JOHANNESBURG (miningweekly.com) – Canada-based Almonty Industries has dropped its planned offmarket takeover offer for ATC Alloys (ATA), after the Australia-listed company’s ferrotungsten joint venture (JV) in Vietnam ran into trouble.

ATA has moved to remove its 40% partner Guangyu Chen as director of the JV company – Hong Kong-registered Asia Tungsten Products (ATPHK) – after a review of the operations revealed that Chen had been acting in his own interests and in the interests of local and international third parties, against the best interests of the JV.

ATA director Michael Bourne has been appointed president and general director of ATPHK subsidiary, Asia Tungsten Products Vietnam (ATPV) – the operator of the Vietnamese ferrotungsten plant. However, ATA said that Chen had refused to acknowledge the actions taken against him and that he had continued to produce ferrotungsten in contravention to a resolution of ATPHK.

ATA said that Chen maintained that he is still president and general director of ATPV and remains at the ferrotungsten facility. The company added that Chen has reportedly been undertaking tolling production for Golden Touch, which is in direct contravention of an earlier resolution that no production should occur pending resolution of the issues related to prior tolling conducted by Chen.

“ATA is concerned that Mr Chen may, in the current production run being undertaken for Golden Touch, favour Golden Touch to the detriment of the joint venture by removing part of the tungsten liner of the ferrotungsten furnace, an asset of the joint venture, and furnishing this as product to Golden Touch,” the company said in a statement to the ASX.

ATA also reported that it had received a letter of demand from Hong Kong lawyers for Golden Touch, relating to previous production runs, demanding product it claimed it was owed or alternatively payment by September 14.  A fresh letter of demands was sent from a second Hong Kong law firm six days later.

ATPHK and ATPV have refuted the claims and expressed their concern with the relationship and conduct of Chen and Golden Touch in past production runs. ATA noted that it had not received a reply to its letter and that the deadline in the letter of demand had passed.

Meanwhile, Almonty chairperson and president Lewis Black said that the company was disappointed to have terminated the heads of agreement. “We are hopeful that [ATA] will be able to resolve the current issues they are facing at their 60% joint venture that owns the Vinh Boa ferrotungsten plant and wish them luck in achieving their objectives as soon as possible,” he stated.