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Claim Preparation for Exchange Rate & Inflation Risk in a Mining Project

In large-scale capital projects—particularly in resource-driven sectors like mining—volatile exchange rates and inflation pose significant financial risks. Without proactive risk allocation and contractual preparedness, such fluctuations can lead to substantial, unrecoverable cost overruns. To address this challenge, we prepared a comprehensive claim package for a major mining project, aiming to recover additional costs caused by adverse currency movements and inflationary pressures. This effort not only positioned our client for successful compensation, but also helped mitigate ongoing financial exposure tied to macroeconomic volatility.
Brief

We prepared a 200+ million USD claim package for a mining project, aiming to compensate for unforeseen cost increases due to exchange rate fluctuations and inflation risks. Through a structured approach combining financial analysis, forecasting, and contractual expertise, we developed a detailed, data-backed claim submission within an exceptionally tight timeline. Our approach aims to develop a comprehensive claim package addressing exchange rate and inflation risks, ensuring cost recovery for additional expenses incurred due to market fluctuations.

Our Approach
  1. Risk & Cost Analysis: We conducted with a thorough assessment of how macroeconomic volatility—specifically currency devaluation and inflationary pressures—had affected the project’s financial health. This involved tracing cost overruns back to specific risk triggers and isolating their financial impact across key budget components such as materials, equipment, labor, and services.
  2. Financial Quantification & Forward Forecasting: We quantified realized losses and developed a forecast for future exposure using:
    1. Estimate-to-Complete (ETC) project budgeting to anticipate remaining financial needs
    2. Project cash flow modeling to identify timing and magnitude of potential cost risks
    3. Exchange rate and inflation projections from globally recognized financial institutions to ensure credibility and defensibility.
  3. Claim Package Development: Based on our analysis, we compiled a detailed and defensible claim package in USD, including, clear documentation of incurred and projected losses, comprehensive financial modeling outputs, contractual references supporting the client’s entitlement to compensation. The package was structured to maximize clarity and strength of argument for potential negotiations or dispute resolution.
  4. Collaborative Execution & Fast-Track Submission: Given the tight timeline, we worked in close coordination with the client’s Contract & Claim Department to ensure full alignment with contractual provisions, formatting standards, and submission protocols. Despite the complexity and volume of the claim, the entire package was finalized and submitted within a very tight schedule—demonstrating both technical rigor and agile execution under pressure.
Strategy

Our strategy combined risk diagnostics, financial analysis, and contract-based positioning to ensure a robust, defensible claim. Key strategic pillars included:

  • Risk Identification & Impact Analysis: Evaluated historical and projected impacts of exchange rate volatility and inflation on project cost components. Mapped risk exposure against project timelines and contractual provisions.
  • Quantification & Forecasting: Measured realized financial losses and developed forward-looking cost impact estimates using ETC budgeting, cash flow analysis, and macroeconomic forecasts from trusted financial institutions.
  • Evidence-Based Claim Structuring: Developed a structured claim document in USD, detailing cost increases with financial evidence and contractual references—supporting both current and future compensation arguments.
  • Contractual Alignment & Collaboration: Worked closely with the client’s Contract & Claim Department to ensure that the claim aligned with contract terms and submission protocols—executing all within a tight one-month timeline.
Results
  • Well-structured claim package maximizing the potential for compensation.
  • Clear financial justifications, strengthening the client’s negotiation position.
  • Accurate forecasting of future cost risks, ensuring long-term financial stability.
  • Efficient execution under time constraints, showcasing strong expertise in claim management.

Through our methodical approach and contractual expertise, we provided the client with a solid claim strategy, increasing the likelihood of cost recovery and mitigating financial risks due to volatile market conditions.

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