Construction company Aveng has taken various measures aligned with restrictions amid the global Covid-19 outbreak at its operations in South Africa, Australia, New Zealand, Singapore, Malaysia, Thailand and Indonesia.
“These events are highly complex, present significant uncertainty and continue to evolve at a rapid rate. The executive team is monitoring the situation on a daily basis and has formulated contingency plans across the group.
“These plans will be adapted continuously to ensure that risks are addressed as they arise and as new information comes to light,” Aveng said in a release on March 26.
In terms of the business impact, Aveng advised that its Moolmans business currently has open cut contract mining operations in the Northern Cape and Mpumalanga provinces in South Africa, as well as in Guinea and a deep level shaft-sinking operation in the Limpopo province of South Africa.
As part of the 21-day national lockdown in South Africa, all non-essential local mining operations are required to be placed on care and maintenance.
Moolmans will cease active mining at its South African sites in accordance with these regulations.
Essential care and maintenance activities will continue as required on a site by site basis to ensure all sites are rendered safe and that the business protects its assets.
This will ensure a full and efficient recommencement of mining activities as quickly as possible post the cessation of the national lockdown, Aveng said.
The Moolmans contract in Guinea continues to operate at this stage.
Aveng remained unsure of the Covid-19-related impact on its subsidiary McConnell Dowell. It had an order book comprising 90% of government projects spanning across its operating regions in Australia, New Zealand, the Pacific and South East Asia.
However, this strong weighting of the order book towards government work is considered to be a significant risk mitigation in the current circumstances. In addition, there is a high level of confidence that government stimulus packages will be made available to ease the financial impact on the industry.
Currently, 85% of McConnell Dowell’s active project portfolio remains operational, subject, in some places, to manageable restrictions associated with social distancing measures.
About 75% of McConnell Dowell’s operations in New Zealand have been temporarily stopped pursuant to a “Stage 4” lockdown announced by the New Zealand government for a four-week period.
In South East Asia, one of Aveng’s projects in Indonesia has been impacted by Covid-19 restrictions, while all projects in Australia were operational as at March 26.
Pleasingly, Aveng said McConnell Dowell had been awarded more than A$900-million in new contracts since December, all with government customers, bringing work in hand to just over A$2-billion.
Aveng Trident Steel is primarily a service centre business serving the automotive industry in South Africa.
Following announcements by a number of large automotive customers and the port authority, Trident’s operations had been significantly curtailed. These operations had been shut down in a controlled manner, in line with the 21-day lockdown.
The operations would restart once the restrictions of the lockdown were lifted. All operations within South Africa for the remaining manufacturing businesses had been closed for the duration of the lockdown with limited operations remaining in other Southern African countries for now.
Aveng said it would continue to give liquidity and cash flow management the highest level of focus. Active cost-saving measures were being implemented for the areas of the business being directly affected to mitigate the overall financial impact.
The company advised that revenue would naturally be lower as a result of closed operations.
“We will continue to engage with our clients, suppliers, insurers, banks and investors over the coming days and weeks to find ways to protect Aveng, ensure its ongoing sustainability and alleviate the burden on our people and other stakeholders,” the company stated.