BMA terminates Peak Downs contract with Leighton Contractors

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The pre-strip contract was originally valid until 2015 but it will now end on July 3 this year, Leighton Contractors said in a statement on Wednesday April 10.

The company estimated the loss at a maximum of A$260 million ($270 million), but said it will be entitled to compensation for early termination.

“Against a backdrop of increasing costs and falling commodity prices, BMA continues to focus on reducing its overheads and operating costs across the business. This includes reviewing contractor arrangements and making the necessary adjustments to ensure operations can remain cost competitive,” a BHP spokeswoman told Steel First.

She added that Peak Downs operations will continue as normal.

BMA declined to say whether it has contracts with Leighton at other mines, and Leighton did not respond to a request for comment at the time of writing.

Steel First understands that HSE Mining would replace Leighton as the new pre-strip contractor.

“Leighton Contractors continues to see solid long term growth in demand for both thermal and coking coal, driven mainly by India and China. Their energy needs should support demand for our contract mining market services for the foreseeable future,” Leighton said in the statement.

The Bowen Basin, located in Queensland, Australia, contains the country’s largest coal reserves. Peak Downs produced 7.5 million tonnes of coking coal in 2012.