THE Australian subsidiary of the Indian company that owns the Griffin Coal mine is expected to go into administration early next year, according to a report published by an energy finance analyst.
A spokesman for Griffin Coal disputed the report and said the company would be issuing a legal notice to the author.
Tim Buckley of the Institute for Energy Economics and Financial Analysis told the Collie Mail Lanco Infratech's local subsidiary, Lanco Resources Australia Pty Ltd., faces the possibility of insolvency by February.
The company owes a final payment of $150 million in February to the creditors from whom it purchased the mine in 2011.
"I think Lanco are going to have serious trouble funding that $150m given that originally when they bought Griffin Coal they bought it primarily with debt," Mr Buckley said.
Declining global coal prices and existing debts add to Lanco's fraught financial position.
Mr Buckley said a local subsidiary of a still listed and operating Indian parent company being put into administration was somewhat unprecedented.
"You have a confluence of laws that cross between Australia and India that are very different, so it is not obvious what the process is going to be," he said.
Mr Buckley said contractor Carna Civil and Mining ripping up their contract with Lanco last week could act as a catalyst that would bring the mine owner's unviability to a head.
"I think the process by Carna last week will accelerate the inevitable outcome.
"Are the workers going to lose out in this? Categorically," he said.
"There are a whole lot of financial indicators that suggest corporate distress is very clearly a potential outcome here.
"If it hasn't already been crossed, it is a line that's going to be crossed very soon."
Mr Buckley said any plans to build a coal export facility in Bunbury were now not likely to happen.
The institute report said there was an urgent need for federal and state government planning to prepare for the economic and social impacts of the structural decline of coal.
"These plans take years to develop and decades to put in place. You can't just whip one up overnight," Mr Buckley said.
A spokesman for State Energy Minister Mike Nahan told the ABC the government would not get involved because it is a commercial matter.
Mr Buckley criticised the state government for denying they had any responsibility for trying to resolve the situation.
"It is a really unusual case and it is going to be ugly for the Collie community.
"The longer the government denies they've got any responsibility for cleaning up the mess, the harder it will be for all the parties to come together and try and work out a viable solution," Mr Buckley said.
