Two major Aboriginal businesses have shut their contracting arms, choosing to invest instead in tourism and mining.
With Western Australia in the midst of another iron ore boom, there are plenty of opportunities for Aboriginal businesses chasing contracts in the mining sector.
Despite that, two well-established Aboriginal operators have shifted away from contracting during the past year.
Gumala Enterprises has been working in the Pilbara for 15 years, winning multiple contracts in its own right and with joint venture partners.
Like most contractors, it has had lean periods, but appeared to be on the up during 2018 and 2019 when it won contracts with BHP and Rio Tinto worth more than $30 million.
Gumala obtained Supply Nation certification in September 2019, which was another signal of the group’s desire to expand its business operations.
However, in July last year, its parent Gumala Aboriginal Corporation (GAC) removed the board of directors and launched a strategic review.
GAC attributed this dramatic move to COVID-19 restrictions, saying they had reduced the pipeline of work and made it very difficult to manage the business and plan for the future.
“The GAC board felt it needed to move quickly and efficiently to resolve the situation, so the decision was made to remove the Gumala Enterprises board,” chair Gloria Smith said at the time.
The decision came shortly after Gumala Enterprises had completed repayment of a $3.3 million loan to its parent, which included GAC writing off about $2.2 million.
In October, GAC completed the strategic review and said it would shut down the civil contracting business.
GAC’s 2020 annual report revealed the discontinued operations generated revenue of $26.3 million that year, indicating their substantial scale.
However, after adding in other income and expenses, Gumala Enterprises incurred a loss of $4.4 million for the year.
The winding down was an expensive exercise, as it resulted in staff redundances costing $350,000, supplier costs of $1.7 million, and bills from the Australian Taxation Office of $2.1 million and the Office of State Revenue of $342,000.
Gumala has retained ownership of a workshop in Tom Price, but its main undertaking is ownership of Karijini Eco Retreat in the Pilbara.
Gumala built the resort in 2007 and took over its management in 2017.
However, it decided last year to appoint private company Mackerel Islands to manage the resort.
Mackerel Islands was founded in 1969 and operates several tourism facilities in the Pilbara.
“This next chapter in Karijini Eco Retreat’s 14-year history will be exciting in terms of potential as we further develop the market,” he said.
To support its continued operations, Gumala Enterprises has taken out a $7 million loan from another entity in the group, Gumala Investments.
Its focus on Karijini could be aided by the state government’s election commitment to invest $10 million upgrading visitor facilities at the remote park.
The government plans to establish a new campground, cultural walk trail and interpretive facilities, and seal the dirt road between the Eco Retreat and various gorges, making the area more accessible for hire cars and coaches.
More generally, the state government is seeking to promote Aboriginal tourism.
Last month, it launched a $20 million fund to support more Aboriginal people who wanted to be involved in the sector, including development of up to three new Camping with Custodian campgrounds.
The government has also launched an Aboriginal tourism action plan, known as Tjina, which was developed by Tourism Western Australia and the Western Australian Indigenous Tourism Operators Council.
Meanwhile, Wintawari Guruma Aboriginal Corporation is close to completing a major shift in its business focus.
WGAC – the registered ‘body corporate’ holding native title for the Eastern Guruma people – set up its own contracting business in 2014.
WGAC’s business arm – Wintawari Guruma Enterprises – has shut down its labour hire operations and is in the process of selling its plant and equipment.
It has retained one aspect of its old business operations: a facilities management joint venture with US-based Civeo, at Fortescue Metals Group’s Solomon mine.
Its new focus is on mineral exploration, under the name Guruma Resources.
The company has applied for nine exploration tenements on Eastern Guruma land, which surrounds Tom Price, and has already been granted three.
This includes six Rio Tinto mines and Fortescue’s Solomon hub.
The area was also home to many culturally significant places, with more than 70 rock art engraving sites, 40 ceremonial areas and 30 traditional burial locations.
Mr Bevan said WGAC had, in the past, experienced poor behaviour by mining companies where they had not complied with agreements or relevant environmental and heritage laws and processes.
Most recently, it protested when Fortescue breached an agreement governing the clearance of land.
Fortescue issued an immediate apology and blamed an administrative error.
“It’s an area under significant pressure,” Mr Bevan said.
“This enables us to manage the heritage in a better way.
“We can engage with partners that are culturally responsible.”
To support its new focus, WGAC has started an evaluation of mining companies operating on its land.
It has introduced a mining company scorecard, with 34 questions covering matters such as heritage surveys, regulatory compliance, care for the environment, relations with native title holders, and environmental social and governance (ESG) reporting.
Early next year, WGAC will publish the results and provide feedback to the mining companies recognising areas of excellence and identifying areas for improvement.
WGAC director Tony Bevan said there were two main reasons for shutting down the contracting arm.
One was to avoid any potential conflicts of interest in dealing with mining companies that may award large contracts.
“The prime focus is the protection of heritage and culture, and that will be unhindered,” he said.
The second reason was that three businesses owned by Eastern Guruma members were already in existence.
“The board recognised that private traditional owner businesses can be more nimble and responsive,” Mr Bevan said.
The private businesses include Muntulgura Guruma, a 50:50 partnership between Clinton Wolf’s iContracting and HHF Pty Ltd, a company set up by the Hughes and Hicks families.
WGAC originally supported the establishment of this business.
A second is SX5 Group, a diversified contractor that is 51 per cent owned by Eastern Guruma elder Kenzie Smith.
The largest is EGPL, which is chaired and part-owned by Tania Stevens.
It has been operating for nearly 20 years and consistently ranked as one of WA’s largest indigenous contractors with about 200 staff, according to Data & Insights.
EGPL increased revenue to $33.9 million and net profit to $1.9 million last financial year, according to financial statements lodged with the Australian Securities and Investments Commission.
The directors’ report said EGPL had a good year due to the strong performance of its joint ventures and exceptional performance in two new projects, which included construction of a sealed road and a conveyor tunnel at Rio Tinto’s Silvergrass mine.
This offset another write-down in its discontinued pastoral operations.
EGPL’s most significant joint venture is with Wirlu-Murra Enterprises, an entity that has been strongly supported by Fortescue.
The joint venture has been in place since 2013 and provides road maintenance and mining services for Fortescue.
Wirlu-Murra chief executive Jose Castillo told Business News the scope of this contract had been increased and would now deliver revenue of $35 million per annum.
Wirlu-Murra also delivers maintenance services in its own right to non-process infrastructure at Fortescue’s Solomon mining hub.
It employs about 70 tradespeople under this contract.
When these contracts were awarded in 2019, Fortescue said they were the largest it had ever awarded to 100 per cent Aboriginal-owned businesses.
The third major leg of Wirlu-murra’s business is bus services: it owns 15 buses and hires a further six to transfer mine workers.
Wirlu-Murra employs 140 people in total, with 32 per cent Aboriginal participation.
It increased annual revenue to nearly $29 million, according to the 2020 report of its parent, Wirlu-murra Yindjibarndi Aboriginal Corporation.