China Construction Bank contributes to a $7.1 billion HKD syndicated loan for the Sino Iron Project

Project narrative

In June 2012, a syndicate of 12 banks — including the Bank of China (Hong Kong) Limited (BOCHK), China Construction Bank Corporation (CCB), Industrial and Commercial Bank of China (Asia) Limited (ICBC (Asia)), and CMB Wing Lung Bank — entered into a $7.1 billion HKD ($916 million USD) syndicated loan agreement with Hong Kong-listed CITIC Pacific Limited for its Sino Iron Project in Western Australia. This loan carried a maturity period of three years and an interest rate of Hong Kong Interbank Offered Rate (HIBOR) plus a margin of 210 basis points (bps). The proceeds were to be used by the borrower via on-lending to Sino Iron Pty Ltd — a special purpose vehicle wholly owned by Australia-incorporated CITIC Pacific Ltd subsidiary CITIC Pacific Mining Management Pty Ltd (CPM) — for the Sino Iron Project. Record ID#97440 captures BOCHK's contribution. Record ID#97441 captures CCB's contribution. Record ID#97442 captures ICBC's contribution. Record ID#97443 captures CMB Wing Lung Bank's contribution. In addition to the four Chinese state-owned banks, the following lenders contributed to the loan syndicate: Australia and New Zealand Banking Group (ANZ), the Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU), DBS Bank, Hang Seng Bank Limited, HSBC Bank PLC, Oversea-Chinese Banking Corporation (OCBC Bank), United Overseas Bank Limited (UOB), and Taipei Fubon Commercial Bank. BOCHK, CCB, ICBC (Asia), CMB Wing Lung Bank, ANZ, DBS, Taipei Fubon, Hang Seng, HSBC, BTMU, OCBC Bank, and UOB served as bookrunners and mandated lead arrangers. CITIC Pacific arranged the facility itself, and originally sought $500 million HKD from banks for a $3 billion HKD ($387 million USD) syndicated loan. CITIC Pacific arranged a visit for bankers to the Sino Iron Project in Australia as part of its solicitations of lending. The target face value was later increased to a $6 billion HKD loan ($773 million USD) prior to general syndication, with the option to increase it further. The loan was needed for the Sino Iron Project amid major cost overruns; it was expected to facilitate the construction of the third, fourth, fifth, and sixth production lines. The Sino Iron Ore Project sought to construct an magnetite iron ore open-pit mine to produce magnetite concentrate and pellets with a capacity of 24 million tons per annum of iron ore concentrate and associated infrastructure located in Cape Preston, located on an area of more than 2.5 square kilometers, approximately 100 kilometers south-west of Karratha, Pilbara, Western Australia. The project is located near the George Palmer deposit, which is situated within the Hamersley basin. In addition to the mine, the project included processing facilities including a crusher, concentrator, and a 6mt pelletizing plant and six production lines. The Sino Iron Project took low-grade magnetite iron ore and converted it into high-grade iron ore concentrate through grinding, concentration, and magnetic separation for export, especially for CITIC Pacific's steel mills in China. The project also included a desalination plant with a capacity of 140,000 cubic meters of water daily or 51 gigalitres per annum, with two trains capable of delivering up to 70 megaliters of water per day, and a dewatering pit with a filtration area of approximately 5,600 square meters, a 25-kilometer slurry pipeline to transport and production to the port, a 480 MW power station consisting of SGT-800 gas turbines from Siemens, and port facilities located at Cape Preston with a 2.6-kilometer long breakwater and facilities in the form of barge loaders to carry iron ore concentrate to a floating transshipment facility for ships moored 20 kilometers offshore. The mine had an estimated annual production capacity of 24 billion tons of iron ore and an expected lifespan of 30 years. It was to employ over 4,000 workers during peak construction and 1,000 permanent workers during operations. Once completed, Sino Iron was to be the largest magnetite iron ore development in Australia and the largest single-stage magnetite project in the world,. It was reportedly China's largest single investment in Australia to that point. Around 2005, CITIC Pacific Limited began to look for a long-term supply of iron ore for CITIC's specialty Chinese steel mill businesses in China; it turned towards Western Australia, where Mineralogy Pty Ltd held mining leases in the Pilbara. In October 2005, CITIC engaged with Australian business magnate Clive Palmer, acting for Mineralogy Pty Ltd, for project proposals on the mining lease. In November 2005, the discussions considered a 50:50 joint venture, but this was rejected. Around January 29, 2006, Palmer and CITIC began negotiations over an 80:20 joint venture proposal (CITIC holding 80%, Mineralogy holding 20%), but these negotiations failed. Then, in March 2006, CITIC and Mineralogy agreed that CITIC would take