23/04/2009 - 00:00

Mineral labs crash down to earth

23/04/2009 - 00:00

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ONE of the big business stories of 2007 and early 2008 was the sale of privately-owned assay labs in Western Australia for hitherto unheard-of prices.

ONE of the big business stories of 2007 and early 2008 was the sale of privately-owned assay labs in Western Australia for hitherto unheard-of prices.

But in recent months, that sector has come crashing down with a thud.

Private companies like Ultra-Trace, Genalysis and Kalassay were sold with multi-million dollar price tags during the boom, ensuring their owners a very comfortable retirement.

Tracking the subsequent performance of some of these companies has become difficult, but the information that is available does not paint a pretty picture.

Ultra-Trace was bought by Melbourne company Amdel, which has since been acquired by the global group Bureau Veritas, while Kalassay's new owner is unlisted English group Inspicio plc.

Hence there is no public information to track their performance.

Genalysis' new owner is Intertek Group plc, which delivered strong earnings growth for the year to December 2008, but noted that demand for sample testing services in its minerals division (of which Genalysis is the biggest part) had declined in the last quarter.

"Accordingly we have reduced headcount through our facilities and further cost reductions will be made if the market remains depressed," the company said in a statement.

Companies that have been involved in minerals testing in WA for longer periods of time have also been adversely affected.

Brisbane-based Campbell Brothers, which owns the ALS laboratory business, has reported a downturn after strong results last year.

"This is particularly so in the minerals division of the laboratory services business," the company said.

It has responded by cutting costs across all its businesses, reducing capital spending and staffing.

SGS Group, a global company that provides testing services across a wide range of industries, has also been affected by weakness in the minerals sector.

Its 2008 report noted that it has taken steps to "align its cost base" to the changed market conditions.

Perth companies Essa Australia and AMMTEC are others to be hit by the downturn.

Essa, which supplies equipment to assay labs, announced this week a major revision of its sales and profit outlook.

"The global financial crisis has had an extraordinary cyclical effect on both capital expenditure and consumables in the mining services sector," the company said.

Essa's order intake declined by 50 per cent during the March 2009 quarter compared to the same period in 2008.

The Belmont-based company said it expects net profit for the financial year to be around break-even.

Balcatta-based AAMTEC, which operates assay facilities and mineral testing labs, told the market in January it had been adversely affected by the economic climate, with a number of clients deferring major projects.

However, it is still anticipating a profit for the financial year.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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