Murray & Roberts CEO Henry Laas
JSE-listed Murray & Roberts (M&R) says it still intends to regain a foothold in the Australian mining market, which it lost when RUC’s Australian holding company entered voluntary administration in late 2022.
However, CEO Henry Laas indicates that it will adopt a capital-light approach to the building of its new Cementation APAC business, the development of which will be pursued more assertively only once the massively downscaled group has a “sustainable capital structure” in place.
Following a “devastating” period during which M&R was forced to relinquish not only RUC but also Clough, which was previously its largest unit, the company is currently at the tail-end of a far-reaching period of deleveraging and rationalisation, arguably epitomised by the 40% shrinking of its head office staff to only 19 people.
Its remaining engineering and contracting businesses are focused primarily on the African and Americas underground mining markets, with M&R Cementation, Cementation Canada, Cementation USA and Terra Nova Technologies comprising R13.5-billion of the group’s R14.7-billion order book.
The R1.2-billion balance is held by OptiPower, which is positioned to service South Africa’s renewable energy and grid-infrastructure markets.
Laas reports the mining businesses are also the most likely growth engines for expanding the group revenue and earnings once it has met all its outstanding debt obligations, and a new capital structure has been finalised. This, despite the difficulties being faced by certain miners and a depressed outlook for some commodities, such as platinum.
While M&R’s net debt has been reduced from the R2-billion level reported last year to about R240-million, outstanding debt to a consortium of South African banks still stood at R400-million and must be repaid by the end of June.
Nevertheless, Laas reports that the focus internally is shifting from deleveraging to growth, including by regaining a position in the Australian mining market.
The intention is to employ a small team of up to three experienced individuals in Australia and to ensure that Cementation APAC is included in the tender lists of mining companies in the country.
The entity would initially enter projects in partnership with the established operating companies in South Africa or North America, which would provide it with the resources, including the bonding capacity, required to undertake the projects.
“So, we don't intend to make a big working capital investment in that region.”