The dispute began in February when Brazilian mining giant Companhia Vale do Rio Doce bought AMCI, and restructured AMCI’s interests in the API Joint Venture and the Belvedere Coal Joint Venture, in which two Aquila subsidiaries respectively hold 50% joint venture interests.

Aquila executive chairman Tony Poli told International Longwall News that AMCI's restructure of the two JVs had resulted in a change in control under the JV agreement, and triggered an option for Aquila to acquire the iron ore and coal interests.

On April 24, Aquila commenced proceedings against AMCI in the Supreme Court of Western Australia.

“Aquila is just pursuing its contractual rights in regards to the two joint ventures … both are important projects to Aquila,” Poli told ILN.

Initial studies at Belvedere indicate the potential for an underground operation of up to three longwalls, producing 11–12 million tonnes per annum of hard coking coal.

The Belvedere project is also subject to an exploration study by CVRD, which has the right to buy 51% of the project by July 2007, irrespective of who owns it.

“If the court determines that there has been a change in control, then the AMCI subsidiaries are bound to offer their respective joint venture interests to the Aquila subsidiaries in accordance with the terms of the API and Belvedere joint venture agreements,” Aquila said in a statement to the ASX today.

But AMCI's legal advisers have disputed that Aquila was entitled to trigger the buyout provisions, and have launched separate legal proceedings in the Supreme Court of Queensland seeking a declaration that there has been no change in control.

AMCI told International Longwall News today that it was not commenting on the matter.