Rio Tinto Group must face a U.S. Securities and Exchange Commission lawsuit over the company’s valuation of coal assets in Mozambique, a federal judge ruled.

U.S. authorities in October 2017 filed fraud charges against London-based Rio Tinto, former chief executive officer Tom Albanese and former chief financial officer Guy Elliott, claiming they inflated the value of assets acquired in 2011 for US$3.7 billion. The assets were sold for US$50 million in 2014, a year after more than $3 billion in writedowns on the properties led to Albanase’s departure.

U.S. District Judge Analisa Torres on Monday narrowed some of the suit’s claims but denied Rio Tinto’s request to dismiss the case, saying the SEC had adequately claimed that statements about asset valuation -- made after Albanese and Elliott learned of “severe adverse developments” -- didn’t square with the information the company had at the time.

“The SEC has plausibly alleged that Rio Tinto was not just facing risks and challenges, but that it was apparent, at least to the individual defendants, that Rio Tinto had no realistic options to transport large amounts of coal,” a problem that would render the business worthless, Torres said.

Rio Tinto, the world’s second-biggest mining company, said it was pleased by the judge’s decision because the ruling eliminated several of the SEC’s charges and “significantly narrows” the case.

“The remaining charges are wholly unwarranted and Rio Tinto intends to vigorously defend itself and is confident the remaining SEC allegations will be rejected once all the facts are considered in court,” the company said in a statement.

Attorneys for the former executives in the case didn’t respond to requests for comment. Albanese has said “there is no truth in any of these charges.” Elliott, who retired in early 2013, has also denied the allegations.

The company’s acquisition of Riversdale Mining Ltd., which owned the Mozambique assets, came as Rio Tinto sought access to coking coal in the Moatize basin while the African nation was seeking to become a major supplier of the steelmaking raw material. But then the government refused to allow the company to transport coal via barge down the Zambezi River, forcing it to rely on railroads that had much lower capacity, and the plans unraveled.

The SEC alleges that Rio hid the project’s setbacks and publicly misled investors about its Mozambique coal project, which executives had told Albanese and Elliot by mid-2012 was worth negative US$680 million. The SEC is seeking the return of unspecified “ill-gotten gains” as well as civil penalties, and to bar Albanese and Elliott from holding director positions.

The case is SEC v. Rio Tinto Plc, 1:17-cv-7994, U.S. District Court, Southern District of New York (Manhattan).