A high-stakes fight over the future of a failed coal mine in Western Australia has become even more fraught after a major power station launched legal action against the receivers of the embattled operation.
Key points:
- Bluewaters Power has launched legal action against Griffin Coal’s receiver, Deloitte
- The power station is calling for a court inquiry into the propriety of Deloitte’s actions while running the failed mine
- Griffin went into receivership in September owning debts of about $1.5 billion
Bluewaters Power — a 440-megawatt, coal-fired generator at Collie, 180 kilometres south of Perth — has lodged writs in the Federal Court against Deloitte acting as receiver for Griffin Coal, further escalating a row at the heart of a growing energy crisis in the state.
The power plant, which is owned by Japanese firms Sumitomo and Kansai, but largely controlled by US hedge funds Elliot and Oaktree, called on the court to “inquire into the conduct” of Deloitte in its role running the mine.
It claimed Deloitte and its partners Matt Donnelly, Sean Holmes, and Grant Sparkes may have acted unlawfully by “seeking to procure the liquidators” of Griffin to terminate its coal supply contracts.
In its writ, Bluewaters said Deloitte attempted to “destroy” its secured rights suggesting it failed to act “in good faith”.
Bluewaters, which typically supplies about 15 per cent of the power to WA’s biggest electricity grid, is Griffin’s biggest customer.
But under long-term deals, the generator pays a price for its coal that Griffin claims is below the cost of production and the source of much of the mine’s woes.
Sorry tale a lawyers’ picnic
The latest development in a complex web of disputes centres on the failure of Griffin, which tumbled into receivership last year owing about $1.5 billion to lenders and creditors.
Its biggest lender is the giant Indian bank ICICI, which is believed to be owed more than $1.1 billion of the outstanding debt.
At the time it failed, Griffin’s lenders led by ICICI appointed Deloitte to run the mine as receiver and manager.
They also appointed insolvency firm Cor Cordis as liquidator to explore whether Griffin’s coal supply contracts could be torn up and rewritten.
But in an extraordinary turn of events, Griffin’s lenders, backed by Deloitte, last month launched proceedings against Cor Cordis, seeking to replace the firm as liquidator.
According to reports, including filings to the corporate watchdog lodged by Cor Cordis, the move by Griffin’s lenders was motivated by frustrations over the liquidator’s willingness to terminate — or disclaim — the coal supply contracts.
The impasse has helped precipitate a crisis in WA’s coal-fired power industry, which still supplies about a third of the electricity used in the grid covering Perth and the state’s south-west.
While Griffin provides coal to Bluewaters and a major bauxite refinery owned by ASX-listed miner South32, the neighbouring Premier Coal supplies the state government’s two remaining coal-fired plants.
Long-running problems at Griffin have bled into Premier and last November forced state-owned power provider Synergy, along with South32, to import coal from abroad at record-high prices to ensure there were enough supplies.
