Rio suing Monadelphous for $493m

Rio Tinto has filed a claim against engineering company Monadelphous in relation to a fire incident that broke out at Rio’s Cape Lambert port facility in the Pilbara.

The fire, which occurred early last year, had reportedly damaged a section of the plant at Cape Lambert and forced Rio to delay its iron ore shipments.

The claim against Monadelphous has been made by Rio's Robe River joint venture, in which it holds a 53 per cent stake. Mitsui Iron Ore and Nippon Steel Australia hold the remaining 33 per cent and 14 per cent, respectively.

Robe River produces around 65 million tonnes of ore per annum, which is then railed to the port of Cape Lambert.

Rio today alleged that Monadelphous, which had been performing maintenance shutdown services at Cape Lambert, was in breach of its contract and ultimately caused the fire in 2019.

The iron ore miner has claimed a total of $493 million in damages, comprising $35 million in material damage costs associated with the re-construction of the Cape Lambert processing plant and $458 million in business interruption costs.

The news sent Monadelphous’ shares down 8.75 per cent at 1:25pm AEST to $8.13.

The engineering group has denied Rio’s allegations, saying the claimed losses “have not been substantiated”.

Monadelphous also said the contract with Rio had contained exclusions and limitations of liability.

Further, the Victoria Park-based group said its $150 million in public liability insurance would cover property damage claims and associated losses.

Monadelphous said it was “unaware of any reason why the insurance policies would not indemnify Monadelphous for liability it may have to Rio Tinto”.

“Along with its insurers and their legal representatives, Monadelphous intends to fully defend Rio Tinto’s legal action”.

Monadelphous said it valued its long-term business relationship with Rio, which has been its customer for more than two decades.