Jharia Coal Mine Worker
Research by Greenpeace has found that the world’s largest coal producer, Coal India, is potentially misleading investors by failing to update them on the true level of its extractable coal reserves.
The research also suggests India may have less coal available for new coal plants than originally thought.
The majority state owned Coal India is currently preparing to sell stock to international investors.
The sale is being managed by leading western including Bank of America, Deutsche Bank, Goldman Sachs and Credit Suisse.
But according to the analysis the firm’s own internal assessment found its extractable coal reserves are 16% lower than it advertised in its 2010 prospectus to the stock exchange.
The review was carried out by its own subsidiary, the Central Mine Planning and Design Institute Limited (CMPDIL) and reported after 2010, but it was not released to investors.
Coal India continues to claim via its website that it has 21.7 billion tonnes of extractable coal reserves.
A review of its internal documents undertaken by Greenpeace and the Institute for Energy Economics and Financial Analysis (IEEFA) has shown that the company has only 18.2 billion tonnes of extractable coal.
At targeted production rates, these reserves could be exhausted in 17 years.
The IEEFA review also adopted the internationally recognized UNFC accounting system. Coal India continues to use the far older Indian Standard Procedure which has been abandoned by the Indian Government.
Greenpeace India has filed an official complaint with the Indian Stock Exchange regulator against Coal India for concealing material evidence on the scale of their coal reserves, in contravention of the terms of the Listing Agreement under the Indian Securities Contracts Regulations Act, 1956.
In 2004, when oil giant Shell overestimated its reserves by around 15%, significant investor anger led to a restructuring of the company, the departure of the chairman and two other senior executives, and a series of high profile and expensive legal cases.
The findings of the disparity between what Coal India claims are their reserves and what the reserves actually are could have a significant impact on the Indian Government’s coal power expansion plans.
India plans to add over 100,000 MW of new coal fired power by 2017.
