27/11/2007 - 22:00

African engineers look to the east

27/11/2007 - 22:00

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Three major South African engineering and construction companies have entered the Australian market with a bang, and each has adopted a different strategy.

African engineers look to the east

TWP Australia managing director Bryan Baillie reckons the Australian mining industry is heading for major change, and that South African mining engineers are well placed to benefit.

RSV Australia’s Allan Mulligan shares a similar view, arguing that Australian mines will increasingly shift to deep-level underground developments.

Both of their companies have entered the local market after winning major contracts on big underground mine projects.

TWP won a tender this year to undertake the feasibility study for BHP Billiton’s $US500 million ($A580 million) Perseverance Deeps nickel project in the northern Goldfields.

If all goes to plan, TWP will continue working on the project during its four-year construction phase, leading up to initial production in mid 2013.

RSV’s first big contract, in joint venture with Maunsell Aecom, was the engineering work on Rio Tinto’s $1.86 billion Argyle diamond mine underground development.

The entry of TWP and RSV into the Australian market contrasts with the strategy adopted by another South African firm, Murray & Roberts, which formed a strategic alliance with local engineering company Clough.

Three years after its initial investment, M&R has been forced to pump more than $200 million into Clough, which has been dogged by a handful of problematic and highly expensive contracts in the oil and gas sector, which remains its main focus.

Murray & Roberts also formed a joint venture with Clough to chase work in the minerals sector.

They teamed up with Aker Kvaerner to win the engineering, procurement and construction management contract for Newmont’s $2 billion Boddington gold project.

Putting together the BHP, Argyle and Boddington projects means that South African engineers have won three of the biggest mine engineering contracts (excluding iron ore) in WA in recent years.

It’s a counter to the trend that has led Australian firms like GRD Minproc, Lycopodium and Ausenco to export their expertise to the African mining industry.

A key difference is the experience that firms like TWP and RSV have acquired in underground mining.

The BHP project, for instance, involves sinking a 1,500-metre deep vertical shaft, which would be the deepest in Australia.

“We saw a need for mines to venture into deeper operations,” said Mr Baillie, who was lured from diamond miner De Beers by the opportunity to establish TWP’s Australian operation.

Mr Baillie has ambitious growth plans.

“Our strategy is to set up the office, ensure the BHP job is done properly, then look for new opportunities,” he said.

The Perth office has 32 staff and is aiming for up to 150 by the end of 2008.

Mr Baillie, who has a 12.5 per cent stake in the Australian arm, is also looking at a possible market float.

“I’ve been mandated by [company founder] Nigel [Townshend] to work towards listing here as early as 2009,” he said.

Mr Baillie said TWP aimed to provide a total solution service to its clients.

“It’s very important for us to be seen as not just specialists in vertical shafts and deep level work. Our expertise goes way beyond that,” he said.

RSV also offers a range of project management and engineering services, though shaft engineering is a particular point of difference.

Mr Mulligan expects an increased move to ‘third generation’ extraction methods, which involve deep underground mining.

“In these boom times, you can afford to look at things differently,” he said.

“Commodity prices are making it more viable to go deeper.”

Mr Mulligan said RSV tailored its solutions to local needs.

“There is no point in just bringing what we do in South Africa and trying to apply that to Australia,” he said.

The Argyle project, for instance, involves 40 kilometres of access declines and the use of ‘block cave’ mining methods.

In contrast, Boddington involves the development of two open pits. First production is due in late 2008 or early 2009 after a 2.5-year construction period.

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