WICET's $1.06 billion trouble as deficit blows out

GLADSTONE'S Wiggins Island Coal Export Terminal's "equity deficiency" has risen from $741 million to $1.06 billion in a year, in another financial blow to the project.

The company, which employs more than 90 people, documented its increased financial liabilities in filings to the Australian Securities Investments Commission.

In the same report the coal export terminal, owned by six coal miners, valued its assets at $3.6 billion at the end of the financial year.

It's another factor that leaves the group in an even worse financial position after it lost two of its owners due to bankruptcy late last year.

But they remain optimistic claiming WICET would continue to engage with industry.

CQUniversity research fellow and senior lecturer in school of business and law Delwar Akbar said the owners could benefit from the high coal price.

The coal price increase, which has reached its highest in five years at $US$300 a tonne, has been driven by Chinese supply after the country's government restricted the working days of its coal mines from 330 days a year to 276.

"The equity deficiency is increasing over time, now it's up to $1.06 billion," the researcher of nine years said.

"They can get more revenue now out of their coal exports ... this could decrease their equity deficiency.

"I'm not saying it's a bad situation, but they do need to handle it with care and better financial management."

On site at WICET, November 2014.

Photo Mike Richards / The Observer
On site at WICET, November 2014. Photo Mike Richards / The Observer Mike Richards

WICET expects to receive enough income from terminal handling charges and take-or-pay agreements to remain a "going concern" throughout the next financial year.

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.

But The Australian Financial Review reported this week that WICET would need the ongoing support of Glencore, which owns more than 40% of the terminal, to remain solvent.

This year Glencore has been getting rid of billions of dollars of assets to reduce debt and strengthen its business after falling commodity prices.

Most recently it sold off Glencore Rail for $1.14 billion.

It's not the first time the project has found itself in financial hardship.

In November 2015, WICET were $500 million worse off after one of the initial owners, Cockatoo Coal went into administration.

Another initial owner Bandanna Energy is no longer part of the terminal.

WICET was approached for comment. "WICET does not comment publicly in relation to its underlying cost structure or its individual owner's circum- stances," a statement read.

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