NOVEMBER 2014: On site at WICET.
NOVEMBER 2014: On site at WICET. Mike Richards

'Uncommercial': Gladstone project slammed over $3.9b trouble

A GLADSTONE coal export project has been labelled "uncommercial" as concern rises over its reported inability to pay back billions of dollars to lenders.

In a complaint to the Productivity Commission of Australia the Environmental Justice Australia hit out at the Wiggins Island Coal Export Terminal.

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It used WICET as an example of how government funding body Export Finance and Insurance Corporation has assisted "uncommercial" projects.

EJA laywer David Barnden said EFIC provided $100 million in an export finance guarantee for the construction WICET in 2011, a project that is now under financial scrutiny.

WICET is reportedly unable to repay $3.9 billion to its 19 Australian and international lenders.

Mr Barnden revealed WICET's financial concerns in a legal complaint warning against Northern Australia Infrastructure Fund (NAIF) directors would breach its duties by awarding a $1 billion loan to Indian mining giant Adani.

The loan would finance construction of a rail line connecting the Galilee Basin to the Abbot Point Coal Terminal, should the controversial mine go ahead.

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

EFIC, which helped fund WICET, is an administrator for NAIF.

"At the height of the coal boom miners agreed to pay a fixed rate to export coal from the terminal regardless of the size of their shipping loads," Mr Barnden said.

"Those payments would be used to pay WICET's loans.

"As of March 2017 WICET's debt was $3.9 billion and miners were urging banks to change the contracts so lenders would carry the liabilities."

It's believed the alternative to the miners' proposal is for WICET to be placed into voluntary administration.

All six owners and WICET were approached for comment, including the chance to refute concerns over lender repayments.

All either declined or did not respond.

"We note EFIC used WICET as an example of a greenfield deal it had been involved in when it pitched to work with NAIF in 2015," Mr Barnden said.

The project, owned by Glencore, Wesfarmers Resources, Yancoal Australia, Aquila Resources, Northern Energy Corporation and Caledon Resources, was the first coal export project in Queensland to be privately owned and funded.

The concern over lender repayments is another factor that leaves the group in an even worse financial position after it lost two of its owners, Cockatoo Coal and Bandanna Energy due to bankruptcy late 2015.

EJA, a not-for-profit legal service, made the complaint of the breach of competitive neutrality policy, on behalf of Institute for Energy Economics and Financial Analysis.



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