The mining union hopes a Gujarat NRE shareholders meeting today will deliver an outcome securing the future of jobs and coal production at the two Illawarra mines.
About 500 coal miners at the Russell Vale and Wongawilli mines have not been paid for four weeks, due to the company’s financial strife.
CFMEU Mining vice president Wayne McAndrew hoped Gujarat NRE would secure the investment it needed to trade out of its current situation so it can continue to employ its local workforce and settle the outstanding wages.
“The past month has been a very tough time for our members at Russell Vale and Wongawilli,” said Mr McAndrew.
“They are experienced and loyal employees under enormous financial strain and struggling with uncertainty over their futures.
“The closure of the mines would be not only terrible for Gujarat employees but for the whole Illawarra economy.
“I hope the matter is resolved today and that Gujarat promptly informs employees on any outcome relating to future investment and the status of their jobs.
“The union will be fighting to make sure that every employee receives all outstanding wages and entitlements in a timely manner.”
Hundreds of Gujarat NRE Coking Coal employees will know whether Jindal Steel and Power has become the new owner of their company by this afternoon.
Many of the unpaid mine workers who own shares in the company will attend a meeting in Towradgi at 2pm to vote whether to allow the Indian steel giant to become the Gujarat’s majority shareholder.
Exactly what this means for the workers – for instance, whether their jobs are safe and when they will next be paid – remains to be seen and will depend on announcements from Gujarat and Jindal following the meeting.
But no matter what the outcome of the vote is, there are likely to be substantial changes within Gujarat NRE in the coming weeks.
A report by BDO Corporate Finance, commissioned by Gujarat and published on the Australian Securities Exchange, says the deal to allow Jindal to acquire 52per cent of the company is ‘‘not fair’’ to shareholders because it will dilute the value of their shares and give the overseas company significant influence.
However, the report says the advantages outweigh the disadvantages overall, because if the transaction does not go ahead the miner will be unlikely to find an alternative funding source.
‘‘If the transaction does not proceed, Gujarat will not be able to achieve its objectives of the expansion plans for its projects and it will have to immediately repay all monies owing to the Jindal Group and bank debts that are maturing as it is unlikely to be able to refinance these bank debts without obtaining alternative funding,’’ the report reads.
If the transaction is approved by shareholders, $68.8 million in new capital will be injected.
However, the Illawarra miner will then need to repay about $47.6 million to Jindal for funds it has already used, as well as $2.5 million in other bonds.
This will leave $18.7 million to pay other debts including employee wages, superannuation and suppliers.
If the deal is passed, the two Gujarat-appointed independent directors – Andrew Firek and Maurice Anghie – would have to resign at Jindal’s request to allow for the new owners to appoint two of their own independent directors.
One nominee of Gujarat Coke will be appointed to the board, which could make way for chairman Arun Jagatramka to retain his seat, and one nominee from Jindal would also be allowed.
Jindal also has the right to nominate a new chief financial officer to Gujarat.
In the month since Gujarat NRE Coking Coal shares resumed trading after an almost three-month voluntary suspension, the share price has dropped from 17¢ to 5.5¢.