©Bloomberg

Samsung C&T Corp is scaling back its mine construction ambitions after losing A$1bn (US$755m) on a project controlled by Australia’s richest woman and becoming embroiled in a series of legal disputes.

The South Korean construction giant recently completed work on the Roy Hill iron ore mine in Western Australia. But it is still fighting court battles with contractors, including a lawsuit filed by Spanish company Duro Felguera for A$65m in unpaid subcontracting work.

“The Roy Hill Project was the company’s first mining construction project, and there are no other mining projects that the company is working on,” said Samsung C&T in a statement.

Samsung C&T added that there was little market demand for mine construction projects due to the difficult situation in commodities’ markets.

The construction company, best known for its work on skyscraper projects such as Malaysia’s Petronas Towers, timed its entry into mine construction badly. In 2013 it won a US$5.6bn contract to build the Roy Hill mine, which is controlled by Gina Rinehart’s Hancock Prospecting, just as a decade-long resources boom ended.

A year later it won a second contract from Bandanna Energy to build a huge underground coal mine in Queensland. But that project never went ahead and Bandanna has since been placed into administration, a victim of the commodities crash.

Samsung C&T developed a processing plant to export iron ore produced from the Roy Hill mine, railroads and harbour infrastructure. The complex project ran over schedule and over budget, and in January Samsung C&T revealed that it would book a A$1bn loss on the contract.

When Roy Hill made its first shipment of iron ore in December, Choi Chi-hun, Samsung C&T president and chief executive, said his company had battled “many challenges” in building the mine in one of the harshest regions in Australia and was honoured to be part of it.

However, Samsung C&T is still dealing with the Roy Hill cost blowout in the courts. Last week Duro Felguera filed a lawsuit seeking A$65m payment for unpaid work at the iron ore mine — the latest in a series of disputes between Samsung C&T and contractors.

“In total, Duro Felguera is owed well in excess of $100m by Samsung in relation to a $500m subcontract for work on Roy Hill,” said Raul Serrano, Duro Felguera operations director.

Samsung C&T said a judicial review on the payment disputes with Duro Felguera is pending and that it is taking all proper steps to resolve them in accordance with the law.

Analysts say the Roy Hill experience has eroded Samsung C&T’s appetite for mining projects.

“In the beginning, Samsung C&T was ambitious,” said Lee Kwang-soo at Mirae Asset Securities. “However in the course of working on the project, uncontrollable risks happened. So it seems difficult for Samsung C&T to expand further into mining in the future.”