Urea plant under threat?

The legal stoush between Lanco Infratech and Perdaman Industries is threatening to derail the $3.5 billion Collie urea plant that would employ about 1500 people during construction.

Picture: Perdaman corporate director corporate Andreas Walewski

The South Western Times understands that on August 30, Lanco axed an agreement to supply the fertiliser maker with coal for the proposed multi-billion dollar coal to urea plant in Collie.

Lanco acquired failed tycoon Rick Stowe’s Griffin Group late last year, which had an existing coal supply agreement with Perdaman.

Perdaman corporate director corporate Andreas Walewski recently told the South Western Times the company had previously entered into a 25-year agreement with Griffin Coal to supply 2.7 million tonnes per annum from 2015.

Mr Walewski said the company has alleged Lanco breached its obligations under the agreement, but he could not disclose what those obligations were.

This month, Perdaman said in a statement it was continuing with its US$3.387 billion legal action against Lanco, its subsidiaries including Griffin Coal and three Griffin directors.

It claims Griffin Coal’s notice of termination is ‘‘a repudiation of its contractual obligations’’ and Griffin’s attempt to almost double the price of its coal ‘‘which is conditional on matters not consistent with the terms of the coal supply agreement cannot cure Griffin’s further breach’’ of the agreement.

But in a surprise twist of events Lanco and its wholly-owned subsidiaryGriffin Coal held a public open day last Thursday to give people in Bunbury a chance to talk about its major development at Bunbury Port.

In a statement issued on August 25, Lanco said despite terminating the 25-year coal supply agreement to Perdaman for its urea plant, it was aiming to boost local jobs and industry by developing Berth 14 at the port.

Collie Chamber of Commerce and Industry chief executive officer Richard Jackson said Lanco was warned by Premier Colin Barnett ‘‘it had every opportunity to do the due diligence’’ it needed and reminded the Indian company of its contractual obligations.

‘‘My view is that there is a whole lot of posturing going on with Lanco,’’ Mr Jackson told the South Western Times.

‘‘This is a big deal and deals of this size can go back and forth, but Lanco appear to be making some very strange moves at the moment.’’

Mr Jackson said he remained confident the deal would go ahead.