SNC gets $2B Vale contract

MONTREAL— Construction and engineering giant Snc-lavalin Group Inc. has been chosen to manage a $2 billion environmental upgrade in northern Ontario for Brazilian mining giant Vale SA.

The Montreal-based firm says it will work with local contractors to modernize Vale’s nickel smelter complex in Sudbury, Ont. The project is expected to cut emissions of sulphur dioxide by 70 per cent from current levels and dust and metal emissions by up to 40 per cent.

The Brazilian firm acquired the smelting operation when it bought Toronto-based Inco several years ago. Construction work on the project is set to begin in April 2012 and be completed near the end of 2015.

SNC will be responsible for project management, engineering, procurement and construction management under the services contract with Vale. The value of the contract wasn’t disclosed in SNC’S announcement Monday.

“Vale is a repeat and long-standing client and we’re delighted they chose to retain us for the implementation phase of this major strategic environmental program,” said Feroz Ashraf, executive vice-president, Snc-lavalin Group Inc.

The company’s contract with Vale comes as SNC grapples with the fallout from its operations in Libya — where it managed several major projects for the Gadhafi regime — as well as accounting irregularities.

SNC shares were trading at $39.36 on the Toronto Stock Exchange, down 64 cents from the previous close and down from $48.37 a share a week ago before the company announced it has cut its 2011 profit forecast by 18 per cent. The announcement sent SNC shares plunging, reducing its market cap by about $1.2 billion in a week to just under $6 billion.

Earlier Monday, SNC said it will defend itself from a class-action lawsuit filed on behalf of shareholders who acquired its securities between March 2009 and February 2012. The suit is seeking $250 million in damages from SNC.

It follows last week’s announcement that SNC is investigating $35 million in mysterious payments made by the firm that have been attributed to unrelated projects.

SNC denies all liability in respect of the claims alleged in the proposed class action.