Wollongong Coal has belatedly informed the stock exchange that it is being being investigated by the state’s mining regulator as to whether it is a “fit and proper person” to hold a mining licence.
A complaint was made last October by anti-coal group Lock the Gate alleging the company was not fit to mine in New South Wales.
By July 1 a formal investigation had commenced. It has taken Wollongong Coal two months to inform shareholders. The miner called the allegations “completely baseless”.
Lock the Gate’s complaint cited Wollongong Coal’s risk of insolvency – the company’s auditors reported that the company’s liabilities exceeded its assets by $721 million – and said only support from its (troubled) Indian parent company Jindal Steel and Power was keeping it afloat.
It also named the miner’s poor record on environmental compliance – centred on problems at its Russell Vale mine – and legal strife the Jindal group is facing in India, including defaulting on loan interest payments.
These issues can go to whether a company is a “fit and proper person” to hold a mining licence under s380A of the NSW Mining Act.
It has taken months but NSW Resources Minister Anthony Roberts revealed the company was the subject of a formal investigation, after being asked about it by Labor resources spokesman Adam Searle in the Budget Estimates committee.
Mr Searle said it was “staggering” the regulator took so long to investigate.
“I’ve got the submission and most of their information is publicly available,” he said. “The mining regulator needs to be much more responsive to genuine and significant concerns about those who hold mining licences.
“None of this is a secret.”
Mr Roberts told the Mercury an initial review had been needed to see whether the probe should proceed.
“This investigation has now been taken over by the Resources Regulator that was formed on 1 July, 2016,” he said.
“Further information and data was required in order to determine whether a formal investigation was warranted.
“The formal investigation currently underway will determine whether there is sufficient evidence to warrant enforcement action against Wollongong Coal.”
The Mercury asked Wollongong Coal (WCL) for comment on the allegations, and whether shareholders had been informed, but the company declined to answer on Thursday.
However early on Friday morning a statement was posted referring to “an article in the Illawarra Mercury”.
“The Department of Industry and Investment has advised WCL that it is carrying out an investigation for the purposes of section 380A of the Mining Act 1992,” it reads.
“As such, WCL does not consider it appropriate to comment on this investigation.
“However, WCL assures of full co-operation with the investigation. WCL, unequivocally, considers the allegations to be completely baseless.”
The announcement was marked as “price sensitive”, which means the ASX should have been informed as soon as was practical.
Lock the Gate has also written to the Australian Securities and Investments Commission alleging Wollongong Coal has failed in its duty to inform shareholders via the stock exchange.
Lock the Gate told ASIC the miner should have made the investigation public as soon as it know about it, because it could have a material impact on the share price of the listed company.