Lanco Infratech nears deal to hike coal prices at Australia mine

28 Nov 2011

Lanco Infratech owned Griffin Coal's threat to halt coal supply to the Bluewaters Power Station in Western Australia unless prices are revised upward, apparently has worked in the favour of the company. The company in the span of next two to three weeks' time may formally announce the terms of upward revision of coal price.

Lanco earlier has also indicated its intention to hike prices of coal sold to the power plant and the likelihood of the suspension of coal supply to the Bluewaters Power Station, which accounts for as much as 10 per cent of power generation in Western Australia.  However, as per the agreement, Lanco will have to supply 1.6 to 1.8 million tonnes per annum to Bluewaters and the coal supply price for which could be in the range of 40 Australian dollars per tonne.

Earlier, Bluewaters power station was set to be sold to Sumitomo Corp and Kansai Electric Power Co for an enterprise value of around $1.2 billion; however, to enable completion of the sale of Griffin Power, the settlement required Griffin Energy to make a contribution to Lanco from the Griffin sale proceeds.

However, apart from Bluewaters, Lanco is also in loggerheads with Perdaman Industries, which has filed a 3.5 billion Australian dollar (about Rs 16,600 crore) lawsuit in the Supreme Court of Western Australia, alleging that Lanco is not complying with a 25 year-long coal supply pact related to its upcoming Collie urea plant in Western Australia.

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