Glory Wealth sues Rio Tinto for $4.6m

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Michelle Wiese Bockmann - Monday 8 December 2008

 

Rio Tinto's iron stockpile at the Parker Point loading facility.

CHINESE dry bulk operator Glory Wealth has sued Australian iron ore miner Rio Tinto for $4.6m. 
As China’s demand for iron ore plummeted in October, Rio Tinto Shipping allegedly failed to load a capesize vessel it had chartered a month earlier from Glory Wealth. 
The bulk carrier was left waiting at Rio’s iron ore terminal at Western Australia for 13 days after the contractual laytime expired, Glory Wealth claimed in a November 24 filing to the United States District Court Southern District of New York. 
As a result, the world’s third-largest iron ore producer owed Glory Wealth $3.5m for demurrage and freight charges, plus an additional $1.1m in interests and costs, Glory Wealth claimed. 
“Despite repeated demands for payment, defendant Rio Tinto has failed, neglected and/or refused to make payment of said sums,” the lawsuit claimed. 
The ship was chartered on September 12, just days before the Lehman Brothers collapse triggered a financial crisis and accelerated massive declines in bulk carrier freight rates. 
The crisis saw iron ore sales collapse as falling steel prices and a looming global recession saw China abruptly slow its pace of iron ore imports from Australia and Brazil. 
The Glory Wealth ship, the 166, 939 dwt, 1995-built Rubin Grace , was hired at a rate of $17.90 per tonne and was meant to have been loaded between October 19-28. 
By then, the rate had fallen to between $6.25-$5.22 per tonne, around a third of what Rio Tinto Shipping had agreed to pay. Rio Tinto declined to comment on the lawsuit. 
The filing is one of a growing number before US and London courts relating to alleged breaches in freight derivatives contracts and counter party disputes. 
Among the higher-profile disputes is Taiwanese owner and operator TMT, claiming $5.3m against Pan Oceanic Maritime for allegedly failing to pay money owed in October in four forward freight agreement contracts. 
John Frederiksen’s Golden Ocean Group is also suing South Korean operator STX Pan Ocean for allegedly failing to pay $4.1m owed for FFAs taken out in November last year. 
STX had bet that average 2008 rates for capesize ships would be more than $135,000 per day. But STX allegedly failed to make October monthly settlement payments.