Chile’s state miner Codelco cancels major contract with SNC-Lavalin GlobeBusiness
A general view shows Chile's Chuquicamata copper mine, which is owned by Chile's state-run copper producer Codelco, near Calama city, Chile, April 1, 2011.Chile’s state miner Codelco has cancelled a major contract with SNC-Lavalin Group Inc., another potential blow for the Canadian engineering firm as it battles to move past legal issues tied to corruption allegations.
Shares in SNC-Lavalin dipped 0.6 per cent on the Toronto Stock Exchange Monday to close at $34.35. They’ve lost 25 per cent of their value since the beginning of the year. The crux of the problem as explained by Mr. Bruce boils down to SNC giving the green light to its subcontractors to do work that Codelco hadn’t approved. In addition, there were also unexpected site conditions to deal with, as well as environmental and safety challenges, the company has said. SNC had expected to complete the project sometime before the end of June.
“It’s not good,” said Chris Murray, analyst at AltaCorp Capital, adding that there could be additional cash-flow problems and financial penalties for SNC. “The question always was: What is the magnitude of the recoverability of the deal?”
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