The Tahmoor coking coal mine, located south-west of Sydney, is currently undergoing a formal sale process managed by administrators. This development occurs as its owner, Sanjeev Gupta's GFG Alliance, addresses ongoing financial challenges. The mine ceased operations in February of the previous year due to depleted cash reserves, a situation that has affected approximately 500 workers.
The objective of the current process is to maximize returns for creditors and facilitate a timely resumption of mining operations.
Mine Closure and Workforce Impact
The Tahmoor Colliery became non-operational in February 2023, attributed to financial instability within GFG Alliance. Following the cessation of operations, approximately 500 workers, including contractors, were initially placed on minimum pay.
By November 2023, roughly half of these workers were informed they would no longer receive wages.
The Mining and Energy Union (MEU) has expressed concerns that a prolonged closure could lead to permanent damage to the deep underground mine and result in hundreds of job losses.
Administration Proceedings
Liberty Primary Metals Australia (LPMA), the holding company for Tahmoor Coal, was placed into administration in November 2023. Michael Brereton, a joint administrator from William Buck, stated that selling Tahmoor is central to realizing value for creditors, following the approval of a Deed of Company Arrangement (DOCA) for LPMA. LPMA holds 100 percent of the shares in Tahmoor Coal.
Separately, Tahmoor Coal, the operating entity, entered voluntary administration hours before a scheduled NSW Supreme Court hearing. This action, initiated by GFG Alliance, aimed to prevent creditors from forcing the mine into liquidation over outstanding insurance premiums. Joseph Hayes from Wexted was appointed as the administrator for Tahmoor Coal.
GFG Alliance stated that this voluntary administration is fully funded and intended to preserve value, protect jobs, and allow the ongoing sale process to continue, thereby preventing immediate business destruction.
Sale Process and Buyer Interest
The formal expressions-of-interest (EOI) process for the mine commenced in January, with a closing date scheduled for February 11. Administrators have reported significant interest from potential buyers, noting six expressions of interest received before Christmas, with additional parties approaching since. The mine's estimated value is in the hundreds of millions of dollars.
Bids from established entities within the coal industry and local consortia will be assessed based on factors such as value, the cost to promptly restart the mine, and financial capacity. Short-listed bidders are expected to undergo a four-to-six-week due-diligence process, with administrators aiming to finalize a transaction by March or early April.
Theuns Victor, LPMA chief executive, described Tahmoor as an established underground longwall mine possessing substantial installed infrastructure and a skilled workforce, adding that LPMA desires the colliery to be restarted as soon as possible and is open to various options, including a sale, joint venture structures, or a standalone financing solution.
Alternative Offer and Legal Challenges
A consortium, which includes the mine's primary contractor RStar, made a $350 million offer to Sanjeev Gupta to acquire the mine outside of the formal administration process. The MEU has publicly supported this offer, or a sale to any other reputable company, asserting that it would clear outstanding debts, including royalties owed to the state government, and provide sufficient funds for a restart.
However, GFG Alliance has maintained that the formal process managed by William Buck is the only pathway being considered for the sale, indicating that speculative, conditional, or unfunded expressions of interest would not be entertained.
The mine's financial situation has also led to legal proceedings. Coal Mines Insurance Pty Ltd (CMI), an industry workers' compensation provider, filed a winding-up application against Tahmoor Coal, seeking to recover $4.7 million in unpaid premiums. During a recent Supreme Court session, Tahmoor's legal representatives unsuccessfully sought an adjournment for the CMI application, citing an attempted payment from an overseas entity.
Justice Ashley Black rejected the adjournment, noting that financial statements for the year ending June 2024 revealed unpaid creditor claims exceeding $18.9 million and a "material uncertainty" regarding the company's ability to continue operations.
Following Joseph Hayes' appointment as administrator for Tahmoor Coal, Justice Black granted a one-week adjournment for Mr. Hayes' investigations into the sale process, with options for future winding-up action remaining available.
In November 2023, State Resources Minister Courtney Houssos declined to remove a fixed charge on Tahmoor Coal's leases, pending payment by GFG Alliance of $29.4 million in overdue royalties. The Shadow Minister for Resources, Dave Layzell, suggested that the NSW government investigate if the operator is a "fit and proper person" to hold the lease.