A $554 million scheme implementation agreement between Russian open joint stock company Magnitogorsk Iron and Steel (MMK) and Pilbara iron ore developer Flinders Mines has been terminated. The two companies entered into the agreement in November last year but MMK passed the June 30 deadline without meeting all its obligations and has now announced that it won’t continue with the acquisition.
The agreement was approved by Australia’s Foreign Investment Review Board in March, after no objections to the acquisition were received and the decision was approved unanimously by the company’s board of directors.
MMK says continuing uncertainty about the agreement was caused by legal action taken by a minority shareholder who sought injunctive relief in Russia’s arbitration court which in effect, restrained the implementation of the acquisition. The shareholder, Elena Egorova, challenged the legitimacy of the MMK board of directors’ resolution with respect to the acquisition of Flinders.
The court proceedings delayed MMK from meeting its commitments and ultimately made it untenable for the company to continue with the acquisition. MMK says up until this time, it has acted in full conformity with the acquisition terms and followed all legally binding obligations.
Flinders says it is now working to engage third parties in Pilbara iron ore project development discussions.