Astor Management AG v Atalaya Mining Plc
| Jurisdiction | England & Wales |
| Judge | Mr Justice Calver |
| Judgment Date | 21 March 2022 |
| Neutral Citation | [2022] EWHC 628 (Comm) |
| Docket Number | Case No: CL-2015-000790 |
| Court | Queen's Bench Division (Commercial Court) |
[2022] EWHC 628 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HONOURABLE Mr Justice Calver
Case No: CL-2015-000790
Anna Boase QC and Veena Srirangam (instructed by Hogan Lovells) for the Claimants
Stephen Moriarty QC and Alexander Milner (instructed by Fieldfisher) for the Defendants
Hearing dates: 21–24, 28 February and 1 March 2022
| (A) Introduction | 3 |
| (B) Parties | 3 |
| (C) Background to the Master Agreement | 4 |
| (i) Astor's involvement with the Project | 4 |
| (ii) Restarting the Project | 6 |
| (D) Master Agreement | 9 |
| (i) The original agreement | 9 |
| (ii) Amendments to the Master Agreement | 12 |
| (E) Events following the conclusion of the Master Agreement | 15 |
| (i) Financing the Project | 15 |
| (ii) Restart of the Project | 20 |
| (F) Litigation between the parties | 22 |
| (i) Trial before Leggatt J and the appeal | 22 |
| (ii) Summary judgment application | 23 |
| (G) The Claims | 24 |
| (H) Legal Principles | 25 |
| (I) Evidence | 27 |
| (J) Proper construction of the Master Agreement | 31 |
| (i) Preliminary observations | 31 |
| (ii) The Master Agreement as concluded on 30 September 2008 | 35 |
| (iii) Amendment and restatement of 31 March 2009 | 54 |
| (iv) Amendment and Restatement of 10 November 2009 | 55 |
(A) INTRODUCTION
The Claimants bring this action for payment of interest which they claim is due by reason of the late payment by the Defendants of consideration under an agreement (the Master Agreement) relating to the Rio Tinto copper mine project in Southern Spain (the Project). The Claimants claim interest of up to €15,157,560, whilst the Defendants deny that any interest is due at all.
(B) Parties
The First Claimant is the parent company of the Astor group, operating from Switzerland, and the Second Claimant is its wholly owned subsidiary. There is no material distinction between them for present purposes and I will refer to them both as “ Astor”. Astor is the successor-in-title of Marc Rich + Co Investment AG, Shorthorn Ltd, and MRI Trading AG all of whom were parties to the Master Agreement. Nothing turns on the difference between the Claimants and the companies which they succeeded as parties to the Master Agreement.
As regards the Defendants:
i) The First Defendant ( Atalaya Plc) was formerly known as EMED Mining Public Ltd; it is a Cypriot company listed on AIM (the sub-market of the London Stock Exchange). Atalaya Plc is the ultimate owner of the Second, Third and Fourth Defendants.
ii) The Second Defendant ( ARM) was formerly known as EMED Tartessus; it is a Spanish company which was set up as a special purpose vehicle to own and operate the Project. Astor held 49% of the shares in ARM before selling them to the Third Defendant who now owns 100% of ARM.
iii) The Third Defendant ( Atalaya UK) was formerly known as EMED Holdings (UK) Limited; 1 it is an English company which owns ARM and which was a source of Intra-Group Funding (as described below). Atalaya UK is 100% owned by the First Defendant.
iv) The Fourth Defendant ( EMED Marketing) was formerly known as Curvico Holdings Limited; it is a Cypriot company whose role was to buy from ARM the entirety of the copper produced by the Project and to sell it on (including through offtake agreements). EMED Marketing is 100% owned by Atalaya Plc.
I refer to the Defendants collectively as “ Atalaya” throughout this judgment save where the distinction between them matters.
(C) Background to the Master Agreement
(i) Astor's involvement with the Project
The Rio Tinto Copper Mine workings date back to at least 1000 B.C. and have been operated by the Phoenicians, Romans, British, Americans and finally, the Spanish workers' co-operative Minas de Rio Tinto (MRT). Before the arrival of the British miners in 1873, mining activity mainly consisted of underground mining in the Filón Sur area in Andalusia, Spain; after their arrival the mining area expanded substantially.
Astor first became involved with the mine in 2004. Mantenimiento en General del Sur, Mantesur Andevalo SL (“ MSA”), wished to restart mining operations at the Project as they had previously proved profitable. The mine lay dormant at the time but was estimated to contain a further 123 million tonnes of untapped reserves of ore.
To assist in the restarting of mining operations, Astor provided loans to MSA of c. €6.7m. These loans were secured by a pledge over the entirety of MSA's shares.
