Ningbo Steel (宁波钢铁), a subsidiary of state-owned Baosteel (宝钢), filed a petition earlier this month at the Hong Kong’s High Court earlier to wind up General Nice Resources (Hong Kong) Ltd. (俊安資源(香港)有限公司), claiming unpaid debts related to iron ore transactions dating back to last year. Although General Nice acknowledge the debt, they have now countersued, alleging that the winding-up petition seeks to hurt their reputation, and are asking for $100m in compensation, equivalent to some 80 times the debt owed and over three quarters of Ningbo Steel’s 2014 net profit (東網, Quamnet).

Ningbo’s case against General Nice will be heard in mid June.

Ningbo Steel started as a private company, led by (now .85-billionaire) Zhang Zhixiang 张志祥, but was later bought by Baosteel Group, a central SOE and one of the world’s largest steelmakers. Executives at Ningbo Steel must have more pressing concerns than all that suing and countersuing in Hong Kong, such as wondering if they won’t get arrested as a corruption crackdown spreads through state-owned Big Steel. The campaign has claimed several heads at Baogang, the most senior of which so far has been deputy GM Cui Jian 崔健. Mr Cui spent part of his career at Ningbo Steel, after its acquisition by Baosteel, and his “discipline violations” (a euphemism for corruption) are rumoured to have taken place during his stint at Ningbo.

General Nice Resources HK is owned by Mainland-based General Nice Group companies, partly through General Nice Development, the Hong Kong company that owns the Isua iron mine in Greenland through a Jersey entity. That is, the owner of the Greenland license is not being directly targeted by the lawsuit in Hong Kong.

In media statements reacting to Ningbo Steel’s filing, General Nice say that, far from being insolvent, they’re a major ore trader with a large turnover and stakes in several listed companies. The figures the company brandishes when describing itself indeed make it hard to imagine it would have any trouble mustering the meagre debt claimed by Ningbo Steel. On the other hand, while profit figures for the whole group aren’t available, there are multiple signs that it isn’t going through its best times. The Group is moving away from its historical core coal business, and these aren’t good days for iron trading in China. Current iron prices mean that Group assets like the Greenland mine, unlikely to be developed any soon, or the Cockatoo Island project in Australia (owned by a troubled company I might be writing about soon) aren’t precisely profit sources. Loudong General Nice, the Group’s HK-listed company, posted losses in both 2013 and 2014.

I discussed General Nice’s various investments and their interesting history in a long-ish article last month.

In the latest news about General Nice’s changing strategy, General Nice Resources CEO Jaffe Lau (柳宇) said yesterday in an interview that the group is looking to increase cooperation or even mergers with Chinese state owned companies, since as private players they find it hard to compete with SOEs for funding from state-owned banks. Although General Nice’s political contacts have arguably been key to the group’s growth in the past, a merger with a state entity would surely give them access to cheaper funding. Assuming a scenario where the Isua mine is eventually developed, having a SOE around would move it closer to getting the billions in investment it’s been estimated to require.

To finish on a bright note, shares of Loudong General Nice, the group’s loss-making HK-listed company, have been doing very well of late and suddenly jumped in the last few days.