AQUILA Resources is awaiting the court-ordered disclosure of emails between Brazilian mining giant Vale's Rio De Janeiro and Brisbane offices.
Its boss Tony Poli is hoping the correspondence around Christmas last year will shed light on what he fears could be a four-year delay to the Eagle Downs coking coal project in Queensland.
Aquila is suing its 50:50 partner in the Queensland Supreme Court because Vale prefers to export Eagle Downs coal through the Dalrymple Bay Coal Terminal near Mackay, rather than an expanded Abbott Point, near Bowen to the north.
An expansion of Abbott Point is due to provide extra capacity in 2012, whereas the closer Dalrymple Bay is not expected to have extra capacity until 2016 or 2017.
Mr Poli took journalists and analysts on a fly-over of Queensland coal ports and mines on Friday as he prepared to battle Vale on two fronts.
Besides the coal terminal row, there is also a fight over a separate Queensland joint venture, Belvedere, where Aquila is disputing the price of an option Vale has exercised to buy out Aquila.
Mr Poli said Vale's abrupt decision not to execute take-or-pay contracts at Abbott Point meant Eagle Downs lost the chance to grab capacity at the port in 2012.
"We had a meeting with Vale on December 23 and they were keen on going forward (through Abbott Point)," Mr Poli said.
But by January, which coincided with the arrival of Vale's global coal managing director Decio Amaral, things had changed.
Mr Poli has no idea why.
"That's what we're keen to find out," he said.
Mr Poli said his shareholders, including steelmaker Baosteel and major global investors M&G and Blackrock, support the legal action.
He says he is looking forward to seeing what the court discovery (disclosure) of documents between Vale's head office and local office will unearth.
It is believed Vale has argued that Dalrymple Bay would have been between $2 and $7 a tonne cheaper.
But with $100-a-tonne margins on coking coal, Aquila says this does not make sense and that getting the product to market earlier would have been far more valuable.
Needless to say, Vale, which became a partner with Aquila when it bought coal assets from Hans Mende's AMCI, sees things differently.
"Dalrymple Bay is much closer and there would be significant savings to be achieved over the life of the mine," Vale's Mr Amaral told The Australian.
"The more important point is that Aquila Coal did not appear to take seriously our concerns about the multi-million-dollar risks with the take-or-pay obligations and port costs at Abbott Point and insisted we sign up regardless."
Mr Amaral said Vale was working with Aquila to find short-term solutions to start Eagle Downs.
Mr Poli said that unless there was some way to move the coal through the planned Wiggins Island Coal Export Terminal at Gladstone, which is targeting 2013 exports, the joint venture faced big losses in value.
The damages Aquila is seeking have not been specified, but are expected to centre on loss of net present value, potential capital expenditure increases over that period and the potential that a period of high prices will be missed. Eagle Downs, which is next to BHP Billiton's big Peak Downs mine, is expected to cost $1 billion to build, not including rail and port costs, and would export 4.6 million tonnes of coal a year.
Since starting Aquila in 2000, Mr Poli has turned the Perth-based miner from a gold explorer with a market value of $6 million to the country's tenth-biggest mining company, with a market value of $2.7bn.
His 26 per cent stake in Aquila is worth $683m and, according to the company, investors who had punted $1000 on the float would now be sitting on $156,000.
While working on coal grounds in Queensland, Mr Poli adopted a similar model to Fortescue Metals Group's iron ore project in the Pilbara in the early part of the past decade: pegging ground the majors had dropped under use-it-or-lose-it mining laws.
At Belvedere, Aquila and Vale are expected to have to rely on a third-party valuation to decide the price Aquila sells its 24.5 per cent stake in the project to Vale after the Brazilian miner exercised an option to buy the stake. Vale's advisers value it at about $100m, while Aquila is looking for more than $300m.
If the pair cannot agree by the end of this week, a third-party valuer needs to be brought in, and uncertainty as to how one might be chosen could provide more problems.
Source: The Australian