Struggling Bowen faces insolvency threat from BUMA

Cash-strapped Bowen Coking Coal is frantically trying to negotiate a deal over more than $15m owed to its former mining contractor BUMA Australia.

Nick Jorss’ Bowen Coking Coal facing cash crunch. Picture: Lyndon Mechielsen

Cash-strapped Bowen Coking Coal is frantically trying to negotiate a deal over more than $15m owed to its former mining contractor BUMA Australia, which has now triggered potential insolvency action against the Queensland miner.

Bowen, which entered a trading suspension on Tuesday, says it received a creditor’s statutory demand from BUMA for $6.8m of the $15.3m it is owed.

The amount takes into account liquidated damages claimed by Bowen Coking against BUMA, which is the subject of ongoing dispute.

Failure by Bowen Coking to pay the amount demanded within 21 days of service of the demand will entitle BUMA to file an application to wind up the miner.

“Such a deemed insolvency event would result in a breach of the company’s debt facility agreements,” Bowen told the ASX, saying it is now considering its position while remaining committed to ongoing talks.

Headed by veteran Queensland coal miner Nick Jorss, Bowen has moved to cut costs by taking over the operation of its flagship Burton mine, which employs 500 workers, from BUMA at the June after the expiry of a mining services agreement.

Shares in the producer fell 25 per cent to 7.5c before the suspension, the second time its shares have halted in the past three weeks amid an increasingly deepening financial crunch.

Bowen has been pursuing commercial negotiations with BUMA and its senior secured lender, Taurus, to defer payment of the debt or consider alternatives.

The company said its deteriorating finances were due to depressed coal prices and increased royalty payments to the Queensland government.

Its future hinged on whether the financing arrangements could be completed, but the situation could change if coal prices remained at their current depressed levels and if it cannot achieve a royalty deferral from the Queensland Revenue Office. The company presently maintains $47.2m of cash and cash equivalents.

Nick Jorss..Pic Annette Dew

Bowen said that while it wishes to continue active engagement with BUMA to find a “reasonable commercial resolution” unless it immediately withdrew the demand or offered an extension of time for payment, the company would be compelled to consider whether continuing commercial negotiations as well as discussions with the Queensland Revenue Office remain viable.

“The company, after further discussions with BUMA, is concerned that there is a reduced

prospect of a negotiated arrangement,” Bowen Coking said. “The company is currently not in a position to fully pay the amount of the demand while also continuing to meet its other payment obligations as and when they fall due and hence, wishes to continue seeking an agreement with BUMA acceptable to all stakeholders.

“The suspension is requested in order to allow the Company to further review its funding position and finalise a funding and debt repayment pathway.”

BUMA won the contract to run the Burton mine in April 2022 including overall operations, clearing, coal haulage and rehabilitation works.

The coal sector’s peak body this week ramped up its lobbying efforts to roll back the bruising Queensland royalty scheme introduced by the previous Labor administration.

Coal Australia chief executive Stuart Bocking said the sector was working constructively with the LNP government to get them to better understand some of the impacts of the “unsustainable” royalty regime.

Labor’s controversial decision to effectively tax coal super profits helped rake in $15.3bn in revenue in 2022-23 – five times more than expected – with the royalties from coal dropping to $5.8bn in 2024-25, according to the mid-year budget update.

Originally published as Struggling Bowen faces insolvency threat from BUMA