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Capabilities
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Engineering SADC
* R millions Background Murray & Roberts introduced mainstream engineering contracting into its portfolio of market offerings through the Pelindaba nuclear project in the early 1960s and enhanced its capability in the specialised marine infrastructure market with the acquisition of the southern hemisphere operations of Danish contractor Christiani & Nielsen in the 1970s. When requested by the South African Government to develop the capacity to provide engineering services for its planned nuclear research facility at Pelindaba in 1960, Murray & Roberts established Engineering Management Services (later rebranded Murray & Roberts Engineering Solutions). This company went on to play a major role in the design and construction of a number of major mining & minerals, oil & gas and general industrial projects in South Africa and the region, including the Mossgas gas to liquids plant and offshore platform, Hillside and Mozal aluminium smelters, and key projects for Sappi, Sasol, Kumba (Iscor), Anglo American, BHP Billiton, Xstrata, De Beers and many others. A mechanical, electrical, instrumentation and piping (MEIP) contracting capability was established by the Group during the 1970s in KwaZulu Natal to serve the industrial expansion taking place in the region. Major projects for Mondi, Sappi, Tongaat Hulett and Illovo established and expanded their agri-industrial facilities over time. Subsequently, Sasol, Shell and Engen (Mobil) became major clients in the petrochemical sector and many projects have been completed for the mining and minerals sector. Murray & Roberts Engineering Solutions and Murray & Roberts MEI were merged during the year to create Murray & Roberts Projects, a major EPC contractor more appropriately positioned to serve the minerals beneficiation, industrial, oil & gas, water and power sectors, including nuclear, which offers significant opportunity to the Group into the future. The acquisition in 2007 of specialist electrical and instrumentation contractor, Wade Walker, has enhanced the Group’s potential offering to these sectors. Market environment The private sector natural resources and industrial markets remained muted through the year despite strong commodity price increases. The predominance of activity remained in public sector power generation and infrastructure development programs. The companies in this cluster are primarily focused on the Group’s core competence in industrial engineering, which if properly applied in the early design and feasibility phases of projects, offers significant value to clients. Leadership Gary Wells was appointed managing director of Murray & Roberts Projects in July 2009 and Keith Smith was appointed chairman of the company in January 2010. Tim Wakefield succeeded Tadhg Bergin as managing director of Wade Walker in April 2010, who in turn had succeeded founder Steve Walker in July 2009. Ian Dryden is managing director of Murray & Roberts Marine.
Operations These businesses leverage design, engineering, project and construction management expertise to deliver major projects in the energy, natural resources and industrial sectors.
Murray & Roberts Projects The company is focused on the power sector, mining & minerals beneficiation, downstream oil & gas and is exploring the potential in the water supply sector. Murray & Roberts Projects is the erection contractor for the twelve boiler house units at Medupi and Kusile coal fired power stations. The company is also leader of the in-house consortium, including Genrec as structural steel fabricator and Energy Fabrication as ducting fabricator. The mechanical erection phase at Medupi was delayed by eleven months and commenced in February 2010. However, ongoing delays with the overall design and the civil engineering foundations continue to hamper progress. Approximately 6 000 tonnes of a total 18 500 tonnes of structural steelwork have been erected on the first boiler unit and welding of pressure parts for boiler assembly has progressed well. A major lift of 1 160 tonnes to erect the roof section of the first boiler was completed early in July 2010. Early stage planning and mobilisation is underway at Kusile, with commencement of erection delayed more than nine months to later in 2010. First power into the national grid from Medupi is rescheduled to mid-2012 with Kusile following twelve months later. Fabrication of the structural steelwork by Genrec has been hampered by late design and significant scope change, which has also impacted fabrication of ductwork by Energy Fabrication operating from its purpose built facility on site at Medupi. Murray & Roberts Projects has been awarded a two-year EPC joint venture contract for the
receiving tank farm located at Heidelberg (Terminal 2) of Transnet’s National Multi-Product
Pipeline. The scope of the project includes design, supply and erection of the multi-fuel tank
farm to a capacity of The company has lodged a proposal to a Chinese power station contractor together with Murray & Roberts Construction and Concor for multidisciplinary construction at Xstrata’s Lesedi 300 MW coal fired power plant at the Tweefontein coal mine in Mpumalanga. An expression of interest has been lodged in respect of IPP proposals for the Coega Development Corporation 3 200 MW combined cycle gas turbine power plant, which plans to use regasified imported liquid natural gas (LNG).
Murray & Roberts Marine Murray & Roberts Marine, in joint venture, completed the Al Raha sea wall project in Abu Dhabi ahead of schedule in December 2009. Other smaller seawall projects in the region have also been completed. Together, these projects involved the design and construction of more than 20 kilometres of seawall protection for new developments. The design and construction of a pipe stringing yard for the Abu Dhabi Crude Oil Pipeline (ADCOP) in Fujairah was completed in July 2010. The project to design and construct the marine pipeline intake for Uramin’s Trekkopje desalination plant in Namibia was impacted by geological variation and is due for completion after the 2010 year end. Murray & Roberts Marine has been awarded a joint venture subcontract to design and construct the material offloading facility for the Gorgon Project in Western Australia. The local partner has experienced liquidity problems and a solution with Clough has been finalised.
