Macmahon launches legal action over major contract loss

Mining contractor Macmahon Holdings has announced it is commencing legal proceedings against Glencore after it lost a major works contract earlier this year.

Addressing shareholders today at its Annual General Meeting, Macmahon said losing the CSA mine shaft sinking contract has added to its mining business’ debts which totalled $17.9 million for the 2013 financial year.

Describing the contract loss as “sudden” the contractor said it is yet to receive a satisfactory explanation for the decision.

At the time Macmahon said the sacking was without “clarification”, and it was thought the $129 million contract cancellation was another example of Australia’s mining sector putting on the breaks, shelving projects, and cutting costs.

“We intend to vigorously pursue our claims in this matter, and have now commenced proceedings against the client in the Supreme Court of New South Wales,” Macmahon told shareholders.

The contractor said it is pursuing claims for unpaid work in relation to the project, and claims for damages arising from the termination.

In a statement Macmahon said it believes Glencore’s real motivations relate to economic conditions rather than the company’s performance.

But it is understood there are a number of reasons for the contractor being kicked off the copper mine in Cobar.

In the early hours of March 16, 41-year-old Jeremy Junk suffered a fatal head injury after being struck by the underside of a working platform.

The shift supervisor who was employed by contractor Macmahon sustained crush injuries when the kibble passed through the opening in the upper deck.

At the time Macmahon was completing a substantial shaft refurbishment project at the mine in western New South Wales.

Not long after the incident Glencore terminated Macmahon’s contract to expand the operation.

A Macmahon spokesperson told Australian Mining safety was and continues to be the company’s top priority and value.

The Business Spectator reported that Glencore accused the contractor of a “serious safety breach”, adding "it’s fair to say there’s a lot of factors that have been involved [in the suspension of work at CSA]".

A former Macmahon employee has told Australian Mining that in his opinion the company lost the project because of safety issues, not just because the mining sector was contracting.

“They’ve lost [the] project because of safety,” he opined.

“I was sitting around the table with the board when the project manager from that [CSA] project was presenting what happened at that stage of the investigation.

“I was gobsmacked that they don’t have things like cages, mechanical and physical barriers around the shaft sinking process to keep people from sticking their heads over the edge having a look at what’s happening down below.

“That’s a third world country thing in a first world country.”

The former employee said he left Macmahon because he felt concerns around site safety were not being heeded saying he received a lack of safety support from head office and is breaking his silence in an effort to improve industry safety.

“It’s not having a go at the company, I left there for my reasons, it’s about getting the industry safe – creating a safe place for people to work,” he said.

The NSW Department of Trade and Investment’s Mine Safety Investigation Unit is currently investigating the incident.

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