https://www.miningweekly.com

M&R outlines evolving impact of Covid-19 disruptions to its projects

3rd April 2020

By: Marleny Arnoldi

Deputy Editor Online

     

Font size: - +

JSE-listed Murray & Roberts (M&R) has noted the evolving impact of Covid-19 on its active projects in Australasia, the Americas and sub-Saharan Africa.

The Oyu Tolgoi project in Mongolia, which the company’s Oil & Gas and Underground Mining platforms run in joint venture with a third partner, has experienced the biggest impact to date.

As Mongolia shares a border with China, the project was brought to a halt owing to supply chain constraints and travel bans. The businesses have, in conjunction with the client, taken the necessary action to reduce costs and preserve cash on the project.

M&R’s projects in Australia and Asia Pacific continue to operate, albeit with added restrictions on people movement that have necessitated a revision of work rotations on most of the remote mining sites.

Most of the company’s project sites in sub-Saharan Africa are shut down for the duration of the 21-day lockdown period that has been instituted by the South African government. Certain of the projects are on care and maintenance and limited essential work, as directed by clients.

Some clients have indicated that costs will be covered during this period.

Projects in Zambia continue uninterrupted.

In the America’s, about 50% of the company’s project portfolio is affected. These projects, mainly in Canada, have been suspended by clients for periods ranging from two weeks to two months, as a measure to prevent the virus from spreading to some of the remote project locations.

Certain states in Canada have declared mines as essential services.

“We have demobilised employees from affected projects and have instituted measures to reduce costs and preserve cash. In the US, only one project is on reduced level of work at this stage.”

ENERGY PROJECTS

It is important to re-emphasise that M&R does not have any oil projects under way at present, but the weak oil price will impact on the gas sector in the medium term.

Currently, the bulk of the Oil & Gas platform’s significant order book of R30-billion, comprises infrastructure sector work.

In Australia, a complete lockdown has not been implemented at this time, although interstate travel is no longer allowed. Projects are continuing, but clients are implementing modified work rosters that will impact on project resourcing and progress.

Engineering and procurement services are continuing on the multibillion-rand Snowy Hydro project, in Australia, and construction teams have since remobilised to site post the tragic Australian bush fires earlier this year, though activities are still focused on site preparation works.

M&R’s multibillion-rand Next Wave project, in Texas, in the US, has been classified as an essential service, with engineering and procurement services continuing.

In Europe, specifically the UK, M&R says that integrated engineering services company Booth Welsh’s projects are on hold – at this stage there is no indication when projects will restart.

M&R says maintenance and outage works are continuing at the Medupi and Kusile power stations in South Africa.

Some projects have invoked force majeure clauses and commercial teams will respond accordingly in line with contractual requirements.

Some clients have indicated that the costs will be covered during this period.

BOMBELA CONCESSION COMPANY

The Gautrain rapid rail service is not operating during South Africa's 21-day lockdown period. The system’s infrastructure has been secured while essential maintenance functions are continuing.

M&R says it expects the shutdown to impact on the fair value adjustment of the investment in the Bombela Concession Company in the current year.

Meanwhile, M&R continues to focus on the safety and wellbeing of all its people and ensuring the long-term sustainability of the business. The safe restart and ramping up of affected projects, once allowed, will be a priority.

It is expected that market conditions will be adversely impacted in the medium term, considering the global Covid-19 pandemic, further deterioration of the oil price and the downgrade of South Africa’s credit rating by Moody’s.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION