Stanwell Defends Fly Ash Deal

Tarong Power Station looking from Tarong North … Coal Reuse had a 10-year deal to remove the waste products from coal combustion at both power stations

November 17, 2016

Stanwell has defended the process it went through before signing a 10-year deal with Coal Reuse to remove fly ash and other combustion products from the Tarong and Tarong North power stations.

ABC Radio reported on Wednesday that liquidators Rodgers Reidy had told Coal Reuse creditors that the failed company had insufficient initial working capital and equity investment to meet the start-up costs of the Stanwell contract, and insufficient working capital to meet the infrastructure requirements.

According to the liquidators, Coal Reuse owes more than $3.7 million to more than 100 creditors.

The report to creditors – which Rodgers Reidy has refused to release to the media – allegedly includes a claim that Coal Reuse’s actual financial position is unclear because “the director had refused to hand over the books”.

A Stanwell spokesperson said the corporation had awarded a contract to Coal Reuse in 2014 “following a competitive procurement process which included a comprehensive process of shortlisting and evaluation”.

“As part of the evaluation process, Stanwell secured a letter from Coal Reuse’s accountants confirming that Coal Reuse was capable of achieving the investment required to fulfil its proposed contract with Stanwell,” the spokesman said.

“To ensure Coal Reuse complied with its contractual conditions, Stanwell also obtained a $1.5 million performance guarantee from Coal Reuse.

“Coal Reuse had been an off-taker of ash products at Tarong Power Station since early 2013.

“Under the terms of the contract between Stanwell and Coal Reuse, Stanwell sold ash products to Coal Reuse which then on-sold them to other businesses.

“By awarding the contract to Coal Reuse, Stanwell consolidated numerous off-take arrangements. It also created an opportunity for Coal Reuse, acting as a broker, to establish new ash markets and increase the amount of ash removed from Stanwell sites.

“Properly administered, the contract provided Coal Reuse with the opportunity to generate solid returns.”

Earlier in the year, Coal Reuse came under fire in the media for storing cenospheres (a power station waste product) in sheds in Brisbane. This came hot on the heels of reports the company owed local businesses thousands of dollars.

Then on September 5, the Supreme Court in Brisbane ordered that Coal Reuse be wound up, and appointed liquidators. Two days later, Coal Reuse’s contract with Stanwell was terminated.

“Since then Stanwell has implemented interim arrangements for the removal of ash products and the provision of ash-related services on our sites, and commenced a market interest process,” the Stanwell spokesman said.

“This will assist Stanwell in finalising its long term strategy for future off-take arrangements in early to mid–2017.

“Following the termination of Stanwell’s contract with Coal Reuse, Stanwell entered into short-term arrangements with a number of off-takers to ensure continuity of supply for their respective ash products.

“Ash which isn’t removed from our sites by the offtakers is pumped across to Meandu Mine and stored in a mine void.’