Monday, February 15, 2016

McConnell Dowell Seeking Sub-Contractors for Northern Pipeline

McConnell Dowell Is Putting Out Feelers For Sub-contractors In The NT And Queensland.
Construction contractor McConnell Dowell has successfully secured the contract for the Northern Gas Pipeline and is now seeking Expressions of Interest from suppliers and subcontractors. Plant hire is high on the menu, which is great news for local companies.
Jemena was selected by the government of the Northern Territory to carry out construction and operation of the North East Gas Interconnector, now commonly referred to as the Northern Gas Pipeline. The entire contract is worth $800 million, and construction is expected to begin in early 2017. McConnell Dowell’s share of the kitty is $300 million.

A whopping 623km in length, the Northern Gas Pipeline will run from Tennant Creek to Mt Isa, allowing massive expansion of currently untapped or under-utilised gas reserves. The economic impact of the Northern Gas Pipeline will be immense, as the extensive construction process and ongoing operations will add significant revenue to the coffers of both the Northern Territory and Queensland.

Jim Frith, Executive General Manager of Pipelines for McConnell Dowell, was very pleased that Jemena chose to grant them the Northern Gas Pipeline project. He said, “The collaborative Early Contractor Involvement approach adopted by Jemena has assisted McConnell Dowell and other project partners and key stakeholders to work together to provide optimized solutions for this project.”

“We look forward to project execution so we can play our part in delivering the full benefits of this project to the community and other project partners,” said Mr Frith. He also underlined the importance of the Northern Gas Pipeline project for McConnell Dowell’s ongoing reputation as a reliable provider of pipeline construction services. “The project is an important addition to our significant track record of successful major pipeline and mechanical infrastructure delivery.”

McConnell Dowell listed plant procurement requirements on at tender time – seeking over 300 machines from everything major earthmoving machines, to lift and shift, pipeline equipment, then onto smaller plant, mine spec vehicles, power generation, welders, compressors and fuel stations. They looked specifically for plant hire companies that could service out of Mt Isa & Tennant Creek. Any companies that had head offices that could service those areas in QLD, WA or NT had a run up start.

Procurement packages are going to be listed on ICN Gateway in the 2nd half of 2016, with no firm date as yet. It is anticipated that there will be around 100 contracts available for local subcontractors, worth up to $112 million.

The Northern Gas Pipeline is set to be completed in 2018.

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Sources: Australian Mining, Jemena.

Tuesday, February 2, 2016

Mining sector can expect more pain in 2016

Despite some positive steps, 2016 isn’t expected to provide miners with much good news after a tough 2015.
More than 55 per cent of mining industry analysts, investors and executives believe the iron ore price will fall below $35 per tonne this year, according to a survey of the industry.

And half of those believed the price still has further to fall, below $33/t.
The survey, undertaken by West Perth-based Consulting firm, took place before the price fell below $40 per tonne in December.

By comparison, only 3 per cent of around 350 mostly Australian respondents had predicted it would stay above $40/t, while around 22 per cent took the middle ground of $34-36/t.
About 23 per cent of those surveyed believed iron ore would be the worst performing commodity for the year, second only to coal.

Graphite, nickel and manganese were the next most frequent choices.

Pricing wasn’t the only bad news for iron ore players to come from the survey, with most respondents believing it would be unlikely there would be major discoveries of the commodity and that few mergers and acquisitions would take place.

A turnaround in the industry is still way off, too, with a quarter of respondents saying the iron ore market won’t improve for one to two years.
A further 44 per cent said it would be more than two years until things got better.
It comes after last week’s World Steel Association analysis of crude steel production in 2015, which contained the unsurprising result that global output had fallen 2.8 per cent to 1.62 billion tonnes during the year.
China, which produces roughly half of global output, leads the way with production falling 2.3 per cent to 804 million tonnes.
But according to a mining group director of sales and marketing  who spoke at the company’s December quarter results announcement last week, the outlook for the commodity could be brighter than some expect.
Chinese iron ore imports hit a record high in December of over 96 million tonnes, he said.
The increase coincided with signs of continued inventory restocking at Chinese ports and further weakness in domestic iron ore production.

He said iron ore imports had risen around 2.2 per cent on the previous year, with seaborne demand remaining strong, while it had been the higher cost producers that were being edged out of the market.
Seaborne iron ore was trading at about 80 per cent of the price of domestic concentrates, he said.
Domestic Chinese mine utilization is also low, currently at 55 per cent, he said.
The sentiment has certainly been improving as more and more (steel) mills are starting to make a profit again.

We expect China's supply side reforms should benefit the steel sector mid long term.
The industry would be expected to consolidate and improve margins.

Other popular commodities.

The standout in the survey was gold, according to the respected managing director.
She said that was unsurprising, given it was historically a safe haven commodity and there had been an unprecedented downturn across the sector.
Another benefit for gold was the Australian dollar’s depreciation.

Although golds popularity is suggestive of the broader desire for security, the fact that gold and copper are such clear standouts this year suggests that people are looking more long term, she said.

Furthermore, the merger and acquisitions market would be busy, most respondents suggested, with more than 25 per cent saying they expected gold to be the driver of most activity, particularly in Australia.

That put it well ahead of nearest rival’s copper, zinc and nickel.

Similarly, 18 per cent of respondents viewed gold as most likely to deliver exploration results, with copper and zinc again featuring highly.
Overall, most respondents felt it would at least six months until the outlook in the mining industry started to improve, with more than 44 per cent believing it would be at least a year until things pick up.

An additional 17 per cent felt it would be more than two years until there was a turnaround.
But she saw positives in the results.
Last year the survey suggested an industry in disarray, she said.

The industry might not be feeling comfortable right now, but they see the light at the end of the tunnel.