The Australian

TerraCom turns its sights to mining services

• The Australian
• 12:00AM April 26, 2018
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• BRIDGET CARTER
  
  Mergers & Acquisitions Editor
  Sydney
  @BridgetCarterb
  
  SCOTT MURDOCH
  
  Journalist
  Sydney
  @murdochsj
  

TerraCom may have a market value of only $79 million, but sources say it could be the one to watch when it comes to acquisitions in the coming months.
And it may not just be mines that are on the group’s agenda.
With former Leighton boss Wal King as chairman, the thinking is that the company may soon expand its reach to mining services assets at a time when plenty are available to buy.
TerraCom, formerly Guildford Coal, has its Blair Athol coalmine up and running in Queensland, and plans to expand in the global energy and resources market.
The young company also has Mongolian assets and is understood to be on the cusp of announcing a lucrative deal that will see Blair Athol move from producing about 2 million tonnes of coal a year to about 10 million tonnes, offering a lucrative stream of cash flow to fund further acquisitions.
One theory is that the group is looking at assets such as those in the mining services division of Downer group.
Downer has denied the assets are for sale despite speculation in the market that the group or its adviser, believed to be UBS, has been offering the business around to prospective buyers.
Contract mining companies are in a difficult spot and never seem to stack up for a company from a perspective of returns versus the capital invested, but could still be considered a profitable investment. Industry veterans say they form a critical component of any well diversified services company.
Among Australia’s mining services business are Barminco, Ausdrill and MacMahon Holdings, which are all understood to have engaged in merger talks at different stages.
However, as is typically the case, the sticking point often remains how much control they are ready to cede.

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