Lanco Infra faces A$3.5 bn lawsuit in Australia

Multinational Perdaman Industries has dragged Lanco Infratech to court in Australia seeking a A$3.5 billion (about Rs 16,600 crore) compensation for not complying with coal supply pact.

For its upcoming urea plant, Perdaman had entered into a 25-year coal supply pact with Griffin Coal, which was acquired by diversified group Lanco for A$730 million in March 2011.

According to Australia-based Perdaman -- which is currently focused on urea production -- Lanco is not complying with the coal supply agreement, worth billions of American dollars.

As per the contract with Griffin, about 89 million tonnes of coal is to be supplied to Perdaman's upcoming Collie urea project in Western Australia over a period of 25 years.

"We have filed a lawsuit against Lanco Infratech seeking a minimum compensation of about A$3.5 billion in the Supreme Court of Western Australia," Perdaman Chemicals and Fertilisers Pty Ltd's Chairman and Managing Director Vikas Rambal told PTI.

Lanco Infratech officials were not available for comments.

Perdaman Chemicals and Fertilisers, whose parent company is Perdaman Industries, has filed the lawsuit against Lanco.

"Because of Lanco's conduct under the Australian consumer act Perdaman is facing road blocks with regards to the works of the proposed USD 3.8 billion urea plant and have also suffered damages," Rambal said.

He said the lawsuit, which comes under commercial litigation case, was filed at the end of May and the hearing is expected on July 27.

The final agreement for the coal supply was signed with Griffin in December 2010.

"We were planning to start construction of the Collie plant next month. Now, it is kept on hold...," Rambal noted.

The uncertainty over coal supply has also affected Perdaman's relationships with prospective stakeholders. About 20 contracts with stakeholders, related to urea supply from Collie plant, have been impacted, Rambal said.

The proposed Collie plant would have an annual urea production capacity of two million tonnes.

Griffin Coal's assets include thermal coal mines with a production capacity of about 5 million tonnes at present.