The BBT SE company said in a statement that it was “putting an end to its contractual relationship with ARGE H51,” an Austrian-Italian consortium.
In 2018, ARGE H51 began work on a stretch of the tunnel between the Austrian village of Pfons and the Italian border. BBT SE said it had “regrettably been forced” to take the decision due to a “definitive refusal to provide contractually agreed services and a loss of trust”.
It added that there had been “no constructive collaboration with ARGE H51 since the awarding of the contract”.
BBT SE did not indicate how Wednesday's decision might impact on the timetable for construction, which has already suffered delays.
The tunnel was initially slated to open in 2025 but the current projected end date is 2028.
In May, Austria's public auditor said it expected work to take until 2030 due to disputes between the companies involved.
Austrian construction giant Porr, one of the companies involved in the ARGE H51 consortium, said in a statement that in its opinion BBT SE's decision was “plainly unlawful and therefore the contract remains valid”.
BBT SE's decision “makes a further multi-year delay to this critical European infrastructure project inevitable, along with cost increases in the millions,” the statement said.
Porr added that it “will take every step necessary to protect its rights”.
The contract for the section in question was signed for almost one billion euros ($1.18 billion), while the cost of the tunnel project as a whole is estimated at 8.4 billion euros.
Half of the total sum is being financed by the European Union, while Italy and Austria are sharing the rest of the costs.
BBT SE said that it “would do its utmost to make sure the pioneering Brenner Base Tunnel project is continued in the best possible time frame” and that the awarding of a new contract would be accompanied by a “careful and detailed analysis of the construction and contract plans”.
The idea of building a rail tunnel under the Alps stretches back to the 1980s and the current project is part of an ambitious European programme to strengthen north-south transport links across the continent.
Once operational, the tunnel will be the longest of its kind in the world, stretching for 64 kilometres (40 miles). Currently 2,800 people are employed in the construction works, which began in 2011.