The surging investment in mining and resources projects in Western Australia has been good news for the state’s engineering fraternity, judging by the latest batch of profit reports and updated data for WA Business News ‘Book of Lists’.
The industry enjoyed another year of growth, with the 10 largest firms in Perth employing nearly 6,000 engineers between them.
WorleyParsons remains the largest engineering firm in Perth by a wide margin, with about 2,000 engineers and 3,200 staff on its WA payroll, according to data supplied for the Book of Lists (see page 24).
With clients including Fortescue Metals Group, Woodside Petroleum, Verve Energy and aspiring magnetite miner Asia Iron, WorleyParsons has good exposure to the state’s major growth sectors.
In partnership with international group FosterWheeler, it has also managed Woodside’s major LNG developments, including the Pluto foundation project.
The duo have also worked on the front-end engineering study for the Pluto expansion projects, but face competition from KBR for the final contract.
The scale of WorleyParsons’ WA operations has been well and truly outstripped by its expanding global network; in the past year its global staffing has increased to 35,100 people working in 43 countries.
The number two engineering firm in Perth, SKM, has a large exposure to the iron ore sector, having worked for BHP Billiton, (mostly via the FAST joint venture with US group Fluor), Rio Tinto, Ferraus and North West Infrastructure.
Another unlisted engineering firm, Perth-based Calibre Global, has also worked on numerous iron ore expansion projects.
Calibre has grown to have 520 engineers and 1300 staff and revenue of more than $200 million, helped by several acquisitions, including the Engenium rail engineering business.
Perth-based engineering companies such as Clough, Lycopodium and GR Engineering provide a good insight to their performance via their stockmarket listings.
Clough, which is in the midst of selling its loss-making marine construction division, reported a fall in statutory net profit, but enjoyed a strong rise in net profit from continuing operations to $49.6 million for the year to June 2011.
The company’s exposure to growth opportunities was illustrated by contract wins on BHP Billiton’s Macedon gas project, the Ichthys LNG project, Wesfarmers’ ammonium nitrate plant expansion and Hancock Prospecting’s planned Roy Hill iron ore project, via the newly former Clough Forge joint venture.
Lycopodium had a good financial year, with revenue up 41 per cent to $169 million and net profit up 6.6 per cent to $17.1 million.
Recent project wins on the Tropicana gold mine development and Rio Tinto’s Marandoo iron ore mine expansion helped to boost its outlook, with the group forecasting higher revenue and profit in the current financial year.
GR Engineering Services, which listed on the Australian Securities Exchange in April, beat its prospectus forecasts, with revenue of $142 million and net profit of $21.1 million.
Managing director Joe Ricciardo said the group was working on construction projects involving lead, zinc and gold and was preparing more than 20 feasibility studies, which signalled a good pipeline of future work.
The company has also won $360 million of work on Moly Mines’ Spinifex Ridge molybdenum project, as a sub-contractor to China-based lead contractor CACS Corporation.
Mr Ricciardo said this contract, which remained subject to Moly securing finance, would be the company’s largest.
Perth engineering firm Arccon, which is part of listed company Allmine, has also won work through its China connections, in this case the descriptively-named China Nonferrous Metal Industry’s Foreign Engineering and Construction Co.
This consortium has undertaken engineering work on two proposed developments – Reed Resources’ Barrambie vanadium project and Marengo Mining’s Yandera copper project in PNG.
While local engineering firms have a strong presence in the mining sector, they are usually outgunned in the LNG sector by larger and more experienced international firms.
The big players in that space include KBR, Technip, Bechtel, Chiyoda and JGC. To varying degrees, these firms undertake most of their LNG engineering work at international offices such as Houston, Paris and Yokohama.
One group that has expanded its Australian presence is Scotland-based Wood Group, which operates here through several brands, including JP Kenny and Wood Group PSN.
In its recent profit report, the parent company talked up the Australian growth of its subsea and pipeline business, which includes JP Kenny. It said this business “continues to perform well, most notably in Australia where we are working on a number of projects, including Chevron’s Gorgon and Woodside’s Browse”.