Rio slashes accommodation construction contracts

The two companies signed an agreement in September for the construction of the village, which was to house personnel working on Rio’s Yarwun 2 project.However, Rio has recently completed an internal review, cutting expenditure, and no longer requires the village.The first rooms were due to be completed by January 2009 and the MAC said it will work together with Rio to determine fair and equitable payments to cover the work already completed.Yesterday, another mining accommodation provider, Fleetwood Corporation, announced that Rio had terminated a $25 million contract for the construction of 250 accommodation units in the Pilbara.The MAC said aside from a small manufacturing contract, the company does not have any other contracts with Rio.Due to the contract termination, the MAC has reduced its 2009 financial year room roll-out target by 300 rooms.The company expects to have 5400 rooms by June 30, 2009, an increase of 1150 from the previous year.The MAC said all other rooms remain on time and within budget.Shares in the MAC were down 9% or 12c to $1.17 this morning, while Rio lost more than 6% or $2.75 to $39.95.

Send this to a friend