On December 22, Australia's third largest iron ore producer Fortescue Metals Group Ltd (FMG) announced that it has reached a settlement agreement in its shipping dispute with SK Shipping Europe Plc (SK Shipping) pursuant to two suspended ship charter contracts.
Under the settlement terms, SK Shipping will discontinue its legal proceedings against the miner. Fortescue has now successfully completed settlements with four counterparties and now has only two remaining vessels to finalize. Following extensive negotiations with SK Shipping, Fortescue has detailed the key terms of the settlement as follows:
* Fortescue is to pay SK Shipping an upfront settlement sum that equates to US$10.17 million for each of the two disputed vessels. Upon payment, the legal action initiated by SK Shipping will be withdrawn.
* Fortescue has restructured its future cargo obligations with SK Shipping whereby two new time charter vessels have been agreed with respective terms of four and eight years.
* The freight rate under the restructured charter arrangements has been set at a base daily rate plus a hire incentive payment and includes a profit share arrangement.