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The West Australian government says it will give an undisclosed cash grant to the receivers and managers of an insolvent foreign-owned coal mine in WA's south so it can continue operating over summer.
Key points:
- Taxpayer funds have been used to prop up an embattled foreign-owned coal miner
- Griffin Coal owes more than $1.4 billion to its investors
- WA's opposition says it's a joke, with that money unlikely to be paid back
Griffin Coal supplies coal to the Japanese-owned Bluewaters power station in Collie, which supports the state's main electricity grid during peak times.
But the miner has been placed in receivership and a liquidators report found the company owed $1.4 billion to a group of Indian banks and a further $33 million to more than 230 creditors.
The McGowan government announced on Tuesday afternoon money would be paid to stabilise the Indian-owned mine so it can continue to supply the privately-owned power station.
The cash — which would effectively act as a loan — would "stabilise its Collie operations and provide certainty for the workforce and community," the government said in a statement.
But a spokesman for the Energy Minister Bill Johnston refused to say how much the taxpayer-funded grant was worth.
He says that is because of an agreement that is commercial in confidence.
It comes amid warnings WA is in for a 'white-knuckle ride' this summer in terms of electricity stability, with fears growing about the health of the state's main power system and whether the lights will stay on over the coming months.
Doubt money would be paid back
The government said the funding would provide time for the commercial parties involved in the Griffin insolvency to finalise their negotiations while ensuring a sustainable coal supply.
Mr Johnston said the government would seek to recover the funding as part of any new commercial arrangements.
But Shadow Treasurer Steve Thomas said that was laughable.
"This is a company that has debts of $1.4 billion dollars and effectively zero capacity to pay that back and now the taxpayers of Western Australia will be contributing to the company to keep the lights on? I think this is hilarious."
Dr Thomas said the grant showed how dire the energy situation was in WA and was the result of the government's failure to manage the state's coal industry.
"The power situation in Western Australia and the issues around Griffin in Collie are so dire, so bad, that there's no alternative but to use, I suspect, taxpayers money, to ultimately prop up a foreign-owned company that is ultimately going out of business.
"That's the situation we find ourselves in because we haven't managed the coal industry well."
He said he doubted the company would be in a position to pay the grant back.
"This is a company that is already going broke [so] I don't understand where the money is going to come from."
The announcement comes after one of Australia's most prominent energy investors called on the government to intervene in the state's beleaguered coal industry before it collapses.
Premier Mark McGowan had also admitted it was likely the state would be forced to import coal from New South Wales to keep the lights on over the coming years as the state looks to close its remaining coal-fired plants by 2030.