The Japanese owners of a major West Australian coal-fired power station are pursuing court action to take over a loss-making, Indian-owned mine amid a worsening crisis in the state's coal heartlands.
Bluewaters, which is owned by conglomerate Sumitomo and backed by a group of so-called Wall Street vulture funds, said it was seeking to trigger step-in rights to take over Griffin Coal's mine near Collie, 180 kilometres south of Perth.
A court hearing between the clashing sides is listed for today in Perth.
The long-awaited action follows years of instability at Griffin, which is owned by Indian interests and is believed to have racked up losses amounting to more than $1 billion in a little over a decade.
It is understood Bluewaters sought to take control of the mine after months of disruptions to its coal supply left it increasingly short of stocks to generate electricity.
The 440MW power station, which is Australia's newest and was only commissioned in 2009, is one of the biggest generators in WA's main electricity grid, which services the south-western corner of the state.
Bluewaters typically supplies up to 15 per cent of the electricity generated in the system, selling to major industrial customers including giant gold miner Newmont and state-owned utilities.
However, records from the Australian Energy Market Operator, which runs the market in WA's main grid, show output from Bluewaters' two units has dramatically fallen away in recent months.
In a statement, Bluewaters confirmed it was seeking to appoint a controller to run the Griffin Coal mine.
Latest chapter in long-running saga
The decision by Bluewaters is the latest twist to a tumultuous saga that began in 2010, when former WA coal tycoon Ric Stowe's business empire collapsed.
Mr Stowe had built the power station in a bid to extend the life of his Griffin Coal mine, but he was forced to sell both assets through administrators when debt loads crippled the business.
While Indian firm Lanco Infratech forked out $730 million for the mine in 2011, Sumitomo along with fellow Japanese conglomerate Kansai paid a reported $1.2 billion for the power station.
Both investments have come back to haunt the owners.
The mine, which is now in the hands of Indian bank ICICI following the implosion of Lanco, is believed to have lost money almost every year since being acquired by Indian interests.
Meanwhile, Sumitomo and Kansai in 2020 wrote the value of the Bluewaters power station down to zero as an onslaught from renewable energy and coal supply woes took a toll.
In a further intrigue, earlier in 2020 a syndicate of Australian and overseas banks, including Westpac and ANZ, reportedly refused to refinance $370 million in debt owed by Bluewaters over concerns about the facility's coal supply security and investing in the fossil fuel.
Instead, the banks sold their debt stakes at a discount to distressed debt specialists — the so-called vulture funds — including Oaktree Capital and Elliot Management.
Those firms have never commented publicly about their intentions for Bluewaters, which is facing an increasingly shaky future after the state government said it would not renew contracts taking half of the plant's output.
Griffin Coal in default: Bluewaters
A spokesman for Bluewaters said the company was exercising its rights to ensure a stable and secure supply of coal.
"This action follows Griffin defaulting on its contractual obligations to Bluewaters, due to its continuing inability to deliver coal in the quantities set under the supply agreements," the spokesman said.
"Griffin has applied to the court to issue an injunction against the appointment of a controller and the matter is expected to be determined by the court in the following days.
"The rationale of the controller appointment is to enable additional capability and funding to reinstate full coal supply to Griffin's 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, productive mine."
Steve Thomas, an Upper House State Liberal MP, said it appeared Bluewaters had lost patience with Griffin and was acting to fix a mess he claimed the government had been unwilling to tackle.
Dr Thomas suggested that while the management of Griffin had been significantly to blame for its problems, deeper causes involved historic contracts set by the state that lowered coal prices to unsustainable levels.
"This will be another hit for the Collie community, though sadly not unexpected," Dr Thomas said.
"The issues faced by Griffin are well known throughout the town of Collie and the region."
