Synergy to sell surplus coal to Worsley alumina refinery

West Australian Government-owned electricity generator Synergy has reached an agreement to sell surplus coal to the operators of a South West alumina refinery plagued by supply issues.

The deal between Synergy and the operators of the Worsley alumina refinery, owned by South 32, was dubbed a short-term arrangement to plug a gap in the facility's supply.

The Worsley refinery, east of Bunbury, is typically supplied by Griffin Coal but the cash-strapped Collie producer has been struggling to maintain that while it battles significant financial issues.

While Energy Minister Mike Nahan confirmed the agreement in State Parliament yesterday, he said it was too early to say the exact volume of coal that would be involved. He also would not confirm the price the coal would be sold at, saying it was confidential for commercial reasons, but said it would be higher than Synergy's initial purchase price.

"It is really is a standby arrangement because there have been some serious issues with the delivery of coal to Worsley by the coal provider, which is Griffin Coal," Dr Nahan said.

"It is in need of the coal and it has approached Synergy on a commercial basis and Synergy has offered them a price which I understand they're willing to take. It is a short-term arrangement and the volume of coal will vary according to demand at Worsley."

Synergy's network capabilities far outstrip demand, with a number of coal and gas-fired power plants sitting idle for most of the year and costing the utility hundreds of millions of dollars per year.