Samsung Construction & Trading (C&T), the largest construction group in South Korea, has said it expects to make losses of more than US$700m on a huge project building a port, railway network and iron ore mine in north-west Australia.
According to reports in the Australian press, Samsung was widely believed to have underbid for the scheme at Pilbara (pictured), which it won in 2013 on a US$4bn fixed-price EPC contract.
By reflecting potential risks that may arise from the projects of the former Samsung C&T, the company aims to remove any uncertainties and focus on the future– Samsung Group company, Cheil Industries
The project was hit by delays and disputes between Samsung and subcontractors, and with client Roy Hill Holdings.
Roy Hill officially took over its integrated mining scheme on 1 February.
2015 was a difficult year for Samsung C&T, which built Dubai’s Burj Khalifa, the world’s tallest building. As well as the Roy Hill loss, the company booked a US$470m loss on oil-related projects.
In all, the company warned of losses potentially totalling $2.2bn for 2015. Contributing to that was a difficult merger with its sister Samsung Group company, Cheil Industries, in September.
"By reflecting potential risks that may arise from the projects of the former Samsung C&T, the company aims to remove any uncertainties and focus on the future," it said.
Samsung described Roy Hill as one of the most complex and challenging projects it had ever done, given the multiple sub-projects that had to be managed in remote areas over vast distances.
The scope of the project (Samsung PR)
It was so big Samsung divided the project into four separate parts and set up an ICT system to manage communications between multiple sites, with a project control room in Perth.
"When we first became involved with Roy Hill, many people questioned why we would take on such an ambitious project in one of the harshest regions in Australia with a landscape and climate so different from our own," Chi Hun Choi, Samsung C&T’s president and chief executive, wrote on the company’s blog.
"However, like the people of Australia and their great pioneers, we battled against the many challenges we faced to finally complete this historic project, which we are honoured to have been part of."
Photograph: Roy Hill Holdings’ 55-million-tonne-a-year iron ore mine (Samsung C&T)