Infrastructure and mining services group Aveng, which recently turned an interim profit after a six year slump, is upbeat about surging activity in SA’s mining industry and remains on track to settle its remaining debt pile over the next two and a half years.
Aveng, previously one of SA’s largest construction companies, has given up this industry locally, where it now focuses on Moolmans, which provides services such as shaft sinking and bulk earth moving, and is one of Africa's largest open-cut mining contractors.
Moolmans was demonstrating a consistent ability to win new contracts, CEO Sean Flanagan told Business Day on Wednesday, with near-term contract opportunities of over R20bn.
“With some of the mines we are in conversation for new five year contracts,” he said, with robust activity coming off the back of what many are saying could be a new global commodities super-cycle — or a period of strong demand which suppliers struggle to match.
Aveng’s comments come as a number of companies report rocketing activity in SA’s mining industry, with equipment suppliers such as Hudaco and Invicta recently saying mining houses were pulling out all the stops in a bid to cash in on commodity prices lifted by a global economic rebound from Covid-19.
In a pre-close update for its year to end-June Aveng said Moolmans had work in hand of R6.5bn at the end of April, up from about R4.7bn at the end of December, although the group is still crunching numbers for the end of June.
The group’s other core businesses is Australasian engineering, construction and maintenance contractor McConnell Dowell, which generates about two thirds of group revenue. Work in hand of A$2bn (R21.5bn) at the end of April was in line with that reported at the end of December, Aveng said, but this business is the preferred bidder for contracts valued at more than A$1bn.
Aveng has previously lauded the growing reputation of McConnell Dowell, while Australia has proved to be a resilient market for construction, including due to extensive governmental support in the wake of Covid-19.
Flanagan said on Wednesday despite a number of Australian cities reinstating lockdowns the group’s operations there and in New Zealand were unaffected. The group also operates in Singapore, Malaysia, Indonesia, the Philippines and Thailand, and the ability of its staff to travel was a problem.
Covid-19 was an ongoing concern, said Flanagan, but operation in SA also continued.
Aveng has also made progress in reducing a debt pile racked up after years of losses, with debt falling from R2.1bn at the end of December, to R1.1bn after a rights issue in March. The group moved to tap shareholders for R300m, but ultimately raised R392m.
The rights offer, aimed at settling debt at a discount and freeing up cash, was so well received Aveng completed a follow-on R100m rights offer earlier in June.
In afternoon trade on Wednesday, Aveng’s shares were unchanged at 4c, giving the group a market value of R2.49bn. It’s share has still fallen precipitously from its record high of R24.41, reached in late 2007.
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