Chinese steel producer Rizhao Steel Holding Group Co., Ltd. said recently that it would sue Mount Gibson Iron, Ltd. to seek a “fair and reasonable” solution for the 114 million U.S. dollars in fines it faces.
Rizhao Steel was fined 114 million U.S. dollars by an arbitrator in Australia for the breach of a 15-year supply contract it reached with Australian iron ore company Mount Gibson Iron, Ltd. in July 2007.
According to the rules of international commercial arbitration, only when the parties involved agree to seek arbitration from an arbitration institution or arbitrator and approve the arbitration’s legal effect, the arbitration process will start, said experts.
Rizhao Steel claimed that the breach of the contract was the result of the low quality of iron ore supplied by Mount Gibson Iron. According to the contract, Mount Gibson Iron would supply 2.40 million tons of iron ore to Rizhao Steel annually.
The Rizhao case is the first fine Chinese steel mills have faced for a breach of contract since the global financial crisis.
Industrial experts believe that the possibility that Australian iron ore suppliers follow Mount Gibson Iron’s lead is very low. As a small iron ore producer, claim for compensation was their only choice.
&$&$By People’s Daily Online&$&$
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Rizhao Steel to sue Mount Gibson Iron against heavy fine