Wesfarmers moves into power

Wesfarmers has emerged as a new player in Western Australia’s deregulated electricity market, competing against the likes of Griffin Group and Alinta to supply industrial customers.

Grange Resources has disclosed that Wesfarmers was one of three potential electricity suppliers for its Southdown iron ore mine.

Wesfarmers Coal managing director Stewart Butel said the company was not in the business of power generation.

However, it has set up a sales company, Premier Power, to pursue electricity supply contracts.

“We have tendered on several opportunities,” Mr Butel said.

“A couple of small contracts have been won.”

Winning the Grange contract would be a big win, since it will consume 80 megawatts of power each year when fully developed.

Mr Butel said Premier would buy its electricity from state-owned electricity generator Verve, which in turn had agreed to purchase its coal from Wesfarmers’ Premier Coal subsidiary.

Rival coal miner Griffin has opted for an integrated energy strategy by building its Bluewaters power station at Collie.

Bluewaters’ anchor customer is the Boddington gold mine, which has contracted to buy 150MW of power each year.

Griffin is pursuing further opportunities, including the Grange project. If successful, Griffin is likely to proceed with a second 200MW generation unit at Bluewaters, which already has environmental approval.

The third potential supplier to the Grange project is Alinta, which is building a series of gas-fired power stations.

Grange said its main electricity supply contract could potentially be augmented by biomass or wind power.

An investor presentation released by Grange – which stated that all key infrastructure for its Southdown project was in place – also disclosed that the company was continuing to work with Western Power on the construction of new electricity transmission infrastructure to service the planned mine.

Company secretary Neil Marston said Grange has asked Western Power to complete the approvals process for construction of a dedicated transmission line to its mine.

However, it may proceed with a phased development so that it can use existing infrastructure instead.