Shipment term

Synergy confirms first ever coal import with shipment from NSW’s Hunter Valley expected by end of summer

An unprecedented coal shortage will force Synergy to ship fuel from NSW’s Hunter Valley – but the utility insists it has enough to keep production going through the summer.

Premier Mark McGowan revealed on Tuesday it was “likely” Synergy would resort to importing coal “this year” due to production problems at the beleaguered Premier Coal mine.

A Synergy spokeswoman later confirmed that the utility was “exploring an option to secure the coal from the highway to guard against any unforeseen disruptions in future coal supply.”

West understands the coal is coming from a mine in NSW’s Hunter Valley and could arrive as early as next month.

This is the first time Synergy has been forced to source coal outside of WA, which traditionally comes from Collie.

The utility would not reveal “commercially sensitive” information, including how much coal it was importing and at what price.

The price of thermal coal has exploded over the past two years – particularly since Russia’s invasion of Ukraine – from a long-term average of around US$60 a tonne to nearer current levels. US$350 per ton.

“Synergy has enough coal to help the Australian Energy Market Operator (AEMO) meet electricity demand in the South West Interconnected System, WA’s main power grid, over the next summer period,” a spokeswoman said.

The West understands that Synergy already has enough coal to operate both Collie Power Station and Muja Power Station at maximum production levels until at least the end of March, with imported coal being considered a hedge against further production cuts at Premier.

As revealed by The West, a bulldozer falling into the side of a pit caused a 10-day shutdown of part of Premier’s Collie mine in August, while a wetter-than-expected winter also contributed to the decline in production.

This is ridiculous and a complete failure of the government sitting at their feet.

“There have been issues with the Collie companies supplying the coal to the system due to rain and some of the overlay on the coalbeds and some of the equipment failures they have suffered,” said said Mr McGowan on Tuesday.

“So it’s likely that (Synergy) will have to (import coal) this year.”

In June, the McGowan government announced the phase-out of all state-owned coal-fired power plants by 2030.

The decision had significant implications for both Premier Coal – which is owned by China’s Yancoal and is Synergy’s sole supplier – and fellow mining company Griffin Coal, which supplies the privately-owned Bluewaters power plant.

Both mines have struggled financially in recent years, with Griffin appointing receivers in September.

In September, the AEMO approved the three-month withdrawal of SWIS from the 300 MW Collie power station due to coal shortages.

South32 announced earlier this year that it would be forced to temporarily import coal, likely from Indonesia, to meet 20% of demand at its Worsley Alumina refinery.

The metal producer has coal supply contracts with Premier and Griffin.

A spokesperson for Iluka Resources – which uses coal as part of the refining process to create synthetic rutile in Capel – confirmed that “recent shortages” have also forced the company to import coal from Indonesia” to supplement local supply”.

WA Liberal Leader David Honey described the coal shortage in WA as an “unacceptable situation” and accused the McGowan government of “not providing electricity security for this state”.

He said the decision to phase out coal use by 2030 – five years later than his own party proposed in the last election – had created “uncertainty” for the two Collie mines.

“There are about 2 billion tonnes of coal reserves in Collie and we will be exporting coal mining jobs to the eastern states,” Mr Honey said.

“It’s ridiculous and a complete failure of the government sitting at their feet.”