Standard Bank launches case against Erdenet to reclaim $120m loan

Standard Bank has launched legal proceedings against Just Group and Erdenet Mining Corp in the UK courts, the South African bank has confirmed.

A spokesman for the bank told Metal Bulletin that the matter is before the courts but declined to comment further on the case.

Standard Bank launched the proceedings to reclaim debts owed by Mongolia-based Just Group, some of which were guaranteed by Erdenet Mining, observers told Metal Bulletin.

Just Group, a Mongolian concern owned by Sharavlamdan Batkhuu, controlled several banking and industrial assets in the country until earlier this year.

Just Group subsidiary Mercantile House had a copper concentrates off-take agreement with Erdenet Mining, and, through other industrial assets, Just Group also provided other services to Erdenet, such as the supply of fuel.

The group was dissolved earlier this year after another of its subsidiaries, Savings Bank, was declared insolvent in July after failing to meet capitalisation requirements set out by the Bank of Mongolia.

The collapse of Savings Bank, which was Mongolia's fifth largest lender, in turn prompted Batkhuu to sell off all assets held by Just Group, and in a press conference covered by local media earlier this year, he said he would take on responsibility for repaying the $120 million owed to Standard Bank.

The bank has now filed a claim in the UK courts against Just Group and Erdenet but as of Tuesday October 29 the case had not been acknowledged by all parties, a source familiar with the matter told Metal Bulletin.

According to local media reports citing Batkhuu, Standard Bank issued a $20 million loan to Just Group, which Erdenet guaranteed. Batkhuu used later loans extended by Standard Bank to recapitalise the failing Savings Bank, and also to buy the Olon Ovoot gold mine from Mongol Gazar.

Batkhuu, who has now sold all businesses within the Just Group, called on State Bank to assist him in paying off his outstanding debts, according to local media.

Erdenet Mining is also involved in a separate dispute with MRI Trading concerning the supply of copper concentrates under a frame contract agreed in 2009.

The Court of Appeal upheld a ruling finding in favour of MRI's $10 million claim against the company, but Erdenet is now seeking the right for an appeal to be heard in the UK Supreme Court.

Erdenet did not respond to a request for comment.



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