over two of Mineralogy's subsidiaries Sino Iron and Korean Steel and the mining rights. On March 31, 2006, CITIC Pacific Limited entered into the 'Sino Iron Acquisition Agreement' and 'Balmoral Acquisition Agreement' to acquire magnetite ore mining rights in Australia at a respective consideration of $215 million USD and $200 million USD. More specifically, CITIC Pacific Limited obtained the mining rights from Mineralogy Pty Ltd. for potentially 6 billion tons of magnetite ore in a mining area located in Pilbara, Western Australia near the mouth of the Fortescue River (under Mining Leases 08/123, 08/124, and 08/125 granted under the Mining Act of Western Australia) through the acquisition of a 100% ownership stake Sino Iron Pty Ltd and Balmoral Iron Holdings Pty Ltd, and the obtaining of the options to acquire the right to extract up to 4 billion additional tons of magnetite ore from Mineralogy. The takeover agreement was signed by Mineralogy Pty Ltd., Balmoral Iron Holdings Pty Ltd., CITIC Pacific Limited, Mr. Clive Frederick Palmer and Balmoral Iron Pty Ltd. The acquisition was completed in July 2006. Then, on August 20, 2007, China Metallurgical Group Corp. entered into a sale and purchase agreement with Catak Enterprises Corp. — a wholly-owned subsidiary of CITIC Pacific Limited legally incorporated in the British Virgin Islands — the purchase of a 20% interest in Sino Iron Pty Ltd — then a wholly owned subsidiary of CITIC Pacific Limited — for a consideration equivalent to 20% of all the funds provided to Sino Iron Holdings Pty Ltd by CITIC up to the date of completion of the acquisition plus interest. MCC made an advance payment of $2,130 billion HKD in 2009, of which $842 million HKD were applied towards the Sino Iron Ore Project. As of June 7, 2010, however, the sale and purchase agreement had not been completed. Metallurgical Corporation of China Ltd (MCC) was the engineering, procurement and construction (EPC) contractor responsible for implementation of the processing area and related facilities. MCC Mining (Western Australia) Pty Ltd (MCC WA) — a wholly owned subsidiary of MCC — was responsible for implementing MCC's contracted obligations. MCC Australia Controlling Co., Ltd. — another MCC subsidiary — was also responsible for project implementation. On January 24, 2007, Sino Iron Pty Ltd. entered into a capped $1.106 billion USD ($8.630 billion HKD) general construction contract with MCC for the Sino Iron Ore Project. Per the contract, MCC was responsible for the procurement of mining equipment and the design, construction, and installation of the primary crushing plant, concentrator, pellet plant, material handling system, camp and other auxiliary infrastructure facilities. On August 20, 2007, Sino Iron entered into supplementary agreements with MCC to, among other things, adjust the capped price of the contract to $1,750 billion USD ($13,650 billion HKD) and expand the scope of works to the second 1 billion tons of iron ore extracted to satisfy additional requirements of the Balmoral Project. On May 11, 2010, Sino Iron and MCC WA entered into another supplemental contract to the general construction contract to increase the contract sum by $835 million USD ($6.513 billion HKD) to $2.585 billion USD ($20.163 billion HKD), as claimed for the changes in the cost structure of the industry, namely the growth in demand for iron ore and corresponding price increase to iron ore and mining projects, including labor, equipment, and construction materials. Additionally, Sino Iron and MCC agreed that the remaining works, besides the works conducted by MCC, would be contracted out to third parties directly by Sino Iron with the works managed by MCC; Sino Iron agreed to pay 1% of the relevant contract price to MCC as management fees. Then, on December 30, 2011, Sino Iron and MCC entered into another supplementary contract to increase the contract sum by $822 million USD to $3.407 billion USD for the completion of the first tow production lines and common facilities for the entire six production lines of the Sino Iron Ore Project. MCC failed to fully consider the full impact of the increase in the construction costs related to mining projects, including labor shortages, higher costs of equipment, and construction materials, and foreign exchange volatility. On January 30, 2013, MCC announced that it had incurred costs over the value of the contract ($3.407 billion USD) and that it had provided additional funding to MCC Mining (Western Australia) Pty Ltd to help its implementation of the project. CITIC Pacific Mining directly managed the mining, construction of the power station, the desalination plant, and the port area. Other major construction contractors and sub-contractors were UGL, Nilsen, McConnell Dowell Constructors and VDM/NRW Civil & Mining Joint Venture, BGC Contracting, Monadelphous Engineering and Programmed Construction. AE&E Australia Pty Ltd was the original contractor for the construction of the power plant; it