SYDNEY Shareholders of Whitehaven Coal (WHC.AX) voted on Thursday to keep the company's board intact, refusing to join a drive by tycoon Nathan Tinkler to oust the chairman and independent directors at Australia's largest independent coal miner.
The battle reflects broader pressures in the Australian mining industry as it tries to deal with a drop-off in demand from major export market China after a decade-long boom.
Tinkler, who is Whitehaven's biggest shareholder with a 19.4 percent stake, has declared war on Whitehaven's management, blaming it for a halving of the company's share price since April, when it acquired Tinkler's Aston Resources.
Mining companies worldwide have watched profits tumble this year as industrial staples like coal, iron ore, nickel and copper are no longer lapped up by China.
Tens of billions of dollars of planned mining investments in Australia alone, earmarked by the likes of behemoths BHP Billiton (BHP.AX) (BLT.L) and Rio Tinto (RIO.AX) (RIO.L), have been frozen or delayed. Costs to mine in Australia, industry executives say, have soared to among the highest in the world.
Tinkler, 36, was one of the success stories of the boom years, working his way up from a mine electrician to Australia's youngest billionaire in a few years after turning a A$1 million bet on an Australian coal deposit into a billion dollar fortune.
But most of Tinkler's wealth is tied up in his Whitehaven stake, worth about A$1.1 billion at its peak and now just A$600 million ($622.17 million), with creditors circling his stable of mining, sports and horse racing businesses.
Whitehaven Chairman Mark Vaile told shareholders there was little sign of a coal market rebound, nothing that benchmark prices had fallen to around $115 per tonne in the December quarter, from around $140 per tonne in the September quarter.
Further discounts were being sought by buyers in secondary markets, he added.
"It's tough out there," said Vaile, a former deputy prime minister of Australia. "There is currently little sign of a market rebound, although forward markets are showing improving prices and there is the prospect of renewed demand growth from China in early 2013."
Vaile and four other directors easily survived the attempt by Tinkler, who did not attend the meeting in Sydney, to force them off the board.
Tinkler told the Australian Financial Review if his push to oust the board succeeded, he would install himself as chairman alongside his own management team, who he said would be better equipped to lead the company through the down cycle in coal.
"I've got far too much invested to stand by and watch this thing continue to fail," Tinkler was quoted as saying in the Australian Financial Review from his new home in Singapore.
Tinkler could not immediately be reached for comment on the re-election of the board.
The tycoon attacked Whitehaven Managing Director Tony Haggarty, saying cows on a farm owned by Haggarty "see more of him than his management team".
After the vote, Haggarty said a "clear mandate" had been delivered for the board to focus on its strategies to improve Whitehaven's fortunes amid sliding coal price.
"The only suggestion I could give Nathan Tinkler is to get his own house in order and leave the running of Whitehaven to those with the experience and qualifications to do so," Haggarty said to applause from shareholders.
Shareholders had sent Tinkler a clear message, Haggarty said.
"They have delivered the existing board and management team a clear mandate to focus on delivering Whitehaven's clearly articulated strategy."
MAULES CREEK PROJECT
Tinkler's stake in Whitehaven was acquired after it took over two companies he controlled, Aston Resources and Boardwalk Resources, in a $2.5 billion deal in April.
He failed to secure funding for a $5.5 billion bid to take Whitehaven private in August and last week wrote to the board seeking to be released from an agreement that prevented him from acquiring additional shares in the company.
Tinkler also used an open letter to shareholders, published on Wednesday, to criticise delays to production at the company's Maules Creek project.
Vaile said the company planned to bring the project into production as quickly as possible and "our clear objective is to be producing coal by Q1 2014."
Whitehaven warned last week after prodding by Tinkler that its profits could slide this year if coal prices weaken.
Tinkler had sought confirmation that the company's outlook for earnings before interest, tax, depreciation and amortization was close to the market consensus of A$188 million, which the company did say was in line with its current projections.
Whitehaven warned, however, that if coal prices stay as weak as they are now, EBITDA for the year to June 2013 could slide to A$50 million.
Whitehaven shares are now trading just below A$3.00, down from more than $6 in April.
($1 = 0.9644 Australian dollars)
(Writing by Jane Wardell; Editing by Ed Davies)