The Dartbrook coal mine in Hunter Valley has entered voluntary administration following a loan default, less than a year after resuming operations. The mine, operated jointly by Australian Pacific Coal and Tetra Resources, defaulted on a $174 million loan from its primary backer, Vitol, in June. This financial setback comes after eighteen months of renewed activity at the site, which had previously been dormant since 2006 due to prior accidents and low commodity prices.
Financial Challenges and Operational Hurdles
The decision to appoint Ben Campbell and David McGrath of FTI Consulting as receivers aims to explore options for the mine’s future. According to a statement submitted to the Australian Stock Exchange on June 2, Australian Pacific Coal indicated that the project faced operational and administrative challenges. One key requirement was to produce 20,000 tonnes of coal within a 30-day span. Despite these hurdles, the company remains optimistic about meeting the necessary conditions, which it describes as “largely administrative.”
The mine’s management has emphasized its readiness to continue operations, with plans to start exporting high-quality thermal coal once steady production is achieved. The company relies on Vitol as the sole marketing agent for all sales and logistics. In light of the default, Australian Pacific Coal requested a halt in share trading last Friday.
Impact on Workers and Future Prospects
The Mining and Energy Union confirmed no immediate impact on jobs at the Dartbrook site. Union president Robin Williams stated that discussions with administrators are ongoing to ensure the protection of workers’ employment and entitlements. The receivers aim to maintain operations while evaluating long-term strategies for the mine’s sustainability.
Earlier this year, Vitol increased its financial support from $143 million to $165 million to assist with the mine’s working capital needs. Additionally, Australian Pacific Coal secured a $5 million unsecured loan from Trepang Services. Executive Director John Robinson explained that the softer coal price environment had necessitated this financial top-up to support the mine’s resumption.
Efforts to recommission Dartbrook began in September 2022, with an assessment in 2021 revealing an estimated 1.2 billion tonnes of coal in the project area. This coal conforms to Newcastle specifications, bolstering its export potential to Asian markets. The first commercial coal sale occurred in December last year, marking a significant milestone since the mine’s acquisition by Australian Pacific Coal in 2015.
Australian Pacific Coal and Dartbrook have been contacted for further comments on the situation. The administration of Dartbrook reflects broader challenges facing the coal industry, balancing operational requirements with fluctuating commodity markets.
