Iron ore miner Fortescue Metals Group Ltd
(ASX:FMG) has been forced to pay damages to shipping contractor Zodiac Maritime after the company lost a court battle in the UK over the suspension of a number of contracts.
The miner says it will pay Zodiac US$78 million to cover charges foregone by the contractor, and any future revenues foregone over the full contract term.
Fortescue says the litigation commenced when the company suspended a number of charter contracts in 2008 due to turmoil in international freight and iron ore markets.
The miner says other shipping contracts that were in dispute were negotiated and settled prior to the court hearing.
These settlements have enabled Fortescue to lock in shipping rates at much lower levels than originally contracted.
Fortescue says the contract with Zodiac has now been terminated.
The miner says it had provided US$20 million in its first half year 2010 accounts for the Zodiac contract; however this will now be expanded by a further US$58 million.
Fortescue says this will take the total shipping position to a loss of around US$100 million for fiscal 2010.
Fortescue Metals Group earned $626.13 million for fiscal 2009.
