UPDATE 2-Chalco threatens legal action in Mongolia coal dispute

Mon Jan 28, 2013 7:56am EST
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* Will seek compensation if Tavan Tolgoi breaches deal

* Offers to help pay Mongolian transportation costs

* Already paying $100 per tonne

By Wan Xu and David Stanway

BEIJING, Jan 28 (Reuters) - The Aluminium Corporation of China (Chalco) warned it would seek legal redress if Mongolia breaks what it says is a loss-making coal supply deal.

Mongolia's state-owned Erdenes-Tavan Tolgoi (E-TT), which runs the 7.5 billion-tonne Tavan Tolgoi project, wants to renegotiate a 2011 deal with Chalco to supply $250 million worth of coal.

E-TT last week delayed an IPO of up to $3 billion, citing problems with infrastructure and the deal with Chalco.

Li Dongguang, the president of China Aluminium International Trading Co Ltd, a subsidiary overseeing the Mongolian deal, told a news conference the company would punish any breach.

"If they maliciously breach the contract in order to seek their unilateral interest and neglect the interests of the other side, in that case the compensation will have no upper limit. In that case, we would take legal action," Li said.   Continued...