Monday, 14 Feb 2011
It is reported that due to the refusal of paying a contract-breach compensation of about CNY 700 million to the Australian Mount Gibson Iron Ltd, Rizhao Steel is confronted with Mount Gibson’s detention for its iron ore cargoes from the Australian ports in a bid to recover damages from Rizhao Steel.
According to the report published on The Australian , iron ore miner Mount Gibson put forward solutions in early February hoping to recover compensation through seizing iron ore cargoes from the ports of Rio Tinto and other miners as it struggles to recover USD 114 million of fines awarded to it from China's Rizhao Steel.
Mr Alan CFO of Mount Gibson said that he doesn’t make sure whether other Australian suppliers were helping us if we seize one of Rizhao ships which may only be worth USD 15 million or USD 20 million.
In July 2007, the two companies signed a 15 year contract, in which Rizhao committed to purchase up to 1.5 million tons of iron ore every year from Mount Gibson. In 2008, affected by financial crisis and the market prices of iron ore dropped below the negotiated long term prices in the international iron ore market, many small steelmakers including Rizhao were unable to fulfill their duty stipulated in their long term contracts and diverted to purchase iron ore in spot market.
(sourced:mysteel.net)
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