BGC wins $720m Arrium contract

Arrium administrators KordaMentha has awarded BGC Contracting a $720 million contract to continue work at the Iron Knob and South Middleback Ranges iron ore projects in South Australia through to 2022.

BGC announced today that its current mining contract with Arrium, which was due to be completed during 2017, had been replaced with a new contract to carry out a full range of mining services over the next five years.

The scope of work includes drilling, blasting, loading, hauling, dumping and train load-out.

BGC Contracting chief executive Greg Heylen said one of the company’s core strengths as a privately owned business was its ability to be adaptive and responsive to significant shifts in the market.

“This has been a challenging time for the mining sector as it dealt with the decline in the commodities markets in the short term,” he said.

“BGC Contracting’s breadth and vertical integration of services has enabled us to improve efficiencies on the project, which has resulted in lower cash costs for Arrium and the administrators.

“During this time we have continued to meet Arrium’s safety and production targets and we look forward to continuing our work with Arrium’s team in the future.” 

Mr Heylen said the workforce and subcontractors in Whyalla had helped navigate through the challenging period.

Arrium executive general manager Matt Reed said a collaborative approach to the recent challenges resulted in significant improvements for both parties.

“With the price of iron ore falling over the past few years, it’s been imperative that we reset our cost base and build a long-term, sustainable business,” he said.

“We had a lot of work to do, but BGC has played a major role in bringing our mining costs down by working in partnership with our operations team.

“We look forward to developing this partnership with BGC over the coming years and continuing to reduce our costs as we create a world-class business.”

KordaMentha partner Mark Mentha said BGC had played a key role in Arrium’s improved cost position.

“Their willingness to partner with Arrium in forming one team has helped the business survive this difficult period,” he said.