He told the Australian Financial Review this could occur as contractors developing the terminal “distract management with arbitration over alleged cost increases”.
Barnes called for an inquiry into construction contractors after the WICET consortium faced multimillion-dollar claims in recent months under the Building and Construction Industry Payments Act by Monadelphous Engineering and its Malaysian joint venture partner Muhibbah Construction.
“The executive team at WICET continues to be distracted by an avalanche of ambit BCIPA claims for which our contractors have generally failed to provide proper substantiation,” he told the newspaper.
“I believe there is a case for a royal commission into the practices of construction contractors and their implications for Australia.”
In June the Australian Building & Construction Dispute Resolution Service had ruled that WICET owed the Monadelphous JV $65.6 million.
While WICET still owed $16.4 million of this sum, Barnes said the JV had two other claims totalling around $150 million with WICET required to analyse 19 boxes of material.
“To comply with the BCIPA, the coal terminal must respond to claims within five days,” the Australian Financial Review reported.
“Recent changes to the act will give companies more time to respond to large claims over $750,000 but only took effect last month.”
However, the CEO said these changes were too late and too little for projects like WICET.
“Barnes said the additional costs incurred dealing with the arbitration claims, which include hiring teams of lawyers and QCs, and the subsequent loss of productivity, were deterring investment in large infrastructure projects.
“Because of unnecessary high construction costs in Australia, infrastructure investors are discouraged from investing here,” he said.
With first exports through the new terminal previously expected in November, Barnes said contractors were stepping up attempts to extract additional payments as it neared completion.
The terminal is expected to have 27 million tonnes per annum of throughput capacity by early 2015.
The initial WICET consortium comprised Xstrata (now Glencore), Bandanna, Caledon Coal, Cockatoo Coal, Aquila Resources, Yancoal, Wesfarmers and New Hope Coal.
Bandanna went into voluntary administration last month.
”Bandanna’s collapse will force the remaining miners to ship additional coal to compensate for the shortfall, find other miners who want to ship coal, or make additional financial payments,” the newspaper reported.
The initial WICET consortium comprised Xstrata (now Glencore), Bandanna, Caledon Coal, Cockatoo Coal, Aquila Resources, Yancoal, Wesfarmers and New Hope Coal.
