19/01/2016 - 12:17

BGC in $520m Cliffs extension

19/01/2016 - 12:17

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One of the state’s largest mining services companies has received a boost, with BGC Contracting securing a five-year contract extension worth $520 million at Cliffs Natural Resources' Koolyanobbing iron ore mine.

BGC chief executive Greg Heylen.

One of the state’s largest mining services companies has received a boost, with BGC Contracting securing a five-year contract extension worth $520 million at Cliffs Natural Resources' Koolyanobbing iron ore mine.

From an initial end date of 2017, it will now operate at the mine until 2022.

It covers a range of services including drilling, blasting, loading, hauling crushing, screening and train loading at the mine, which is about 400 kilometres north-east of Perth.

BGC Contracting chief executive Greg Heylen said the contractor had met safety and production targets in a tough climate for producers.

“BGC’s long-standing relationship with Cliffs has seen the two companies work collaboratively over the better part of the last decade, and during this time we have continuously and reliably delivered on the contract,” he said.

“This has been a tough period as the iron ore price has fallen, and I believe that by maintaining strong relationships with Cliffs at all levels of our organisation, we have helped them succeed at Koolyanobbing in what has been a difficult market for all iron ore miners.”

BGC, which is seventh on the BNiQ mining contractors list, also won work in November when it formed a joint venture with indigenous contractor Yurra for a rail line with Rio Tinto.

The value of that deal was undisclosed.

Earlier in the year, BGC had been involved with David Flanagan’s rescue of Atlas Iron, with the company issued shares that had been valued at $17 million and relinquishing its operations on one mine, Wodgina.

It remains the contractor on the Mt Webber mine.

US-based Cliffs has been under pressure during the boom, with chief executive Lourenco Goncalves reportedly declaring in April last year that iron ore mining was a "doomed, horrible business".

Despite a continued drop in the price of the steel-making commodity since, the company’s WA operations have remained in business, with today’s contract a possible indication of its longer-term plans.

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