A troubled Western Australian coal mine that supplies one of the state’s largest power stations has invoked a so-called Act of God clause to suspend operations, blaming a wetter-than-usual winter.
- Griffin Coal has invoked force majeure, citing wet winter
- The Indian-owned mine is reported to have lost $1b in a decade
- Griffin supplies one of the state’s biggest power stations
In a move the state government labelled concerning, Indian-owned Griffin Coal has declared force majeure at its mine near Collie, about three hours’ drive south of Perth.
The decision is the latest setback at the mine, which is believed to have lost more than $1 billion since being taken over following the collapse of former tycoon Ric Stowe’s business empire in 2010.
Griffin’s general manager Joao Paulo da Silva Fernandes, in a note to stakeholders, cited “a very wet winter” for the suspension of coal deliveries to customers.
These include Bluewaters, the 400MW power station whose value was last year written down to zero by its Japanese owners amid the crumbling economics of coal-fired electricity generation.
Unlike the eastern states, WA does not export its coal, which is used domestically for electricity generation and industrial purposes.
Company explains decision
Mr Fernandes said the company was seeking protection as a last resort.
“As you are aware, we have had a very wet winter, both in terms of overall quantity of water and in terms of cadence or consistency that this water has fallen,” Mr Fernandes wrote.
“Since the beginning of May until the 20th of July, it has rained on 52 days, impacting the operations in the pit and leading to many days spent doing clean-ups only.
State ‘deeply concerned’
WA Energy Minister Bill Johnston declined to be drawn on Griffin’s motives for the declaration but noted that the neighbouring Premier Coal mine was operating normally.
Mr Johnston said the state government was “deeply concerned” about the situation at Griffin, which he pointed out had been subject to operational difficulties for years.
“The government hasn’t been advised how long Griffin expects to be out of operation but we’d hope that they’ll be able to have a clear plan to get back into production as soon as possible,” Mr Johnston said.
Although not being a direct customer of Griffin, the WA government is indirectly exposed to the miner through its power provider Synergy and water utility Water Corporation, which buy electricity from Bluewaters.
Despite this, and the size of Bluewaters on the state’s biggest grid, Mr Johnston said he was confident the disruption to coal supplies would not affect taxpayers or consumers.
“The government has paid careful attention to any impacts on the electricity system and we’re very confident that we have plenty of electricity supply, even if Bluewaters was to be disrupted by these current challenges,” he said.
Suspension raises eyebrows
Steve Thomas, an Upper House Liberal MP from the South West region, said it was hard to understand Griffin’s decision to declare force majeure.
Dr Thomas noted the term referred to unforeseeable circumstances and while winter in Collie had been relatively wet the conditions were “far from extreme”.
He said the suspension seemed to highlight the “dire” financial position of Griffin.
“It has been wetter than recent years but it’s not a significantly wetter winter than we’ve known in the past in the South West region,” Dr Thomas said.
“It’s an old-fashioned wet winter.
Union seeks pay reassurance
Greg Busson, the district secretary of the Construction, Forestry, Mining and Energy Union (CFMEU), said his biggest concern was the welfare of Griffin’s workers.
He claimed staff were paid out of the cashflow generated by coal sales and a suspension of deliveries rang “alarm bells”.
“It’s a very worrying time,” Mr Busson said.
“Have they got the funds to ensure people’s entitlements?
“They’re the concerns the members have got.”