Under the contract, VDM’s western operations will provide the engineering design work and construction of a plant maintenance workshop, heavy vehicle fuel facility and related infrastructure, as well as additions to the existing village facilities.
The six-month project will require a peak workforce of 80 people with mobilisation to site, located 60km northwest of Tom Price, expected to commence in late July.
The Brockman 4 work follows a number of bulk earthworks contracts VDM also received from Western Power and CBH, worth a combined total of $10 million.
The contractor said the award by CBH for the Mingenew Q type capital sealing project was the largest in a series of Hyparspace solutions for CBH, with more than 16sq.km of gas-tight roofing and wall-cladding being engineered and constructed for an 80 tonne grain storage facility.
The recent awards brought VDM’s work in hand to more than $170 million.
VDM said the contract with Rio built upon the strong existing relationship between the two companies as the contractor increased its activity in the resources sector.
“This project sees VDM achieve another important step in our transformation and strategy to increase our activity in the resource sector,” VDM managing director Andrew Broad said.
“To have the confidence of a tier one client such as Rio Tinto is a testament to the efforts of the western operations team and I look forward to the successful delivery of this project.”
In the past year, VDM scooped up three contracts with BHP Billiton worth a combined $55.8 million for works which included an accommodation camp, warehouse maintenance buildings and an ammonium nitrate storage facility, all in WA’s Pilbara region.
In May, VDM bagged a combined $28 million with CITIC Pacific’s Sino Iron project, also in the Pilbara, for separate installations of milling facilities for mine developer MCC Mining.
The project was being developed at Cape Preston, 100km southwest of Karratha.
Despite, collecting a swag of mining contracts this year, VDM announced an earnings downgrade last week for the 2012 financial year due to a company re-shuffle and cost blowout on its BHP camp project.
Australian stockbrokers Patersons Securities said while the earnings downgrade was disappointing, it was an isolated case in its view.
“From a valuation perspective we have valued VDM on the basis of FY13 forecast earnings and in this context we view today’s contract newsflow as significant,” Patersons industrial analyst David Gibson said.
“We highlight that Rio has historically been a significant client for VMG and we expect the recent approval of $5.15 billion in [capital expenditure] for the major’s Pilbara iron ore expansion operations to underpin a new wave of contract awards for the services sector.”
Patersons said despite the setback on the BHP camp work, the company was performing at better margins than previously anticipated which would bode well for profitability going forwards and it expected VDM to post a June 30 cash balance of more than $20 million.
This article first appeared in ILN's sister publication ConstructionIndustryNews.net.