sub-contracted to many companies. Forge Group Construction was a design and constructor contractor for filter building structures, foundations for equipment such as stackers and tanks, and the main control building at the port. Forge's subsidiary Cimeco had a $40 million USD contract for the civil works for the mine's stockpile area. Kerman Contracting was responsible for works associated with Lines 3 to 6. MCC awarded a sub-contract to VDM Group subsidiary Wylie and Skene for the construction of accommodation and warehouse facilities at the project site. Thiess was contracted for structural, mechanical and piping (SMP), electrical, and concrete works. BGC Contracting was responsible for building the foundations for six trains of autogenous grinding (AG) mills and pebble crushers under an $80 million USD contract. Reinforced Earth was responsible for constructing the walls for crushers three and four under a contract from BGC Contracting. Catalpa was responsible for the casting of the in-situ intake pumping station and the construction of associated in-situ slabs for the desalination plant. McNally was responsible for the design, engineering, fabrication, transport and installation of an administration office, laboratory, and ablutions building. Murphy Pipe and Civil was responsible for the construction of the concentrate, desalination and return pipelines, using the equipment and personnel provided by Orion Pipeline. Monadelphous was contracted for pipe works associated with the concentrator. CADS was responsible for the construction of the $20 million USD slurry and return water pipelines. Wormald provided fire protection solutions to be installed at the mine. Allmine Group was responsible for civil works of the processing plant. HICAL was responsible for the construction of access roads and highway intersections. Metso Minerals was responsible for mineral processing equipment for the mine. DSMAC was responsible for the delivery of iron ore processing equipment. SCEE was responsible for the electrical installation and pre-commissioning works for Lines 1 to 6 under a $100 million USD contract. Auscenco was the EPC contractor for the desalination plant. CITIC entered into a SEK 373 million contract with Siemens to supply a steam turbine generator for the project. Sinotrans was contracted for logistics works in partnership with Toll Australia. IDE Technologies was responsible for desalination works; Downer EDI Mining was responsible for crushing/maintenance work, and Terex was responsible for mobile equipment. Bucyrus Australia Pty Ltd was contracted for the provision of mobile equipment. Penglai Jutal Offshore Engineering (PJOE) was contracted for desalination plant works. CITIC Heavy Industries was contracted for grinding mills work. Dalian Heavy Industries and ThyssenKrupp were contracted for stackers and reclaimers works; ThyssenKrupp was also contracted for crushers work. Metso was contracted for the dewatering plant. With the initial mining rights acquired in March 2006, CITIC Pacific Mining was established in May 2006. Australia's Foreign Investment Review Board (FIRB) issued approval for the project in June 2006. In 2008, Sino Iron entered into Indigenous Land Use Agreements with three Native Title claimant groups for the Cape Preston area, granting native title and land tenure certainty for the projects and benefits for the Aboriginal groups. Government approval for the commencement of construction was granted in May 2008. The first shipment from the project was planned in 2009 and full production was scheduled for 2010. Construction began in August 2008. In February 2009, port construction began. As of March 25, 2013, 85% of the civil works had been completed. In July 2013, Line began producing magnetite concentrate. In September 2013, Line's 2 commissioning begins. In December 2013, the first magnetite concentrate was shipped to China. In March 2015, the first concentrate was exported to China. Line 3's commissioning began in October 2015. Line 4's commissioning began in November 2015. Project was completed on May 26, 2016, with the commissioning of lines 5 and 6. As of 2021, Sino Iron had shipped over 100 million tons of magnetite concentrate during its lifetime. In 2021 alone, Sino Iron shipped over 21 million wet metric tons of concentrate to CITIC's special steel plants and other steel mills and had a profit of $950 million USD, 121% over than 2020, due to higher iron ore prices, cost control measures, and operating efficiencies. The Sino Iron Project has been the subject of numerous disputes, controversies, cost overruns, and other problems. As a very high-profile project — reportedly four times bigger than any iron ore project in China — these issues have been heavily popularized in the press, with CITIC Pacific Chairman Chang Zhenming stating in a June 2012 Financial Times interview that "The whole of China is watching this project". Added to the fact that CITIC Pacific Chairman Larry Yung, one of China's