COPPER: Codelco unexpectedly cancels US$260M contract with SNC-Lavalin

CHILE – State owned copper producer Codelco announced yesterday that it was cancelling a US$260-million contract with Montreal-based SNC-Lavalin Group. The contract covered building two new acid plants at the Chuquicamata project 1,650 km north of Santiago. SNC-Lavalin said it was “appalled and surprised” by the decision. The contractor said it had reached an agreement with the miner in good faith on Feb. 1, 2019, regarding the completion of the project. The acid plants were nearing completion, and the start-up and commissioning will no doubt be delayed as SNC-Lavalin has demobilized its team from the site. Codelco accused SNC of “seriously” and “repeatedly” breaching aspects of the contract, leading to delays in construction, payments to subcontractors, and quality issues. SNC countered with this: “It should be noted that Codelco has reached this decision after SNC-Lavalin openly informed Codelco of the status of the execution of the works, as requested by Codelco, which showed delays caused by site conditions that were the responsibility of Codelco, and the poor and unjustified acts by the main construction subcontractors.” Codelco, the world’s largest copper producer, is about 62% through the development of an underground mine at Chuquicamata as pit resources are exhausted. The project will have a life of at least 41 years. SNC maintains it website at www.SNCLavalin.com.