SNC-Lavalin Group Inc., the embattled engineering firm at the heart of Canada’s biggest political crisis in years, has been dealt another blow in Chile.
Copper producer Codelco said Monday that it canceled a contract worth US$260 million to build two new acid plants in the Chuquicamata mine. Montreal-based SNC has “seriously” and “repeatedly” breached aspects of its contracts, according to Codelco, which cited delays in construction and in payments to subcontractors, as well as quality issues.
“Codelco made several attempts to resolve the problems facing the project, with the last attempt in February,” according to the statement from the Santiago-based company.
SNC-Lavalin said in a statement that is “appalled” and “surprised” by the decision that puts the project’s completion and commissioning date further at risk. The company is demobilizing the job site and assessing the legal and financial impact of Codelco’s decision. It is also preparing dispute resolution actions to recover as much as possible of the previously announced losses that are due directly to the client and to poor sub-contractor performance.
Difficulties around the contract were initially flagged by SNC on Jan. 28, when it disclosed trouble at an unidentified mine in Latin America and took a writedown on its energy unit amid a diplomatic spat between Canada and Saudi Arabia. About two weeks later, it said it had failed to reach an agreement with the miner and that the parties would try to settle the dispute with an accelerated arbitration process.
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