SNC-Lavalin Group Inc. refuses to disclose the location of a "serious problem" in its mining business, which triggered a significant decline in stocks on Monday. But analysts point to Chile. Shares of the company fell 27.81% on the Canadian stock exchange yesterday.
AltaCorp Capital, Desjardins Capital Markets, Canaccord Genuity and Raymond James claim that a Codelco copper mine is the likely source of suffering for the CNS. SNC CEO Neil Bruce declined to identify the project in question and said the troubled contract was awarded in 2016.
According to the date, "the contract is likely to be for engineering, procurement and construction for the construction of sulfuric acid plants for Codelco," said Chris Murray of AltaCorp on Tuesday.
The mysterious mining fiasco on Monday contributed to the biggest decline in more than 25 years of SNC, based in Montreal, which also received a blow for a depreciation of its business in Saudi Arabia for the diplomatic struggle with Canada.
SNC is working to get out of a pending legal dispute with Canadian prosecutors over previous corruption allegations. The lack of an agreement with Canada likely cost SNC more than $ 3.8 billion in lost revenue and continues to undermine its international reputation, Bruce told Bloomberg TV in an interview last month.
Daniela Pizzuto, a SNC spokeswoman in Montreal, declined to comment on whether Codelco was the source of the problems. Codelco also declined to comment.
Part of the reason for the excess cost of the troubled project came from the desire to "satisfy the customer," which led SNC to give up its risk mitigation processes, Bruce told analysts in a teleconference on Monday. The chief executive said the project will be completed early in the second quarter.
SNC-Lavalin announced two contracts with Codelco in November 2016. One involved the replacement of an effluent treatment plant at the Chuquicamata copper smelter in northern Chile to comply with new environmental regulations. The second was to build two sulfuric acid plants at the same site.
The smelter stopped operations in December and should resume in February, but now Codelco says it will be offline until March. The work is taking longer than expected, in part because the miner thought it could meet the requirements with an upgrade of the old mills, but decided to build new facilities, said Codelco Executive Director Nelson Pizarro.
Sources inside the state say they are not responsible for the fall of the Canadian company because the decline came after the CEO of Canada acknowledged problems in its business in Saudi Arabia where SNC Lavalin provided $ 937 million.