Macmahon secures Byerwen contract extension

The Byerwen coal mine.

Macmahon Holdings has won a $700 million contract extension from Byerwen Coal to continue work at its coking coal mine in Queensland.

The contractor has been providing open cut mining services at Byerwen since the mine was established in 2017, employing more than 430 workers on the site.

With the extension, Macmahon will continue working at the Bowen Basin mine for three additional years, with the option to extend for another two years.

Macmahon plans to spend $16 million on ancillary equipment and has also procured two additional 800-tonne hydraulic excavators for the project, worth $37 million.

Macmahon chief executive and managing director Michael Finnegan was pleased to extend the relationship between Macmahon and Byerwen.

“We are very pleased to have secured this expansion and extension at Byerwen, which is one of our cornerstone projects in Australia,” Finnegan said.

“Byerwen Coal is an excellent partner and the project has been very successful since its inception. We look forward to continuing to work with our client on the development of this premium asset.”

Byerwen Coal is a joint venture between the QCoal Group and Japanese steel manufacturer JFE Steel.

The contract extension will expand production at Byerwen to 10 million tonnes of hard coking coal per annum from this June until November 2023, with full capacity expected from July this year.

This is expected to bring a revenue of $700 million, and could exceed $1 billion if the contract is extended again.

The contract helps Macmahon to stay on track to meet its 2020 financial year guidance of $1.3 to $1.4 billion in revenue and earnings before interest and taxes (EBIT) of $85 to $95 million.

It also puts Macmahon ahead for the upcoming 2021 financial year, increasing the company’s work in hand by approximately $115 million to more than $1.2 billion.

QCoal group managing director Christopher Wallin said it was satisfying to be able to confirm the increased production from the Byerwen mine.

“The development of the Byerwen project is a great success story for the industry, with the mine now emerging as a very low-cost producer of hard coking coal,” Wallin said.

“I am very proud that this expansion will enable us to further contribute to the Queensland economy with additional local employment and opportunities for regional communities.”

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