MARKETS

Massey sued for breach of contract

WHEELING-Pittsburgh Steel filed a multi-million dollar lawsuit on Wednesday against a Massey Energy subsidiary for the breach of a coal supply agreement.

Angie Tomlinson

The suit charged Central West Virginia Energy Company (CWVEC) with breaching its long-term coal supply agreement beginning in late-2003 and continuing to the present, causing Wheeling- Pittsburgh Steel to purchase coal on the spot market at significantly higher prices.

"Massey's flagrant disregard of its long-term coal supply agreement has caused millions in dollars of damages to Wheeling-Pittsburgh Steel's business and dramatically increased the cost of our coke oven repair program," said chairman James Bradley.

"We tried to work with the leadership of Massey Coal to resolve these issues, but without any success," Bradley said.

Massey chairman Don Blankenship said his company was disappointed to learn of the lawsuit. "We too have been frustrated with our inability to ship everything due under this contract but have been forced to declare force majeure on multiple occasions due to transportation issues, labor shortages and other occurrences which are clearly defined by the coal supply contract as events of force majeure," he said.

CWVEC has supplied Wheeling-Pittsburgh Steel with high volatile metallurgical coal since 1993. In 2002, during Wheeling-Pittsburgh Steel's bankruptcy process, an amended coal supply agreement was signed and approved by the bankruptcy court that extended this contract’s requirement through to 2010.

Anticipated annual sales under the contract are approximately 1.2 million tons.

Blankenship said it had not been notified of the value of damages claimed.

Massey said it would continue to work diligently and in concert with the railroads and other transportation providers to remedy the issues and ship the required quantity and quality of coal under the terms of the contract.

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