macmahon, downer vie for karara contracts

Australian Financial Review
Monday 21 September 2009
Page 15

Macmahon Holdings and Downer EDI are among a group of companies vying for a lucrative contract to carry out mining activities at Gindalbie Metals' soon-to-be-established $1.8 billion Karara iron ore operation in Western Australia.

The contract for Karara - worth an estimated $600 million over a six-year period - is a rare chance to win new iron ore work since the global financial crisis put the clamps on mine development.

For Macmahon, it also represents an opportunity to limit any fallout from the potential consummation of the proposed joint venture between BHP Billiton and Rio Tinto in WA's Pilbara..............

While Gindalbie is not expected to announce the mining contractor for Karara until early next year, the miner is poised to award a slew of works packages over the next few months as project construction gets underway.

The contracts - for earthworks and concrete, port facilities, an accommodation village, an 85 kilometre rail spur and other works - will amount to $500 million and add to the flood of work in WA from the $43 billion Gorgon liquefied natural gas project............

We've got a long-life mine - plus 35 years - so we want to get a lot of the local businesses involved, Gindalbie managing director Garrett Dixon said. "We've introduced a policy not only to give local employment preferences, but also local businesses. We understand that some contracts will be too large for locals, but there will be a lot they can tender on - if not directly to ourselves, subcontracting to the bigger guys"

The company also has plans to support up-and-coming contracting groups ahead of the industry giants in building the project.

"There's an emerging middle-tier (of contractors) that we think we can develop a very good relationship with, "Mr Dixon, himself a former executive at contracting group Henry Walker Eltin, said.

"A lot of the bigger companies came from that space anyway and a lot of the good people from the bigger companies have gone out to form smaller ones."

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