The multibillion-dollar Roy Hill iron mine project in Australia, which hired South Korean builder Samsung C&T as its main contractor, is having trouble staying on schedule after a series of safety incidents led the Australian government to ban heavy-lifting operations for two weeks.

The builder has been constructing the mine’s processing plant facilities, a 340-kilometer railway line and port facility, since it won a $5 billion order from Australian billionaire Gina Rinehart’s Roy Hill Holdings. It is Samsung C&T’s biggest single project so far.

According to Australian media reports, a series of safety-related incidents in lifting operations have occurred at the plant’s facility construction site over the past year.

Roy Hill Holdings CEO Barry Fitzgerald said in a statement that his company recognized there had been “serious issues” in lifting operations conducted by contractors Samsung C&T and Leighton Constructions.

In response, Australia’s Department of Mines and Petroleum conducted a site inspection in late January. Based on the audit, the authority issued four improvement notices to Roy Hill.

“Operations of some 40 cranes at the site were suspended for about 14 days in January due to the matter,” a Samsung C&T spokesman told The Korea Herald on Tuesday.

Samsung C&T, however, downplayed concerns over the impact of the recent two-week-long work suspension.

“The strengthened safety standards will not change the projected completion date, slated for December this year,” the official said.

Industry watchers pointed out that issues, whether small or big, involving the Roy Hill project could have a big impact on Samsung C&T amid rising business uncertainties.

Last year, Samsung C&T suffered 150 billion won ($138 million) in losses after the Qurayyah independent power project in Saudi Arabia was delayed. The project was supposed to be completed last year.

“The amount of reserves was equal to the operating profit of the same quarter,’’ said Park Yong-hee, a construction stock analyst from E*TRADE, a leading online brokerage firm in Korea.

Due to a failure to control project costs, the company suffered net losses of 54.03 billion won in the fourth quarter.

He went on to say that another serious challenge for Samsung C&T is dwindling overseas orders.

In response, the builder slashed its overseas order target to 10.3 trillion won this year. Last year, the company achieved just half of its overseas order target of 18.1 trillion won.

A year later, however, the builder faces uncertainties in overseas construction business.

“The company is downsizing the workforce in construction business,” a person who is close to the matter told The Korea Herald.

The builder, however, denied the workforce reduction.

“The slump in the overseas construction business will affect the entire performance as it was (C&T’s) most profitable unit last year,” Park said.

The other two major businesses of Samsung C&T are domestic construction and trading. 

By Seo Jee-yeon, Park Han-na
(jyseo@healdcorp.com) (hnpark@heraldcorp.com)