Collie coal region in doubt by WA Department of Finance

Increasing cost pressures on coal miners in Western Australia have led to speculation that power stations in the Collie region may lean towards imported coal.

The Electricity Market Review from the WA Department of Finance said that despite a lack of apparent impediments to the availability of local coal, commercial concerns for major Collie producers Griffin Coal and Premier are creating an uncertain future for cost effective production.

Both Griffin and Premier have admitted to poor performance and rising operations costs, which has them vying to renegotiate long term contracts for higher coal prices for sale into the WA power generation market, as they continue to sell their product at a loss.

The report acknowledged that both companies have faced difficult conditions, particularly in relation to the decreasing quality of coal mined, and the increasing expense as greater quantities of overburden hamper efforts to access operational reserves.

“The current markets for these fuels indicate that their costs are likely to rise in real terms over the coming years,” the report said.

“If prices need to increase significantly it may be that other coal resources become competitive or, more likely for power stations in the region of the Collie mine, there is the possibility of coal imports from countries such as Indonesia.”

“This would provide an effective cap for domestic prices at import parity levels.”

Any negative changes to the demand or production levels of coal from the Collie region would have significant impact on the local economy, as the two companies are among the biggest employers in the South West of the state.

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