A local consortium says it is “hastily” working on a bid to take over the mothballed Tahmoor mine, owned by British billionaire Sanjeev Gupta, to ensure operations start soon and “there is a workforce to come back”.
The Tahmoor coking coal mine, south-west of Sydney, has been closed since February after running out of cash amid financial turmoil within Mr Gupta’s GFG Alliance.
About 500 workers, including contractors, were stood down on minimum pay, and in November, about half were told they would not be paid.
William Buck was appointed administrator of Liberty Primary Metals Australia (LPMA) in November.
LPMA is the holding entity for GFG’s Australian steel and mining businesses, including Tahmoor, and relies heavily on income from the mine to meet its financial obligations.
About 500 workers were stood down when operations ceased at the Tahmoor mine earlier this year. (ABC News: Shaun Kingma)
This week, RStar, Tahmoor’s majority contractor, has partnered with GBA Capital to assemble a bid.
RStar’s legal representative, Olivia Hitchens, principal at Artemide Law, said the consortium was moving quickly to put together an attractive offer.
“We want everyone who’s employed at the mine to continue. That is mission critical for us,” she said.
“RStar’s workforce is a contracted workforce that would remain, as would the existing workforce … our proposal also carves off a piece of the pie for management to participate as equity owners.”
Ms Hitchens said the closure had been difficult for RStar workers, many of whom had worked at the mine for decades.
“I think that the idea came about out of fear that someone else might take over the mine, who might not understand it, might not have the same relationship with management and might not love it the way that our client loves it,” she said.
Creditors report
The creditors’ report released by William Buck on Monday found LPMA’s holding-company structure and the complexity of GFG’s global arrangements left its Australian businesses exposed.
It also revealed a failed $US1 billion plan to shift an electric arc furnace from South Korea to Romania to capture EU steel incentives.
Administrators said tens of millions were borrowed against Tahmoor to support the project before the economics collapsed when EU incentives were reduced.
Combined with production issues, the cash drain left the mine unable to fund operations, forcing its closure earlier this year.
Administrators said they had received letters from third parties expressing interest in acquiring Tahmoor Coal and were recommending a Deed of Company Arrangement (DOCA) as a better outcome for creditors than liquidation.
Ms Hitchens said the release of the creditors’ report provided vital clarity for the consortium as it finalised its bid.
“Until now, we didn’t know what that looks like, but we need to get an idea of that number,” she said, referring to the scale of LPMA’s debt.
She said analysts were now assessing the mine’s assets and future potential following a four-hour underground inspection on Tuesday.
The mothballed Tahmoor coal mine, which has been closed since February amid financial turmoil at GFG Alliance. (ABC Illawarra: Kelly Fuller )
Site tour
This week, the RStar consortium conducted that tour with management, which Ms Hitchens described as highly encouraging.
“They have a really clear plan to re-open the mine, and it was really impressive.”
She added that the consortium had been in contact with Mr Gupta and appreciated the access he provided to the mine and his cooperation.
Ms Hitchens said the situation remained “complicated,” with the administration process, a separate wind-up application from the mine’s workers’ compensation insurer, and the NSW government’s decision to remain a secured creditor all adding uncertainty.
“There is a lot of hope here, and hopefully governments, unions, investors and powers that be [will] back our consortium and can move quickly, because it is a great asset — a really solid asset.”
