BC Iron and former contractor Watpac in legal dispute
PERTH (miningweekly.com) – Junior iron-ore company BC Iron is set for a litigious start to the year, having initiated legal proceedings against its former mining services contractor Watpac Civil & Mining in late December.
The two companies are in a dispute over the April termination of the mining contract at the Nullagine joint venture (JV) operation, in Western Australia.
Watpac claims that it is due a A$12.5-million payment from JV partners BC Iron and Fortescue Metals; however, BC Iron has maintained that no further payments are due to Watpac.
Instead, the junior iron-ore miner has filed a writ of summons and a statement of claim in the Western Australian Supreme Court, claiming that Watpac had breached its primary service obligation to BC Iron, as the manager of the JV.
BC Iron claimed that the JV has suffered losses as a result of these alleged breaches.
BC Iron is seeking the recovery of damages.
Watpac has maintained its innocence, disputing the claims made by BC Iron and saying that the matter will progress through the court process.
Direct shipping ore operations at Nullagine were suspended in December, as the JV struggled against the continued fall in iron-ore prices. Iron-ore prices slumped 43% in 2015, partly owing to weakness in the Chinese residential construction market.
Since 2014, BC Iron had been working to reduce costs at the Nullagine JV, implementing a number of measures, including terminating a higher-cost road haulage contract and a number of consultancy contracts, as well as implementing redundancies at the Nullagine mine site and at the company’s head office.
The company also transitioned its major mining, crushing and screening contractor at the Nullagine project and varied the terms of the rail and port services agreement with Fortescue over the JV project.
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