Government backing for mines, which could potentially include the Adani Carmichael project, comes as banks under pressure from activist groups

This article is more than 3 years old

This article is more than 3 years old

The Turnbull government has responded to the increasing unwillingness of Australia’s banks to fund major coal projects by overturning a ban on government-backed loans to domestic miners.

Steve Ciobo, the minister for trade, says protesters and activist groups have so discouraged Australia’s retail banks from financing “otherwise viable exporters in the coal sector” that the government must step in to fund a growing “market gap.”

He said government funding would now be provided via the Export Finance and Insurance Corporation (Efic), and he has written to Efic asking it to change its mandate to broaden its lending criteria.

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Earlier this year, the financial regulator warned that climate change posed a material risk to the entire financial system, urging companies to start adapting.

And Australia’s big four banks have increasingly distanced themselves from controversial coal projects in recent years, but the government has complained that banks have been scared off by aggressive campaigning by activist groups.

The Commonwealth Bank indicated last month it would not lend money to Adani’s proposed Carmichael coalmine, leaving the project without financing from any of the big four banks.

The first of the big four banks ruled out lending to the project two years ago, with NAB distancing itself from the mine in September 2015, and ANZ following suit in December.

Facebook Twitter Pinterest Malcolm Turnbull and Steve Ciobo. Photograph: Lukas Coch/AAP

Then in April this year Westpac became the third of the big banks to rule out funding the project, drawing criticism from then-resources minister Matthew Canavan, who said the bank had a conflict of interest because of its interest in other coal-producing regions, and called for a boycott of the bank.

The Commonwealth Bank had previously stepped back from the project, ending its role as a finance adviser, but until last month had not indicated it would avoid financing it.

National Party MP Mark Coulton asked a dorothy dixer in question time on Monday so Ciobo could explain why the government wanted to overturn the federal ban on government-backed loans to domestic miners.

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“Will the minister update the House on the steps being taken to support jobs and growth in Australia’s export industries, including resources, and will the minister explain how radical action groups are threatening this growth?” Coulton asked.

Ciobo replied: “I’m increasing the scope of Efic’s statement of expectation so that Efic has got more ability to finance onshore resource projects.

“Now ... what are some of the radical groups doing that is threatening this? The fact is that we are seeing a campaign. We’ve seen, for example, the stepped-up campaign of activist groups which is discouraging our major retail banks from financing otherwise viable exporters in the coal sector.

“But it’s not just about coal, it’s also about what we can do in other sectors within resources,” he said.

Labor has requested a briefing from the government about Efic changes.



Rod Campbell from progressive thinktank the Australia Institute has ridiculed the government’s announcement.

“I think it’s extraordinary that we’re seeing a Liberal government look to reintroduce taxpayer-finance to the mining sector,” Campbell said.

“Just when you thought it was just the Nationals wanting the Northern Australia Infrastructure Facility, the Liberals have gone one better and said taxpayers can now finance mining projects anywhere in the country.

David Barnden, from Environmental Justice Australia, says the focus on Efic has traditionally been on small and medium-sized enterprises, so it will be interesting to see how much its focus changes under its new mandate.

Ciobo says the changes will not “duplicate” government support to resource projects, so Efic will not be able to provide finance for the construction of projects that are partially funded by the Northern Australia Infrastructure Facility (Naif)

Adani is seeking a loan of up to $900m from the Australian government through the Naif for a rail line between its proposed Carmichael coalmine and the Abbot point coal terminal near the Great Barrier Reef.