A Commentary on the Reporting of Coal Exploration Results, Coal Resources and Coal Reserves

"INTRODUCTION This paper addresses the prevalence of poor public reporting practices of Coal Exploration Results, Coal Resources and Coal Reserves in southern Africa. Currently, the reporting of coal tonnage without supporting coal qualities or “saleable” tonnes and quality is a poor reporting practice that occurs far too often. Not all coal is equal – therefore it is extremely important that investors or potential investors are provided with the full details of both run-of-mine (“ROM”) and Saleable coal tonnage, their associated qualities and other material and relevant information. Competent or Qualified Persons should note that publicly reported information should be sufficient to enable an informed reader to make a reasonable and balanced assessment of the significance of the information provide. “Companies are encouraged to provide information in their Public Reports, which is as comprehensive as possible” (CRIRSCO, 2013): too often this isn’t the case and material matters are either not reported or inadequately disclosed. According to the South African National Standard (SANS) 10320:2014 draft document - “tonnage and coal quality that will be available for sale, either in the raw ROM state (raw Saleable) at a specified moisture content, or after beneficiation of the ROM coal by processing operations to produce materials at specified qualities, size ranges and moisture contents. The assessments must demonstrate that at the time of reporting, the marketing of the products is reasonably justified. The basis of the predicted practical product yield to achieve the Saleable Coal Reserve must be stated. The moisture basis of reporting shall be stated.” As an example to why coal qualities are so important to the public, the requirements of South Africa’s electric public utility (Eskom) power stations are highlighted. The Kendal power station, commissioned in 1988, operates at a Calorific Value (“CV”) range of 19 to 20MJ/kg, an Ash content between 29 and 34% and Volatiles between 20 to 21%. Other power stations, such as Kriel or Hendrina, may require different qualities such as a CV range of 22 to 23MJ/kg, an Ash content between 20 and 28% and Volatiles between 22 to 23%. Thus, in terms of domestic saleable coal, it isn’t just about reporting the coal qualities but also informing the investor as to which power station the coal is intended to be sold as “boilers are designed to burn particular qualities of coal” and “it is not always possible to transfer coal between stations because of different quality requirements at each station” (Chetty, 2010). Sulphur content is also another important quality with the ideal coal content having a quality of less than 1% Sulphur."