BGC Contracting’s involvement in mining has so far been in iron ore, but is making a major move into the coal sector. And while it does not expect a price recovery before 2017, CEO Greg Heylen said there were plenty of opportunities to be had along the way.

“Yes there are challenges, but our business is about long-term, and clearly coal will eventually settle down and recover to the stage where prices start to improve,” Heylen told International Coal News.

“Our contracting business is an extensive mining contractor already, but only in the iron ore space, so strategically we want to move into coal mining as well, and we think there is a unique offering to clients where we can design or build run – or a combination of all – their coal plants via the new JV.”

Heylen dismissed concerns that the move into coal may be perceived as a brave move given the current price environment.

“I wouldn’t describe it as brave. There are still pockets of opportunity in the market, and we see that as long as we select those opportunities correctly and strategically, those opportunities are still there,” Heylen said.

“BGC has built a lot of greenfields mine sites for clients – Anglo American for example just recently at the Grosvenor mine site in Queensland – so we see this JV as just adding onto the construction expertise that BGC is wanting to apply on the east coast in the coal market that it currently does very well in other parts of Australia.

“We see some clients looking to utilise contractors’ capital, and both DRA and BGC have very good balance sheets that a lot of contractors don’t have; and we think the JV combined therefore can provide the opportunity of funding these projects, particularly in the ore handling plants by funding, building, designing and operating it for clients.

“For some clients, that is very relevant where access to capital is tight for everyone in the market. That’s an advantage the JV has over many other competitors – a strong balance sheet and proven performance in this area.”

While the bulk of its coal opportunities lie in Queensland and New South Wales, the JV is also looking at gold and uranium plays in Western Australia.

“The JV of DRA and BGC is currently undertaking that work for Atlas Iron, with which we’ve had a long relationship, which needs some improvements to its ore handling process,” Heylen said.

There’s an opportunity with Vimy Resources, which we think has great potential in the market, headed up by [BC Iron founder] Mike Young, with a greenfields uranium project, that’s something DRA and BGC is very significant.

“That’s another example where they’re potentially looking for contractors with strong balance sheets to provide some capital towards the project to get them going.”

In gold, Heylen said the JV was in the running for a handful of projects including for Phoenix Gold where he believes the JV will have the same strategic advantage.

“There has been an improvement in the last six months in terms of opportunities for contractors to tender,” Heylen said.

“We’re actually seeing relatively high activity for tenders, which is pleasing compared to where the market thought it was going to be – at very low levels – say, six months ago.

“We don’t see it as doom and gloom. It’s difficult, but the good contractors like ourselves are in it for the long-term, as we find ways through this.”

He said BGC forecasts “flat levels” for coal pricing through 2016 before things start to improve in 2017.

DRA Pacific CEO Clive Hart said his company could benefit through the enhancement of its ability to offer EPC and lump sum turnkey contract packages, and other contract models such as build own operate transfer, assisted by the strong balance sheet of the two organisations.

“The JV is pursuing a number of promising opportunities, which we hope to announce soon,” Hart said.

DRA Pacific is the Australian branch of the global engineering and project delivery organisation DRA, headquartered in Johannesburg, South Africa.

DRA has more than 30 years of experience in the study and delivery of minerals processing and mining projects globally. Its experience includes iron ore, gold, base metals, coal, diamonds, PGMs, mineral sands, rare earths and fertiliser minerals.