- Monadelphous Group (MND) and Rio Tinto (RIO) have reached a confidential out-of-court settlement for a $493 million claim
- Rio Tinto blamed a Monadelphous subsidiary for causing a fire at an iron ore processing facility in January 2019
- The settlement has been covered by the proceeds of insurance, allowing the parties to consider the matter now closed
- Monadelphous Group is up 4.82 per cent and trading at $11.31 per share
- Rio Tinto is up 0.82 per cent and trading at $118.68 per share
Monadelphous Group (MND) and Rio Tinto (RIO) have reached a confidential out-of-court settlement for a $493 million claim.
In late July 2020, Rio Tinto had filed a writ of summons in the Supreme Court of Australia against Monadelphous’ wholly owned subsidiary, Monadelphous Engineering Associates (MEA).
The writ was related to a fire incident which took place at Rio Tinto’s iron ore processing facility at Cape Lambert, WA in January 2019.
MEA performed maintenance shutdown services at the facility prior to the fire occurring. In its claim against the company, Rio Tinto alleged that MEA was in breach of the maintenance contract and, as such, were responsible for causing the fire.
Rio Tinto’s claim was for a combined $493 million in loss and damage. This amount consisted of $35 million in material damage costs associated with the reconstruction of the Sinter Fines processing facility and the remaining $458 million for the provision of a temporary operating solution, as well as the business interruption losses arising from Rio’s alleged inability to process iron ore during the facility reconstruction period.
MEA denied the allegations and claimed losses, and fully intended to defend itself against the claims. The subsidiary had public liability insurance with a total limit of $150 million, which would cover property damage claims and associated losses.
The two parties have now settled out of court, with the settlement being covered by the proceeds of insurance. As such, Monadelphous and Rio Tinto now consider the matter to be concluded.
In an announcement to the market, a representative of Monadelphous welcomed this positive outcome.
“Monadelphous highly values its long-term business relationship with Rio Tinto, is pleased that this matter has been resolved amicably, and is looking forward to continuing to work closely with this very important customer into the future,” the announcement read.
Monadelphous Group is up 4.82 per cent, trading at $11.31 per share at 1:50 pm AEST.
Rio Tinto is up 0.82 per cent, trading at $118.68 per share at 1:50 pm AEST.