Downer Secures Roy Hill Contract Worth $500 Million

Monday, November 18th, 2013
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Roy Hill Mining Camp
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Engineering firm Downer EDI has nabbed a mining services contract for Hancock Prospecting’s Roy Hill iron mine in the Pilbara worth around half a billion dollars in total.

In a statement made to the Australian Securities Exchange Downer said that it had obtained a contract for the provision of early mining services to the Roy Hill open cut iron ore mine for a period of four and a half years, with execution scheduled to commence by the end of the month.

Under the contract Downer will be responsible for pre-strip and supplementary mining services during the opening years of the iron ore mine, which will be primarily run on an owner-operator basis. Services that Downer will provide to the project will include drill and blast, as well as the load and haul of overburden and ore.

According to Downer infrastructure construction will begin in early 2014, with full-scale mining set to commence by the second half of the same year.

The company expects the contract to require the employment of over 220 staff as well as up to $110 million in capital, with $40 million to be spent on new equipment and $70 million to be supplied from existing stock. Equipment for the project will include a fleet of 18 haul trucks and two excavators.

The project is just one of several mega contracts awarded in recent months in relation to Hancock Prospecting’s Roy Hill iron ore development, attesting to the lucrative opportunities for engineering and construction firms still available in the resources sector, despite long abounding reports of the mining boom’s demise.

In September NRW Holdings won the rail earthworks contract for Roy Hill, which entails the full construction of approximately 330 kilometres of main line heavy haul rail formation connecting the iron ore mine to Port Hedland.

The contract, which will employ a total of 1500 staff at its peak and is scheduled for completion by January 2015, is valued at around $620 million in total.

In the same month a joint venture formed by ASX-listed Forge Group and Spanish firm Duro Felguera secured a $1.47 billion contract from Samsung C&T for engineering, procurement and construction work in relation to Roy Hill’s processing facility.

The value of the contract for Forge is around $830 million, and according to the Forge’s managing director David Simpson is the company’s single largest contract to date.

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