The first loads of bedding coal were delivered to the Wiggins Island Coal Export Terminal (WICET) in March.
Photo Mara Pattison-Sowden / The Observer
The first loads of bedding coal were delivered to the Wiggins Island Coal Export Terminal (WICET) in March. Photo Mara Pattison-Sowden / The Observer Mara Pattison-Sowden

REVEALED: The 'best hope' for Gladstone project's $3.9b trouble

REOPENING failed coal mines in Australia would be the best hope for the financially-struggling Wiggins Island Coal Export Terminal, a resources expert said.

Weighing in on the most recent financial blow for WICET, resources analyst John Rolfe believes there's "few options" to get the project out of its money troubles.

>> 208-day delay costs troubled coal project millions

The coal export terminal company was ordered to pay $4 million to a contractor in a recent, and ongoing, Supreme Court trial.

It comes amid heightened concerns of the company's inability to pay nearly $4billion back to 19 lenders under its current "use or pay" contract.

Professor Rolfe, from CQUniversity school of business and law, described the $4million payout as another "blow" to WICET.

John Rolfe speaking at Fitzroy Water Workshop.
Photo Allan Reinikka / The Morning Bulletin
CQUniversity's John Rolfe. Allan Reinikka ROK291015awater4

He said the company is attempting to arrange a new funding model for its lenders, instead of the original "use or pay" funding model.

"The mining companies are wishing to restructure the payment model because coal prices are much lower since 2012, and charges at WICET are higher than other coal ports," Prof Rolfe said.

"The best options to hope for are that the mines previously operated by Cockatoo Coal and Caledon Coal will reopen under new arrangements so that throughput at Gladstone can increase.

"(But) coal companies are cautious about expansion, and international coal prices remain subdued and uncertain."

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The $4 million court-ordered payment from WICET to contractor Civil Mining and Construction was prompted by delays and disruptions during construction works on the Gladstone site.

The case isn't over for the two companies yet though, with Brisbane Supreme Court Justice Peter Flanagan requesting more information on five matters.

Both companies are to provide further written submissions and appear again on July 28.

"This has to be put into perspective that it is currently receiving about half a billion dollars per annum from the coal companies that have partnered to build WICET," he said.

One of its six coal miner owners, Caledon, was also placed into administration recently, however creditors have only had one meeting.

"(The court decision) is one more blow to the company, which has recently lost Caledon Coal as a partner and is dealing with calls from the remaining coal partners to restructure its debt and reduce tonnage fees," Prof Rolfe said.