Positions and Interests: mediation in WA over mining plant and equipment
Resource investment group Atlantic Ltd and Australian based mining company Mineral Resources Ltd (MRL) are headed for “contractual mediation” in relation to the “crushing, milling and beneficiation (CMB) plant” at Windimurra, WA.
According to Atlantic, it has spent over $20 million rectifying issues arising from the CMB plant which it purchased from MRL in 2010, and further, Atlantic claims losses in excess of $100 million due to the problems at the plant. Atlantic has been investigating potential legal action in relation to the Windimurra operation since 2012; however, it seems that its investigations have been impeded.
In a statement dated 17 January 2014, Atlantic has initiated “contractual mediation procedures to attempt to obtain further material to assist its investigations but this process has been delayed because if unavailability of Mineral Resources Limited’s management, which leg to a fixed date for a mediation being cancelled.” Read the full statement via Atlantic’s website.
On 19 January 2014 MRL responded stating, among other things, that it “considers Atlantic’s suggestion that there may be some legal recourse against MRL is entirely without foundation in all respects.” The full response can be read via MRL’s website. MRL’s position is apparently based on its reading of the contract sale which, it says, expressly excludes all liability of MRL to Atlantic in respect of defects and issues allegedly experienced since Atlantic acquired the CMB plant.
It is clear from these 2 documents that both companies have strongly held views and positions regarding the CMB plant. Atlantic’s position is that issues and problems at the plant have caused it to suffer financial loss; MRL’s position is that it is not responsible for any defects or issues at the plant.
But what might each company’s underlying interests be? On the face of its statement, Atlantic’s immediate interest is to obtain information from MRL regarding the plant “to assist its investigations” into potential legal proceedings. Atlantic first raised the possibility of legal action in its Quarterly Report for the period ending December 2012. Neither the 2014 statement nor the December 2012 Quarterly Report identify the potential defendant to the mooted legal proceeding.
MRL – perhaps justifiably – assumes it is in Atlantic’s sights, and uses a letter to the ASX to deny any liability connected to the CMB plant. MRL does not mention any information that might be available to assist Atlantic’s investigations, or bring the companies closer to resolution.
Once mediation is convened, the mediator will need to help both parties see beyond their entrenched positions and identify the underlying interests at play. It may be that a “win-win” solution can be reached; one that gives Atlantic access to important information regarding the maintenance and operation of the plant, and gives MRL a better understanding of what in fact is being alleged.
What do you think?