By Daniel Stacey
SYDNEY--Australian mining services company Forge Group has laid
off 1,300 workers after calling in insolvency specialists, ahead of
a planned sale of assets in South Africa, Asia and the U.S..
The job losses are the latest blow to Australia's mining
services sector, which is bearing the brunt of resources spending
cuts on new projects by companies like BHP Billiton Ltd. (BHP) as
commodity prices soften. BHP's planned US$20 billion expansion of
its Port Hedland harbor facilities and Woodside Petroleum Ltd.'s
(WPL.AU) US$40 billion Browse gas-export project in Western
Australia lead a list of delayed investments Down Under.
Forge called in insolvency specialists late Tuesday after its
lenders withdrew financial support, citing cost overruns and profit
warnings on two power projects. The Perth-based company's collapse
prompted several customers to sever engineering contracts with
it.
"There is no money to pay employees and no work to perform,"
said Mark Mentha, of KordaMentha, which was appointed as Forge's
receiver this week.
Among those to cancel contracts with Forge was Roy Hill Holdings
Pty Ltd., which is building a new US$10 billion iron ore mine in
the Australian outback, a spokesman for KordaMentha said. Forge had
been building a A$1.47 billion processing plant at the site with
Spanish joint venture partner Duro Felguera SA (MDF.MC).
Forge may owe as much as 500 million Australian dollars (US$447
million) to lender Australia & New Zealand Banking Group Ltd.
(ANZ.AU) and trade creditors, the spokesman said.
Still, Forge's offshore construction and engineering arms--known
as the Taggart and Webb Groups--are continuing to operate ahead of
moves to find a buyer.
Forge was valued at A$362 million as recently as late November,
when it shocked the market by warning of a deep annual loss as two
power projects soured. It employed 1,753 workers in Australia and
814 workers overseas prior to its collapse.
-Write to Daniel Stacey at daniel.stacey@wsj.com
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