May 12, 2020 / 9:42 AM / 19 days ago

Korea South East Power Co bans Australian testing lab from coal tenders

MELBOURNE/SEOUL, May 12 (Reuters) - A South Korean power provider has banned Australian testing laboratory ALS Ltd from certifying its coal tenders, a month after a probe found workers in the assayer’s coal division had manually amended certifications to improve quality.

ALS in early April told Australian regulators that an independent investigation had found that about half the certificates it provided for export coal samples over the past decade had been manually altered.

The Brisbane headquartered firm, which commissioned the probe in response to allegations in an unfair dismissal suit, said last month that it had overhauled processes in its coal division, which accounted for less than 3% of earnings and had let four workers go.

The probe found no issues in any other of its divisions.

In two public tenders by Korea South-East Power (KOEN) for thermal coal lodged last week that are to close on May 14, the utility specified that “ALS Limited... is not allowed as an international independent inspection agency.”

The line was inserted into the tender documents after the ALS’s probe, a source at KOEN who spoke on condition of anonymity told to Reuters.

The two tenders, which covered 290,000-310,000 tonnes of coal combined, were for shipments to be delivered by July and August, the tender documents show.

“ALS has not received any formal communication from KOEN Energy in relation to coal certification services,” an ALS spokesman said.

“After completion of the independent investigation into certification of coal samples, the Company has stringent measures in place that ensure the integrity of coal certification and reporting.”

The issue came to light earlier this year after allegations in an unfair dismissal case that Australian miner TerraCom Ltd had worked with ALS’s Brisbane-based testing laboratory to falsely upgrade the quality of its coal in export documentation. TerraCom denied the allegations.

The assay reports, going back to 2007, had been amended at four laboratories of the coal superintending and certification unit of ALS’s coal business in New South Wales and Queensland states, it said in a statement to the Australian stock exchange.

Australia, which is known for its high quality coal, is the world’s biggest exporter of the fuel to markets like Japan, South Korea, China, Taiwan and India.

Trading sources said last month that the ALS unit has about 40% of the market for testing coal samples to ensure shipments meet quality standards agreed with buyers, according to industry estimates. (Reporting by Melanie Burton in Melbourne and Jane Chung in Seoul, editing by Louise Heavens)

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