BMA pushes locked in contracts

BHP BILLITON Mitsubishi Alliance has been signing up contractors to long-term supply agreements in order to help the company manage the looming skills shortage in Australia, says Goldman Sachs & Partners Australia.
BMA pushes locked in contracts BMA pushes locked in contracts BMA pushes locked in contracts BMA pushes locked in contracts BMA pushes locked in contracts

Courtesy BHP Billiton Mitsubishi Alliance.

Lauren Barrett

An investment research report by the financial firm said BMA was being quite active in signing up contractors to “preferred service arrangements”

The report highlighted BMA’s decision to sign up engineering firm Bechtel to manage the delivery of its projects through the Bechtel BHP Billiton project hub as an example of the company’s move to lock in contractors.

The motion comes as BMA plans to develop a spate of new coal mines and expand existing coal mines, such as its Broadmeadow extension project in Queensland.

“BMA ... appears to have been signing contractors to long-term supply agreements in order to guarantee engineering capacity to deliver its projects,” Goldman Sachs said.

The research said many companies were in line to capitalise on Australia’s coal developments and expansion projects.

Sedgman was awarded a major coal handling and preparation plant contract worth $22.2 million.

Monadelphous would come out as another winner from the engineering and construction boom after it scored two contracts worth $100 million, to do structural and mechanical works at Rio Tinto Kestrel mine in Queensland.

Goldman Sachs said the coal sector only had $8 billion invested in “definite” coal projects compared to $46 billion in projects considered “less advanced”

Goldman Sachs said the higher number of less advanced projects was due to coal infrastructure constraints, such as port and rail.

Xstrata Ulan West and Kestrel mine expansions were considered “definite projects”, as was BMA’s Daunia coal mine in the Bowen Basin.

The report noted that most of the “less advanced” projects were located in the Galilee Basin, such as the Alpha coal mine and the Carmichael coal mine, due to the lack of infrastructure in the region.

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