Sodexo signs $180m contracts

Aboriginal joint ventures are a feature of many of the state’s largest facilities management contracts.

The renewal of four major contracts with Fortescue Metals Group and Rio Tinto has maintained Sodexo’s status as the largest operator in the state’s facilities management sector.

Sodexo employs about 4,200 people in Western Australia, putting the French company at number one of the BNiQ database of facilities management (FM) companies (see table, next page).

Compass Group subsidiary ESS Support Services Worldwide is next on the list, followed by Downer subsidiary Spotless and Optus Stadium operator VenuesLive.

Spotless expanded its profile last year with the acquisition of Welshpool-based contracting, maintenance and services business Envar.

In another notable acquisition last year, US-based operator Civeo purchased Action Industrial Catering.

Civeo already operates villages at Kambalda and Karratha and has substantially boosted its WA presence with the acquisition.

These transactions add to a history of consolidation in the FM sector in WA.

They follow US-based Delaware North moving to full ownership of Northern Rise Village Services in 2018, and Sodexo buying out Morris Corporation in 2017.

The Morris acquisition made Sodexo the major FM supplier to Fortescue.

The relationship is evidently working well, as Fortescue announced late last year it had renewed contracts with three Sodexo joint ventures.

Worth $165 million over three years, the new contracts are with Sodexo and Pilbara Aboriginal groups Palyku Enterprises, Kariyarra Hospitality Services, and Karlka Developments subsidiary Karlka Facilities Management. 

The joint ventures will manage catering, cleaning and recreation services at Fortescue’s two villages in the Chichester Hub and its Hamilton village in Port Hedland.

Fortescue chief executive Elizabeth Gaines said native title groups with which Fortescue had Indigenous Land Use Agreements owned all of the Aboriginal businesses.

She said the joint ventures had 21 per cent Aboriginal employment across the three camps.

“These contracts are awarded on merit,” Ms Gaines said.

“Each of our business partners has competitively demonstrated the commercial ability to deliver the contracted services, and by working within a joint venture the Aboriginal businesses have the support and opportunity to increase their active participation and build long-term sustainability.”

Fortescue also has FM contracts with joint ventures established by Action Industrial Catering.

Action runs the Kangi camp with Wintawari Guruma Enterprises, the exploration and construction camps at Eliwana with PKKP Enterprises, and the Japal camp at Iron Bridge with Njamal Mining.

As well as renewing the Fortescue contracts, Sodexo has renewed its contract at Rio Tinto’s Argyle diamond mine for two years, at a value of $15.4 million.

The contract was signed in November 2019, with the renewed period beginning retrospectively in February 2019.

Sodexo will work with Rio Tinto as it transitions the diamond mine from a production site into rehabilitation, with the 37-year-old mine set to close at the end of 2020.  

Services to be delivered by Sodexo include aerodrome operations, village and industrial cleaning, village catering, retail, accommodation management, bus services, laundry operations and handyman services.

Sodexo’s chief executive of energy and resources Asia-Pacific, Darren Hedley, said the renewed contract was a great result.

“Thanks must go to our dedicated team for their commitment to building a strong relationship with our client, after we acquired Morris Corporation that had previously held the contract for three years,” he said.

Sodexo’s largest FM contract in WA covers Rio Tinto’s Pilbara iron ore assets.

In that case, the Aboriginal involvement comes through separate contacts Rio has with Brida, Pindari and Eastern Guruma subsidiary Pilbara Aboriginal Investments to provide cleaning and grounds maintenance services.

In the metropolitan market, the competition is illustrated by arrangements at Perth Airport.

ISS Facility Services provides security services, OCS Services is the contract cleaner, and Delaware North has more than a dozen retail concessions in the terminals.