BGC Contracting awarded $720m Arrium contract
Leading Australian mining and construction firm BGC Contracting Pty Ltd has been awarded a new five-year contract by the Administrators of Onesteel Manufacturing Pty Ltd** (Arrium) at its Iron Knob and South Middleback Ranges iron ore projects in South Australia.
The new five-year contract is valued at more than $720 million.
Arrium Administrators KordaMentha have confirmed that BGC Contracting’s current mining contract, previously due to be completed this year, will be replaced by the new contract through to 2022.
Under the contract, BGC Contracting will provide a full range of mining services, including drilling, blasting, loading, hauling, dumping and train load-out.
BGC Contracting’s Chief Executive Officer Greg Heylen said the new contract was a significant vote of confidence in the project and reflected well on the collaborative relationship between the two companies over the past four years.
“This has been a challenging time for the mining sector as it dealt with the decline in the commodities markets in the short term. One of our core strengths as a business is that being privately owned and vertically integrated allows us to be adaptive and most importantly, responsive to significant shifts in the market,” Mr Heylen said.
“BGC Contracting’s breadth and vertical integration of services has enabled us to improve efficiencies on the project, which has resulted in lower cash costs for Arrium and the Administrators.
“During this time we have continued to meet Arrium’s safety and production targets and we look forward to continuing our work with Arrium’s team in the future.”
Mr Heylen also said that the workforce and subcontractors in Whyalla had helped navigate through this challenging period, and he looked forward to continuing to work with Arrium to provide a more certain employment outlook for the region.
Arrium Mining Executive General Manager Matt Reed said the collaborative approach to recent challenges had resulted in significant improvements for both parties.
“With the price of iron ore falling over the past few years, it’s been imperative that we reset our cost base and build a long-term, sustainable business,” Mr Reed said.
“We had a lot of work to do, but BGC has played a major role in bringing our mining costs down by working in partnership with our operations team. We look forward to developing this partnership with BGC over the coming years and continuing to reduce our costs as we create a world-class business.”
KordaMentha Partner Mark Mentha said BGC Contracting had played a key role in Arrium’s greatly-improved cost position.
“Their willingness to partner with Arrium in forming one team has helped the business survive this difficult period,” he said.
The Iron Knob and South Middleback Ranges iron ore projects are located close to Whyalla in South Australia, and provides lump and fine products internationally to the world’s steel markets.
Note: **All references to Onesteel Manufacturing Pty Ltd are to be read as subject to Deed of Company Arrangement.
Picture: The South Middleback Ranges iron ore project.