Mt Gibson cancels second offtake contract

Mount Gibson Iron has torn up a second offtake agreement with a Chinese customer that had planned to buy product from its Iron Hill mine in the Mid West.

Mt Gibson said it formally terminated an agreement with Sinogiant Steel Holdings for a quarter of the Iron Hill offtake, after the customer failed to comply with a fundamental term of their agreement.

The news imirrors Mt Gibson’s cancellation of another offtake contract, with Chinese company Xinyu Iron and Steel Group last month, in which it cited the same reason for the decision.

Both Sinogiant and Xinyu had committed for a quarter of production from Iron Hill late last year, around the same time a third customer signed up for the same amount.

The termination today means about 75 per cent of Iron Hill’s production for the first year is now up for grabs.

“Consistent with Mt Gibson’s rights, the company is now free to place all production previously committed to Sinogiant with alternative customers,” Mt Gibson said in a statement.

“Mt Gibson has reserved its rights to pursue Sinogiant for any resulting losses.”

Chief executive Jim Beyer said the company continued to sell Iron Hill material into the market and expected to place all production with customers as it became available.

Mt Gibson shares were 1.4 per cent lower to 33.5 cents each ahead of the close of trade.