Yancoal is seeking to alter its contract with WA’s state-owned power generator Verve Energy, as production costs continue to outweigh the price being paid for coal.
Premier Coal mine is the major supplier to Verve Energy which produces about 60 per cent of the electricity for the south-west grid.
The West Australian reports that Yancoal is in contract talks with Verve, and is seeking an 18 per cent increase on the current price of $38 per tonne.
Earlier this year Yancoal cut jobs at Premier Coal mine as the low cost supplier struggled with increasingly tough coal seams in the Collie Basin.
Energy Minister Mike Nahan said the company was struggling to “make a quid”.
"Premier is in negotiations or discussions with Verve right now. I don't get close to those negotiations but they're asking for an up-lift in coal prices.
"It will probably have to come up – how much I can't answer, I just don't know."
Yancoal bought Premier Coal from Wesfarmers in 2011 for $297 million.
Earlier this year the company announced plans to pursue “aggressive” cost reductions across its Australian sites in 2013 as a result of declining coal sales prices.
In a presentation released to the stock exchange Yancoal said the plan would build on previous reductions it made in 2012.
“More cost reductions are planned for 2013 with another 11 per cent expected, taking the total cost cuts from first half 2012 to about 15 per cent for the company,” it said.