Lanco Griffin severs ties with mining contractor Carna

The Griffin Coal mine in Australia, owned and operated by Lanco Infratech Ltd through a subsidiary, has severed ties with its mining contractor Carna.

According to the company, the work on the Griffin Coal mine has resumed, with its parent company Lanco Resources Australia taking up mining on its own.

Lanco Griffin has terminated the contract with Carna after it had walked out of work without any intimation. The contractor has removed its equipment.

However, Griffin, which has its own mining equipment, has resumed normal mining, Lanco said.

The diversified infrastructure company, faced with a huge debt burden, is seeking to pare debt by selling some of the assets and divesting stake in others.

The Griffin Coal mine is one such project, where the company is looking at divesting a stake.

Lanco Infra had to contend with several hurdles after the acquisition of the Griffin mine, including a suit by Australia-based Perdaman Chemicals, which accused the company of breaching a coal supply agreement and sought damages.

A report by the Institute of Energy Economics and Financial Analysis has stated that the acquisition of Griffin Coal by Lanco Infratech at the peak of the coal boom is at risk of becoming a stranded investment with potential negative impact on investors.

It further stated that Lanco Griffin faces the likelihood of insolvency in early 2015.

Lanco had purchased Griffin for $800 million in 2010.

On Thursday, the scrip of Lanco Infratech closed 2.8 per cent lower at ₹6.60 on BSE, while the benchmark Sensex gained 0.42 per cent to 28,562.82 points.

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