It’s been a very mixed day for Monadelphous Group Ltd [ASX:MND].
The engineering company has released both good and bad news to the market. But it was the latter that dictated the market’s response…
The MND share price is down 8.98% at time of writing. All thanks to a ‘Writ of Summons’ courtesy of Rio Tinto.
Fiery past and windy future
Long story short, Rio is seeking $493 million in compensation for loss and damage to its operations.
A result that they have levelled at a ‘fire incident’, which Rio believes Monadelphous is responsible for. As Monadelphous reports:
‘MEA had been performing maintenance shutdown services prior to the fire commencing, and Rio Tinto has alleged that MEA was in breach of the maintenance contract, thereby causing the fire.’
However, Monadelphous goes on to deny any wrongdoing, stating:
‘MEA denies Rio Tinto’s allegations and claimed losses (which MEA considers have not been substantiated). Further, the contract between Rio Tinto and MEA, which governed the maintenance work performed by MEA, contains exclusions and limitations of liability which will be relied upon by MEA in defence of the claim.’
Suffice to say, it seems as though both parties may be in for a legal stoush. One that could be very costly in terms of both time and money.
That threat has, sadly, weighed heavily on Monadelphous share price today.
However, it wasn’t the only news the company had to share.
Monadelphous also revealed a new contract win. With its joint venture subsidiary (Zenviron) securing a new deal with General Electric.
Together, the duo will be working on the Murra Warra Stage II Wind Farm, a renewable energy venture in regional Victoria.
With a contract value of $80 million, Zenviron will provide crucial build capabilities. Helping deliver a balance of civil and electrical engineering to get the site up and running.
A fantastic win for Zenviron and Monadelphous. But, more importantly, perhaps a sign of where the company’s future may be headed.
Because while the old stalwarts of our resources sector, like Rio, are still going strong; the future looks like it will belong to renewables. A trend that no investor can afford to ignore.
Indeed, it is a topic that our own editor-in-chief, Callum Newman, has been covering a lot recently. As can be seen in this recent article, for example.
Now, more than ever, it seems renewables are preparing for their breakout moment. A shift that could finally bring about the energy future we’ve long heard about.
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