Government reveals cost to keep Collie coal power station burning

The state government has offered failing Collie coal miner Griffin $19.5 million of taxpayer money to keep operating.

Deputy Premier Roger Cook revealed the figure in a ministerial statement on the first day of parliament.

WA taxpayers are paying $19.5 million to prop up failing coal miner Griffin.Credit: Peter Braig

With Griffin Coal in receivership and the state’s south-west electricity grid facing an uncertain summer the WA government in December announced it would pay a grant to the company to keep it operating and supplying coal to Japanese-owned Bluewaters power station in Collie.

However, at the time ministers, including Cook and mines minister Bill Johnston, would not reveal the value of that grant because of commercial sensitivity.

In his statement, Cook said the government had offered $19.5 million to Griffin “to date” but no funds had been drawn down so far.

Cook said he expected a portion of the money would be used for equipment repairs and contract costs to prepare the mine for winter.

“The funding reaffirms that state government’s commitment to work with coal providers to ensure security of supply, whilst ensuring an orderly transition away from coal, including for those entities that use coal in their technical processes,” he said.

“While ideally, the government would not have to intervene this way we will not put the stability of our energy system at risk.”

Cook reaffirmed the government’s intention to recover the grant costs through mining revenue once new project terms between Griffin and Bluewaters are agreed to.

“Customers are expected to pay an appropriate price for coal that reflects the true costs of production,” he said.

Premier Mark McGowan himself conceded it would be difficult to get that taxpayer money back, describing the grant as “payments that we just need to make.”

Deloitte took control of Griffin in September and the subsequent liquidators’ report found the miner owed a group of Indian banks more than $1.4 billion.

Griffin’s woes were exacerbated by state agreements and long-term commercial arrangements that saw it being paid between $40 to $50 per tonne of coal.

Australia’s current per tonne coal price is hovering above $400.

Griffin and Deloitte are locked in negotiations with Bluewaters and its other major customer South32 over new commercial agreements once the state agreement ends in 2023.

Cook said it was the government’s firm belief that Griffin, Deloitte and its customers should come to a new arrangement that would see it paid a “fair price” for its coal to ensure its operations in the long term.

The industry has also been battered by the WA government’s decision to shut down all coal-fired power stations by 2030.

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