Giant dumps multimillion-dollar CSA contract

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 08 Jul 2013   Posted by admin


GLOBAL miner Glencore Xstrata has allegedly cited a ‘serious safety breach’ for the termination of a contract with Macmahon Holdings at its $129 million CSA expansion project in NSW, The Australian Financial Review has reported.
Macmahon advised that its shaft sinking project was terminated by Glencore Xstrata subsidiary Cobar Management on 4 June and it would seek further details regarding the decision.
“Macmahon is currently seeking clarification on the reasons for and consequences of the termination and will advise of the impact on market guidance once details are known,” the company stated.
The alleged breach was said to have occurred in April.
The AFR reported that while the contract termination was initially viewed as yet another corporate measure to cope with falling commodity prices, a spokeswoman for Glencore said, “it’s fair to say there’s a lot of factors that have been involved [in the suspension of work at CSA]”.
The CSA project was expected to contribute about $6 million of revenue to Macmahon in June, and $80 million of revenue in the 2014 financial year.
The termination only worsened Macmahon’s year, with the company already forecasting a $20 million loss for the year to 30 June, following a $37.6 million loss in the six months to 31 December 2012.
The contract termination also raised speculation that Glencore Xstrata may axe the expansion project altogether.
When asked if the Macmahon contract termination was the precursor to cancelling the project, Glencore’s local representatives told media that the company was considering its options.