An increasingly bitter dispute between the Indian owner of Collie's Griffin Coal mine and its main contractor could be headed for the courts.
In a potentially serious development for the security of power supplies in the South West, it is understood negotiations between Carna Civil and Min- ing and Lanco Infratech have deteriorated.
Carna, the Waroona-based business that has managed Griffin since last year, suspended operations on Thursday amid a row over allegedly unpaid debts owed by Lanco.
The contractor is believed to have claimed it is owed between $20 million and $30 million, a figure Lanco disputes.
Despite hopes a partial solution to the impasse could be brokered - involving the payment of at least some money to Carna - it is understood Lanco has rejected the proposition. Instead, Lanco is believed to have told Carna it owes the contractor nothing and may have in fact overpaid it between $3 million and $4 million.
The breakdown in negotiations could have significant implications for the security of electricity supplies in the South West grid because Griffin provides coal to Bluewaters power station, one of the region's biggest electricity generators.
Amid Griffin's continuing financial woes - it has been losing about $6 million a month for the past year - there are questions about how long India's ICICI bank will wear the reverses.