Australia's Aquila: Vale dispute cost 200,000/t in coal shipments

Wed Jul 13, 2011

SYDNEY, July 13 (Reuters) - An ongoing marketing dispute between miners Vale and Aquila Resources has so far cost 200,000 tonnes in lost shipments of steel-making coal from the jointly-owned Isaac Plains mine in Australia, an Aquila spokesman said on Wednesday.

"This has so far resulted in the cancellation of four shipments totaling about 200,000 tonnes of metallurgical coal," the spokesman told Reuters.

The impasse comes after flooding in Australia's Queensland state coal belt earlier in 2011 had already hindered the mine's performance to reach its full production capacity of 2.8 million tonnes annually.

While production at the mine has continued and some individual sales have been completed, 50-50 owners Aquila and Vale have not been able to sell coal since November without the threat of either side taking legal action.

As a result, stockpiles of coal have mounted and Aquila has warned they would soon reach their limit if shipments did not resume, forcing the mine to shut.

Vale could not be immediately reached for comment.

Steve Badenhorst, director of Vale's Australian coal operations in late June told Reuters that Vale was prepared to expand the capacity to stockpile coal if needed.

Vale, based in Brazil and one of the world's biggest diversified mining houses, and Australia-focused Aquila, in mid-November agreed to enter into their own contracts with customers to sell coal.

The dispute quickly emerged over the ability of Aquila and Vale to take their separate shares of coal from the mine and utilise port and rail capacity contracts.

The two companies have also been at odds over the price Vale will pay for exercising its option to buy Aquila's 24.5 percent interest in the separate Belvedere coal mine, which Aquila estimates will cost A$2.8 billion to develop.

Vale holds 75.5 percent and said a year ago it planned to buy Aquila's interest at "fair market value."