Article content continued

SNC-Lavalin said in a statement that is “appalled” and “surprised” by the decision that puts the project’s completion and commissioning date further at risk. The company is demobilizing the job site and assessing the legal and financial impact of Codelco’s decision. It is also preparing dispute resolution actions to recover as much as possible of the previously announced losses that are due directly to the client and to poor sub-contractor performance.

Difficulties around the contract were initially flagged by SNC on Jan. 28, when it disclosed trouble at an unidentified mine in Latin America and took a writedown on its energy unit amid a diplomatic spat between Canada and Saudi Arabia. About two weeks later, it said it had failed to reach an agreement with the miner and that the parties would try to settle the dispute with an accelerated arbitration process. SNC cut its profit outlook for a second time and said the impasse would contribute up to a $350 million negative drag on the mining and metallurgy unit’s fourth-quarter earnings before interest and taxes.

Trudeau Impact

SNC has been at the centre of a controversy that has engulfed Justin Trudeau after his former attorney-general said the Canadian prime minister and some of his aides pressured her to intervene to help the construction firm avoid a trial.

SNC has been charged with paying bribes related to work in Libya more than a decade ago. Trudeau has said he supported a so-called deferred prosecution agreement for SNC because the company employs 9,000 people in Canada. The company has since indicated it was giving up on settling the fraud and corruption charges and was focusing on preparing for trial.