AusGroup JV enters EPC phase at Cloudbreak

02 November 2011

AGC Industries Pty Ltd (AGC), a subsidiary of AusGroup Limited (AusGroup), and Kiewit Australia Pty Ltd (Kiewit Australia), a subsidiary of Kiewit Corporation (Kiewit), partnered in a joint venture (JV) for an Engineer-Procure-Construct (EPC) contract by Fortescue Metals Group (Fortescue) for the Cloudbreak iron ore mine expansion.

The award includes the addition of; a front end circuit of wet scrubbing and screening; new desands module and tails thickening; tailings transfer and modifications to the existing desands modules for the Cloudbreak Enhancement Project at Fortescue's Cloudbreak mine site, located approximately 120 kilometres north of Newman.

Joint venture partners AMEC Minproc, AGC and Kiewit Australia came together earlier this year, as part of a the Cloudbreak Early Contractor Involvement contract. Since then, the team has been working alongside Fortescue to define and commence long lead procurement leading to the award of the EPC contract.

“This is an exciting time for AGC as we further expand our capability profile through exposure to the new contracting models through our partnership with Kiewit Australia,” said Stuart Kenny, AusGroup CEO and Managing Director. “This award represents the first significant EPC project AGC has secured and is a testament to the strength of the alliance we have developed with Kiewit Australia and AMEC Minproc throughout the past year.”

The Kiewit Australia team is also proud to be a key player in the joint venture.

“Kiewit Australia is eager to build upon our successful partnership with AGC as we begin the construction phase of this important project,” said Jack Cotton, Kiewit Australia Operations Manager.

Pursuant to the JV agreement, the EPC contract valued at AU$247 million will be provided through a joint operating arrangement known as CEPT JV of which AMEC Minproc have 35% share and KAGC JV (see details following) have a 65% share. AGC’s participation in the CEPT JV will be through the KAGC JV joint operating arrangement between Kiewit Australia (75%) and AGC (25%). The net result of these arrangements is that AGC will have a 16.25% interest in the CEPT JV. AGC’s share of the contract is estimated at AU$40 million.

The above JV will be funded through internal resources and is not expected to have any material impact on the Group’s earnings per share or net tangible assets per share for the current financial year ending 30 June 2012.

None of the Directors or substantial shareholders of AusGroup has any interest, direct or indirect, in the JV, save through their shareholdings in AusGroup.

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