Fortescue refuses Armada cancellation payment

The Pilbara iron ore producer “suspended” nine loss-making COAs last December following the freight market collapse.

Fortescue said that Armada was one of the nine COAs cancelled.

However, because the company had since “gone into a scheme of arrangement protection, this nullified our agreement”, a company spokesperson told a Sydney conference yesterday.

Armada filed for bankruptcy protection in US and Singapore courts in early January, with court documents listing Fortescue as one of its largest creditors.

The iron ore producer owed US$81m for the non-performance of a six-year COA, signed in May 2008, to ship 66 cargoes of 160,000 tonnes of iron ore from Western Australia to China until June 2014.

The contract rate was at US$14.20 per tonne.

The market has since recovered with the current  comparable Baltic Exchange spot rate at about $14.90 per tonne.

Settlements have been agreed for two COAs with Belgian owner Bocimar and three with Classic Maritime, the company said.

Fortescue is also considering an upgraded production target of 26m tonnes for the year ending June 30.

The group's stockpiles at Port Hedland are close to 600,000 tonnes.

Fortescue sold ore at an average price of US$59.24 per tonne in the three months ended March 31.

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