Downer EDI lands contracts worth $2B

DOWNER EDI has won $A2 billion worth of five-year service contracts for BHP Billiton Mitsubishi Alliance’s Goonyella Riverside and Norwich Park open cut mines in Queensland’s Bowen Basin.

Blair Price

The contracts are for load and haul of prestrip material at both mines, plus drill and blast services at Goonyella Riverside.

Downer will deploy $190 million worth of new equipment for the contracts over the next 12 months.

The engineering and infrastructure services group said this was mainly funded through a combination of operating cash flow, new finance and operating leases.

“Downer has ample funding capacity for the BMA contracts and also the Fortescue Metals Group contract at Christmas Creek for which Downer is preferred bidder,” the company said.

“Downer will remain well inside its target leverage range of 25-35 per cent.”

In March 2009, BMA binned contracts for prestripping work at the two mines, causing contractors Macmahon and HMP Constructions to shed 400 jobs according to union officials at the time.

HMP went into voluntary administration the next month.

The cuts came as Queensland was suffering from lower coking coal demand as a steel market slump followed the onset of the global financial crisis.

Shares in Downer EDI are up 5.3% this morning to $4.78.

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