FALLEN coal tycoon Ric Stowe has launched an audacious bid to reclaim his coal empire, taking legal action that could eventually force the West Australian Government to give him back his mining tenements.
If successful, Mr Stowe would also undermine the coal export plans of Indian power giant Lanco Infratech, which bought his debt-laden Griffin Coal operations for $750 million from administrators in late 2010.
It will add to the pressure on Lanco, which controls half the state's coal supplies but is struggling to bed down its purchase.
Earlier this month, via some of his backers, the Perth-raised but Monaco-based Mr Stowe established a West Australian holding company to engineer his fight back.
The vehicle, Genbow Pty Ltd, has since lodged documents in the state’s Mining Warden’s Court asking for exploration and mining rights for land containing huge coal reserves that are part of Lanco's expansion plans.
Sources close to the case, which is scheduled to start on May 4, said Mr Stowe is claiming that Lanco, as required under state laws, has not spent enough money on exploration and developing the tenements. Given this, Lanco should forfeit the mineral rights so that he can expand domestic production, as opposed to Lanco's export plans, he says.
Mr Stowe could not be contacted and his lawyers Allens Arthur Robinson declined to comment this week.
However, the success of the case could turn on whether the claim under the state’s Mining Act will override a separate state agreement that usually governs the operation of mines such as Griffin, and does not normally require specific exploration amounts.
Some of the Griffin tenements are outside this agreement, however.
Mr Stowe’s play has shades of small miner Cazaly Resources' ultimately unsuccessful tilt in 2005 against mining giant Rio Tinto.
Cazaly argued that Rio failed to renew its claim over a key iron ore mining tenement and should have been forced to give it up to allow other miners to develop the resource after Rio sat for decades on the valuable land without spending the required exploration money. However, then WA resources minister John Bowler issued a ministerial order handing back the tenement to Rio in the interests of “investment certainty”. A legal challenge to that order, funded by Fortescue Metals Group, failed.
State Mining Minister Norman Moore declined to comment on Tuesday on the case before the courts.
Lanco is relying on the coal reserves to expand the mine and export coal to India to justify its purchase price for Griffin.
Griffin Coal director Prasad Kandimalla defended the company's pace of development and criticised Mr Stowe's inaction when he owned the mining operation.
“It is unrealistic that any company would consider a claim against Griffin Coal based on inactivity when we are moving ahead with a major expansion of the Collie operations,” he said.
“The expansion will see the company's extensive reserves tapped and production increased from four million tonnes per annum (mtpa) to up to 20mtpa.
“Perhaps the party in question should compare this growth path with the state of the company when it was in receivership and prior to the investment and commitment made by Lanco Resources Australia.”
Yet questions continue to be raised at an official level about Lanco’s plans, with the company yet to lodge a mining plan with the government.
According to government sources, Lanco also asked for but was refused a waiver of an $8.5 million debt owed to the state-owned Fremantle Port last month, raising questions about the financial health of its local operations.
Mr Kandimalla said Lanco continued to meet its obligations and would not respond to “speculative commentary about our specific dealings and discussions with government”.
Genbow is registered to offices where Mr Stowe’s remaining companies, including his main Devereaux Holdings, are located. Directors of Genbow include Mr Stowe’s tax lawyer Donald Pearson and Irish-born Noel Corcoran, who is said by Stowe insiders to have helped the coal magnate structure his offshore holdings in the past.
The main shareholders in Genbow are said to be the same Malaysian investors who backed Mr Stowe in his ultimately unsuccessful attempt to buy back Griffin from administration in 2010.
Mr Stowe is also in negotiations to buy back his family's $50 million mansion.
DOWNFALL OF A TYCOON
- Stowe plans resort near millionaires’ playground, hoping to cash in on the tourism boom in south-west WA
- He was worth $720 million according to the 2009 BRW Rich List.
- The coal baron’s group collapsed in early 2010. He owed more than $2bn to creditors including major US investment houses Harbinger Capital Partners and Clearwater Capital plus the ATO.
- Coalmine sold for $750m to Indian power giant Lanco Infratech in December 2010.
- Initial dividend from sale of coalmine helps Stowe begin negotiations to reclaim his $50 million family mansion on the outskirts of Perth called Devereaux Farm – talks ongoing.
- The remaining stake in Stowe’s business – the $1.2bn power arm – is subject to final negotiations with Sumitomo and Kansai Electric.
- Stowe’s long-time financial advisors establish Genbow.
- Genbow launches legal action against Griffin Coal/Lanco