WA’s largest private power station moves to take over loss-making Indian-owned coal mine

The Japanese owners of a major coal-fired power plant in Western Australia are taking legal action to take over a losing Indian-owned mine amid a worsening crisis in the state’s coal heartland.

Bluewaters, owned by the Sumitomo conglomerate and backed by a group of so-called Wall Street vulture funds, said it was seeking intervention rights to take over the Griffin Coal mine near Collie, 180km south of Perth.

A court hearing between the feuding parties is scheduled for today in Perth.

The long-awaited move follows years of instability at Griffin, which is owned by Indian interests and is believed to have racked up more than $1 billion in losses in just over a decade.

Bluewaters is understood to have sought to take control of the mine after months of disruptions to its coal supply that left it increasingly short of supplies to generate electricity.

The 440 MW power station, which is Australia’s newest and only commissioned in 2009, is one of the largest generators on WA’s main power grid, serving the southwestern corner of the state.

Bluewaters typically supplies up to 15 percent of the electricity generated on the system, selling it to major industrial customers, including gold mining giant Newmont and state utilities.

However, records from the Australian Power Market Operator, which runs the market on the WA main grid, show that output from the two Bluewaters units has fallen sharply in recent months.

In a statement, Bluewaters confirmed that it was seeking to appoint a controller to manage the Griffin Coal mine.

Final chapter of a long-running saga

The Bluewaters decision is the latest twist in a tumultuous saga that began in 2010, when former Washington coal tycoon Ric Stowe’s business empire collapsed.

Stowe had built the power station in an attempt to extend the life of its Griffin Coal mine, but was forced to sell both assets through the managers when the debt load crippled business.

While India’s Lanco Infratech shelled out $730 million for the mine in 2011, Sumitomo, along with Japanese conglomerate Kansai, paid $1.2 billion for the power plant.

Both investments have come back to haunt homeowners.

The mine, now in the hands of India’s ICICI bank after Lanco’s implosion, is believed to have lost money almost every year since it was acquired by Indian interests.

Meanwhile, Sumitomo and Kansai in 2020 wrote down the value of the Bluewaters power station to zero, as the onslaught of renewable energy and coal supply problems took their toll.

In other intrigue, in early 2020, a syndicate of Australian and foreign banks, including Westpac and ANZ, reportedly refused to refinance $370 million in debt owed by Bluewaters over concerns about the security of the facility’s coal supply and the investment. in fossil fuel.

Instead, banks sold their debt holdings at a discount to troubled debt specialists, so-called vulture funds, including Oaktree Capital and Elliot Management.

Those firms have never publicly commented on their intentions for Bluewaters, which faces an increasingly unstable future after the state government said it would not renew contracts for half of the plant’s output.

Griffin Coal in default: Bluewaters

A Bluewaters spokesman said the company was exercising its rights to ensure a stable and secure supply of coal.

“This action follows Griffin in breach of its contractual obligations to Bluewaters due to its continued failure to deliver coal in the quantities set out in supply agreements,” the spokesperson said.

“Griffin has applied to the court to issue an injunction against the appointment of a controller and the court is expected to determine the matter in the coming days.

“The rationale for the controller’s appointment is to enable additional capacity and funding to restore full coal supply to Griffin customers from its Ewington mining operations in Collie.

“The controller will work closely with Griffin employees and contractors to return operations to a safe, stable and productive mine.”