Australian Lawmaker Alleges Widespread Coal Industry Fraud

Peabody Energy and other mining giants are facing explosive allegations that they lied about the quality of their coal in order to boost profits.

An Australian politician on Monday accused several coal giants, including U.S.-based Peabody Energy, of “lying for years about the quality” of Australian coal exports.

In an explosive speech before Parliament, Independent MP Andrew Wilkie said a whistleblower — a high-level executive in Australia’s coal sector — provided him with thousands of pages of documents detailing widespread industry fraud that involved falsifying lab tests to make coal appear to be of higher quality.

“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,” said Wilkie, speaking under parliamentary privilege, which gives members of parliament certain legal immunity. “And this has allowed them to claim, for years, that Australian coal is cleaner than it is in order to boost profits and prevent rejection of shipments at their destination.”

Wilkie called the scheme “environmental vandalism” that puts Australia’s reputation at risk and “makes all the talk of net zero emissions by 2050 a fiction.” He called for parliamentary investigation into the matter.

Australia is one of the world’s top coal producers, and industry supporters have long argued that Australian coal is “cleaner” than overseas competitors. Australia Prime Minister Anthony Albanese, of the center-left Labor party, recently defended ongoing coal development, saying that if Australia halted its exports there would be “replacement coal from other countries that’s likely to produce higher emissions.”

The alleged scandal threatens to turn that narrative on its head.

An excavator is pictured next to a mound of coal at the Port of Newcastle, in New South Wales, Australia.
An excavator is pictured next to a mound of coal at the Port of Newcastle, in New South Wales, Australia.
Bloomberg Creative via Getty Images

Wilkie said the documents implicate mining companies Peabody Energy, Terracom, Anglo American and Glencore, and that fraudulent exports went to Japan, South Korea, China and India. The documents also implicate coal testing companies SGS and ALS, as well as accounting firm Ernst and Young and Macquarie Bank, he said.

Wilkie highlighted one instance where a draft quality test by SGS purportedly showed a batch of coal with 16.7% moisture content, which he said is “pretty damp and won’t burn well.” In the final document, however, SGS listed the moisture content for that same coal at 15.9%.

“That represents hundreds of thousands of dollars in extra profit from the relatively small shipment to Japan and ensured it wouldn’t be rejected on arrival,” Wilkie said.

Peabody, the only U.S. company named in the alleged scam, did not respond to HuffPost’s request for comment Monday. But in a statement to The Guardian, a company spokesperson said Peabody “strenuously denies Mr. Wilkie’s claims.”

A spokesperson for Anglo American told The Guardian the allegations are “entirely false.”

Wilkie’s testimony widens a coal-testing scandal that first rocked the industry back in February 2020. As the Australian Financial Review first revealed, a commercial manager at Terracom sued the company after he said he was fired for refusing to participate in manipulating quality test results. In the wake of AFR’s reporting, ALS conducted an internal probe that found up to 50% of its coal test results had been “manually amended without justification” over several years, as Wilkie highlighted on Monday.

AFR reported Monday that the Australian government has been fighting to keep records related to the scandal from becoming public, saying their release would have an “unreasonable adverse effect on the coal industry.”

Wilkie said Australian authorities, including federal police and the Australian Securities and Investment Commission, have so far failed to act on the alleged criminal activity, despite clear evidence of misconduct, and called for his colleagues in Parliament to support an inquiry that would allow for witnesses to “safely present their testimonies and evidence.”

“Let’s ditch the game playing and go straight to an inquiry so the industry can be held accountable for its sins, and so Australia can restore its reputation as an honest trading partner,” he said. “And, most importantly, so we can learn just how dirty the world is and how much more urgent our response to climate change must be.”

Several other members of Parliament were quick to voice support for such a probe.

“The reality is there is no such thing as clean coal, and the evidence provided by this brave coal industry whistleblower suggests that the coal industry has been misleading the world for years,” Independent MP Sophie Scamps said in a statement.

Australian Resources Minister Madeleine King told The Guardian that the allegations are “concerning.” She pledged to look into the matter and said the government is “committed to maintaining Australia’s reputation as a reliable and competitive supplier of high-quality metallurgical and thermal coal.”

Wilkie’s bombshell allegations came as the United Nations annual climate summit drew to a close. At the conference, U.S. climate envoy John Kerry praised his Australian counterpart, Chris Bowen, and the nation’s new climate commitments.

“He is doing an incredible job of demonstrating the difference an election makes,” Kerry said of Bowen, who serves as Australia’s minister of climate change and energy. “The government of Australia has stepped up in remarkable ways and we’re pleased with that.”

Before You Go

Popular in the Community