Media Releases | 24th Oct, 2013

Report questions track record of coal companies seeking cash and coal

24 October 2013

A research report released today titled ‘Victoria’s Coal Wannabes’ finds that none of the companies seeking government grants or coal allocations to develop Victorian brown coal export projects have any existing commercial coal operations, and many of the companies have financial difficulties or are verging on insolvency.

It is expected that the State and Federal Governments will announce within weeks $90 million in funding under the Advanced Lignite Demonstration Project (ALDP) for companies seeking to build pre-commercial scale brown coal projects in Victoria. The Victorian Government is also currently considering allocating 13 billion tonnes of coal from the Latrobe Valley’s unallocated coal resources – the equivalent of 13 mines the size of Hazelwood mine.

The report ‘Victoria’s Coal Wannabes: A report profiling the companies seeking government grants and coal resources for Victorian brown coal projects’ was written by author Bob Burton and commissioned by Environment Victoria. It is based on a forensic analysis of the Annual Reports, audited financial statements and public statements of nine of the companies known to be seeking cash and coal handouts from the Victorian and federal governments.

Environment Victoria Campaigns Director Mark Wakeham said today:

“This research finds that most of the companies lining up for cash and coal handouts have never built a commercial project and have very little capital behind them. If the cash grants go ahead Victorian taxpayers will be bankrolling the coal pipe-dreams of a handful of speculators.”

“In some cases any cash grant to companies will end up directly in company directors’ pockets with board members giving themselves bonuses if their company receives a government grant.”

“The same companies seeking taxpayer-funded cash handouts are also behind the Napthine Government’s decision to consider an allocation of 13 billion tonnes of Latrobe Valley coal. An announcement is expected before the end of the year from Minister Ryan about the status of the proposed coal allocation.”

“Given the tenuous financial status of these companies the most likely outcome of any cash or coal handout is that the promised projects never proceed and a few coal executives profit at the taxpayers expense. This has proven to be the case in past coal and cash handouts in Victoria with not one project being developed from the last coal allocation.”

“However if governments are reckless enough to hand over enough taxpayer cash and coal, and they also bankroll infrastructure like a coal port at Westernport or Corner Inlet, Victoria could very well end up with new coal mines and a polluting export industry at exactly the time we need to be cleaning up our economy.”

“Handing over taxpayer-funded grants to coal companies is ill-advised and not in the public interest. Handing over billions of tonnes of brown coal would be a disaster, creating massive uncertainty for landholders in the Latrobe Valley and opening the door to dozens of new coal mines and a polluting new export industry.”

“Its time for the Napthine Government to get serious about supporting the smart, clean businesses of the future in regional Victoria rather than continuing its obsession with an outdated, polluting and environmentally damaging energy source.”

Download the report >



Selected findings from Victoria’s Coal Wannabes: A report profiling the companies seeking government grants and coal resources for Victorian brown coal projects:

  • Coal company Exergen will issue three directors with shares conservatively worth $14.65 million if the company is successful in receiving an Advanced Lignite Demonstration Project grant.
  •  Coal company Mantle Mining reported a $5.9 million loss in the 2012/13 financial year and had only $1.8 million cash in hand as at June 30 2013.
  •  Coal company Environmental Clean Technologies reported an operating loss of $5,444,185 for the 2012/13 financial year, leading their auditor to conclude: The ability of the consolidated entity to continue as a going concern is dependent upon the future successful raising of necessary funding through equity or loans. These conditions … indicate material uncertainty that may cast significant doubt about the consolidated entity’s ability to continue as a going concern…”.[1]
  •  Coal ‘entrepreneur’ Allan Blood, who reportedly made windfall profits on-selling coal he was granted through a previous government allocation process (for a project that was never built), is again seeking a coal allocation from the Napthine Government via his new company Latrobe Fertilisers.
  •  Coal company Ignite Energy reported a 2012 calendar year loss of $6,004,208. In an April 17, 2013 letter Nigel Young, a partner at the auditing firm Ernst & Young, noted that “the consolidated entities current liabilities exceed its current assets by $2,229,716” and that “The ability of the consolidated entity to continue as a going concern is dependent on generating sufficient income to cover its costs and obtain necessary finance to continue its operations and in particular realise the value from material intangible assets included in the balance sheet of $132,169,540 … the directors are using their best efforts to ensure that such sources of funds are obtained and continue to be available in the future however, should losses continue and future funding not be successful, the consolidated entity may be unable to continue  as a going concern.”[2]
  •  Coal company Shanghai Electric Australia Power & Energy Development state in a filing with ASIC that one million shares in the company have been issued, but as at September 5 2013 none had been paid for.


[1] Environmental Clean Technologies, Half Year Financial Report – As at 31 December 2012, February 2013
[2] Ignite Energy Resources, “Current & Historical Company Extract”, September 5, 2013.




For further information or comment

Mark Wakeham, Environment Victoria Campaigns Director, 0439 700 501