The Tahmoor Mine Ordered Into Liquidation

The Tahmoor coking coal mine, located south-west of Sydney and owned by Sanjeev Gupta's GFG Alliance, has been ordered into liquidation by the New South Wales Supreme Court. This ruling concludes a period of non-operation for over a year and multiple administration processes stemming from financial difficulties within GFG Alliance, impacting approximately 500 workers. The decision was made after an application by Coal Mines Insurance (CMI) over unpaid premiums and aims to provide liquidators with broader powers to investigate the company's financial transactions.

Mine Closure and Initial Administration

The Tahmoor mine ceased operations in February of the previous year after exhausting its cash reserves. Approximately 500 workers, including contractors, were initially placed on minimum pay, with around half later ceasing to receive wages by November.

In November, Liberty Primary Metals Australia (LPMA), the holding company for Tahmoor Coal, was placed into voluntary administration. William Buck was appointed as joint administrator with the stated objective to restart the mine and maximize returns for creditors. At this time, administrators reported receiving six expressions of interest before Christmas, with a formal process commencing in January, scheduled to close on February 11. The mine was estimated to be valued in the hundreds of millions of dollars.

Approximately 500 workers, including contractors, were initially placed on minimum pay, with around half later ceasing to receive wages by November.

Legal Challenges Mount

In August, Coal Mines Insurance (CMI), the industry's workers' compensation provider, initiated a winding-up application against Tahmoor Coal, seeking to recover approximately $4.7 million in unpaid premiums.

Hours before a scheduled NSW Supreme Court hearing on the CMI application, Tahmoor Coal mine was also placed into voluntary administration in early February. Joseph Hayes from Wexted was appointed as the administrator. GFG Alliance stated this action was taken to prevent creditors from forcing the mine into liquidation over outstanding insurance premiums and to preserve value and jobs.

During a subsequent court session, Tahmoor's lawyers sought an adjournment for the CMI winding-up application, claiming an overseas entity linked to GFG Alliance had attempted to pay the debt. Justice Ashley Black rejected the adjournment, stating the court addresses matters as they exist. Financial statements presented during this hearing showed unpaid creditor claims exceeding $18.9 million and a "material uncertainty" regarding the company's ability to continue operations.

Purchase Offers and Union Advocacy

During the administration period, the Mining and Energy Union (MEU) actively advocated for the mine's reopening. The MEU confirmed that a $350 million offer to purchase the mine was made in late January by a consortium that included RStar, the mine's primary contractor. This offer was made outside the administrators' formal expressions-of-interest process. The MEU supported this offer, or any sale to a reputable company, citing belief that it would clear outstanding debts and fund the mine's restart.

GFG Alliance maintained that the formal process managed by the deed administrators (William Buck) was the only pathway being considered for a sale. It stated it would not entertain speculative or unfunded expressions of interest.

The MEU confirmed that a $350 million offer to purchase the mine was made in late January by a consortium that included RStar, the mine's primary contractor.

Supreme Court Orders Liquidation

In a subsequent hearing, the NSW Supreme Court ordered the liquidation of Tahmoor Coal. Justice Black issued the winding-up order, acknowledging the potential hardship for the approximately 500 workers previously stood down. CMI continued to advocate for liquidation, asserting it would result in the immediate loss of 238 jobs, with 50 staff retained for care and maintenance.

Joseph Hayes, the administrator appointed for Tahmoor Coal, requested a three-week adjournment, citing uncertainty regarding a $40 million funding commitment from Clydesdale, another Gupta-owned company, for the administration process. Christopher Withers SC, representing CMI, highlighted that related-party debt constituted about $250 million of the total $432 million in claims against the mine. He argued that liquidation would grant stronger powers to investigate loans and security arrangements made while the company was insolvent.

The MEU submitted a statement to the court supporting voluntary administration as a means to potentially save jobs. The NSW government, which is owed approximately $30 million in unpaid royalties, noted its charge over the Tahmoor mining lease and its authority to appoint a receiver.

Justice Black described the decision as challenging, emphasizing that the liquidator would possess the authority to investigate significant transactions related to the mine's financial collapse. Shaun Fraser and Jonathan Henry were appointed as liquidators.

Related-party debt constituted about $250 million of the total $432 million in claims against the mine. Liquidation would grant stronger powers to investigate loans and security arrangements.

Immediate Aftermath

The MEU expressed disappointment with the court's outcome and stated plans to seek an immediate meeting with the appointed liquidators to discuss options for its members and employees. GFG Alliance acknowledged the court's decision, reiterating its view that a sale conducted through voluntary administration would have offered the best opportunity to maximize stakeholder value and maintain employee continuity.