Aquila-Vale dispute over Eagle Downs

A budget dispute over the Eagle Downs coal project in Queensland has developed between subsidiaries of Perth-based Aquila Resources and its Brazilian partner Vale.

The dispute between Aquila Coal and Bowen Central Coal (BCC) concerns the approval of the latter part of the proposed budget for the 2010-11 financial year for the commencement of construction of the project.

It's centred around the condition upon which the initial capital works component is to be approved.

In a statement Aquila said, "BCC has proposed that the condition be that a Feasibility Study is delivered and the participants in the Project make a decision to undertake mine development for the relevant development area."

The heart of the argument is BCC's disputation over whether the Feasibility Study needs to take into account port and rail logistics which are acceptable to financial institutions.

Aquila said it does not think the commitment for port and rail logistics is a prerequisite for the study to be delivered.

However Aquila said it was of the strong view that port and rail logistics which are sufficiently certain to be acceptable to relevant financial institutions are a necessary component for a Feasibility Study to be complete and of the standard required by the terms of the joint venture agreement.