Griffin Coal has launched an eleventh-hour bid to stop power generator Bluewaters from appointing a controller, after a production shortfall of 400,000 tonnes.
Griffin Coal has launched an eleventh-hour bid to stop power generator Bluewaters from appointing a controller, after a production shortfall of 400,000 tonnes.
Bluewaters, owned by Kansai Electric and Sumitomo Corporation, claims Griffin was in default of its contractual obligations and had been unable to deliver coal.
Those contracts require up to 3,000 tonnes of coal to be supplied daily.
That is used to run the state’s two newest coal-fired power units, with combined capacity of about 430 megawatts.
In the interim, Bluewaters could be forced to buy power on the market to supply customers, while its stockpile dwindles.
The units are producing at closer to 100MW today.
Griffin sought an injunction against the appointment of a controller in the Supreme Court today, saying it had claimed force majeure.
The appointment would cost $20 million, the business claimed.
A labour dispute starting earlier this year at the Ewington mine had led to industrial action and cost production hours, Griffin said.
Border closures and the state's worker shortages added to those troubles.
From early June, Griffin had claimed a force majeure and could not deliver nominated coal supply targets or keep replenishing Bluewaters' stockpile.
Business News understands Bluewaters has about 75,000 tonnes of coal stockpiled, which would be equivalent to about 25 days of maximum supply.
But lawyers for Bluewaters told the court today that the minimum stockpile should be 250,000 tonnes.
It's also understood that Griffin's contract with South32 takes precedence for supply.
In July, Bluewaters had submitted default notices.
“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,” a Bluewaters spokesperson said in a statement.
“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.”
Griffin argued there was a strong case there had been no default.
“The part suspension is accurately predicted, there has been and will be deliveries of 1,250 tonne per day on average," Griffin barrister Konrad de Kerloy told the Supreme Court this afternoon.
“We would submit that there is a strong prima facie case that the notices are invalid because they never specified what the default was and what was required to cure it.
“The defendants are not interested in allowing us to cure the default, if there has been one.
“It’s also worth noting the catastrophic consequence of the appointment of receivers and managers, which involves costs in excess of $20 million."
He said coal supplies had been expected to return to normal from September.
Bluewaters' lawyer Joseph Garas said Griffin had not sufficiently specified the extent to which it was or wasn’t able to perform its obligations under the contract.
“There are significant amounts of money changing hands as part of the agreements in place and Bluewater needs certainty over what is and isn’t being delivered on a day-to-day basis,” he said.
“They’re also required to identify with precision if it’s partly or completely affected, quantify the amount being delivered and do their best to mitigate the impact of any force majeure event.”
The two parties have been in a series of disputes.
In 2020, Bluewaters hit Griffin with breach notices.
Griffin was owned by India's Lanco Infratech, which collapsed in 2017, and has since been controlled by foreign banks including ICICI.
