Mining company loses legal battle over coal supply

A MINE at Callide tried to change the agreement it had with supplying two power stations because of the mining downturn and a court has ruled against it.

Callide Coalfields, run by Anglo Coal, had an agreement to supply coal to two power stations at Callide, located south-west of Gladstone near Biloela.

The agreement had been in place since 1998 and involved CS Energy and Callide Power Management, which operated the two power stations.

In November 2013 the mine issued the power stations a notice saying it wished to change the coal supply agreement because they had experienced a change in circumstances due to the coal mining industry.

In the "change event" notice, the mine explained that the costs in the coal supply contract were much less than market value.

The mine also said it would lose $3.3 billion if the power stations continued in the contract for the life of the mine, or until 2031.

It listed 12 reasons for changing the circumstances, including market conditions, change in environmental conditions and increases in labour, diesel and production costs.

But the power stations claim the mine issued this notice because it was less profitable than anticipated.

The power stations took legal action against the mine, questioning whether the mine's reasons could be defined as a "change event" within their agreement.

On Wednesday the Supreme Court found in the power stations' favour, concluding the notice the mine issued did not abide by the terms of the agreement because it did not supply the power stations with relevant data.

Within the legal dispute, Supreme Court Justice Peter Flanagan ruled on 36 different legal questions with regard to one power station and 37 questions on the other.

Among these, he found Callide Coalfields did not meet the criteria for a "change event" as defined in the companies' agreement. - ARM NEWSDESK