West Australian taxpayers have spent millions of dollars propping up a failed foreign-owned coal mine at the centre of the state's energy woes, paying for costs such as repairs to broken machinery.
In answers to questions in state parliament, the McGowan government has confirmed the receivers of the Griffin Coal mine in WA have drawn down $7.3 million from a $19.5 million grant provided by Treasury.
The government said the money had been used to repair a busted excavator at the mine, about two hours south of Perth, along with "additional mobilisation" works ahead of winter.
These typically include preparing mine sites and moving dirt – known as overburden – in a bid to expose a resource such as coal.
But the revelations have drawn scorn from the state opposition, which said it beggared belief that WA taxpayers were having to pay for day-to-day expenses such as mechanical bills at a privately owned coal mine.
Griffin Coal has been mired in controversy for years amid deep financial and operational problems.
The issues culminated when the mine was tipped into receivership in September last year, with debts of almost $1.5 billion.
Government 'throwing good money after bad'
The historic mine is effectively owned by a group of Indian banks led by the country's biggest private lender, ICICI, which is believed to be owed more than $1 billion.
Shadow energy minister Steve Thomas, whose upper house electorate covers the Collie area, said the use of public money to keep Griffin afloat was embarrassing.
Dr Thomas said while he had some sympathy for the government's predicament given Griffin's importance to the state's biggest electricity system, taxpayers were being exposed to major risks.
He said the drawdown of $7.3 million was likely to be the first of many handouts by the state and the total bill for keeping Griffin alive could eventually run into tens of millions of dollars more than has so far been allocated.
"This is the state government subsidising a diabolically bad, diabolically managed business," Dr Thomas said.
"This is a business that has been at death's door now and on life-support for a very long time.
"And the state government is throwing good money after bad to keep the lights on.
"I think it's a joke, but it's been a long-running joke and the punchline is still coming, because I suspect this company cannot survive and will eventually go bankrupt."
Griffin's descent into receivership helped precipitate a crisis in WA's domestic coal industry, which is still responsible for providing about a third of the power in the state's biggest electricity system.
Problems at Griffin and its neighbouring rival, Premier Coal, forced state-owned power provider Synergy and ASX-listed miner South32 to take the extraordinary step of importing coal from interstate and overseas to prop up local supplies.
Little chance of money's return
They also prompted the government to throw Griffin a financial lifeline in December to keep the mine operating and safeguard power supplies over summer.
When he announced the bailout, Premier Mark McGowan acknowledged that little – if any – of the money would ever be recovered.
"I suspect that these … are payments we just need to make," Mr McGowan said at the time.
"Griffin Coal is not in a good financial position but we need to ensure that our electricity system continues to operate.
"And so, we will do that."
Dr Thomas said so long as the government was subsidising Griffin under its current owners, the mine's underlying problems could not be solved.
He said there was little doubt Griffin needed to be paid more for its coal given it was currently selling every tonne it mined below the cost of production.
"The biggest blockage to this in my view has been ICICI Bank and the other components that are around it," Dr Thomas said.
"They seem determined to maintain the current impossible situation rather than find a resolution, presumably to their own benefit."
Permanent fix 'urgently needed'
The mining union agreed the use of government money to pay for Griffin's normal business needs was a sign of the mine's desperate situation.
Greg Busson, the state secretary of the Mining and Energy Union's WA district, said the state funding would allow Griffin to carry out work that should have been undertaken years ago.
For example, he said Griffin would be able to provide an extra 450,000 tonnes of coal thanks to the cash injection, which would also allow it to better plan its operations.
But Mr Busson said a longer-term fix for Collie's broader coal industry was urgently required, given both miners were struggling financially in the face of the rise of renewable energy.
He argued 2023 would be a critical year, noting Griffin's State Agreement – which gave it the right to mine – would expire mid-year.
"[Griffin] has been a long-festering sore that's had too many bandaids on it," Mr Busson said.
"[The government] are doing this for the right reasons — to try to secure the coal and power supply through the winter period.
"But there are some big decisions that have to be made going forward.
"Griffin is probably just the stand-out one."
State Development Minister Roger Cook said the $7.3 million had been provided "consistent with normal government standards for payments, including information about expenditure and invoices".
"The funding agreement includes requirements for regular reporting, the provision of information upon request and dealing with repayments in certain circumstances, and prevents funding being used for certain purposes, including payment to secured creditors," Mr Cook said.
