Canadian company didn't fulfill coal agreement, Arch claims

By Kelly Holleran | Jun 25, 2009

CHARLESTON -- A Missouri coal-selling company has filed suit against a Canadian steel manufacturer, alleging it did not accept or purchase an agreed-upon amount of coal.

Arch Coal Sales Company says it entered into negotiations with Essar Steel Algoma Inc. in mid-2008 concerning Arch's sales of high volatile metallurgical grade coal.

Essar wanted to use the coal for its steel manufacturing operations, according to the federal complaint filed May 20.

In September, Arch and Essar executed an agreement, in which Arch agreed to sell four "Lake Vessels" of coal, the suit states.

Under the terms of the agreement, one vessel of coal would be delivered per month from Sept. 1 through Dec. 31, the complaint says.

"The Agreement further provided that Arch's September, October and December 2008 shipments would be sourced from Arch's affiliate's Pardee mine, which has various sources but a delivery point located in Virginia, and Arch's November 2008 shipment would be sourced from Arch's affiliate's Mountain Laurel mine, which is located in Logan County, West Virginia," the suit states.

Essar was required to take and pay for between 60,000 and 72,000 tons of coal from Arch before Dec. 31, pursuant to the terms of the agreement, Arch claims.

However, Essar only accepted and paid for 25,767 tons of coal – one vessel from Mountain Laurel shipped on Sept. 7 with 14,203 tons and one vessel from Pardee shipped on Sept. 23 with 11,564 tons, according to the complaint.

Arch notified Essar in a Jan. 14 letter that it was in default under the agreement. Arch gave Essar five days to cure its default by either scheduling the delivery of the coal requirements or by compensating Arch for its damages, the complaint says. Arch does not specify how much in damages it incurred, saying the release of the information would violate the confidentiality provision in its agreement with Essar.

Even after receiving the letter, Essar failed to perform either of the options Arch gave it and has refused to remedy its default, according to the complaint.

Arch is seeking compensatory damages in excess of $75,000, plus pre-judgment interest, costs, disbursements, attorneys' fees and other relief the court deems just.

Edward D. McDevitt of Bowles, Rice, McDavid, Graff and Love in Charleston will be representing it.

Bruce A. Americus and Matthew F. Burger of Buchanan, Ingersoll and Rooney in Pittsburgh will serve of counsel.

U.S. District Court case number: 2:09-567

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