PROCESSING

Codelco cancels SNC-Lavalin EPC contract

SNC-Lavalin has said that Chile's state copper company Codelco has terminated its contract

Paul Harris

This article is 5 years old. Images might not display.

Codelco stated SNC-Lavalin failed to meet its commitments under a US$260 million contract, including quality issues and delays in subcontractor payments and project execution.

The news follows earlier profit warnings issued by the Montreal-based company related to engineering, procurement and construction (EPC) contracts with the world's largest copper producer to replace the Chuquicamata copper smelter effluent treatment plant, and to build two sulphuric acid plants at the same site.

"We are appalled and surprised by the decision taken by Codelco today. We had reached an agreement in good faith on February 1st regarding the full completion of the project and a process for a fast-track dispute resolution of previously announced unresolved issues through accelerated arbitration," SNC said in a statement.

The company said the project was nearing completion, but the termination of the contract by Codelco would put its completion and commissioning date further at risk.

SNC said that effective immediately it had started demobilising the job site, assessing the legal and financial impact of Codelco's decision, and preparing the dispute resolution actions to recover as much as possible of the previously announced losses.

The engineering firm said that issues with the performance of the contract were due to, "site conditions that were the responsibility of Codelco, and the poor and unjustified acts by the main construction subcontractors".

"We believe that this termination is unwarranted and in breach of good faith agreements reached by the parties," the company said.

The Codelco termination throws another handful of salt into an openly wounded company that is facing criminal charges from allegations the engineering firm paid millions of dollars in bribes to win government business in Libya between 2001 and 2011. If convicted, the company would be barred from bidding on Canadian federal contracts.

CEO Neil Bruce said last week up to 9,000 jobs at the company were at risk if it was unable to obtain a remediation agreement called a deferred prosecution agreement (DPA). A DPA is a means for protecting innocent stakeholders from the criminal actions of a few bad actors in a company.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Magazine Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Magazine Intelligence team.

editions

Mining Magazine Intelligence: Automation and Digitalisation Report 2024

Exclusive research for Mining Magazine Intelligence Automation and Digitalisation Report 2024 shows mining companies are embracing cutting-edge tech

editions

ESG Mining Company Index: Benchmarking the Future of Sustainable Mining

The ESG Mining Company Index report provides an in-depth evaluation of ESG performance of 61 of the world's largest mining companies. Using a robust framework, it assesses each company across 9 meticulously weighted indicators within 6 essential pillars.

editions

Mining Magazine Intelligence Exploration Report 2024 (feat. Opaxe data)

A comprehensive review of exploration trends and technologies, highlighting the best intercepts and discoveries and the latest initial resource estimates.

editions

Mining Magazine Intelligence Future Fleets Report 2024

The report paints a picture of the equipment landscape and includes detailed profiles of mines that are employing these fleets