Australian contractor Clough's collapse leaves more than $8 bln of projects in limbo (updated)

CLP Holdings

06/12/2022 03:05

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      Major power projects hit in Australia
    

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      Clough working on Mongolia's Oyu Tolgoi copper mine
    

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      Deloitte seeks swift capital injection for Clough
    

  
 (Adds TransGrid comment, project details)
    By Sonali Paul
       MELBOURNE, Dec 6 (Reuters) - More than $8 billion worth
of gas, power, rail and mining projects across Australia,
Mongolia and Papua New Guinea face delays following the collapse
of engineering firm Clough on Monday.
    Projects that could be hit include the expansion of the Oyu
Tolgoi copper mine in Mongolia, run by Rio Tinto
 RIO.AX  RIO.L , and major power plant and transmission projects
essential to maintaining a stable grid in Australia from 2023. 
    Clough, with a global workforce of 2,500, was placed into
voluntary administration by its South African parent, Murray &
Roberts Holdings  MURJ.J , after a deal to sell the business to
Italian construction giant Webuild SpA  WBD.MI  fell through.
    Deloitte, appointed as administrator, said it would assess
Perth-based Clough's financial position over the next two to
three days and begin an accelerated sale and recapitalisation
process, aiming to get projects back on track.
    It said the goal is to source "immediate interim funding to
be able to continue work on as many projects as possible as
quickly as possible". 
        Webuild and Clough are partners on a A$5 billion ($3.4
billion) rail project in Australia's Queensland state and the
A$5 billion expansion of Australia's biggest hydropower scheme,
Snowy 2.0, which is already facing a delay of nearly two years
into 2028.
    Clough is also handling construction of the A$768 million 
($515 million) Waitsia Stage 2 gas project, owned by a unit of
Japan's Mitsui & Co  8031.T  and Australia's Beach Energy
 BPT.AX . 
    The Waitsia Stage 2 project was due to start producing gas
for export through the North West Shelf liquefied natural gas
(LNG) plant in late 2023. Mitsui said it would work with all its
partners to ensure the project proceeds.
        "Given that an administrator has only just been
appointed for Clough, it would be premature to speculate on the
precise impacts for the Waitsia Gas Project Stage 2," Mitsui E&P
Australia said in a statement.
    Clough is also the contractor on a key project needed to
shore up Australia's power supply, the 320 megawatt (MW)
Tallawarra B gas-fired power station owned by EnergyAustralia, a
unit of Hong Kong's CLP Holdings  0002.HK .
    An EnergyAustralia spokesperson said the company was working
through the implications of Clough going into administration and
would have further comment later on Tuesday. Tallawarra B was
due to start operating in October 2023.
    Another major project involving Clough is a 900 kilometre
power transmission line, EnergyConnect, owned by TransGrid,
essential for hooking new solar and wind farms to the grid. 
    TransGrid said it would continue to work with Clough's
partner Elecnor to deliver the A$2.3 billion project.
    "We expect to meet the current completion deadline of late
2024," TransGrid executive general manager Gordon Taylor said in
emailed comments.
    Rio Tinto had no immediate comment on the impact of Clough's
collapse. 
($1 = 1.4901 Australian dollars)
 (Reporting by Sonali Paul; Additional reporting by Praveen
Menon in Sydney; Editing by Kenneth Maxwell)
 ((Sonali.Paul@thomsonreuters.com; +61 407 119 523;))