NRW to replace MACA through $702m contract

The owner of a major magnetite operation in the Mid West has dropped MACA as its mining contractor, with NRW Holdings set to take over the work next year.

In an announcement on Friday, NRW said it had received a letter of intent from Chinese-owned Karara Mining to complete work on its namesake iron ore project, as part of a five-year contract worth $702 million.

Karara is the largest mining operation and first major magnetite mine in the region, located 200 kilometres south-east of Geraldton.

The operator is a division of Beijing-headquartered Ansteel.

If contracted, NRW will complete load and haul, drill and blast, and ROM rehandling works at Karara, requiring about 250 employees.

The work also includes train loading and rehandling of product stockpiles, as well as miscellaneous dayworks at the mine site, camp, and access roads.

The Jules Pemberton-led business is set to begin work under the contract in March 2022, when the MACA agreement expires.

MACA, which secured the work through its acquisition of Downer EDI’s Mining West division in February, said its performance at Karara had been in line with expectations.

“MACA expects revenue and earnings to remain broadly in line with market consensus in FY22 and looks forward to replacing the Karara project with other similar opportunities in FY23 and beyond,” the Welshpool-based contractor announced on Friday.

Its Karara workforce will be offered positions at other MACA sites at the expiry of the contract, managing director Mike Sutton said.

“MACA remains well positioned to replace the contract with one of the many material opportunities in the sector,” he said.

Meanwhile, NRW says it will immediately procure key mining equipment required for the project at an estimated cost of about $170 million.

That includes the purchase of three, 600-tonne face shovel excavators and a fleet of 220t trucks.

Mr Pemberton said NRW had a strong presence in the region, noting the company's Geraldton-based DIAB Engineering business and work on goldminer Gascoyne Resources’ Dalgaranga operations.

“NRW has a long history as a high-quality provider of mining services to our clients in the iron ore industry and I look forward to a long and successful partnership with Karara Mining,” he said.

“[We] look forward to continuing to support the existing and highly experienced workforce on site through this transition, as well as creating employment opportunities for the Gascoyne region community.”

Karara chief executive ChangJiang Zhu said NRW was an established Western Australian business with extensive open-cut mining experience.

“Offering new prime equipment, NRW has the capability to undertake the entire Karara scope of work comprising a broad range of mining, construction and engineering services,” Mr Zhu said.

“We look forward to negotiation of an agreement with NRW and commencement of mining services early next year.”

Despite the contract win, NRW was trading 0.7 per cent lower to $1.50 per share, as at 12:32pm AEST on Friday.

MACA shares have dropped 6 per cent to trade at 80 cents.