The Tahmoor Coal mine, owned by Sanjeev Gupta, has entered voluntary administration just hours before a court session that could have led to its liquidation due to outstanding insurance premiums. This development comes after approximately 500 employees have been out of work since the mine, located to the southwest of Sydney, was shut down last February amid the financial struggles linked to Gupta's GFG Alliance.
The parent company of the mine, Liberty Primary Metals Australia (LPMA), had also been placed in administration back in November, and the window for interested buyers to step forward is set to close on February 11. Recently, a local group, led by RStar—the mine's primary contractor—submitted a bid of $350 million to purchase the mine outside the formal expressions-of-interest process, aiming to resume operations as swiftly as possible.
GFG Alliance confirmed the voluntary administration of Tahmoor Coal right before the New South Wales Supreme Court was scheduled to hear a winding-up application initiated by Coal Mines Insurance (CMI). This strategic move was taken to stave off potential liquidation by creditors over unpaid insurance premiums.
The organization stated that this voluntary administration is fully funded and aims to protect the value of the business, maintain employment, and facilitate the ongoing sale process. They expressed that this action would prevent what they referred to as the immediate devastation of the business that would follow liquidation.
Joseph Hayes from Wexted has been appointed as the administrator for Tahmoor. He informed the court that he will take the next two weeks to assess the sale process being handled by the administrators of LPMA. "I’ll gain a comprehensive understanding of their efforts and quickly form an opinion on how that process can be enhanced or approved," he noted. "If improvements aren’t feasible, I will report that back to the court."
Justice Ashley Black granted a one-week postponement to allow Mr. Hayes to conduct his investigations, while leaving open the possibility of future winding-up actions.
Bob Timb, president of the Mining and Energy Union in the area, expressed his frustration that the situation at Tahmoor had deteriorated to this extent. "While it’s disappointing that we’ve reached this critical point, we are pleased with the appointment of an administrator," he remarked. He added that the union will continue to advocate for the interests of its members throughout this process, sharing that he has already had preliminary discussions with the mine's administrators to expedite a sale allowing workers to return to coal production.
The $4.7 million unpaid insurance debt lies at the heart of this dispute. Following a sometimes tense court day, Tahmoor's legal team sought unsuccessfully to delay the CMI winding-up application. CMI, which provides workers' compensation for the industry, is trying to recover these unpaid premiums. Senior counsel Farid Assaf claimed that a Gupta-linked overseas entity had attempted to settle the debt, but the payment was rejected. He explained that the firm was in the process of transferring the funds to the court but required more time for the international transaction to complete.
Justice Black challenged Tahmoor regarding the reasons for the delay, dismissing requests for postponement based on the premise that the court must address matters as they currently stand, rather than on hopes for forthcoming payments. Financial documents for the year ending June 2024, presented during the hearing, revealed that creditor claims exceeded $18.9 million and highlighted significant uncertainties regarding the company's ability to continue operating. Justice Black also indicated that the initial request for a month-long adjournment seemed to be merely a tactical maneuver, as the sale process is expected to extend until June, contingent upon whether a buyer is local or foreign. Furthermore, it was noted that there are no arrangements for ongoing payments to Coal Mine Insurance, despite the insurer remaining obligated to provide coverage for the limited activities still taking place at the mine.
