The 500 employees of collapsed coal miner Griffin Coal has been assured that $12 million in entitlements owed to them are safe, after the West Australian Government stepped in to guarantee the workers would get their money.
Griffin Coal was placed into administration on Sunday following its failure to make $30 million worth of debt and tax payments.
The company is owned by highly reclusive Perth businessman Ric Stowe, whose fortune is valued at $720 million.
The administrators will keep the company operating as usual as they seek to investigate why the company collapsed and work out a way to recover some of Griffin Coal’s $700 million in debt, about $530 million of which is owed to US bondholders.
West Australia’s Energy Minister Peter Collier has also reassured businesses and consumers that the state’s electricity supplies are safe despite the collapse of one of the state’s biggest suppliers.
“It will have no real impact in terms of supply of coal for Western Australia or electricity within Western Australia,” he told ABC news.
But Collier says the Government will not step in and bail out the collapsed company and believes its best hope is to find a new buyer.
“I would imagine there would be plenty of players in the field and I don’t imagine they would have too many problems solving that issue or selling the company.”
West Australian conglomerate Wesfarmers, which owns other coal mines in the state, has emerged as the most likely candidate to buy the collapsed company. A spokesman for Wesfarmers has said it is watching to see how the situation develops.
Meanwhile, unions have declared that Griffin Coal can continue as a viable operation, despite the collapse.
West Australian Construction Forestry Mining and Energy Union mining division secretary Gary Wood said the best option for all creditors is that the mine continue to trade out of its current position.
But Wood also claimed Griffin Coal situation has been clouded because the mining company has been tied up with another of Stowe’s projects, the construction of the Bluewaters coal-fired power station. As this project has been hit delays and cost blowouts, Wood claims Griffin Coal has been put under more pressure.
“We know that Griffin Coal in its own right is a viable operation,” he told ABC. “It’s where it gets mixed up into the rest of the Griffin Group’s assets that it becomes a bit of a mess and it’s questionable how viable it is. But in its own right, it’s extremely viable.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
