Struggling iron ore trader Radiant World is threatening legal action against Glencore, accusing the larger rival of causing losses exceeding $1.4 billion in a sweeping dispute.

Singapore-based Radiant World, which rose rapidly from obscurity to become one of the world's largest iron ore merchants, has been grappling with a liquidity crisis in recent weeks. Several banks and trading firms, including Glencore, have cut ties with the company over suspected discrepancies in documentation related to its trading operations.

Japan's Mizuho Bank, one of dozens of global lenders that have provided financing to the company over the years, initiated legal proceedings against Radiant World at the Supreme Court of Singapore on Friday. Singapore police confirmed they have launched an investigation into Radiant World after receiving complaints related to the locally headquartered firm. Radiant World denies any wrongdoing.

On Thursday, the company sent a legal letter to Glencore demanding the recovery of more than $800 million. Radiant World and another entity, Sapphire Minmetals, claim this amount was paid to the Anglo-Swiss metals mining group in recent years. They are also seeking compensation for losses stemming from the "destruction of value" of the business.

Glencore stated: "These claims are baseless, and Glencore will vigorously defend them." The company added, "Radiant World's actions have caused us losses and exposed us to risks, and we will take appropriate measures."

This month, Glencore said it had stopped doing business with Radiant World and set aside provisions for contracts with the trader.

The legal letter from Radiant World describes a complex, multi-year trading and financing relationship that came to a head in 2021. Radiant World claims that Glencore decided to close out derivative positions and demanded repayment of nearly $1.2 billion in exposure, which Glencore says arose under derivative contracts with Radiant World and Sapphire Minmetals.

Company records show Radiant World previously held shares in Sapphire Minmetals but fully divested its stake in 2015. In its letter to Glencore, Radiant World refers to Sapphire Minmetals as an "independent legal entity," while Sapphire Minmetals responded earlier this month, stating "historical shareholding does not represent an existing operational or financial relationship."

Radiant World claims the parties had reached an agreement on the derivative exposure: it could repay the debt gradually while Glencore assisted the Singapore trader in raising financing and investments externally. The letter cites an alleged WhatsApp message from 2024 sent by Glencore executive Peter Hill, listing the support Glencore had provided to the iron ore merchant.

The alleged message from Hill reads: "Don't forget - it was us who allowed you to accumulate $1.2 billion of exposure, and we have basically funded your entire company's survival over the past few years. So don't make a fuss, relax, we will continue to support you as always, and we will keep doing so as long as it is reasonable for us." Hill declined to comment.

Radiant World further claims its relationship with Glencore went beyond an ordinary trading counterparty, describing Glencore as a "senior partner" in the relationship. The company alleges Glencore would review and approve qualifications of potential employees, advise on financing, and provide entry price references for trades.

The letter also mentions that Glencore had entered into an agreement to subscribe for warrants representing a 4.995% equity stake in Radiant World, and later indicated it would "help bring in hedge funds and other investors" to provide funding for the company. Radiant World says Glencore anticipated the company could be valued at approximately $5 billion with the new investments.

Radiant World says Glencore recently issued termination notices to the Singapore company and Sapphire Minmetals, claiming the two entities owe the London-listed company $951 million, while offsetting $471 million that Glencore owes to both parties.

Earlier this month, Glencore said: "Our book exposure to Radiant World is not material, well below our $500 million risk threshold." This figure already accounts for the provisions Glencore has set aside. A person familiar with the matter said Glencore's net exposure to Radiant World has always remained below $1 billion, and that Radiant World has accounted for less than 10% of Glencore's iron ore business by volume on average over the past decade.