24 January,2009 12:43 PM IST | | AP
The US arm of ArcelorMittal is facing a breach of contract lawsuit that accuses the world's largest steel producer of reneging on a $40 million deal to buy more than 200,000 tons of coal used for making steel.
The suit filed by a subsidiary of Foundation Coal Holdings claims ArcelorMittal began asking to renegotiate even before the delivery contract went into effect this month.
Foundation's Kingston Resources Inc subsidiary claims ArcelorMittal took delivery of three barges of coal in early January, but now refuses to take additional shipments.
ArcelorMittal has yet to file a response to the suit and an ArcelorMittal spokesman declined comment Friday, while a Foundation spokesman did not immediately respond to a request for comment.
ALSO READ
Death toll climbs to 42, ArcelorMittal faces ownership transfer
PM to attend bhoomi pujan of ArcelorMittal Nippon Steel's Hazira plant expansion
SC paves way for ArcelorMittal to take over Essar Steel
ArcelorMittal to invest $5 bn in new steel mill in Brazil
Belgian steelworker's suicide note blames Indian tycoon Lakshmi Mittal
The precipitous plunge of steel and coking coal prices is at the heart of the dispute.
"I understand there have been a lot of people that have backed out of contracts for things like scrap steel," said Charles Bradford, a steel industry analyst with Bradford Research/Soleil Securities.
"If the price of something falls, the buyer wants a lower price. Now, they never ask for a change if it went the other way, but this is kind of typical."
ArcelorMittal signed the delivery contract in September. At the time, mine operators were still signing coking coal contracts for $250 or more a ton.
Spot prices have since fallen on weak demand for coke, which is used to fire steel mill blast furnaces.
