Shares in Perth-based engineering company Monadelphous Group dropped more than 10% on Monday after news broke that it was being sued by Rio Tinto over a fire at one of Rio’s iron ore export terminals at Cape Lambert in the Pilbara.
The shares ended at $7.99 as investors assessed the news that Rio is seeking $493 million in damages.
On Friday afternoon Rio filed a writ of summons in the Supreme Court of Western Australia in Perth. In it Robe River Mining and Pilbara Iron are seeking damages over the that broke out on January 10, 2019, at the Port lambert terminal.
Monadelphous said in a statement that it would contest Rio’s action.
It said its unit Monadelphous Engineering Associates (MEA) had been performing maintenance shutdown services prior to the fire breaking out. Monadelphous said Rio has claimed that MEA breached terms of a contract with Rio and caused the fire.
“Monadelphous Engineering Associates (MEA) had been performing maintenance shutdown services prior to the fire commencing, and Rio Tinto has alleged that MEA was in breach of the maintenance contract, thereby causing the fire,’’ Monadelphous told shareholders this morning.
The fire damaged part of the plant that separates Robe Valley lump and fine products and led to Rio declaring a “force majeure” on some contracts.
The damages being sought largely consist of losses due to the inability to process iron ore during the period of repair work at the facility.