SNC Lavalin snags Panama copper mine contract

Montreal — SNC-Lavalin received the green light to proceed with a Panama mining contract worth about US$355 million in fees for a group led by the Montreal-based engineering and construction giant, which is still struggling to put alleged ethical lapses behind it.

The overall cost of the Cobre Panama copper project will be about US$6.2 billion, including US$3.2 billion of infrastructure to be overseen by the SNC joint venture group.

SNC has a 70 per cent interest in the joint venture and is partnered by GyM S.A., a member of Grana y Montero Group, and Techint International Construction Corp., each with a 15 per cent interest.

The contract is with Minera Panama S.A., a subsidiary of Toronto-based Inmet Mining Corp., to provide detailed engineering, procurement and construction management services for the project infrastructure component of the project.

The contract covers infrastructure related to an open pit mine, including supporting infrastructure related to concentrator and processing facilities, transmission lines, roads, bridges, camps and port facilities, SNC said in a news release.

“This is a tremendous opportunity for SNC-Lavalin to work with its joint venture partners, Inmet, MPSA and local stakeholders, to design and build the project infrastructure for this world-class copper mine in Panama,” said Feroz Ashraf, executive vice-president, SNC-Lavalin Group Inc.

“This award builds on our 20-year relationship with Inmet and reflects their continuing confidence in our ability to carry out challenging and prestigious projects for them.”

Detailed engineering and procurement is to begin immediately and infrastructure construction activities are already in progress at the site, SNC said.

The project is scheduled to be operational in 2016 and the mine is expected to have a life of about 30 years.

Neil Linsdell of Versant Partners said the contract should generate gross margins of 25 to 30 per cent and contribute $2.4 billion to the SNC services backlog.

“It’s a nice vote of support and hopefully will show investors that SNC is very much alive and active,” he said in an email.

The contract follows a string of recent wins in the past several months making it “one of the most successful periods for new business in the company’s history,” added Pierre Lacroix of Desjardins Capital Markets.