21/07/2020 - 13:00

Griffin Coal dispute intensifies

21/07/2020 - 13:00

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Indian-backed miner Griffin Coal could have controllers appointed within weeks after receiving a default notice from a major power generator, as their dispute escalates.

Griffin Coal supplies the Bluewaters Power generators.

Indian-backed miner Griffin Coal could have controllers appointed within weeks after receiving a default notice from a major power generator, as their dispute escalates.

Bluewaters Power, a privately owned business which operates two 217 megawatt coal-fired generation units, claims Griffin has defaulted under a coal supply agreement.

Bluewaters is owned by Japanese businesses Sumitomo Corporation and Kansai Electric, and the units supplied the state with 3.2 terawatt hours of power in the past 12 months, according to  the Australian Energy Market Operator, about 18 per cent of the local market.

Business News understands there’s a level of concern about potential supply disruptions ahead, prompting Bluewaters to act.

But a major disruption has not yet occurred.

Griffin is owned by Indian conglomerate Lanco Infratech, which hit the wall in 2013.

It is unclear if Griffin will agree it is in default or take some other action, with 14 days to respond.

Both parties had undertaken 12 months of negotiating to resolve the dispute before the notice was issued.

“The priority of the controller will be to stabilise coal supply to Bluewaters from Griffin Coal’s assets, utilising additional funding from customers, including Bluewaters, and in doing so maintain the circa 250-strong existing workforce in the Collie region,” Bluewaters chief executive Andrew Sutherland said.

“In the medium term, the controller will systematically evaluate the commercial and technical viability of future coal production from these assets.

“Our power station is capable of reliable and efficient production of up to 15% of WA’s electricity for at least the next 15 years, pending the viability of ongoing coal supply and the pace of substitution, as market sentiment drives the state’s transition of baseload power generation capacity from coal to alternative technologies.”

In October, it was reported Bluewaters had applied to the WA Supreme Court to confirm it had rights to step-in and appoint a controller to Griffin.

A Griffin Coal spokesperson said the company is reviewing the validity of the default notice that was issued by Bluewaters and don’t have a comment at this stage.

“It is widely known that Griffin Coal has been operating in an unsustainable manner for some time now, given the revenue received for the coal is below cost,” the spokesperson said.

“A commercially sustainable coal price is required from its customers in order to continue to take Griffin Coal forward in a stable manner with no disruption to supply.”

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