How did the first half of 2017 fare for services companies operating in the Australian mining industry? Australian Mining investigates.
With improved commodity prices comes renewed optimism for not just miners but mining services companies as well.
And that was how the first of 2017 panned out for contracting groups in Australian mining, with a series of new contracts or work extensions handed out to key players in the industry during the six-month period.
Australian Mining takes a closer look at some of the companies that were awarded key mining contracts during the first half of the year.
Much of Ausdrill’s order book is now split evenly between Australia and its mine services division in Africa. While the WA-based company may be moving towards Africa’s mining industry more than ever, it is still active at operations in Australia where it has maintained historical relationships. Ausdrill secured more than $200 million worth of contract extensions with two of its existing clients in the Goldfields region of Western Australia – Kalgoorlie Consolidated Gold Mines (KCGM) and Gold Fields. Ausdrill received a $143 million contract renewal to provide drill and blast, and grade control services for an additional five years at KCGM’s Super Pit gold mine.
It was also awarded a $60 million contract extension for three years to provide exploration drilling services at Gold Fields’s St Ives and Granny Smith gold operations. In eastern Australia, Ausdrill subsidiary, BTP Equipment, secured a $70 million contract extension at Peabody Energy’s Hunter Valley and Bowen Basin coal operations. Internationally, African Underground Mining Services (AUMS), a joint venture between Ausdrill and Barminco, won a $US280 million ($371.5 million) contract at the Ahafo gold complex in Ghana, West Africa with Newmont Mining.
Privately-owned BGC Contracting is committed to establishing a collaborative model with its clients in the mining industry. It is through this model, which provides detailed incentives for both parties, that the company has strengthened its portfolio in mining. In March, the Perth-based company secured a five-year contract worth more than $720 million for Arrium’s Iron Knob and South Middleback iron ore operations near Whyalla in South Australia.
The contract replaced BGC’s existing mine services contract with Arrium. Most recently, BGC was awarded a five-year, $700 million contract by Idemitsu Australia Resources at the Boggabri coal mine in New South Wales. The collaborative model it is applying to these agreements is similar to what was used on its contract at Cliffs Natural Resources’ Koolyanobbing iron ore operation in WA.
While CIMIC was eager to bolster its mining services capabilities through an acquisition of Macmahon, its existing mining units, Thiess and Sedgman, have been busy adding to its order book. Thiess won a mining services contract at MACH Energy’s Mount Pleasant coal mine in the Hunter Valley in April. Under the contract agreement, which is set to generate around $500 million in revenue up until 2021, Thiess will conduct total mining operations, including mine planning and engineering. Thiess also secured $134 million worth of contracts to provide mining solutions to coal mines in Indonesia. Meanwhile, Sedgman was awarded a $107 million EPC contract by Heron Resources at the Woodlawn zinc-copper project in New south Wales.
Civmec is demonstrating its multi-disciplinary capabilities through the contracts it has won so far in 2017. The Perth-based, Singapore-listed company has been active in the mining, oil and gas and infrastructure sectors. In mining, Civmec has been awarded contracts or work extensions at a diverse range of projects in Western Australia.
Civmec, as part of the Amec Foster Wheeler Civmec Joint Venture (ACJV), was awarded a $298 million engineering, procurement and construction (EPC) contract at the Gruyere gold project in WA. In June, Civmec announced it had received $90 million worth of contracts for resources clients, with the most notable a construction job at Alcoa’s Pinjarra alumina refinery in WA.
The company will undertake the engineering, procurement, delivery, construction, integration, commissioning and performance testing of a filter facility, materials handling system and supporting infrastructure at the Pinjarra refinery. Civmec also secured a contract to construct the civil component of the process plant at Altura Mining’s Pilgangoora lithium project in the Pilbara.
GR Engineering continues to feature as a contract winner in WA gold sector, which has been resurgent over the past 18 months as prices for the precious metal have remained healthy. After winning the EPC contract for Eastern Goldfields’ 1.2 million tonne per annum (Mtpa) processing plant at the Davyhurst gold project last September, GR has added two further gold prospects to its contract pipeline.
