Aquila and Vale take a break on coal sales dispute
A legal clash between Brazilian mining giant Vale (NYX:VALE) and Australia's Aquila Resources (ASX: AQA) has taken a step towards resolution this morning after the companies announced they’ve reached an agreement on coal shipments from their co-owned Isaac Plains mine in Queensland.
The understanding, which replaces a previous and debated contract, will allow both companies to sell coal through June 2013. It also states that Aquila will drop a damages claim against Vale which it begun in July last year, with each party bearing its own legal costs.
“Resolution of these two key issues assisted the parties in also reaching agreement on approval of the budget for Isaac Plains for the current financial year,” Aquila said in a statement.
World second largest miner Vale and Aquila subsidiary IP Coal have been at each other's throats over the terms of off take from the Isaac Plains coal mine. IP Coal maintains that each party has the right to separately take their share of the product and deliver it to their own customers. Vale, on the other hand, opposes this notion and pushed for a new agreement to permit the separate shipping of coal.
The Isaac Plains coal mine, located on central Queensland, is Aquila's only cash generating and producing asset and Aquila is banking on the revenue to subsidize its $3 billion stake on a West Australian Pilbara iron ore project, which includes a proposed port at Anketell Point.