COMPANY NEWS Macmahon exits civil tunnelling after 50 years
27 Feb 2013
TunnelTalk reporting
- Australian construction and tunnelling giant Macmahon completes sale of the majority of its construction and heavy civil engineering portfolio to Leighton Holdings in a move that sees the company withdraw from the construction industry to concentrate on more profitable mining operations.
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- The announcement - which formalises a decision taken in December last year (2012) - coincides with release of Macmahon's half yearly results. These showed a loss of Aus$60.7 million from its discontinued construction business.
- In contrast the company's mining business achieved record revenues of Aus$533 million and a Aus$23.1 million profit after tax, on an order book currently valued at Aus$3.6 billion.
- Macmahon Chief Executive Officer Ross Carroll said while the overall result was extremely disappointing, the performance of the company's mining business was a strong endorsement of the new strategy and the decision to exit the construction business after nearly 50 years of history in that sector.
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- He said: "With a record order book, strong balance sheet and low gearing, we are in a good position to grow the areas of the business that are already performing well. The recent growth of our mining business in a time of challenging market conditions highlights its sustainability and holds the company in good stead for its mining focused future."
- The exit from construction will see most projects transferred to Leighton, with the exception of the Hope Downs 4, Solomon Rail Spur, Gladstone LNG project and several other minor projects, all of which are nearing completion.
- Commercial terms could not be agreed with respect to the Hong Kong XRL and Trangie Nevertire Irrigation Scheme projects. Macmahon will continue to participate in and retain exposure to these projects as well as to completed construction projects.
- Project tenders to be transferred to Leighton upon successful contract award will include Macmahon's share of the Pacific Highway Upgrade from Frederickton to Eungai and the North Strathfield Rail Underpass, both of which were awarded in December 2012.
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Herrenknecht TBM lowered for Alkimos water tunnel
- The Aus$20 million sale includes associated plant and the transfer of some employees, but redundancies among the near 5,000-strong workforce will be made. Macmahon will retain Aus$40 million worth of construction equipment for use in its mining business, or sale.
- In addition to its many involvements in tunnel construction in the road and rail sector, Macmahon, in JV with Strabag subsidiary Zublin, was involved in the Alkimos Wastewater Treatment Plant in Western Australia, a project that included excavation of two million m3 of sand and limestone, the construction of a 3.8km ocean outlet and 1.2km of open cut. A critical component of the project was a 4.8km bored tunnel under a built-up suburb, with the JV achieving a then Australian record of 66m of excavation in a single day.
- More recently the Tunnelled Gravity Sewer Project under Darwin's CBD was awarded to Macmahon, in 2011.
- Leighton Holdings chairman Hamish Tyrwhitt said that 10 construction projects were involved in the sale, with the bulk being transferred to the company's John Holland construction business.
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