Tag Archives: mine contracting

SNC-Lavalin’s Resources segment in line for reorganisation

SNC-Lavalin Group says it is exiting lump-sum turnkey (LSTK) contracting and will reorganise its Resources (Oil & Gas and Mining & Metallurgy) and Infrastructure Construction segments into a separate business line following continued poor performance.

The company, which earlier this year stopped bidding on all future mining EPC projects, said it was also exploring all options for its Resources segment, particularly its Oil & Gas (O&G) business, including transition to a services-based business or divestiture. SNC-Lavalin’s Resources division reported negative EBIT of C$256.6 million ($195.4 million) in 2018.

“The decision to reorganise the company will allow SNC-Lavalin to focus on the high-performing and growth areas of the business, which will be reported under SNCL Engineering Services,” the company said, adding that it will fulfil the contractual obligations of its current LSTK projects and then be reorganised as SNCL Projects.

The reorganisation and exiting from LSTK contracting is the first step of the new strategic direction for the company that is focused on de-risking the business and generating more consistent earnings and cash flow, SNC-Lavalin said.

Ian L Edwards, Interim President and Chief Executive Officer, said: “LSTK projects have been the root cause of the company’s performance issues. By exiting such contracting and splitting it off from what is otherwise a healthy and robust business, we are tackling the problem at the source and, as a result, we expect to see a material improvement in the predictability and clarity of our results.

“Going forward, the reorganisation will allow us to focus on leveraging growth opportunities and end-to-end project management capabilities that we have in SNCL Engineering Services, delivering consistent earnings and cash flow, with a leaner capital structure, to our shareholders.”

In March, SNC-Lavalin confirmed a $260 million engineering, procurement and construction contract with Codelco at Chuquicamata, in Chile, had been cancelled following a dispute.


Barminco wins extension at Hindustan Zinc-owned Rampura Agucha zinc-lead mine

Ausdrill’s recently added subsidiary, Barminco, has been awarded an underground mining services contract at the Rampura Agucha zinc-lead mine in India from Hindustan Zinc worth approximately A$100 million ($71 million), the ASX-listed company says.

Hard-rock underground miner Barminco has operated at Rampura Agucha for Hindustan, a subsidiary of Vedanta Limited, since late 2016. The new underground mining services contract is for a three-and-a-half-year term, subject to review and mutual agreement of rates after the first year.

The scope of work includes the extension of development works that were being provided under a recently completed contract, plus the addition of production work in the Barminco-developed area of the mine. Under the contract, Hindustan will provide capital equipment and consumables. Barminco will commence work immediately, Ausdrill said.

Barminco CEO, Paul Muller, said: “We are very pleased to have been awarded a contract that extends our operations at the Rampura Agucha mine with an expanded scope to include production works. We look forward to deepening the relationship we have built with Hindustan Zinc over the past few years by delivering on this extended scope of works both safely and efficiently.”

Rampura Agucha is the second largest zinc mine in the world, according to Hindustan, with production of 3.9 Mt in the company’s 2018 financial year. It has a zinc-lead reserve grade averaging 15.7% Zn+Pb, with total reserves of 46 Mt as of March 31, 2018.

The ongoing underground mine project is being developed with a vision of producing 5 Mt/y of ore and includes a main production shaft of 955 m depth, 7.5 m diameter and hauling capacity of 3.75 Mt/y; two ventilation shafts, two declines from surface and paste fill plants, according to Hindustan.

Watpac mulls sales of Civil & Mining business

Watpac says it is in discussions with another party in regards to the sale of its Civil & Mining business.

The ASX-listed company said due diligence was being undertaken by the potential acquirer on an exclusive basis, as the two looked to tie up a deal.

It added: “The proposed transaction has an assessed potential value broadly in line with the current written down value of the company’s assets.”

In October, Belgium’s BESIX Group made a cash bid to acquire all of Watpac in an attempt to expand its contracting business. The bid was due to expire today; the same day the bid for the civil and mining business emerged.

In the year to June 30, 2018, Watpac recorded a consolidated statutory loss after tax of A$56.9 million ($42 million). While its construction business generated an underlying profit of A$20.6 million, it was weighed down by “impairment and restructuring provisions resulting from the board’s strategic review of the Civil & Mining business”, the company said.

The Civil & Mining business employs approximately 400 people nationally – about 40% of Watpac’s total national workforce – with active projects in Western Australia.