Fortescue Metals Group has proven itself to be one of Australia’s busiest iron ore miners, with the company announcing the commencement of mining at its Christmas Creek Deposit in the Pilbara just hours before striking a $1.2 billion deal with China’s Hunan Valin Iron & Steel Group.
The first overburden blast occurred on February 21, signalling the commencement of mining and the start of Fortescue’s integrated mine operations where ore from the new operation at Christmas Creek will be blended with product from the established Cloudbreak mine.
Under Fortescue’s mining operations timetable, waste material will be removed over the next month before mining of the exposed ore body begins in late March.
It is expected that mined ore will be available for transporting to the Cloudbreak Ore Processing Facility during May 2009.
Just how the ore will be transported is currently up in the air, as the miner pushes forward with the suspension of its 10 long term shipping Contracts of Affreightment and Consecutive Voyage Contracts on the basis of unforeseen circumstances.
According to a company ASX announcement, Fortescue’s right to suspend the contracts is being contested by the various ship owners. Litigation proceedings have commenced and one arbitration hearing is currently listed for June 2009.
The arbitrations concern various claims including demurrage costs, failure to lift cargo and failure to declare laycans.
Currently, the total amount of these arbitration claims for the shipping contracts Fortescue has suspended is approximately US$30 million which is expected to increase.
Fortescue has appointed maritime lawyers in London to defend the claims.
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