental organisations lobbied against the decision. Following years of intense public pressure, last year the New South Wales government withdrew the mining licence. The company, which had yet to start work, demanded and received 100 million Australian dollars in compensation and sold the enormous piece of land.

For the region, it was clear. The agricultural and natural area of more than 16,000 hectares – bigger than 22,000 football pitches - had to be retained for the region. In the end, twelve farming families from the region and an institutional investor bought the same number of plots from Shenhua for a total of 120 million Australian dollars.

This institutional investor is a joint venture of the Kempen and the Clean Energy Finance Corporation (CEFC), a bank owned by the Australian federal government that invests exclusively in sustainable projects. Together they have bought roughly one third of the total area, a 6,000 hectare plot called Breeza. This land had previously been used as farmland and cattle pasture, and has much potential for improvement. 

The land was bought at an auction. Kempen and CEFC teamed up with local farmers who wanted to buy a few smaller, high-value pieces of farmland within the Breeza area and were willing to pay a premium for them. This meant that Kempen and CEFC were able to outbid several large institutional investors. One of the conditions of the sale was that the new owners must provide 'koala corridors' so that the animals can roam freely.

Sustainable agriculture
In addition to a plot of about 3,500 hectares on which crops such as wheat, barley, rapeseed and chickpea are already cultivated, about 1,500 hectares of somewhat neglected land will be revitalised for crop production. Furthermore, part of the land will be used for environmental management, including the planting of native plants. Moreover, Kempen and CEFC are looking into whether the plot is eligible for generating carbon credits and biodiversity credits.

For the Kempen SDG Farmland Strategy, this is now the third farming area in Australia. Last year the Fund invested in two other areas in the same state: an avocado plantation and a piece of agricultural land for grain, pulses and maize crops. The latter project was also a joint venture with CEFC.

The portfolio of the Kempen SDG Farmland Strategy, which was set up over a year ago, consists of 12 farmland projects in four different countries. In addition to Australia, it has invested in land projects in Denmark, Portugal and the United States. At the end of March, the strategy had €382m in committed capital. The strategy was initially launched in conjunction with the multi-billion investor Pensioenfonds PostNL (the Dutch postal workers’ pension scheme), and today its clients include retail investors, family offices, as well as Dutch insurers Coöperatie Dela and De Goudse.

The investment team is always looking at new opportunities, and they are currently evaluating potential investments in New Zealand and the United Kingdom.

 This document is prepared by [the fund managers of the fund / strategy (‘the Fund/Strategy’), managed by Kempen Capital Management N.V. (‘KCM’). The Fund/Strategy currently holds shares/bonds in the subject company. The views expressed in this document may be subject to change at any given time, without prior notice. KCM has no obligation to update the contents of this document. As asset manager KCM may have investments, generally for the benefit of third parties, in financial instruments mentioned in this document and it may at any time decide to execute buy or sell transactions in these financial instruments.  
 
This document is for information purposes only and provides insufficient information for an investment decision. This document does not contain investment advice, no investment recommendation, no research, or an invitation to buy or sell any financial instruments, and should not be interpreted as such.  
 
This document is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such.  
The views expressed herein are our current views as of the date appearing on this document. This document has been produced independently of the company and the views contained herein are entirely those of KCM.  

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