A failed coal mine at the centre of a growing crisis affecting Western Australia's electricity system owes a group of Indian banks more than $1.4 billion, according to an audit of the company's finances.
In a report filed with the corporate regulator, Jeremy Nipps from Melbourne-based liquidator Cor Cordis, found Griffin Coal owed $1.41 billion to secured creditors through a trustee known as Certane.
It is understood Certane acts on behalf of an Indian banking syndicate led by ICICI Bank, which has been the ultimate owner of the coal mine near Collie south of Perth since Indian firm Lanco Infratech hit the wall in 2017.
A further $33 million was owed to more than 230 other unsecured creditors including the WesTrac heavy machinery business controlled by Kerry Stokes' Seven Group, the Australian Taxation Office, mining giant Glencore and dozens of small companies from Collie.
Assets 'grossly overvalued'
Revelations about the size of the debt sparked calls from politicians and analysts for the banks to "come clean" on their losses to stem the pain for Collie and head off a potential disaster in WA's biggest electricity grid.
It also comes after the banks put Griffin into receivership with consultancy Deloitte last month in a bid to stymie attempts by a disaffected customer to seize control of the mine.
South West Upper House Liberal MP Steve Thomas said it was unacceptable that such an important part of WA's economy was mired in crisis because a group of banks seemed unwilling to accept their mistakes.
Dr Thomas said suggestions in the liquidator's report that Griffin had recoverable assets worth about $200 million were likely to be grossly overvalued.
Regardless, he said they would go practically nowhere towards paying the money owed to the Indian lenders.
"I think it's time for the companies in charge of this to come clean," Dr Thomas said.
"It's time for people to be told the true financial situation of Griffin Coal.
"This company is in a financial mess.
"There are just not sufficient financial assets to get anywhere near the amount of debt that this company owes.
"It's only the embarrassment of a few executive directors of the ICICI Bank, in my view, and their need to keep hidden from their colleagues the disaster that they have presided over, that has kept this company alive for the past few years."
Fears for WA power system
The plight of Griffin, which is believed to have lost money ever since Lanco Infratech paid more than $700 million for the asset in 2010, has been thrust into the spotlight amid rising fears for the security of WA's power system.
Griffin supplies coal to the Japanese-owned Bluewaters power station, which has a capacity of 440 megawatts and typically supplies up to 15 per cent of the power in the state's main grid.
The mine is also supposed to supply the nearby Worsley Alumina refinery, which is considered the jewel in the crown of ASX-listed miner South32.
However, Griffin's failure to supply contracted volumes to Worsley last month prompted South32 to make the extraordinary announcement it was seeking to import coal from overseas to maintain its operations.
In another twist, the WA government this week confirmed that its 300MW Collie A power station would be idled for three months until January to conserve coal supplies for the hottest part of summer.
Although Collie A is supplied by rival Premier Coal, it's understood Premier's own stockpiles have been whittled down over the past two years as it sought to compensate for disruptions at Griffin.
Veteran mining analyst Peter Strachan said it seemed clear that Griffin was distressed and its lenders were staving off the inevitable by declining to write off their investment.
Mr Strachan said it was particularly concerning that among the debts owed by Griffin was the money supposed to go towards a mine rehabilitation fund.
He said that given the scale of Griffin's historic mining operations, which cover a vast area east of the town of Collie, the massive costs to clean up the site could eventually be lumped with taxpayers.
"They owe everyone from the post office, the local butcher, baker, the tyre repair guy," Mr Strachan said.
"They've got a lot of people that they haven't paid.
"The other thing that's concerning is that they owe money to a fund that's used for rehabilitation.
"So, you have to wonder when this thing closes down, who's going to pick up the bill to rehabilitate the open pit and the waste dumps and everything else?"
Call on banks to face the music
Dr Thomas agreed, saying the longer Griffin's woes continued the harder it would be for the state – and the people of Collie – to deal with the fallout.
He called on the mine's bankers to face what he says is reality and walk away from the troubled operation.
"There's no way they're getting the $1.4 billion back," Dr Thomas said.
"I think somewhere deep down in ICICI Bank … they must understand that this company cannot survive.
"But they've dragged this out now for years.
"I mean, we've been waiting for an announcement, a recognition, of the simple truth that the company is in dire straits for years, and it hasn't come forward.
"It's been hidden from us and it's been hidden from the community.
"What we see in the liquidator's report now is all of this laid bare."
