Rio initiates arbitration process with GFG Group on outstanding payments for Dunkerque smelter

According to the Reuters report, Rio Tinto Plc has started an arbitration process with Sanjeev Gupta’s GFG Alliance as the latter has not made final payments for the purchase of the Dunkerque aluminium smelter in France. The news came after Rio Tinto confirmed this on Monday, September 2.

In a statement it said, “Rio Tinto confirms it has triggered an arbitration process in relation to the sale of the Dunkerque aluminium smelter, France, to Liberty House.”

In December 2018, Rio Tinto completed the sale of its Dunkerque aluminium smelter in northern France to Liberty House, the part of the GFG Alliance, at $500 million.

Rio Tinto also said, “The arbitration relates to non-payment of customary post-closure adjustments, including working capital, which was agreed by both parties in the sale and purchase agreement.”

GFG Group, on the other hand, reported to Reuters that the outstanding amount was small and the transaction so far had been very successful. Relationships with its banks were constructive as well, added the Group in a statement.

“As is usual practice in sizeable mergers and acquisitions, there is a mechanism in place post-completion to settle the final consideration to be paid to the vendor net of working capital, accounting and other issues,” GFG said.

“This system is ongoing with the vendor as part of the normal process, and differences are being reconciled. This smelter is operating on budget, it is highly profitable and cash generative despite poor aluminium prices,” added GFG Group.