The simmering row between Minproc Engineers Ltd and the Canadian group Kap Resources Ltd over a Chilean nitrate project has erupted into outright warfare and is headed for the courts.

Minproc said on Friday that it had suspended all project works on the Yolanda nitrate project, demobilised its management team and instigated urgent arbitration proceedings chasing payments of more than $US9.5 million ($12.3 million) from the Kap subsidiary Minera Yolanda.