richest men and founder of CITIC Pacific — and the son of Rong Yiren, the so-called "Red Capitalist" and Vice President of the People's Republic — was the center of the project made it all the more high-profile. CITIC Pacific itself admitted in its 2012 annual report that, during the decision-making to invest in Sino Iron, CITIC and MCC had underestimated the complexity, works, time, and funds needed to implement an iron ore mine abroad of Sino Iron's scale. The project had become so much of a debacle by 2012 that CDB had wished to pull out of the project. Cost overruns and delays were a particularly major issue for the project. The Sino Iron Project had an original budget of $2.47 billion USD. By the end of 2007, it had grown to $4.2 billion USD. It was planned to launch initial operation in the first half of 2009. On May 4, 2010, CITIC Pacific announced that the project had a cost of $5.2 billion USD On August 8, 2010, CITIC Pacific announced that the first production line would be ready for operational training by the end of 2010 with the first concentrate shipment in the first half of 2011. Then, on January 19, 2011, CITIC Pacific announced that the first production line would be ready for commissioning by the end of July 2011 with export scheduled for later in 2011. On July 18, 2011, CITIC Pacific announced that the production and export of iron ore concentrate in the first half of 2012. On December 30, 2011, CITIC Pacific announced that the first production line would be completed by the end of August 2012 (but now the project costs were expected to be over $6.0 trillion USD). On April 13, 2012, project expenditure had reached $7.1 billion USD. On November 19, 2012, CITIC Pacific announced that total costs would be less than $10 billion USD and that full operation was expected for 2014. The continued delays and cost overruns of the Sino Iron Project negatively impacted CITIC Pacific's Moody's credit profile, even as the first production line went into operation, with predictions of additional spending by CITIC Pacific to meet capital expenditure needs. Standard & Poor's assigned CITIC Pacific a junk rating despite its valuable parent CITIC Group. One attributed reason for the delays was the long times it took the Australian Government to issue permits and approvals for the government; these delays then lead to cost overruns. The cost of compliance with government regulations for environmental and historical protection also increased the cost, with a two-hole bridge that would have cost $800,000 AUD if built in China costing over $50 million USD due to its use of steel pipe piles for environmental protection, much to the chagrin of the Chinese managers, who found compliance with environmental regulation exhausting. Another reason for the cost overruns was the use of expensive Australian labor and the high demand for materials and engineering services across Australia. In Western Australia, mine workers typically earn $100,000 AUD, twice the average income of Australians and there is great competition for their services. Labor issues themselves were a major pain point during construction for the Chinese companies. Chinese mining projects tend to rely on cheap labor from China for construction. However, in Australia, labor laws require the use of Australian workers — more expensive and less plentiful than Chinese labor — and with different sets of cultural values around working. CITIC Pacific managers publicly bemoaned the habits of Australian workers and the Australian labor habits, while the project experienced labor strife. For example, the Chairman of Sino Iron Pty Ltd. Hua Dongyi lacked trust in local Australian managers because they would leave work at regular time, take vacations, and expect bonuses, while engineers would leave work when it was time, even whilst processing concrete. Even when foreign labor was nominally allowed, worker visas were difficult to obtain; only several hundred were issued and of that number, very few workers had to come because of Australian government rules requiring foreign workers to a certification in English. CITIC could not even get visas for chefs to cook for the Chinese managers. One of the motivations of the Sino Iron Project was to support China's economy and increase its influence over the iron trade by weakening the power of companies like BHP Billiton, Vale, and Rio Tinto from dominating the commodity market and its price. As China imports 60% of its iron ore and the Chinese steelmaking sector is an important part of its economy, being able to reduce its reliance on foreign suppliers was seen as especially important. With high iron ore prices, the project seemed set up for success. However, in the years since the 2006 conception of the project, Chinese steel demand declined and prices fell. In 2010, for the first time in a decade, China imported less iron ore than the previous year. In 2011, tight monetary policy and government restrictions on property construction led to