West Australian premier Colin Barnett has warned Indian power firm Lanco Infratech that it can not pull out of its coal deal.
The coal supply deal previously agreed to by Lanco would affect 10% of the State’s electricity supply, according to The West.
Lanco acquired the troubled coal miner Griffin Coal for $750 million in December.
The mine itself produces around two millions tonnes of coal annually, all of which goes to the Bluewaters Power Station, which supplies a tenth of Western Australia’s power.
Lanco told the power station in May that it will cease supplying coal this month due to financial difficulties.
Following this, Barnett contacted Lanco to remind it of its contracts.
“I contacted them and made it very clear we expected the contracts to be honoured, and we have made it clear we expect them to behave as a good corporate citizen, and I’m sure they will do that.”
“It seems to me now they want to walk away from the contracts they purchased as part of that deal and the obligations to supply coal,” he told Fairfax Radio on Wednesday.
He stated that while Lanco is entitled to mine the coal, it did not have the right to export it.
Barnett said that while the contracts can be negotiated, Lanco needed to stick to its existing agreement, even if it was not commercially beneficial.
“They went in eyes wide open so we expected them to do their proper due diligence on the coal, the asset and also the contracts that Griffin had," Barnett said.
“But I don’t think companies can come in here into Australia, into the Australian legal system, buy an asset and suddenly think they can redo all the existing obligations. That won’t work.”