Magnitogorsk Challenges Fortescue Stake Freeze

Russian steelmaker Magnitogorsk Iron & Steel Works (MAGN.RS) said Thursday it has filed a legal challenge against a freezing order on its stake in iron ore miner Fortescue Metals Group Ltd. (FMG.AU).

The stake--valued at 857.6 million Australian dollars ($877.1 million)--was frozen as part of a dispute with miner Eurasian Natural Resources Corp. PLC (ENRC.LN) by Australia's Federal Court in Sydney Nov. 25, according to court documents released Thursday. Magnitogorsk holds around 5% of Fortescue, the world's fourth-largest iron ore miner.

The court will hear the Magnitogorsk's challenge Dec. 9, the steelmaker said.

The marketing division of ENRC--a diversified miner focused on Kazakhstan and listed in London--wants the stake frozen as collateral in a case it has brought against Magnitogorsk over the steelmaker's failure to buy all the iron ore it is contracted to purchase.

A person with the knowledge of situation said earlier Thursday that the two parties are close to settling the dispute.

Magnitogorsk is contracted to buy around 12 million metric tons of ENRC's 17 million tons annual iron ore output, but the miner said in a quarterly report Nov. 10 that the steelmaker would only take 70% of this amount during the last four months of 2011.

-By Nadia Popova, Dow Jones Newswires; [phone], [e-mail]

(David Fickling in Sydney contributed to this item.)