Sedgman denied $49.9 million in costs dispute with Heron Resources

Underground mining at Woodlawn commences. Image: Heron Resources.

Sedgman claims for $49.9 million in additional costs following a contract with Heron Resources have been rejected by the contract superintendent.

CIMIC Group subsidiary Sedgman stated earlier this month that Heron owed the additional costs on an engineering, procurement and construction (EPC) contract carried out at Heron’s Woodlawn zinc-copper project in New South Wales.

Sedgman, contracted to build Woodlawn’s processing facility, made a claim for additional costs of $22 million and forecast costs of $28 million to the end of March 2019.

The contract superintendent has, however, rejected the majority of Sedgman’s claims, with the exception of contract works totalling $223,057, less than half a per cent of what the company originally sought.

“Sedgman is attempting to circumvent the guaranteed maximum price through the submission of a list of 22 alleged variations claiming for unsubstantiated costs,” a Heron statement read

“The contract superintendent has determined that the majority of the variations have either no merit, or are time barred under the EPC contract, and in some cases refer to events that predate the parties entering into the EPC contract.”

Heron also announced that it would pursue liquidated damages in relation to the late completion of the Woodlawn processing facility.

The Woodlawn plant is on track to commence production in the first quarter of 2019.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.