An aerial photo of a coal-fired power plant.

Warning WA government to intervene before embattled coal miners pull down power system

One of Australia’s most prominent energy investors has urged the Western Australian government to intervene in the state’s ailing coal industry before it collapses and the lights go out.

Oliver Yates, the first head of the federal government’s green bank and senior adviser to investment fund Sentient Impact Group, said WA is headed for an energy disaster amid a growing crisis affecting the coal industry.

Coal-fired power still accounts for about a third of the electricity used on the state’s largest power grid, but the local miners responsible for producing the fuel are struggling financially.

In September, Indian-owned Griffin Coal was placed in receivership with nearly $1.5 billion in debt, while Chinese-owned Premier Coal was hit by a series of setbacks and falling production.

As in most other states with the resource, thousands of workers are employed in WA’s coal industry.(ABC News: Anthony Pancia)

Mr Yates said the problems plaguing the two miners were likely only to worsen if demand for coal power continued to fall amid a burgeoning renewable energy industry.

Coal is still needed “until it is no longer”

But the former investment banker said WA still needs the coal plants “until the point at which they don’t anymore” and the state cannot afford to let them fail.

And he said it was a similar situation across Australia, as other regions that have long been the heart of electricity systems, such as Victoria’s La Trobe Valley and New South Wales’s Hunter, have struggled with the same problems.

“It became quite apparent to me that the participants in the Collie region…are in dire straits financially,” Mr. Yates said.

“Actually, they don’t invest in their assets.

“They are sweating their assets, which is a common occurrence that occurs when the private sector knows their assets are likely to be closed.”

Highly visible workers on a cherry picker next to power lines with the Perth skyline in the background.
Concerns are growing about power reliability on WA’s largest power grid.(Scope of delivery: Western Power)

Mr Yates said it was a “logically sensitive” measure for the companies.

“The problem is, if you don’t invest in the assets — whether it’s equipment or it’s a mine that’s just clearing the overburden so you can get to more coal — effectively you’re getting very significant, abrupt ones.” encounter problems,” he said.

“They are important strategic assets for the state and WA.”

Earlier this year, Premier Mark McGowan announced the government would close its two remaining coal-fired power stations – supplied by Premier Coal – by 2029.

That would keep a single coal-fired power plant, the 440MW Bluewaters plant controlled by US hedge funds, in the state.

According to Mr Yates, who ran the Clean Energy Finance Corporation, the WA government must step in before the local coal industry’s problems get any worse.

There are many ways to do this, from direct state control via a so-called transitional authority to a regulated company that can be understood by the state and private investors.

He said it seemed inevitable that the current operators of Washington’s two coal mines would hit the wall.

“Sharks” can start circling

While acknowledging that some private investors would be willing to pick up the pieces, Mr Yates said only “sharks” would be interested due to the extreme financial, political and social risks involved.

“You can always get the private sector involved,” he said.

A smiling man with brown hair wearing a suit and green tie stands in front of a green tree background.
Oliver Yates says the WA government has little choice but to intervene in the state’s failing coal market.(Delivered: Oliver Yates)

“When the state says, ‘We really need this coal, how about we give guarantees on coal or everyone has to pay a lot more for coal,’ they are effectively crowding out the private sector.

“And if you do that, you’ll end up getting sharks around.”

WA Energy Minister Bill Johnston acknowledged that the plight of WA’s two coal miners was a serious problem for the government.

However, Mr. Johnston argued that their problems were inherently private business matters and it would be inappropriate – even unlawful – for the state to intervene.

“While the Griffin and Premier Coal companies are operating, there is no legal way for the government to take over the mines,” Johnston said.

“These two companies have statutory rights under Australian law.

“It is simply not possible for the government to ignore private ownership of the mines.”

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