Late last week, a judge in London granted an order freezing the UK assets of Erdenet Mining Corp up to the value of US$7.115 million, plus £637,818 (US$841,855) in incurred costs, related to a failed copper supply contract between it and Switzerland-based MRI Trading. This ruling restricted the company’s ability to transact sales of copper and other metals in England’s capital.
Notice of the order has been served on a number of banks and trading houses in London, freezing payables to Erdenet pending recovery of the amounts due to MRI.
The ruling is not good news for Mongolia, which has an economy starved of resource investment following falling commodity prices and delays to key mining projects – the underground development of Rio Tinto’s Oyu Tolgoi copper-gold project being the standout example.
Last week’s ruling relates to a long-running dispute over the failure by Erdenet to honour a contract, dated January 30, 2009, between it and MRI Trading to deliver 40,000 tonnes (wet) of copper concentrate produced at Erdenet’s mine in Mongolia.
MRI, which specialises in the trading of non-ferrous ores, concentrates, refined and precious metals for its global smelting and processing customer base, has been trying to recover this money since, going through arbitration proceedings at the London Metal Exchange and having its case heard at the UK High Court, the latter of which found in its favour.
Erdenet, which produces copper and molybdenum concentrates from its deposit on the Erdenetiin-Ovoo region of Mongolia, recently became a 100% state-owned entity after Russia’s Rostech Corp, which previously owned 49% of the company, sold its minority stake back to the Mongolia government.
On its website, the Mongolia company states it has previously concluded long-term agreements with the likes of Trafigura and Samsung to supply its products to leading Chinese smelters.