Colin Barnett has floated a merger of the operations of struggling Collie miners Griffin and Premier Coal in a bid to solve their financial problems.
Griffin, owned by India's Lanco Infratech, lost a reported $18 million in the past three months, sparking fresh worries about the local industry's sustainability.
The reports have crossed over into the political arena this week, with Energy Minister Mike Nahan suggesting renegotiation of long-term coal contracts were a possibility.
The Premier yesterday offered a more radical solution, suggest- ing it was "inherently inefficient and high-cost" for two companies to mine one coal deposit.
"They could merge operations," Mr Barnett said. "But there is an inefficiency in two mining companies operating a good drop-kick apart from each other on the same coal deposit.
"The companies say they are losing money. But if they expect the State Government to increase the price paid for coal, we would expect to see some very substantial efficiencies in the coalfields.
"It's been talked about for probably 30 years, maybe it's about time they got on with it."
Lanco is focused on coal exports to improve its bottom line.
Opposition leader Mark McGowan said Mr Barnett's comments were a "complete distraction"."Every time the Premier interferes in the private sector he loses a project or he loses the public hundreds of millions of dollars," he said.