Wade Walker
The AngloGold Ashanti Iduapriem gold mine expansion project in Ghana was completed in the year, but little new opportunity became available in Africa as the global financial crisis continued to subdue investment in mining projects on the continent. Some work was acquired on smaller projects for First Quantum’s Kansanshi copper mine in Zambia and at Guelb Moghrein in Mauritania. The company focused on the South African market where the contract for electrical work at all the Gautrain stations and tunnels proceeded well. Negotiations are well advanced to secure a long term subcontract with Alstom for instrumentation work connecting the Medupi turbines, boilers and water treatment works.
Genrec Established in the 1950s, Genrec is a leading steel fabrication and erection contractor that has played a key role in numerous major infrastructural projects,
Genrec has focused exclusively on its steel fabrication contracts for the Medupi and Kusile power stations during the year. The company was impacted by significant challenges associated with delays and design changes in these contracts. Genrec has the responsibility to detail engineer and fabricate about 240 000 tonnes of structural steel over a period of five years for the two thermal power station projects. A major upgrade was undertaken to increase production capacity to around 30 000 tonnes per annum and the company commenced delivery of structural steel to Medupi for the first boiler in 2009. Basic engineering and technical support is the responsibility of Hitachi Power which secured the contract to design, build and commission the twelve boiler house units for the power stations. This process has suffered significant delay and disruption as a result of late basic engineering and an unreasonable subsequent sequence of design changes and variations. This has severely hampered detailed design and production efficiency at Genrec. Notwithstanding, the Group has made a significant investment to overcome the challenges and ensure the best possible outcome for South Africa’s critical power program. Genrec has subsequently improved production output and people productivity and initiated a drive to contain costs without compromising quality. A zero tolerance approach to safety is reflected in the decline in the company’s LTIFR to 1,5 (2009: 10,9). Laurence Savage joined the Group in August 2009 as managing director of Hall Longmore. He was appointed managing director of Genrec from February 2010, where he has made a significant difference in dealing with the design disruption on the Medupi and Kusile projects. Genrec will only seek new opportunities from 2012 after the power station contracts peak.
UCW Union Carriage and Wagon (UCW) was established in the 1950s to serve the South African rolling stock market in both passenger and freight sectors, and built the prestigious Blue Train in 1972. Murray & Roberts acquired ownership of the company through its acquisition of Standard Engineering in the early 1990s. UCW has two major long term contracts to design, build and systems integrate the Ore Line and Coal Line locomotive projects as part of Transnet’s Main Line Locomotive Investment Program. The contracts are in partnership with Mitsui and Toshiba and involve the supply of 110 new class 19E locomotives for the Coal Line corridor and 44 new class 15E locomotives for the Ore Line project. The company has delivered 27 of the 19E units to date, with 23 of these in active operation. In addition, it has delivered 10 of the 15E units, with an additional seven units on the production line. While both projects are running behind schedule due to historic challenges in the business, the introduction of more effective systems and a quality network has resulted in a significant improvement in the production cycle. A three year project to refurbish 10M4 and 5M2A coaches for PRASA was completed in March 2010. UCW had delivered all 81 vehicles for Gautrain by September 2010. The company was impacted by high interest charges in 2010 due to stock holding costs associated with delays in the progress of its locomotive contracts and a substantial outstanding payment by a major client. Gary Steinmetz joined the Group and was appointed managing director of UCW from October 2009. He has brought a rare experience in complex systems fabrication and assembly to the Group and his partnership with operations director Craig Holden has significantly improved the performance of the company. A strong focus on safety has resulted in a significant reduction in the LTIFR to 5,1 (2009: 11,4). UCW is awaiting confirmation of extensions to its 15E locomotive and PRASA coach refurbishment contracts and is pursuing other opportunities in the domestic and SADC markets. Sustainability A focus on safety across the cluster saw no fatalities or major incidents in the year. Murray & Roberts Projects reduced its LTIFR to 0,4 (2009: 1,1). Murray & Roberts Marine reported an LTIFR of 1,2 (2009: 0,0) and Wade Walker’s LTIFR of 4,5 (2009: 0,0) was the result of five injuries suffered by a subcontractor in a road accident on the Gautrain project against a sharp reduction in hours worked during the year.
Murray & Roberts Projects increased capacity in human resource, health & safety, commercial and planning management through the year. The Medupi and Kusile management teams were restructured to improve overall effectiveness in the environment of delays and disruption that prevailed through the year. The Group’s integrated ERP system was enhanced to improve the standard of quality and discipline in project management and a sustainable development program was introduced to build core competencies in-house. This includes a key strategic drive to strengthen engineering competence and increase activity in the front-end engineering phase of projects. The company concluded agreements with two level 1 BBBEE engineering companies. Murray & Roberts Marine and Wade Walker have strong operations management and business systems appropriate to the nature of the businesses. Prospects The Medupi and Kusile boiler projects make up about 40% of the Group’s order book and provide an extended baseload of activity until 2016. While Murray & Roberts Projects is pursuing opportunities with independent power producers in South Africa, it is also positioning itself for future involvement in the minerals beneficiation, oil & gas and water sectors. Murray & Roberts Marine expects to leverage market value from relationships established with new clients in recent years and is pursuing opportunities in the domestic market as well as Malaysia and East Africa. Wade Walker has broadened the traditional scope of its business to include the power sector in the domestic market and Africa.
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