SNC dealt another blow with Chile copper mine project cancellation

Bloomberg

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 that it cancelled a contract worth $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 demobilising 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 January 28, when it disclosed trouble at an unidentified mine in Latin America and took a writedown on its energy unit. 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. SNC cut its profit outlook for a second time and said the impasse would contribute up to a C$350 million ($260 million) negative drag on the mining and metallurgy unit’s fourth-quarter earnings before interest and taxes.
SNC has been at the center of a controversy that has engulfed Justin Trudeau after his former attorney-general said the Canadian prime minister and some of his aides pressured her to intervene to help the construction firm avoid a trial.