The collapse of the coal price has taken its toll on Australian industry, with AUD354 million (USD274 million) writs flying between Monadelphous Muhibbah Marine (MMM) and the new Wiggins Island Coal Export Terminal (WICET) in Gladstone.
On 15 June both WICET and Monadelphous, which holds a 50% share in the MMM joint venture construction company alongside Malaysian Muhibbah Construction, announced lawsuits in the Queensland Supreme Court.
WICET initiated the court action against MMM, claiming costs at the new terminal had blown out. MMM have counter-sued for extra money owing from changes to the scope of work at the terminal.
It is not the first time the parties have been before the courts, with WICET citing successful legal action in December.
Until now, MMM has preferred the Building and Construction Industry Payment Agency to adjudicate over payments in dispute.
Fuelling the spat is the plummeting coal price putting financial pressure on the terminal as costs blow out.
Citigroup slashed its long-range forecasts for both thermal and metallurgical coal in May, with current prices dropping below pre-2008 crisis levels in March.
WICET is owned by a consortium of eight Australian and international resources companies Aquila Resources, Bandanna Energy, Caledon Coal, Cockatoo Coal, Glencore, New Hope Group, Westfarmers Curragh, and Yancoal.
Cockatoo Coal undertook an AUD125 million equity raising in February to finance its Baralaba coal mine expansion. Bandanna Energy went into administration in September last year, while multinational miner Glencore was forced to suspend production for several weeks to avoid selling coal at a loss during the world glut.
Despite the ongoing dispute, WICET made its first shipment of 73,000 tonnes of coal in April, three years after terminal construction at the Gladstone port got under way.
WICET provides 27 million tonnes per annum of new export capacity for Gladstone with room for expansion. However, according IHS McCloskey, there are now doubts over whether its eight shareholder/shippers will be able to fill contracted volumes, given the current downturn.
In a statement posted on the company website, WICET said MMM have claimed additional payments of AUD440 million with the Building and Construction Industry Payment Agency, double the original contract sums, but was awarded only AUD81 million.
MMM was contracted to construct a jetty, ship berth, and ship loaders at the terminal. In a statement to the Australian Securities Exchange on 15 June, Monadelphous announced it would “pursue a counterclaim through MMM in excess of AUD200 million to recover costs associated with changes in the scope and nature of the works”.
The Perth-based Monadelphous is also involved in major resources energy and infrastructure projects such as the Dampier port upgrade, as well as mechanical and piping work for Rio Tinto and Hancock Prospecting’s Newman mine in the Pilbara, Chevron’s Wheatstone, and the INPEX LNG project in Darwin.