Mining services company Aerison collapses amid $47m dispute with Gina Rinehart’s Roy Hill mine

Mining services company Aerison has called in administrators after failing to settle a $47.5m dispute with Gina Rinehart’s giant Roy Hill iron ore mine, putting more than 250 jobs at risk.

WA mining services company Aerison has collapsed over a $47m payment dispute with Gina Rinehart's Roy Hill mine in the Pilbara.

Mining services company Aerison has called in administrators after failing to settle a $47.5m dispute with Gina Rinehart’s giant Roy Hill iron ore mine, putting more than 250 jobs at risk.

The company said late on Tuesday its directors had called in KordaMentha as voluntary administrators after failing to settle a running dispute with Roy Hill over payment for its work building a desalination plant at the giant Pilbara iron ore mine.

The company has been suspended from trading since early May as it talked to its bankers, and to Roy Hill, to find a way through a liquidity crunch caused by the dispute over payment for work on the mine.

Aerison had $27.1m in borrowings at the end of December, according to its last annual financial statements, and owned another $15.8m in trade payables.

It is understood its dispute with Roy Hill centres around the quality of work on the desalination plant, as well as responsibility for variations to the projected cost caused by Covid-19 supply chain issues and broader inflationary pressures, with Aerison invoking formal dispute clauses in its contract with the iron ore miner in late May.

WA mining services company Aerison has collapsed over a $47m payment dispute with Gina Rinehart's Roy Hill mine in the Pilbara.

At the time managing director Giuseppe Leone said the company had been working for six months to try to resolve the dispute surrounding the work – which kicked off in February 2022, amid hard lockdowns of the WA border during the Covid-19 pandemic.

“Our move to invoke the dispute clauses contained within the contract was a last resort in an attempt to protect the interests of the company and our team, supply chain, contractors and shareholders,” he said.

KordaMentha administrator Richard Tucker said that, like other contractors in the WA mining industry, Aerison had been under significant pressure from rising costs in the Australian mining industry.

“However, the business was robust and the real cause of the issue was a dispute with Roy Hill which had resulted in a liquidity shortfall,” he said.

“At its core, Aerison is a niche player in the market with deep relationships and a loyal workforce. The dispute with Roy Hill will be vigorously pursued as part of the voluntary administration process.”

Mr Tucker said KordaMentha had already seen strong interest from other mining services companies in buying the group, given the company’s 30-year operating history and strong stable of long term clients – including Rio Tinto, BHP, Iluka and Fortescue Metals Group.

Aerison shares last traded at 10c, valuing the company at about $32.4m on the market.

The company employs about 250 workers across multiple sites in the WA resources industry.