SNC-Lavalin Group Inc. refuses to reveal the location of a "serious problem" in its mining business that pushed an epic falling stock Monday. But analysts point towards Chile. The company's papers fell 27.81% on the Canadian stock market in yesterday's day.
AltaCorp Capital, Desjardins Capital Markets, Canaccord Genuity and Raymond James say that a copper mine run by Codelco is the probable source of SNC's suffering. The general director of SNC, Neil Bruce, refused to identify the project in question and said that the problematic contract had been awarded in 2016.
According to the date, "the contract is probably engineering, acquisition and construction for the construction of sulfuric acid plants by Codelco," said Tuesday in a note Chris Murray of AltaCorp.
The mysterious mining fiasco contributed Monday to the largest decrease in more than 25 years by SNC, based in Montreal, which also received a blow for a depreciation of its business in Saudi Arabia for the diplomatic fight with Canada.
SNC is working to get a pending legal confrontation with Canadian prosecutors for past corruption charges. The lack of an agreement with Canada has probably cost SNC more than $ 3,800 million in lost revenue and continues to damage its international reputation, Bruce told Bloomberg TV in an interview last month.
Daniela Pizzuto, SNC spokesman in Montreal, refused to comment if Codelco was the source of the problems. Codelco also declined to comment.
Part of the reason for the excesses in the costs of the problematic project arose from the desire to "satisfy the customer", which prompted SNC to renounce its risk mitigation processes, Bruce told analysts at a telephone conference on Monday . The executive director said that the project would be completed at the beginning of the second quarter.
SNC-Lavalin announced two contracts with Codelco in November 2016. One involved the replacement of an effluent treatment plant in the Chuquicamata copper smelter in northern Chile to comply with the new environmental regulations . The second was for the construction of two sulfuric acid plants in the same place.
The grave stopped operations in December and was expected to resume in February, but now Codelco says it will be offline until March. The work is delaying more than expected partly because the miner thought he could meet the requirements with an update of the old plants, but then decided to build new facilities, said the executive director of Codelco, Nelson Pizarro.