ORRIE FENN

ORRIE FENN
Business platform CEO

UNDERGROUND
MINING

“UNDERGROUND MINING’S GEOGRAPHIC FOOTPRINT
IS EXTENSIVE COVERING SIX CONTINENTS AND
ITS SERVICE OFFERING SPANS THE PROJECT
VALUE CHAIN INCLUDING SPECIALIST ENGINEERING,
SHAFT CONSTRUCTION, MINE DEVELOPMENT, SPECIALIST
MINING SERVICES INCLUDING RAISE BORING AND
GROUTING, AND CONTRACT MINING.”

    AFRICA      AUSTRALASIA     THE AMERICAS      TOTAL      
R MILLIONS   2017        2016      2017        2016      2017        2016      2017        2016    
Revenue  3 565         3 640     1 727         1 392     2 754         3 756     8 046        8 788    
Operating profit  124         86     217        125     123         295     464        506    
Margin (%)  3%         2%     13%        9%     4%        8%     6%        6%    
Order book  11 021         9 731     3 117         1 924     3 368         2 603     17 506        14 258    
Segment assets  1 139         955     982        809     1 494        1 867     3 615        3 631    
Segment liabilities  1 093         944     377        205     439        724     1 909        1 873    
People  5 616         5 407     1 008         919     826        1 048     7 450        7 374    
LTIFR (fatalities) 1.15(0)         2.39(1)    0.96(0)         0.51(0)    1.97(0)       2.08(0)    1.23(0)       2.11(1)   

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HISTORY
(R billion)

          

GEOGRAPHIC
SPLIT (%)
HISTORY (R billion)           GEOGRAPHIC SPLIT (%)
   

NEAR ORDERS AND PIPELINE
(R billion)
NEAR ORDERS AND PIPELINE (R billion)

ORDER BOOK
TIME DISTRIBUTION (R billion)
ORDER BOOK TIME DISTRIBUTION (R billion)
   

Near orders: Tenders where the Group is the preferred bidder and final award is subject to financial/commercial close – there is more than a 95% chance that these orders will be secured.

Category 1: Tenders the Group is currently working on (excluding near orders) – projects developed by clients to the stage where firm bids are being obtained – chance of being secured as firm orders a function of final client approval as well as bid strike rate.

Category 2: Budgets, feasibilities and prequalification the Group is currently working on – project planning underway, not at a stage yet where projects are ready for tender.

Category 3: Opportunities which are being tracked and are expected to come to the market in the next 36 months – identified opportunities that are likely to be implemented, but still in pre-feasibility stage.

 

PROJECT LIFE CYCLE REVENUE DISTRIBUTION

  

GEOGRAPHIC DISTRIBUTION

REVENUE PER REGION
PROJECT LIFE CYCLE REVENUE DISTRIBUTION   GEOGRAPHIC DISTRIBUTION - REVENUE PER REGION (%)
 
underground mining
underground mining
Note: 1 MRC=Murray & Roberts Cementation South Africa and Murray & Roberts Cementation Zambia
2 CCI=Cementation Canada, Cementation USA, Cementation Mexico, Cementation Sudamérica, Merit Consulting
(provides project & construction management consulting to mine owners – surface-related) and Cementation Above Ground
(provides EPC services for bulk material handling/processing to the surface mining/minerals industry). 		 

PLATFORM’S PROJECTS REPRESENT MOST KEY COMMODITIES

PLATFORM’S PROJECTS REPRESENT MOST KEY COMMODITIES

Underground mining  

PROSPECTS

Mining is a cyclical business with deep troughs and high peaks. After the commodity super cycle peaked in 2011, the mining industry was forced into a preservation cycle and, from 2013, major mining companies reduced capex by up to 60%.

For the first time in five years, the industry appears to be moving into an upturn. Various research reports indicate that demand for commodities is anticipated to grow in the short term on the back of an increase in commodity prices and supply and demand dynamics.

Many new large opportunities are presenting themselves in sub-Saharan Africa and the Americas; and engineering-led international opportunities outside of the Americas are increasing, as well as large hole raise boring and shaft sinking prospects in Australasia.

In countries and regions where current mining activity is high, there is a large investment pipeline of underground mining projects. This is projected to increase in the future, and the platform is active in these areas and positioned to take advantage of any upturn in the commodity cycle. Most key commodities are represented in the current portfolio of projects.

There is substantial scope for organic growth within the platform, as mining companies continue their ongoing infrastructure replacement brownfields spend to sustain their operations and as greenfields expansion increases to meet future demand. With its global footprint, and the ability to pool and leverage its resources, Underground Mining is well placed to win work and support its clients during the upturn.