SIMEC Tahmoor Coking Coal is in even further danger of closing with new legal action against its British billionaire owner putting scores of jobs on the line.
Citibank, acting on behalf of Credit Suisse, is taking Sanjeev Gupta to court in an attempt to wind up two of his operations - OneSteel Manufacturing and Tahmoor Coal.
If successful, the move could trigger the appointment of liquidators to the Tahmoor coal mine, which employs more than 400 largely local Wollondilly staff, as well as to the Whyalla steelworks in and its associated mines in South Australia, which employ more than 1800 workers.
Credit Suisse is trying to recoup some of the money it is owed by breaking up Mr Gupta's Australian assets.
The legal action is the latest setback for Mr Gupta's global business after the collapse of one of its major lenders, Greensill, last month.
But his UK-based company, GFG Alliance, has vowed to vigorously defend the court action, saying it does not conduct any financing with Credit Suisse.
A company spokesperson said GFG Alliance was in "constructive discussions" with Grant Thornton, Greensill's administrators, and other stakeholders to negotiate a solution.
"The Australian businesses are performing well and generating positive cash flow, supported by the operational improvements we've made and strong steel and iron ore markets," the spokesperson said.
The potential liquidation comes on the back of Tahmoor Mine's bid to extend their works at the site, ensuring the viability of the facility into the future.
Hume MP Angus Taylor has said he supports both the extension plan (being decided upon by the Independent Planning Commission) and the workers during this difficult time.
"GFG Alliance is a significant employer here in Australia with a strong performance record," he said in a statement.
"Locally, the Tahmoor Coking Mine is a well-established and successful business employing hundreds of local workers.
"I've always been a supporter of the mine, and as a major employer, I know it is incredibly important to families and businesses in the Tahmoor community.
"I am watching this matter closely and urge workers and the community to remain calm as we better understand the situation as it unfolds.
"I will do all that I can to ensure the community is supported during this period of uncertainty."
The case is set for a directions hearing on May 6.
- with AAP and the Illawarra Mercury