In April, Dacian Gold executed a $107.1 million EPC contract with GR at the Mt Morgans project in WA. The EPC contract involves development of the Mt Morgans treatment facility and supporting infrastructure. GR also signed a letter of intent with Gascoyne Resources for an EPC contract for a minerals processing facility at the Dalgaranga gold project in WA. To finish off the financial year, GR secured another EPC contract, this time a $31.3 million deal with AngloGold Ashanti at the Sunrise Dam gold mine.
Much of the news flow surrounding Macmahon this year has focused on its battle to fend off CIMIC, which launched a takeover bid for the Perth-based contractor in January. Macmahon survived the attempt from CIMIC, mainly due to an agreement it secured to become the mining services contract for Indonesia’s PT Amman Mineral Nusa Tenggara (AMNT) at the Batu Hijau copper-gold mine.
While that complex agreement was yet to be executed by the end of June, it involved the services contract and Macmahon acquiring assets from AMNT, which would become a major shareholder of the contractor in return. Outside of that drama, Macmahon also announced it had executed a preparatory work agreement with Byerwen Coal at its mine in Queensland’s Bowen Basin. The scope of work for the contract was expected to include open cut mining and bulk earthworks for an initial period of three years.
The engineering firm is more active in the oil and gas sector these days, winning key work at the Ichthys LNG operation in northern Australia and a proposal for Oil Search’s assets in Papua New Guinea. However, Monadelphous has also been busy in the mining industry, particularly in the Pilbara region. In February, the company announced it had secured $120 million worth of new contracts for resources companies, including Fortescue Metals Group and BHP.
The work with Fortescue includes two contracts, one for cranes services at the FMG Solomon and Solomon Hub sites, and the other to provide abrasive blasting, cleaning and relining of steel ore wagons for subsidiary, The Pilbara Infrastructure. Monadelphous’ contract with BHP is to upgrade a water treatment plant at the Mining Area C iron ore operation in the Pilbara.
In WA’s emerging lithium sector, Altura Mining is racing against Pilbara Minerals to be the state’s next producer of the battery metal at its Pilgangoora project. Altura awarded NRW a $110 million contract for mine development and drill and blast services at the project in February. The five-year contract includes the construction of mining infrastructure, development of mine haul roads, drill and blast services and load and haul production mining of ore and overburden.
Pilbara Minerals has been actively awarding contracts ahead of developing its Pilgangoora lithium operation this year, with the EPC contract for the project going to RCR Tomlinson. Worth up to $148 million, the contract involves the EPC of Pilgangoora’s 2Mtpa lithium-tantalum processing plant, including wet-and-dry circuit with concentrator, associated plant and commissioning of the mine. RCR selected sub-contractors, Primero and Minnovo, to provide it with technical and engineering support at Pilgangoora. Away from mining, RCR is busy in the renewable energy sector, winning multiple EPC contracts for wind farm developments.
Aboriginal businesses continue to figure prominently in the award of new mining services contracts. Major mining companies, such Rio Tinto and Fortescue, are leading the way in this area.
Fortescue awarded $100 million of new work to Aboriginal businesses and joint ventures at its iron ore operations in the Pilbara of Western Australia just before the end of the financial year. The work included $65 million in partnership with Yindjibarndi-owned businesses. Fortescue also awarded Aboriginal-owned business Redspear Safety a three-year contract to supply lifting and rigging equipment across its operations.
Meanwhile, Pilbara Aboriginal business Pindari was awarded a long-term facilities management contract by Rio Tinto in May. The multi-million-dollar contract secures Pindari routine cleaning, grounds maintenance and associated services within nine Pilbara mine sites for five years, with options to extend.
Also in the Pilbara, Guma Indigenous Construction Resources Group (ICRG) has been awarded a contract to carry out the Roy Hill port sump installation project at the miner’s operations near Port Hedland in Western Australia.
Elsewhere in WA, Yagahong Alliance, a JV between Central Earthmoving and the Yugunga-Nya People, was awarded an $8.2 million contract for the development of the Monty copper-gold mine, a JV between Sandfire Resources and Talisman Mining.
This article also appears in the August edition of Australian Mining.