EuroChem Group AG is pushing for compensation from Italian engineering group Maire Tecnimont SpA and two of its lenders over the halted construction of EuroChem’s Nordwest 2 ammonia and urea project in Kingisepp, northwest Russia.
Maire Tecnimont and the two banks could be looking at paying out €212 million (approximately $204 million at current exchange rates), according to a Bloomberg report.
Construction work on the project, which on completion would see the addition of some 1 million mt/y of ammonia production capacity and 1.4 million mt/y for urea, has been halted since Russia’s invasion of Ukraine on Feb. 24.
EuroChem had been targeting for the complex to come on stream in 2023, and this past February reported that start-up target remained on track (GM Feb. 25, p. 32; Aug. 20, 2021). The group green-lighted the project in February 2021 (GM Feb. 12, 2021). According to thereport, citing court documents, EuroChem filed a lawsuit against Maire Tecnimont and Société Générale SA (SocGen) and ING Groep NV in London after the banks in early August refused to pay a so-called performance bond provided as a guarantee by Maire Tecnimont, and backed by the lenders.
The banks claim they could not make the payment because of European Union (EU) sanctions on EuroChem Founder and former CEO billionaire Andrey Melnichenko. His wife, Aleksandra Melnichenko, became the new beneficiary of the trust holding the controlling 90% stake in EuroChem in May (GM May 27, p. 29). Andrey Melnichenko withdrew as a beneficiary of the group and resigned as its CEO in early March after coming under EU sanction (GM March 11, p. 1).
The value of the guarantee is equal to about 20% of Maire Tecnimont’s industrial order, according to the report, citing the Italian firm’s latest financial report.
Spokespeople for Maire Tecnimont and ING declined to comment to Bloomberg, while spokespeople for EuroChem and SocGen did not respond to Bloomberg inquiries.