a further decline in steel prices. As a result, the Sino Iron Project's economic outlook considerably worsened during its development. In order to finance procurement for goods from Australia and Europe, and amidst the cost overruns for Sino Iron (25% increase in cost by July 2008) that raised the Australian dollar's value (due to increased commodity exports), in June and July 2008 CITIC Pacific entered into a series foreign exchange contracts to hedge against the rising currency, making deals with CDB and other international banks (including Citibank, Rabobank, Barclays Capital, BNP Paribas, Morgan Stanley, HSBC, Standard Chartered, Natixis, Credit Suisse, Bank of America, Calyon, and Deutsche Bank). As the contracts were being signed, the global financial crisis struck the Australian dollar, causing its value to plunge and causing serious problems for CITIC Pacific. However, it was not until September 7, 2008, five days prior to the bankruptcy of Lehman Brothers, that CITIC Pacific Chairman Larry Yung and other senior executives learned about the foreign exchange contracts. CITIC Pacific's board then sought to delay announcing the losses so as not to affect the company's ability to enter into loans and other financial agreements. It was only on October 20, 2008 that CITIC Pacific announced the exposure, amid potential losses of $2 billion USD. According to CITIC Pacific Chairman Larry Yung, these contracts were entered into without proper authorization and thus the potential maximum exposure under them was not correctly evaluated; Yung blamed the group finance director for failing to follow CITIC's hedging policy and its set procedure and the group financial controller for failing to act in oversight. Both the finance director and financial controller resigned and disciplinary action was taken against other staff members associated with it, including Frances Yung Ming Fong, daughter of Chairman Yung, being demoted with a pay cut from her position in the finance department. CITIC Pacific terminated some of the foreign exchange contracts, and kept others to allow flexibility for its operating expenditure. The Securities and Futures Commission of Hong Kong launched an investigation into the matter, followed by the Hong Kong police; authorities accused CITIC Pacific of a conspiracy to defraud for delaying the announcement of the losses in order to allow it to enter into loan contracts based on an inaccurate belief concerning its financial position. On April 3, 2009, the Hong Kong police raided the CITIC Pacific Office; shortly thereafter, Yung and his deputy both resigned. Disputes over the police's rights to the documents followed, with Hong Kong's High Court, in rejecting CITIC's claim to the documents, noting that the documents were produced to support a prima facie case of conspiracy to defraud and of theft. In March 2012, the Court of Appeal ruled that some of the documents were privileged and disagreed with the earlier findings of alleged criminal conduct, although the case was said to be active. The right to mine at the Sino Iron Project was granted under a contractual agreement from Mineralogy Pty Ltd., itself having its right to mine derived from the mining leases granted to it under the Mining Act 1978 (WA) and the Iron Ore Processing (Mineralogy Pty. Ltd.) Agreement Act 2002 (WA). In the event of a breach by Mineralogy of the mining leases or other tenements, its capacity as a lessor could cease, forcing Sino Iron to negotiate with the State Government of Western Australia to receive approval to continue to mine and likely leading to production slow-downs or stoppages, and, if failing that, lose the right to mine at the Sino Iron Project. One of the clauses for the agreements stated that, barring exceptions, if either Sino Iron Pty Ltd and Korean Steel Pty Ltd produced fewer than 6 million tons of iron ore by March 2013, each of them would have to pay an amount to Mineralogy, to be calculated by reference to the royalty payable on the amount of magnetite ore required to produce 6 million tons of iron ore concentrate. Sino Iron acquired the mining rights and site leases for the project area between 2006 and 2008 and exercised an option to acquire another billion tons of magnetite ore in April 2012. Then, in 2012, Mineralogy issued notices alleging that there had been breaches of terms of the agreements. Then, on November 19, 2012, Sino Iron Pty Ltd and Korean Steel Pty Ltd filed an injunction with the Supreme Court of Western Australia to prevent Mineralogy from terminating the mining rights and site leases agreements, which was granted on November 22, 2012 and to be effective until the Supreme Court ruled on the issue. CITIC argued that changes in the iron ore market meant that the formula for calculating the royalty was not capable of calculation (being based on a benchmark iron ore price that no longer exists), so that CITIC had said that a provision had been made to reasonable estimate for the liability for