PRESSURING labs to alter test results is an "open secret" in the Hunter Valley coal industry and has been going on for decades.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Industry insiders who spoke to the Newcastle Herald this week said the process, designed to increase coal company profits, was operating "just below the surface" and many people were aware of it.
A former Newcastle-based senior lab manager said there used to be "a lot of discussion about people going to jail" if they were ever caught "fiddling with the numbers".
He reported the issue twice to the Independent Commission Against Corruption (ICAC), but said the watchdog did not investigate.
"It is so entrenched in the industry and it's been that way for a very long time, it's almost like normal practice for some people," he said.
"They are basically choosing a set of numbers that suits them and if you don't agree to play ball, you don't get the next contract.
"It's as simple as that."
The Newcastle Herald reported on Wednesday that the Mayfield ALS lab was at the centre of an international fake coal testing scandal after a forensic audit revealed up to half of all Australian coal certificates issued by the global testing giant had been "manually amended without justification".
The ALS coal superintending unit is headquartered in Newcastle and does the lion's share of coal sampling for Hunter mines.
The unit processes more than 39,000 samples for shipping analysis each year, which equates to about 3000 certificates.
Four senior staff, including three from Newcastle, have left ALS since the scandal broke.
A Newcastle lab worker said he was "not at all surprised" by the high rate of tampering at ALS labs in Newcastle, Mackay, Gladstone and Emerald, dating back to at least 2007.
"What the coal companies want, the coal companies get," he said.
"It no doubt needs some further investigation to reveal the true extent of the problem.
"No doubt this would be making a few people in the industry pretty nervous."
The issue came to light earlier this year when the Australian Financial Review reported allegations in an unfair dismissal case that Australian miner TerraCom had worked with ALS to falsely upgrade the quality of its coal in export documentation.
TerraCom has strenuously denied the allegations from its former commercial general manager Justin Williams who alleges he was dismissed from his role after rejecting demands to make ALS change its analysis results.
Rival laboratory company SGS was also named in the court proceedings. Mr Williams alleged SGS helped falsify the test result on another TerraCom shipment of coal last year. Both companies deny the allegations.
A retired Hunter coal manager said it was "about time" the coal testing rort was made public.
"None of this will be surprising to a lot of people in the industry," he said.
"I'm not talking about huge variations at the lab, we're talking about small variations in key elements that can make a very big difference in the price of the coal. It's all about money and nothing else."
ALS has reported the fake testing scheme at its labs to NSW Police.
The former senior lab manager, who was previously a National Association of Testing Authorities (NATA) technical assessor and signatory, said small decreases in moisture and sulphur content could make coal appear to be much better quality than it is.
He said significant variations is different labs' test results were "glossed over" and "lost in the noise".
The first time he became aware staff were changing test results was when one of his lab managers called him to a meeting and explained it.
"They called me in and told me they were fiddling the numbers, they said everyone was doing it, and it was just the done thing," he said.
"Straight away I told them it wasn't on and they needed to stop, I wanted no part of it."
He said it was "that blatant" in some cases that mine staff would call and request numbers be changed.
"Due to the volume of coal we are talking about enormous dollars here," he said.
He recalls a Chinese client, who owned several power stations, wanting his Hunter coal tested at a certain Newcastle lab.
"He needed to make sure the test results were accurate because he'd had problems before."
- Do you know more? Donna.page@nwcastleherald.com.au
While you're with us, did you know the Newcastle Herald offers breaking news alerts, daily email newsletters and more? Keep up to date with all the local news - sign up here