THE past few weeks have brought good news to about 20 steel fabricators around Perth. Engineering firm Monadelphous has been progressively sub-contracting $30 million worth of work for BHP Billiton’s Area C iron ore mine and port expansion projects.
THE past few weeks have brought good news to about 20 steel fabricators around Perth.
Engineering firm Monadelphous has been progressively sub-contracting $30 million worth of work for BHP Billiton’s Area C iron ore mine and port expansion projects.
So far it has awarded contracts worth about $18 million to firms such as Park Engineers, SDK Constructions, T.C. Engineering, Piv’s Engineering and Allcon Steel Constructions and the balance will be awarded over the next two months.
While $30 million is only a tiny portion of the billions of dollars worth of work flowing from Western Australia’s big projects, these contracts have a major impact in places such as Welshpool, Bibra Lake and Wangara.
“Its getting pretty busy around Perth,” said Park Engineers’ works manager Gary Azzalini.
“The big projects are very important for our industry.”
The Area C contracts will help to maintain capacity in the steel fabrication industry, which in the past has been wracked by “feast or famine” conditions.
The lack of work in 1999-2000 led to the exit of several operators, including Transfield, Kewdale Structural, ABB and Stelform Engineering.
However, Australian Steel Institute state manager Rupert Grayston said he believed other firms had more than filled the gap.
He said Pacific Industrial and Fremantle Steel Fabrication had expanded and invested in state-of-the-art equipment.
Both of these firms, along with Park Engineers and United KG, were big winners from Woodside’s Train Four project, winning contracts last year collectively worth more than $30 million.
Mr Grayston said other groups such as Thiess (through Bos Australia) and Ausclad had shown their faith in the industry by buying the Stelform and ABB operations respectively.
The opening later this year of the fabrication hall and other common-user infrastructure at the Australian Marine Complex would provide a further boost.
“It will give us a capability we haven’t had before,” Mr Grayston said.
As well as the fabrication shops, another group currently enjoying buoyant conditions are the engineering drafting companies such as Perth Drafting, Steelplan and Westplan, which provide “shop detailing” services –the detailed drawings used by fabricators.
In fact, some industry observers describe shop detailing as a “real bottleneck at the moment”.
Perth Drafting managing director Bill Weir is more sanguine.
“We’re handling it okay,” he said.
“I think there are enough firms in Perth to handle the work.”
The prospect of further resource projects getting underway provides a positive outlook for many businesses across WA.
Monadelphous is a case in point. Last week it announced strong growth in revenue and profit for the six months to December 2002, and chairman John Rubino said “the outlook for at least the next few years remains buoyant”.
The contracts won by Monadelphous over the past year include:
p three construction contracts worth $80 million for BHP Billiton;
p a $50 million general services contract, in joint venture with Brambles, for Woodside’s Train Four; and
p a $3.6 million deconstruction project for Rio Tinto’s HIsmelt project in Kwinana.
Another company that is on the “up and up” is Fleetwood, which is the main accommodation provider for resource projects in Karratha and the wider Pilbara region.
Over the past year, it has won con-tracts worth nearly $20 million for BHP Billiton.
Fleetwood’s other recent contract wins include accommodation units for Burrup Fertilisers’ ammonia project (for up to 700 people) and for the Plutonic gold mine.
Stockbroker Paterson Ord Minnett has recommended Fleetwood, along with mining contractor Henry Walker Eltin and drilling contractor Ausdrill as preferred stocks for investors wanting exposure to the resources sector activity.
Other companies it expects to benefit include Monadelphous, United Group, PCH Group and Clough.
Clough is currently working on the HIsmelt project, after its joint venture with Kvaener won a $40 million engineering, procurement and construction management con-tract.
The HIsmelt project will involve up to 80 EPCM staff and a construction workforce in excess of 300.
GRD is another Perth-based company to have won a major EPCM contract. Its subsidiary GRD Min-proc, in joint venture with Lycopodium and Hatch, was recently awarded the contract to construct the treatment plant at Newcrest’s Telfer gold mine.
While new projects are an important source of work, ongoing maintenance also provides valuable opportunities.
PCH Group, which has a two-year maintenance contract at BHP Billiton’s HBI plant in Port Hedland, expects that maintenance contracts will help the company smooth its earnings.
“With a significant number of new projects in Australia and overseas forecast, there will be a substantial increase in the number of plants requiring ongoing maintenance. We will focus on these opportunities in the years ahead,” managing director James Cullen said.
Bassendean firm Specialised Welding has a similar focus.
“Over the years we’ve got a lot of work from repairs,” managing director Trevor Robinson said.
“As a business, our aim is to look more at the quality repair work.”
However, that will not be to the exclusion of bidding for construction contracts.
Specialised Welding won a $300,000 construction contract on Train Four and Mr Robinson is looking to other new projects for further opportunities.
Its Train Four contract was an example of the “boomerang” contracts that project proponents are now trying to encourage.
As well as the contracts awarded by companies involved in big projects, the associated infrastructure development creates further work opportunities.
The WA Government has recently let two contracts for the design and construction of a seawater supply scheme and desalination plant on the Burrup Peninsula.
The two contracts, worth a total of $67 million, were awarded to joint venturers John Holland (a subsidiary of Leighton Holdings) and McConnell Dowell Constructors.
The Government is also spending some $200 million to upgrade several ports around the State.
One example is the Port of Geraldton, where the shiploader and materials handling systems are being upgraded.
A beneficiary of this work will be Mt Gibson Iron, which has commenced development of its Tallering Peak Hematite Project.
Mt Gibson Iron last week awarded a $4.9 million contract to Broad Construction Services (a subsidiary of Leighton Holdings) to design and construct iron ore storage facilities at the Port of Geraldton.