SYNERGY — PREMIER COAL SUPPLY CONTRACT
712. Dr D.J. HONEY to the Minister for Energy:
I refer to Western Australia's
current coal supply issues with Premier Coal, with which the government has an
enforceable coal supply contract.
(1) What action has the minister
taken to ensure that Synergy enforces the contract?
(2) What have
been the outcomes of the minister's actions in terms of ensuring
Synergy secures adequate coal supplies for this summer as per the long-term
contract?
Mr W.J.
JOHNSTON replied:
Before I answer that question, I will
let the member know that the name of the consulting firm helping Western Power
on the bushfire issue is Eco Logical Australia.
(1)–(2) It
is absolutely true that Synergy has an enforceable contract with Premier Coal,
and it could sue for liquidated damages against Premier Coal for its failure to
supply the contracted volumes of coal. The problem with that is that it might
lead to Premier Coal going into liquidation. That is actually not in the
interests of Western Australians.
We all know of the troubles with
Griffin Coal. Imagine if Premier Coal had the same financial challenges as those with Griffin Coal. It would not only make
the community of Collie a disaster zone, but also turn off the lights in
Western Australia. That is the member's plan. No wonder he sits where
he does. This is the problem. He just does not get this issue. Premier Coal is
a foreign-owned private company, as is Griffin. The government of Western Australia
cannot—it is not that we do not want to—seize the assets of a foreign-owned
company. It is legally not possible. Let me make it clear: it is not a company
because of Western Australian law; it is a company because of commonwealth law.
We cannot overturn the Constitution of Australia because we do not like the
outcomes that the free market in Western Australia for coal delivery is
providing to us. The free market is exactly that. We do not operate any coal
mines in Western Australia. We have a contract with them.
What has occurred is that Synergy has
discussed the issues around that and asked Premier Coal to provide 100 000 tonnes of more coal than it would
otherwise get between now and Christmas. How is Premier Coal, through
its owner Yancoal, providing that additional coal? Yancoal owns Premier Coal
and Yancoal is the majority owner of a company
called Yancoal Australia. Yancoal Australia actually operates the Premier
mine, but it is owned by Yancoal, not
Yancoal Australia. Premier Coal, through its common ownership, has asked Yancoal Australia to provide two shipments
of 50 000 tonnes of coal from New South Wales. That is where it is going to
make up part of the short deliveries that Premier Coal is responsible for.
This
is not an ideal outcome, but I just make the point: the government of Western Australia
is not bringing any coal into Western Australia and neither is Synergy;
it is being brought into Western Australia by Yancoal
Australia that has common shareholding in and operates Premier Coal. That is a sensible
outcome, because if we took action to enforce the contract that we have
with Premier Coal and sought liquidated damages, that would take cash out of
the business, it would make the government of Western Australia's
business Synergy better off because we would have the money that we took out of
Premier Coal, but the Premier business would go into financial challenge.
I
note that there is a story by Dan Mercer about this issue. What I said to Dan
Mercer I will say here: there is no magic wand. If we could walk down
there and say, ''Abracadabra'', and the coal supply is returned,
we would do it, but I live in the real word; I do not live in fantasy world.
That is why I am working with the leadership of Synergy and Energy Policy WA
and the other resources of government to get a good outcome for the people of
this state. I am not playing silly politics that make no sense.