Coal of Africa told to come clean

28 November 2010 | 03:53 Code : 20282 Geoscience events
The JSE said on Friday that it would ask Australian miner Coal of Africa for a formal response...

The JSE said on Friday that it would ask Australian miner Coal of Africa for a formal response as to why it did not disclose the contents of a pre-directive to shareholders concerning the closure of its Mooiplaats colliery in Mpumalanga.The pre-directive, issued on October 28, advised the miner to cease unauthorised activities at Mooiplaats within 24 hours. Coal of Africa communicated the existence of the pre-directive to shareholders only after its contents were made public this week in Business Report.Coal of Africa’s share price subsequently shed 19 percent to hit a low of R7.55 on Wednesday, but recovered to close on Friday at R8.03.Mooiplaats is Coal of Africa’s second operation to grab the attention of environmental authorities after its Vele colliery, under construction near the Mapungubwe World Heritage Site in Limpopo, was shut in August, resulting in the company laying off 593 workers. The group warned this week that another 500 jobs would be lost if Mooiplaats was closed.In a statement to shareholders, Coal of Africa insisted Mooiplaats had not been instructed to cease operations. The pre-directive, however, states: "You are? advised to cease with the unauthorised activities? within 24 hours of receipt of the notice."Andre Visser, general manager of issuer services at the JSE, said the exchange would put the matter to Coal of Africa’s sponsor for a formal response, in order to establish if there had been a need for an announcement to shareholders.Shareholder activist Theo Botha said Coal of Africa should have issued a cautionary statement alerting shareholders to the existence of the pre-directive, even if it disagreed with its contents."They had a risk, and by not addressing the risk, they brought damage to the company," he said. "Isn’t it better for you to bring out a statement and tell shareholders not to worry because you’re addressing the |issue?" Pamela Ntuli, deputy director of enforcement at the Mpumalanga department of economic development, environment and tourism, said on Friday that the state’s counsel to Coal of Africa to shut operations was "written in black and white on the pre-compliance notice. They either take our advice or they don’t".An environmental lawyer said the pre-directive may have been poorly drafted in that it had issued an immediate instruction, whereas the law provided for companies to make rectification applications ahead of being issued with compliance notices.

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