GlencoreXstrata cans Cobar expansion contract

Mining powerhouse GlencoreXstrata has terminated Macmahon’s contract to expand the CSA Cobar mine.

The expansion consisted of sinking the shaft deeper in an effort to reduce production costs.

Macmahon’s dismissal is yet another pain point for the contractor who has recently sold its construction arm as it turns its focus towards becoming a fully fledged mine site contractor.

The company has already forecast a $20 million loss for the year to June 30, after a $37.6 million loss in the six months to December 31.

The CSA project was expected to contribute approximately a further $6 million of revenue to Macmahon in June 2013, and $80 million of revenue in the 2014 financial year.

SMH reports about 70 jobs are linked to the expansion project.

The sacking, which Macmahon says was without “clarification”, comes barely two weeks after reports Australia’s mining sector is moving into the next phase as exports overtake capital investment.

''Macmahon is currently seeking clarification on the reasons for, and consequences of, the termination,'' the company said in a statement.

When asked if the copper and silver mine would be shelved SMH reports a GlencoreXstrata spokesperson said: ''The company is considering its options with regard to the project”.

Cobar mayor Lilliane Brady said she was notified of Macmahon’s dismissal on Saturday, receiving a phone call telling her the contractor left the site on Friday, May 31, five days before the ASX was notified.

''I was in Sydney when I had a phone call to say Macmahon's had finished at Cobar Mines,'' she said.

Operating intermittently since 1871, work at the existing Cobar mine is expected to continue as usual while the miner reviews the project which employs more than 300 people.

The CSA underground mine produces over 1.1 million tonnes of copper ore and produces in excess of 185,000 tonnes of copper concentrate per annum.

The concentrate is exported to smelters in India, China and South East Asia.

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