Coal news and updates

The Indian owners of the Griffin coal mine in Collie are in talks with investors to sell a stake in the project, as part of their strategy to pay down a hefty debt burden.

 

Lanco Infratech, which has been negotiating with lenders to restructure its debts since last year, has been seeking to sell assets and repay debt which stood at about $US5.9 billion at the end of March.

 

It said last month it would sell power projects to raise $825 million.

 

The company, which acquired Griffin Coal for about $760 million in 2011, said discussions were underway with "some strategic/financial investors" over a possible stake sale.

 

The company added the discussions were preliminary.

 

There have been disruptions at the mine over a number of issues.

 

The 380-strong local workforce has downed tools at the mine site twice in the last three months over unpaid debts.

 

It is understood contractor Carna Civil and Mining pulled the workforce after Lanco Infratech failed to pay an outstanding debt of several million dollars.

 

Mine 'unsustainable' says local MP

 

The Member for Collie-Preston, Mick Murray, said with high production costs and low coal prices, the mine is unsustainable.

 

"One of the problems is the price of coal, its just not high enough to sustain the mine," he said.

 

"You know with overheads ... the losses continue so it's quite obvious now it's just they've decided to cut their losses and put it on the market.

 

"If they [Lanco] keep going, it's pointless, the mine will go broke; they are pouring in money every month and not making anything."

 

Mr Murray said cost cutting had already been attempted.

 

"All corners have been cut to try and make sure the amount of money that is being lost is not unsustainable in the short term," he said.

 

"Like cutting how many people can work in the mine and using contractors where possible. [It's] not always palatable in the community but [Lanco] are trying to keep the mine afloat."

 

Mr Murray called on the company to provide the people of Collie with answers.

 

"It's incumbent they make some public statements for the community of Collie and certainly the Great South West," Mr Murray said.

 

"It's our major employer and we need to know which way it is going.

 

"I met with Griffin two weeks ago and at that stage they were still pondering what to do. The mine is losing money and there has clearly been a re-think."

 

Mr Murray said even if the mine was sold, it would not mean it was sustainable.

 

"I think it's a failing of the State Government. The Government should have been in there a long time ago mediating and working out how we can have a sustainable mine of the future," he said.

 

"The sale won't make the mine sustainable. The cost of production is still higher than the coal price they are getting so it doesn't matter who buys it, something has to change.

 

The Bluewaters power station, which provides power for the state's South West but can provide up to 15 per cent of the state's power supply, relies on coal supply from Griffin.

 

"Bluewaters are in a tight spot, they need the coal so they are watching this very closely," Mr Murray said.

 

The MP said he has been told the mine will be sold or put up for sale and finalised over the next year into 2015.

 

Lanco's local company, Griffin Coal's managing director David Trench, said he was aware of the statements made by Lanco's group executive chairman but he has not been consulted over the decisions.

 

Lanco and the State Government have been contacted for comment.

 

 

Source: ABC/Reuters