NRW Holdings has suffered another blow from the iron ore pullback, losing up to $80 million in work after BHP Billiton scaled down work at the Port Hedland inner harbour project.
The civil and mining contractor, which earlier this month cut its earnings guidance, said it would lose an estimated $100 million because of Fortescue Metals Group’s decision to curb expansion plans.
This time, NRW said it did not expect the forecast to be affected.
NRW yesterday said it had been notified by project manager Fluor & SKM Team (FAST) that the scope of works at the inner harbour would be cut back.
“The reduction in scope relates only to the works at Nelson Point and will result in approximately $75 million to $80 million being removed from the total contract, although this amount has not yet been conclusively determined,” NRW said in a statement.
No jobs were expected to be lost as a result.
The original 16-month contract for the inner harbour project was worth $129 million and would have had a peak workforce of 140.
In the wake of Fortescue’s cuts, NRW was predicting earnings growth of 15 per cent this financial year, compared with the 20 per cent guidance given last month when reporting annual results.
It has since won a year-long $133 million contract on Rio Tinto’s Cape Lambert Port B project.
The contractor’s share price closed yesterday down 9¢, or 4 per cent, to $2.25. Like that of other iron ore-focused service companies, the stock has plunged since topping $3 last month.
In addition to scaling back or deferring projects, the big miners are understood to be looking to squeeze contractors’ margins in response to uncertainty about Chinese iron ore demand.