In 2006 Astor sought to enforce its pledge but MSA resisted enforcement, resulting in litigation in the Spanish courts. While the litigation was ongoing, MSA transferred its interest in the Project to ARM in exchange for a 49% shareholding in ARM. The remaining 51% of shares in ARM were held by Atalaya.
Astor was successful in its claim in the Spanish courts. It was declared the 100% owner of the shares in MSA and was entitled to challenge the transfer of title in the Project from MSA to ARM.
Instead of becoming embroiled in further litigation, Astor and Atalaya entered into the Master Agreement for the sale of Astor's interest in ARM on 30 September 2008. By that agreement, Astor gave up its 49% stake in ARM, and any claim to title of the Project in return for consideration of c. €63.3 million. Payment of the majority of this consideration was deferred as Atalaya did not, at that time, have the resources available to pay and until mining restarted, no revenue could be generated from which payments could be made to Astor.
(ii) Restarting the Project
Between 1995 and 2001, the mine was operated by the workers cooperative, MRT. During this six year period, a total of 25Mt of ore was mined 2, but because there was no production in 1999, the average annual production was 5Mtpa. Annual production was 5.2Mtpa and 7.1Mtpa in 1996 and 1997 respectively, and peak production equivalent to 9.3Mtpa 3 was achieved in an eight month period in 1998. The mine closed in 2001 due to the low copper price and remained dormant (until it was restarted in 2015 as described below).
On 2 August 2007, Atalaya announced (subject to various conditions, including finalising the Master Agreement with Astor) its intention to commence copper
In a report dated November 2007, AMC stated: “ The mine operated successfully in the past at the same levels of throughput that are now proposed by [ARM] on completion of Restart Plan, described in this report”. 4 It was anticipated that reactivation of the mine and plant would take six months and the project life would be eleven years. For this future period, forecast production capacity was recorded in a “Life of Mine Ore Production Schedule” as follows: 5
| Year | 2008 | 2009 | 2010 | 2011 to 2017 | 2018 |
| Estimated Production | 0.8Mtpa | 5.3Mtpa | 6.0Mtpa | 7.5Mtpa | 4.1Mtpa |
So far as the figure of 7.5Mtpa is concerned, AMC stated that:
“The capital investment required to restart and upgrade the plant, mobilise and commence contract mining services and establish other facilities necessary to achieve and sustain a production rate of 7.5 Mtpa is estimated at £23.2M (€33.3M or US$46.6M).” (emphasis added)
It is clear that at this stage AMC was assessing the practical requirements for the operation of the mine on the basis of two alternative production capacities, namely 4.8Mtpa (the restart level) and 7.5Mtpa (the expansion level) (but not at a production level above that):
“The ore is drawn through slots into a tunnel underneath the fine ore stockpile and discharged by feeders onto a belt running to the concentrator building where milling and flotation sections are located. With a throughput of 4.8 Mtpa, two milling trains need be employed… To achieve a throughput of 7.5 Mtpa, additional milling capacity will be required… With a throughput of 4.8 Mtpa, three banks of rougher flotation cells will be employed. Each bank contains eleven 500 cubic foot Wemco cells… When operating at a throughput of 4.8 Mtpa not all of the existing flotation cells are required but all will be brought into service to achieve a throughput of 7.5 Mtpa… The scavenger cleaner bank contains ten 500 cubic foot Wemco cells but only seven are required for 4.8 Mtpa. For 7.5 Mtpa, all ten will be used… 6
5.9 Summary
Two levels of annual throughput have been considered for the Rio Tinto Project namely 4.8 million tonnes and 7.5 million tonnes, the plant has proven capacity to achieve these production rates; annual throughputs of 5.2 and 7.1 Million tonnes having been achieved in 1996 and 1997 respectively. Therefore there is little doubt that, after refurbishment of the equipment, these production levels can be achieved once more and the Restart Plan successfully implemented…
Assuming that an EPCM management team is appointed for the start-up phase and the necessary permits are obtained, it is estimated that about 24 weeks (see Schedule, Appendix 5.4) will be required to bring the plant up to point of mechanical completion to allow it to be operated a rate of 4.8 Mt. The cost of this exercise is estimated to be €9.4M including EPCM and first fill but excluding contingency. Expansion to a rate of 7.5M will require a...
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...17 See the 1 st witness statement of Alessandro Braca, paragraph 64. 18 Wood v Capita [2017] AC 1173 at [13]; applied in Astor Management AG v Atalaya Mining PLC [2022] EWHC 628 (Comm), per Calver J at 19 This is not a dispute which it is necessary for me to resolve in this case by reason ......