SNC's reputation takes hit

SNC-Lavalin Group Inc. is leaving the door open to a lawsuit against Chile's state-owned copper mining company, which has terminated its contract with the construction giant.

A spokesman for SNC-Lavalin tells The Canadian Press that the company is looking at all options to determine whether to take legal action.

The Montreal-based engineering firm has said it was "appalled and surprised" that state miner Codelco ended the US$260-million contract due to alleged quality issues and delays in subcontractor payments and project execution.

The contract, awarded in November 2016, included engineering, supply and construction of two new acid plants for a smelter at the Chuquicamata mine in northern Chile.

SNC-Lavalin is now demobilizing the job site and preparing dispute-resolution actions to recover some of the roughly $350 million in losses, which the company blames on Codelco and subcontractors.

Analyst Yuri Lynk of Canaccord Genuity says investors should not expect any recovery in 2019 and that such a big project cancellation will hurt SNC's reputation in the mining industry.

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