Australian Magnesium Corporation on Monday said that its key customer, Ford Motor Company, has been released from a contract that would have involved supplying the vehicle maker with magnesium, Dow Jones reported.
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The move follows the shelving of Australian Magnesium’s $US1.75 billion Stanwell smelter project in Queensland after it was hit by cost over-runs and failed to attract a new equity partner, the report said, adding that Ford has agreed to forego its $30 million deposit on the supply agreement, in exchange for a $10 million payment.
Key Australian Magnesium shareholder Newmont Australia has committed to provide the $10 million payment to Ford, Dow Jones said, noting that the $30 million was provided by Ford in 1997 to contribute to the funding of a demonstration plant in nearby Gladstone and a magnesium project feasibility study.
Dow Jones said the Ford contract accounted for almost half the intended annual production from the planned Stanwell plant and no on-going financial relation obligations now apply to either Ford or Australian Magnesium in relation to the supply agreement.
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