Downer to take 400 Macmahon workers at Christmas Creek

Macmahon Holdings employees at Christmas Creek will be rehired by Downer EDI in order to fill requirements for the consolidated contract with Fortescue Metals Group.

Last month Macmahon lost their contract with FMG for mining at Christmas Creek 2, which will end on April 20, as FMG took steps to consolidate the Christmas Creek 1 and 2 mining contracts.

Downer EDI’s mining division picked up the new contract, and the company has said would be worth around $750 million until September 2016.

Downer EDI said it would take on 400 staff from Macmahon, which would remain working at the project after safety retraining.

It is understood that Downer will take on 150 Macmahon employees when the new contract begins in April, followed by another 250 in the following month after training the first intake.

A spokesperson for Downer said the company will be able to provide greater efficiency in the consolidated contract to work the two sites with greater efficiency.

Macmahon has lost $260 million in revenue over the failed deal, which took place as a result of FMG cost saving measures, and the contractor has already begun to implement business resizing initiatives including consolidation of Perth offices.

Macquarie Securities expects the contract will generate net profits of $5 to $8 million for Downer in FY16.

Macmahon shares (ASX: MAH) fell from 0.057c to 0.034 following the February 23 announcement, but recovered and fell back to 0.049c yesterday.

Downer EDI (ASX: DOW) has traded between $4.35 and $4.41 since the announcement.

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