With expectations of 40 per cent revenue growth in fiscal 2019 to circa $1.1 billion, mining services provider NRW Holdings (ASX: NWH) is capitalising on a strategic diversification program.
“The difference now is we are more diversified by client, by commodity and service capability than at any other time,” NRW chief executive Jules Pemberton said.
NRW now has a hefty pipeline in resources and infrastructure for the next five years, Mr Pemberton told the Diggers & Dealers Mining Forum.
NRW was only one of two contractors to be invited to present at Diggers & Dealers this year, which also marks the first time in the forum’s 27-year history that contractors have joined miners and explorers in presenting to investors.
The addition of contractors to the presenters’ schedule underscores the growing importance of the working relationship between contractors and mining companies as the mining sector recovery gathers momentum.
NRW is actively bulking up in the gold and lithium mining sectors, while maneuvering for pole position in Pilbara iron ore mining.
Last month BHP Iron Ore awarded NRW the contract for bulk earthworks and concrete works at its South Flank Precinct project, marking a major resurgence in mine development in the Pilbara. The project will commence in September 2018 and is located 120 kilometres north-west of Newman.
The contract is valued at approximately $176 million and will see NRW undertake bulk earthworks and concrete for the overland conveyors and primary crushers together with ancillary works relating to non-process infrastructure.
South Flank helps mark a dramatic turnaround in the Pilbara, the world’s largest source of iron ore. where new investment in mining had slowed following the construction mining boom of the previous decade.
NRW is mobilising to the South Flank project next month and will serve as a platform for future growth in the Pilbara, where it also is working with Rio Tinto and Fortescue Metals Group.
“With investment coming back in the Pilbara, we are going to grow that business,” Mr Pemberton said.
Mr Pemberton estimates that in total, some $2.5 billion in new work will be made available for contractors in the region.
“That’s the sort of size of the market that’s there over the next three to four years that wasn’t there previously,” he said.
Outside of the Pilbara, opportunities are emerging for infrastructure on both the west and east coasts of Australia.
In Perth alone, Mr Pemberton estimates some $7 billion in infrastructure construction is planned, much of it in rail.
A move deeper in the gold sector is also seen as key for NRW, with the sector until recently dominated by its peers.
“It’s important for us to make sure we keep that connection in the gold space, and for commodity diversification as well,” Mr Pemberton said.
On the east coast of Australia, NRW has 10 contracts in Queensland, mainly in the thermal and coking coal sectors, with a further three in neighbouring New South Wales. That makes NRW the largest drilling contractor on the east coast.
Much of NRW’s growth has come on the back of its acquisition of Queensland and northern New South Wales-focused Golding Group in September 2017 for $85 million from CHAMP Private Equity.
“What it did was double the size of our business and brought considerable strategic benefits to the group,” Mr Pemberton said.
Golding operates three divisions: civil, mining and urban.
“With the activity on the east coast in terms of infrastructure and infrastructure spending and commitment from the governments, this is a really important platform for us to pursue of growth ambitions there,” Mr Pemberton said.
The deal followed NRW in December 2017 buying the east coast business of contractor Hughes Drilling for $11 million.