Civmec boosts order book as strength returns to WA resources sector

The South Flank site. Image: BHP

Engineering contractor Civmec has recorded a 51 per cent increase to its order book in the March quarter on the back of major contract wins with BHP and Albemarle.

The leap in fortunes (to an $840 million order book) on the previous quarter is reflective of what Civmec refers to in its quarterly statement as “a pickup in Western Australia’s resource sector”.

Civmec secured two large Western Australian contracts in February that helped it to the significant increase.

The company was drafted to construct a lithium hydroxide plant for Albemarle (the Albemarle Kemerton Plant), as well as a $48 million fabrication and assembly contract at BHP’s South Flank iron ore mine.

Civmec chief executive officer Patrick Tallon said the Albermarle contract was “ideally suited to our operations, including civil and concrete installation, fabrication, modularisation and site erection of steel and mechanical equipment for this key Australian development”.

The company shares space with several other high-profile contractors that have started working on major Western Australian projects this year, including at the same operations.

The recent spate of strong contract wins in Western Australia is emblematic of a return to fortunes for the state’s mining sector.

Last week, Treasurer Ben Wyatt predicted that the state would enjoy an operating surplus of $1.5 billion for the 2019–20 period, its first in five years. The Treasurer added this could extend to over $2 billion to 2022–23.

In February, the same month Civmec announced its contracts with Albemarle, BGC Contracting entered Western Australia’s ‘Lithium Valley’ for the first time with an earthworks contract at Kemerton.

Metso followed in April with a contract to supply pyro-processing and communition equipment to the billion-dollar site, which will be fed with lithium concentrate from Albemarle’s Greenbushes site.

Civmec has some involvement with Metso’s contract through the supply of certain equipment, including three 56-metre long kilns weighing around 200 tonnes each.

Monadelphous secured a major $212 million construction contract with BHP at South Flank in March, while a $65 million facilities expansion deal helped push Decmil to profitability in its 2019 first half report.

NRW Holdings and WorleyParsons also inked key contracts at Rio Tinto’s Koodaideri iron ore project in the Pilbara in January and April, respectively.

Civmec stated it was optimistic about the medium-to-long term future of the company, having remained profitable during a period of challenging market conditions.

Tallon said the group was looking forward to continued engagement with its “blue-chip clients”, particularly for iron ore clients looking to add value to upcoming expansion programs.

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