The Whitehaven Coal Ltd (ASX: WHC) share price is sinking in afternoon trade today. This comes as the coal miner faces backlash over its Vickery coal project extension that was approved yesterday.
Whitehaven shares are currently changing hands at $2.83 apiece, an 8.71% drop from the market open.
This is a complex issue with a lot of moving parts – but we've done the analysis for you. Here are the details.
Image source: Getty Images
Let's set the scene quickly
In order to grasp the situation fully, it's important to realise the backdrop here.
The Vickery colliery, located around 20km north of Gunnedah in NSW, was originally owned by Rio Tinto Limited (ASX: RIO) before its closure in 1998. Whitehaven then acquired the mine and was granted a restart approval in 2020.
It has since been a messy road for the project's upstart, as several climate activist groups have come out against the mine's go-ahead.
For instance, a group of eight students unsuccessfully sought an injunction against the Vickery extension in May of this year.
However, a Federal Court agreed that the federal environment minister, Sussan Ley, did have a responsibility to ensure no harm was caused to the future of young people as a result of the decision.
The Federal Court ordered the minister to at least factor this into any decision making, before approving the project.
Whitehaven's Vickery extension project gains approval
Alas, Ley used ministerial powers entrusted by the cabinet and yesterday approved the controversial plans to extend open-cut operations at Vickery. This appears to have had a negative effect on the Whitehaven Coal share price.
The minister has subsequently appealed the Federal Court's ruling as well.
Ley's decision is still subject to a series of assessments on environmental conditions, a water management plan, and how the coal giant intends to offset any destruction to the local habitat.
However, in a statement released late Thursday afternoon, Ley indicated that contingencies and restrictions imposed by NSW authorities on the site would mitigate any risk posed to the future of children, or humans in general.
Ley also indicated that if the mine wasn't approved, a new coal resource, either in Australia or abroad, "will be developed to take its place". She referenced the work of Professor Will Steffen, of the Australian Department of Climate Change, in her findings.
As such Ley determined there was no harm to humans, now or in the future, that could arise from approving Whitehaven's $600 million expansion project.
Unsurprisingly, Whitehaven Coal welcomed the decision, which completed an "exhaustive process" that spanned 5 years. The Whitehaven Coal share price also ended Thursday's session in the green.
Yet, the approval has faced severe backlash, with investors, politicians, and community members alike voicing their distaste for Ley's decision.
Australian Greens party environment spokesperson Sarah Hanson-Young took to Twitter to say: "Once again, Sussan Ley proves she's the minister AGAINST the environment, not for."
"Expanding coal in the middle of the climate crisis is madness," Hanson-Young added. "Approving a new coal mine just weeks before the world's climate summit in Glasgow is poor form from Australia."
Whitehaven Coal share price snapshot
Some investors appear to hold the same sentiment as the Greens. At one stage today the Whitehaven Coal share price sunk as low as $2.77 but is now at $2.83 — down 8.71% on the day.
The miner's shares are still up more than 70% this year, and 227% over the past 12 months.
