Western Collieries to close Collie underground mines

15/2/94

The State Government has accepted Western Collieries' decision to close its underground mining operations.

Energy Minister Colin Barnett said the decision by Western Collieries was difficult but inevitable due to non-competitive underground coal.

The Minister said the job losses were regrettable but he had been assured that Western Collieries would attempt to reduce the workforce through voluntary redundancies, as well as working to redistribute any jobs throughout the industry.

"The decision will undoubtedly serve a blow to Collie but I believe it has been made with the best interests in mind for the coal mining industry and the State as a whole," he said.

Mr Barnett today agreed to remove existing State Government obligations for Western Collieries to mine underground coal, allowing the company to carry out the closures.

He said SECWA and Western Collieries had renegotiated an existing 1985 coal contract which required SECWA to take 2.3 million tonnes of coal a year from Western Collieries until the Year 2003.

A new contract which has been negotiated with SECWA would extend the original agreement by a further seven years.  Both contracts would need to be approved by Cabinet and Executive Council.

Mr Barnett said the new coal contracts were expected to save about $200 million over 10 years, allowing energy costs to be reduced for the State.

"The main problem was that underground coal cost SECWA about $60 a tonne compared to open-cut coal which cost around $41 a tonne," he said.

"Simply, underground coal was 50 per cent more expensive, and productivity was one third of the levels achieved for Western Collieries' open-cut mines."

The Minister said the Government had a long-term commitment to coal mining in Western Australia.

SECWA required coal for its Muja, Kwinana and Bunbury power stations as well as the long-term commitment to the 300MW Collie power station.

"The changes to the contract will enable Western Collieries to make new investment in the $100 million Premier Coal Mine to achieve an efficient and competitive open-cut operation," Mr Barnett said.

"It would also provide head-to-head competition between coal producers, and between coal and natural gas for the State's future power generation needs."

Media contact:  Carolyn Vicars - 222 9699