An MP has made a speech in the Federal Parliament claiming leaked documents prove that Australian companies have been lying for years about the quality of Australian coal. An industry whistleblower provided thousands of documents revealing that companies have been creating fraudulent quality reports for their coal exports and paying bribes.
Andrew Wilkie, an independent MP, said that this misconduct involves coal exports to Japan, South Korea, China and India. The companies involved include TerraCom, Anglo American, Glencore, Peabody and the Macquarie Bank.
“In essence, coal companies operating in Australia are using fraudulent quality reports for their exports and paying bribes to representatives of their overseas customers to keep the whole scam secret”, stated Mr Wilkie in his speech. “This has allowed them to claim for years that Australian coal is cleaner than it is in order to boost profits and to prevent rejection of shipments at their destination.”
This fraud amounts to “environmental vandalism and makes all the talk of net zero emissions by 2050 fiction. It could also be criminal, trashing corporate reputations as well as our national reputation”, he continued.
As an example, Mr Wilkie shared documents regarding a shipment of coal from the mining company TerraCom Resources in Australia to Japan. Analysis by testing lab SGS measured the moisture content of a coal sample at 16.7 per cent in a draft report. It then changed this to 15.9 per cent in the final version. This is relevant because higher coal moisture content reduces coal’s efficiency when burnt. The result is higher coal use and, ultimately, greater emissions. Japan would have rejected the shipment had the true coal quality been shown, said Mr Wilkie. He is subsequently calling on the government to establish a parliamentary inquiry into the allegations.
The reputation of Australian coal is ‘in tatters’
The vast scale of this misconduct is shocking. Testing lab ALS told the Australian Stock Exchange in April 2020 that an independent investigation had found that “approximately 45 per cent to 50 per cent of certificates of analysis were manually amended without justification”. The whistleblower also alleges that global accounting firms, such as Ernst & Young, are aware of the fraud but choose to ignore it because the coal companies are lucrative.
The implication of this is that importing countries would have been paying higher prices for inferior coal. This would enable Australian companies to exploit profits and prevent the rejection of shipments at their destination. “Australia has already exported more than 100 million tons [91 million tonnes] of thermal coal this year to South Korea, Japan, India, and China combined”, said Tim Buckley, Director of Climate Energy Finance. “This fraud has extended back over a decade, putting in question the integrity of potentially hundreds of billions of dollars of Australian coal exports”, he added.
“The Australian coal industry’s reputation is in tatters following these damning revelations”, said Kelly O’Shanassy, CEO of the Australian Conservation Foundation. “This should spell an end to Australian politicians – including Prime Minister Albanese – perpetuating the myth that Australian coal is somehow cleaner than coal from elsewhere… There’s no such thing as ‘cleaner coal’ and it’s taken a brave whistleblower to reveal the extent of the deceptions coal companies have engaged in to increase their profits and try to hide the true nature of their dirty product.”
The clean coal myth: A disaster for health and the climate
Coal is the world’s dirtiest energy source. Selling inferior coal under the guise that it burns cleaner undermines global efforts to rein in catastrophic climate change. It would also mean exposure to increased pollution and health risks in importing countries.
“Coal is polluting and toxic. This revelation that exporters in Australia manipulated coal quality certificates to sell low-quality coal as high quality is very concerning. This would in effect mean increased pollution and health risks for countries that imported coal from Australia”, said Shweta Narayan from Health Care Without Harm. “India has been a long-term partner and imported millions of tons of coal. If Australia manipulated coal quality certificates of shipments to India, this would have likely resulted in increased pollution and associated health risk for millions of Indians.”
Joojin Kim, Executive Director of Seoul-based Solutions for Our Climate, said: “South Korea paid top dollar and bought coal from Australia under the impression that it was of higher quality. However, this recent scam suggests that imported Australian coal may have been of much lower quality, adding to South Korea’s existing air pollution problem and public health burden from fossil fuel use.”
While Australia brings forward its plans to retire its polluting coal plants at home, companies are planning new coal mining capacity of almost 300 million tonnes per year in the country, mainly for export. These plans severely threaten efforts to reduce emissions and defy global climate goals. Now, these leaked documents also suggest that the climate and health harm of Australian coal could be greater than previously understood. Australia needs to end its coal addiction and invest in green export industries fit for a safe future.