PERTH (miningweekly.com) – ASX-listed iron-ore producer Mount Gibson Iron has been awarded $114-million in damages by the arbitrator in its dealings with Chinese steel mill Rizhao Steel Holdings Group.

The arbitrator found that Rizhao repudiated its obligations under the long-term agreements with Mount Gibson’s subsidiaries, Mount Gibson Mining and Koolan Iron Ore, for the supply of iron-ore, and that consequently, Mount Gibson was entitled to loss of bargain damages.

The arbitrator has now ordered Rizhao to pay $114-million by way of damages, as well as a 6% interest on, and from the date of the award, as well as Mount Gibson’s legal costs.

The iron-ore miner said on Tuesday that it would take steps to immediately recover the judgment debt in full.

In October 2008, a number of Mount Gibson’s customers breached their offtake agreements. The iron-ore miner was subsequently compelled to complete large equity raisings and negotiate short, medium- and long-term offtake agreements with alternative customers in order to mitigate the financial risks at the time.

“We are very happy with the result of the Rizhao arbitration, which vindicates our decision to take legal action against those customers who breached our offtake contracts with Mount Gibson, placing the company, its employees and shareholders under enormous pressure,” said Mount Gibson MD Luke Tonkin.

“Of the three customers against whom legal proceedings were commenced, Mount Gibson has now recovered $25-million by way of a settlement, and received arbitral awards in its favour of $23-million and $114-million,” added Tonkin.

He noted that the settlement and the arbitral awards would go some way to compensating shareholders for the events of late 2008.

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