Contractors with close ties to Fortescue Metals Group were hit hard yesterday, despite denials that the miner's cutbacks would hurt earnings this financial year.
Mining services provider NRW Holdings went into a trading halt to prepare a detailed response to the Fortescue bombshell after its stock fell 8 per cent.
Among its contracts with Fortescue, NRW has been involved in preparatory works at the Solomon hub project and at Herb Elliott Port.
The iron ore-focused contractor last month emphasised a strategy of diversification into other commodities and regions.
Engineering company Calibre Group was the worst affected by the sell-off, losing 17 per cent of its value. The stock closed below $1 for the first time since floating last month at $1.63.
Calibre said in an announcement to the ASX that it did not expect Fortescue's measures to have a material impact on its forecasts for 2012-13. "Calibre's project activity for Fortescue predominantly relates to the rail components of Fortescue's expansion program, and accounts for approximately 3 per cent of Calibre's outstanding FY2013 forecast revenue."
Fortescue accounted for 18 per cent of the contractor's revenue in 2011-12, according to a results presentation last month.
Forge Group, which has a $125 million contract on the Solomon developments that will be affected by Fortescue's deferral, also said it would not be materially affected.
Managing director David Simpson said some loss of revenue from that project would be offset by a $280 million Rio Tinto contract Forge announced on Monday.
Fortescue's contracts with Macmahon Holdings, RCR Tomlinson and Brierty were not thought to be affected by yesterday's changes.
Ausgroup chief executive Laurie Barlow said he expected a joint venture engineering and construction contract at the Cloudbreak mine to be competed by year-end.
"We feel pretty optimistic that we'll finish that project," Mr Barlow said.Aside from deferring work on the Kings development, it is understood that Fortescue has been telling contractors to speed up completion of projects at the Solomon Firetail deposit.
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