Delta mining group sunk by bad debts, poor deals

Hard times: The longwall miner about 6km in and 300m beneath the escarpment in the Wongawilli mine. It was buried in a roof collapse in 2014.

Hard times: The longwall miner about 6km in and 300m beneath the escarpment in the Wongawilli mine. It was buried in a roof collapse in 2014.

Wollongong Coal has been identified as the company whose unpaid debts helped sink mining services group Delta.

That’s the conclusion of the administrators from audit and insolvency firm Grant Thornton, who have revealed Delta, which ran the Wongawilli mine, may have been insolvent since December last year.

Wollongong Coal was “regularly disputing” claims for payment made by Delta and “unnecessarily delaying payments of approved invoices”, Delta directors are quoted as saying among the main reasons for the company’s failure.

They also said the condition of the Wongawilli mine’s infrastructure and equipment was “different to the position outlined in the contract”, and this was “compounded” by Wollongong Coal refusing to spend money to “make good”.

Delta directors list the top cause of the company’s failure as the “unprofitable mining services contract between SBD Services (Delta) and WCL (Wollongong Coal)”.

Also high on the list was industrial action by Delta’s Appin employees in December and January, coupled with stand-downs caused by gas buildups at Appin in the previous months.

“Faulty machinery” and a roof fall at Wongawilli also damaged profitability.

The administrators agreed with the directors, while adding some other factors.

The non-payment, stand-downs and delays caused cash flow problems, which the administrators said meant Delta may have been insolvent “from as early as December 2016”.  

In May WCL agreed “in-principle” to advance Delta $2.1 million but this was withdrawn three weeks later, the report says. Five days later Delta went into administration.

Wollongong Coal did not respond to the Mercury’s request for comment.

Accountants late last year concluded Delta may have been trading while insolvent for several months before the white flag was raised.

The administrators have filed their report for Delta’s creditors and shareholders ahead of a second meeting in Sydney on Friday which is expected to give clarity on the chances creditors and employees will receive any of what they are owed by Delta.

Delta owes about $570,000 to employees at Wongawilli.

A meeting on Friday was set to decide whether to liquidate.

The Delta group employed about 600 people across seven collieries.

Delta’s administrators continued to work with mines at Appin and Berrima but South32 terminated the Appin contract recently.

This caused parties who had been interested in buying Delta and its assets to pull out, the report said.

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