Wollongong Coal's application to have itself removed from the ASX due to the company’s ongoing dire financial situation should ring alarm bells for all NSW taxpayers, given its stalled coal mining operations and current inability to cover its rehabilitation liabilities.
Last Friday (July 10) Wollongong Coal applied to de-list from the ASX, citing “low levels of liquidity and investor interest” and that the compliance costs of remaining listed on the ASX “are a significant burden”.
The company also has zero revenue, negative shareholders funds, and huge debts.
Bizarrely, the financially stricken company is still pushing ahead with plans to proceed with its Russell Vale Colliery Underground Expansion Project and continue mining underneath the Greater Sydney water catchment area for another five years.
In the company’s latest Annual Report, Wollongong Coal advised shareholders it expected the Russell Vale application to be referred to the Independent Planning Commission for a final decision by June 2020. Like most things this company has forecast, this has not occurred.
The company's Underground Expansion Project has also been put into further jeopardy by the imposition of their obligation to realign Bellambi Creek at a cost of $7.5m.
Wollongong Coal’s latest move also comes after it was reported the company’s estimated cost of rehabilitating the Russell Vale colliery is $215M, while the NSW Government holds just $7.6M in financial assurance. The Resources Regulator, meanwhile, estimates the clean up cost at $12,354,410, but it is not clear whether this difference has been paid by the company.
Lock the Gate Alliance NSW spokesperson Nic Clyde called on the Berejiklian Government to rule under the Mining Act that Wollongong Coal is not a "fit and proper person" to hold mining titles particularly when they extend underneath NSW’s critically important water catchment and there is a long history of failed environmental protections.
In NSW, if a mining company does not have the financial capacity to comply with its obligations under the Mining Act, it is - by law - not ‘fit and proper’, and can have its mining leases cancelled.
A company with negative capital is highly likely to be putting workers’ lives at risk.
“Wollongong Coal has next to no income, a billion-dollar debt and liability problem and neither of its two mines are producing coal, Mr Clyde said.
“Wollongong Coal is a train-wreck of a company that should have been stripped of its right to mine coal in NSW years ago. It is grossly irresponsible for the government to stand back and watch them lodge a fresh application to continue mining inside a Special Area of our drinking water catchment.”
Independent financial analyst Tim Buckley of IEEFA said, “This company should have had the receivers appointed years ago, Australia’s regulators are yet again taking a very lax view in failing to enforce directors duties regarding trading while insolvent.”
Illawarra Residents for Responsible Mining spokesperson Gavin Workman said, “This company cannot even afford basic bookkeeping functions for the ASX, so it certainly cannot be trusted to perform complicated mining processes under Sydney’s water.
“The NSW Regulator has been investigating Wollongong Coal for more than four years and the company’s financial situation has only disintegrated further. The NSW Berejiklian Government must put this dying company out of its misery.”
Mr Workman said “when the company is removed from the ASX, it will inevitably become less transparent.”
“Information is difficult to obtain on this company and its finances; the ASX until now has provided a solid and transparent way to scrutinise this company’s behaviour.
“Once Wollongong Coal’s application is successful, this suspect company will be more secretive and even less accountable.”