Bros get together for Australian mining sector

GLOBAL advisory and restructuring firm Gordon Brothers is partnering with industrial auctioneer Ritchie Bros to provide insolvency services to the Australian mining sector.
Bros get together for Australian mining sector Bros get together for Australian mining sector Bros get together for Australian mining sector Bros get together for Australian mining sector Bros get together for Australian mining sector

Gordon Brothers and Ritchie Bros have formed an alliance offering end-to-end insolvency services to the mining sector.

Paul Hunt

Senior Journalist: Energy & Commodities

Paul Hunt

The two businesses have formed an official alliance aimed at broadening their scope of advisory services and asset remarketing to the mining and contractor market.

Speaking to Australia's Mining Monthly alliance head Andrew Cotton said while the Australian mining industry was prospering, the market would see some insolvencies in the not-too-distant future.

At the moment strong commodity prices combined with private investment and government support is supporting mining companies and contractors.

In fact, according to the Cotton, industry insolvencies in the mining sector are down as much as 60% compared to 2019-2020.

"This was driven by government policy and action around the COVID-19 assistance packages," Cotton told AMM.

Financial institutions, the taxation department, and creditors supported moratoriums on commitments, which allowed business to "navigate through the pandemic downturn," he said.

However, as this assistance "winds back" over coming months and the next year, Cotton said a perceived "rationalisation" would occur.

"We do not believe it will be a tsunami, rather a controlled realignment of business activity," he explained.

To meet expected demand, Gordon and Ritchie will offer "buffer solutions" to help business push through the hard financial times.  

The alliance will offer asset advisory, trading, direct lending and "special-situations financing" to convert asset equity and reduce debt into working capital where possible.

"The majority of mining, contractor and mining support businesses are asset-based entities that can be subject to significant and rapid disruption to cash flow through no fault of their own," Cotton said.

He said fluctuating commodity prices, contract losses and unforeseen production declines were the biggest risk to miners and contractors.