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Company Demands $532.6 Million From Fluor

Construction: Australia's Anaconda Nickel says the Aliso Viejo firm failed to finish mining project on time.

November 16, 2000|From Times Staff and Wire Reports

An Australian mining company said Wednesday it is demanding that Fluor Corp. pay more than $532.6 million for failing to complete construction of a mine in time and within budget.

Anaconda Nickel Ltd. in Perth said it issued its demand, which amounts to $1 billion Australian, because pending arbitration proceedings over its dispute with the Aliso Viejo company could be jeopardized by Fluor's plan to spin off its mining operation into a separate company later this year.

"To put it simply, Anaconda has a very large claim against Fluor, and this spinoff transaction clearly jeopardizes the ability of Anaconda to collect on that claim," Andrew Forrest, Anaconda's chief executive, said in a statement.

Fluor said in a press release that it "vigorously disputes and denies" Anaconda's claims, calling them unfounded.

Fluor said the proposed spinoff separating Fluor and its A.T. Massey Coal business into two public companies will have "absolutely no impact" on its ability to pay any amount that might be awarded from the arbitration process, which is in its early stages.

Besides, it said, in the "unlikely" event of an arbitration award against it, the new Fluor after the spinoff "will clearly have more than sufficient resources, including substantial insurance coverage," to pay an award.

Three years ago, the company's Fluor Daniel Pty Ltd. unit in Melbourne said it won a $575-million contract for construction of a major new nickel-cobalt mine in Western Australia for Anaconda's Murrin Murrin Operations Pty Ltd.

Fluor Daniel said the total cost of the mine construction project was estimated to be $680 million. The mine, northeast of Kalgoorlie, in the Goldfields region, would be one of the world's largest nickel-cobalt mines, Fluor Daniel had said.

It did not give an expected completion date at the time, nor did Anaconda on Wednesday when it accused Fluor of breaching the contract. Anaconda also did not disclose how far over budget Fluor Daniel had gone.

In spring 1999, Fluor said it had to take a $20-million quarterly charge stemming from a loss at the Murrin project.

In Wednesday's trading, Fluor's shares rose 75 cents to close at $37.19 on the New York Stock Exchange.

Anaconda stock fell 11 cents to close at $2.84 a share on the Australian Stock Exchange.


Bloomberg News was used in compiling this report.

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