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Roy Hill port contracts torn up

Fresh cracks are appearing in Roy Hill's ambitious bid to start shipping iron ore from Port Hedland by September, after major construction contracts at its port operations were torn up yesterday.

The jobs of more than 300 workers are in limbo after Samsung C&T, head contractor on the $10 billion mine, rail and port project, terminated the port contracts of global construction giant Laing O'Rourke.

Laing O'Rourke had a $215 million contract for structural steel and associated mechanical, piping and electrical work at the port, including ore train unloading facilities and conveyor belts.

The company stood down its workers in Port Hedland and is believed to be in the process of advising its remaining staff the contract has been scrapped.

It is understood the contract was torn up after the two sides failed to resolve a running dispute over progress and which company would bear responsibility for delays.

Laing O'Rourke confirmed it had been involved in lengthy negotiations with Samsung over "longer-term commercial matters". A spokesman said the company had made significant progress on the work but the contract had been terminated as a "mutually acceptable approach".

It is understood some work has already been handed to other companies, with Civmec recently handed a $30 million package on the train unloading facilities.

But a contractor for the remaining work is still to be appointed.

Roy Hill said Laing O'Rourke workers had been asked to express an interest in moving to a new subcontractor but industry sources suggest a changeover of management and workforce upheaval is likely to set work back by weeks.

Roy Hill chief executive Barry Fitzgerald said the contract termination would have no impact on Roy Hill's scheduled completion date.

"As head contractor, Samsung is ultimately responsible for delivery of the project within budget and schedule, and we respect their right and ability to make this decision," he said.

"Construction of the project is progressing well, with the project now more than 74 per complete."

The Laing O'Rourke dispute is not Samsung's only run-in with subcontractors on the project.

NRW Holdings is still to announce whether it has resolved a dispute over payment claims for scoping changes on its $620 million rail earthworks contract, and a number of other local contractors are known to be pursuing payments over contract variations.

It is believed Samsung is also looking to bring in additional subcontractors to speed up work at the mine's processing facility, which is understood to be running behind schedule.