MacMahon announces $135 million writedown

MacMahon Holdings has announced a $135 million writedown as challenging conditions in the mining market continue to put the strain on contractors.

MacMahon said the impairment related to the carrying value of certain equipment, goodwill and inventory assets.

The company said its mid-year review process led to the writedown after taking into account continued low commodity prices and challenging conditions in the mining services sector.

“As a result of this review, MacMahon now considers that demand for the company’s services will remain subdued for longer than anticipated,” the company said.

The move follows the departure of MacMahon’s managing director Ross Carroll and deputy chairman Barry Cusack last month.

In November MacMahon cut 45 people from its two Perth offices.

Mining services companies are bearing the brunt of a downturn in the commodity cycle, with job cuts and closures mounting.

This week Sandvik announced it will close its Wollongong operations and reduce its Kalgoorlie site in the wake of continuing mining uncertainty.

More than 63 jobs will be affected as a result.

Meanwhile, Downer EDI blamed the downturn in mining for its four per cent profit slide in the first half, which is down to $94.7 million.

Highlighting the way miners are leaning on contractors to secure costs savings, BC Iron revealed it is looking to renegotiate the terms of several of its workforce contracts in order to save money amid the weak price of iron ore.

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