accounting standards. On March 18, 2013, CITIC Pacific's Australian counsel received court documents from Mineralogy seeking declarations and related relief from the courts of Australia in relation to it. On November 24, 2017, the Supreme Court of Western Australia ruled that Sino Iron and Korean Steel each owed $74,706,735 USD ($149,413,470 USD total) to Mineralogy for the unpaid royalties from the quarters between December 31, 2013 and March 31, 2017, and that CITIC's counter-claim was dismissed. Another dispute between CITIC and Mineralogy emerged when it came to Mineralogy's rights to possess the port at Cape Preston. In 2013, it began proceedings in the Federal Court of Australia concerning this, and in a statement of claim dated December 12, 2014, Mineralogy alleged that Sino Iron had denied Mineralogy's right to operate and maintain the port facilities and that this was a breach of contract. The Federal Court of Australia heard the matter in June 2015 and ruled in August 2015, denying Mineralogy's argument, allowing Sino Iron and Korean Steel or their designated operators to operate the port. Mineralogy appealed the decision, with an appeal heard from May 9 to 12, 2016, but judgment was reserved. Additionally, a dispute over the option agreement to acquire the rights to mine another one billion tons of magnetite ore near the Sino Iron Project arose between Mineralogy and CITIC. CITIC exercised the first option under that agreement on April 13, 2012, after which Mineralogy alleged that the option agreement had been repudiated by CITIC and thus over. CITIC began legal proceedings against this claim, and on September 30, 2015, the Supreme Court of Western Australia ruled that CITIC had not, in fact, repudiated the option agreement. Still, Mineralogy failed to take the action to complete the exercised agreement, so, on March 31, 2016, CITIC, Sino Iron, and Korean Steel began another proceeding in the Supreme Court of Western Australia to acquire the mine rights for the additional billion tons of ore. As of June 2017, Mineralogy declined to support mine continuation proposals to keep the Sino Iron mine going. CITIC Pacific claimed that it would have to close the mine if it could not construct an enlarged tailings storage facility, increase its waste-drop storage capacity, and increase the capacity of its stockpiles and infrastructure at the Cape Preston export terminal because of the risks of the mine becoming waste-bound. However, Mineralogy, through its owner Clive Palmer, rejected this argument, claiming that CITIC Pacific would not shut down the project because of the amount of money it had sunk into it. CITIC sought to compel Palmer and Mineralogy to agree to the expansion without having to pay an additional fee for the land access. The dispute widened outside of the courts; Western Australia Premier Mark McGowan threatened to intervene on behalf of CITIC by changing an agreement governing the operations in order to allow it to expand the Sino Iron Project. Despite this, in March 2023, the Supreme Court of Western Australia ruled in favor of Mineralogy. Justice Kenneth Martin said that Mineralogy had the right to seek a $750 million AUD payment for the access to the additional land cover and that CITIC had to negotiate with Palmer and Mineralogy for access, as there was no contractual obligation binding Mineralogy to provide additional tenement land, although Mineralogy did have to conduct a good faith negotiation if Sino Iron and Korean Steel was able to demonstrate the land was necessary for the mining project. Justice Martin also ruled against CITIC's claims of unconscionable conduct ruling against Palmer (who represented himself) and Mineralogy. There were also several disputes with contractors with the project. MCC and CITIC Pacific traded blame for the delays between the project; MCC called CITIC Pacific's specifications for the project "unreasonable requirements" due to much of being custom-made and requiring expensive installation, while CITIC Pacific argued that the mineral processing technology was a major component for the delay, alongside a lack of experience by the contractors and extreme weather. CITIC and MCC signed an additional contract in which MCC would pay CITIC Pacific over $5 million USD for each day the project is overdue. The numerous contract revisions were also indicative of issues between MCC and CITIC Pacific. The disputes between MCC and CITIC Pacific eventually went to adjudication by China's State Council and Wang Qishan, vice-premier for financial matters. In late 2010, Sino Iron terminated its contract with AE&E Australia Pty Ltd, which was responsible for construction of the power plant, due to AE&E's failure to comply with terms under the construction agreement; it entered contracts with AE&E's sub-contractors to complete construction. AE&E claimed damages from Sino Iron in court, while Sino Iron filed counter-claims; the dispute went into arbitration was to formally begin in late 2013.