BHP Nickel West's nickel sulphate plant at the Kwinana refinery. Credit: BHP/TheWest
Troubled engineering and construction firm Aerison Group has revealed a financial hit from a contract with BHP’s Nickel West division, as it continues to fight Gina Rinehart’s Roy Hill over a project cost blowout.
The issues concern a February 2019 construction contract linked to the powder leach process of BHP’s nickel sulphate plant in Kwinana.
It came to light following a query from the Australian Securities Exchange, which quizzed the Perth-based Aerison on why it did not flag significant changes to contracts earlier than February 28 when it released its preliminary annual results.
In the report for the year to December 31, Aerison said it reached agreements with customers “for variations and claims associated with scope changes, extension of time and delay and disruption” while disclosing significant, non-recurring items. The company said it accepted “lower settlement amounts than what would have otherwise have been accepted” to expedite an improvement in working capital.
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Aerison in its response to the ASX on Thursday revealed the BHP agreement was the “key contract in question” and confirmed it had been varied to a “material” extent.
It said the total value of the contracts referred to in its preliminary financial report were $89.6 million, “of which $71.3m pertains to the BHP contract and $15.6m to another varied contract which is not material in isolation”.
While the cost blowout of the BHP contract is not known, Aerison said a deed of settlement and release of $15.9m excluding GST was executed with the mining giant around March 3 this year.
Aerison’s shares have been suspended since May 4, with the company seeking $47.5m from Roy Hill over a contract for the construction of its saline water reverse osmosis desalination plant.
The company said it was complying with disclosure obligations under listing rules.
Aerison shares last traded at 10¢.
