Rio Tinto sues Australia’s Monadelphous over fire at iron ore facility

(Reuters) – Global miner Rio Tinto Ltd on Monday said it has initiated proceedings against a unit of engineering contractor Monadelphous Group over a fire that occurred last year at its iron ore processing facility at Western Australia.

A Rio spokesperson confirmed the suit after Monadelphous said in a statement that it would contest a writ received from Rio. Monadelphous said it was separately informed by Rio that the claim is for A$493 million ($351 million), largely consisting of losses due to inability to process iron ore during the period of repair work at the facility.

“As the matter is now before the court, Rio Tinto is unable to provide any additional comment,” Rio’s spokesperson said.

Perth-based Monadelphous said its unit Monadelphous Engineering Associates (MEA) had been performing maintenance shutdown services prior to the fire commencing. Monadelphous said Rio has claimed that MEA breached terms of a contract with Rio and caused the fire.

“The contract between Rio Tinto and MEA … contains exclusions and limitations of liability which will be relied upon by MEA in defence of the claim,” Monadelphous said in a statement.

Shares of Monadelphous dropped as much as 8% to A$8.20, its lowest since March 30, while Rio’s shares traded about 1.3% higher.

(Reporting by Shriya Ramakrishnan in Bengaluru; Additional reporting by A K Pranav; Editing by Kenneth Maxwell)