Coal mining in Collie risks becoming so costly that the State would be better off importing the commodity to keep the lights on, a report commissioned by the Barnett Government claims.
In a suggestion that casts doubt over the long-term prospects of WA's coal mining hub, the team behind a review of the State's energy industry has questioned whether it can survive.
The review team, led by Eastern States-based businessman Paul Breslin, said that although there was no shortage of coal reserves in WA, it was becoming uneconomic to mine them.
WA's coal mining industry is dominated by two companies - Indian-owned Griffin Coal and Chinese-controlled Premier, which are based in Collie.
The mines supply coal to power stations that last year provided about half the electricity used on the South West grid.
They are also among the biggest employers in the South West, employing hundreds of workers directly and underpinning much of the economic activity in Collie.
According to the review team, there were "commercial concerns" for the mines, which are dealing with worsening coal quality and being forced to sell it at a loss.
As part of a discussion paper outlining the key issues in the local energy system, the review team said importing coal from Indonesia might end up being more affordable.
"If prices need to increase significantly, it may be that other coal resources become competitive or, more likely, for power stations in the region of the Collie mine(s), there is a possibility of coal imports from countries such as Indonesia," the paper said.
Collie MP Mick Murray lashed out at the suggestion, saying it would undermine the town's confidence. He said it was implausible that importing coal from as far away as Indonesia could be cheaper than producing it locally.
A Griffin coal spokesman said the cost of bringing coal from Indonesia was likely to be between $100 and $120 a tonne - more than double the local price.