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Major engineering house and underground mine development specialist TWP Holdings is moving one step closer to achieving one of its ultimate goals: to partner with the world’s major mining clients, CEO Digby Glover tells Laura Cornish.

The acquisition announcement

On  23 October 2012, Basil Read announced it had entered into an agreement with Worley Parsons whereby Worley Parsons RSA Group, a wholly-owned subsidiary of Worley Parsons, will acquire the entire issued share capital of TWP for a cash consideration of R900 million.

The acquisition of TWP excludes Basil Read Matomo Projects, TWP Investments and LYT Architecture (formerly TPS.P Architects). The excluded companies will continue to operate autonomously and as wholly-owned subsidiaries of Basil Read. The transaction will be effective from January 2013.

“One of the growing trends in the mining industry is seeing major mining houses looking to secure partnerships with EPCM service providers who are able to offer their clients significant breadth and depth of skills and experience to get the job done and back it up afterwards,” says Glover.

While TWPs’ effort to secure such partnerships has been a strategic focus for several years already, its imminent purchase by one of the world’s largest engineering companies, Worley Parsons, will further enhance its capability to offer the international mining industry the full suite of EPCM partnership advantages.

TWP’s tier one partnership agreement with Anglo American, aimed at transforming its procurement and supply chain operations, has been very successful since its launch in March 2011. It represents a model the company wants to replicate. The tier 1 agreement involves supplying the highest level of EPCM services for significant mining projects and has allowed strong partnerships to develop in a far more effective way than through traditional ‘per-contract’ agreements. “As a result, we have greater insight into Anglo’s long-term project pipeline, affording it sufficient time to allocate skilled resources to these projects,” Glover outlines.

As a result, TWP’s overall workload with Anglo American has increased significantly over the past 18 months – particularly in coal and iron ore. “We are able to understand their business needs – particularly upfront during the pre-feasibility study stage.”

There is a need to develop significant project pipelines in a skills and cash constrained macro environment, for both the local and global mining industry.“Partnership alliances enable us to plan our workload and improve our service offering and costs, thanks to the continuity of work, and also provide our clients with the opportunity to understand the internal workings of our business and understand how we operate.”

Worley Parsons provides TWP with an immediate large-scale infrastructure portfolio (ports, rail, etc.). This is a significant advantage considering the majority of new mining projects in Africa are not viable without associated infrastructure, including housing, roads, bridges, etc. “As a Worley Parsons’ company we will have the size and presence to best compete for the largest and most prestigious global mining jobs. While we have been aggressively growing and diversifying our offering and geographic footprint, the acquisition will kick this drive up a gear. The merger will add TWP Projects’ 1 000 staff complement to WorleyParson’s42 000 global headcount and will increase its mining-related business, which currently accounts for about 12% of its work portfolio. “From Worley Parsons’ international platform, we can inject our deep level mining skills across the globe in the near future.”

A year in review

While the Southern African industry has been operating in a cash constrained space, TWP’s 2012 year has been a good one. With a number of projects in execution stage, and numerous more in studies, 2013 looks set to remain positive. The company has seven shaft sinking projects either in execution phase or due to move into execution shortly. These include Wesizwe’s Bakubung PGM project, Royal Bafokeng Platinum’s Stydrift project, Impala Platinum’s 17 and 20 Shaft projects, two gold projects in the Democratic Republic of the Congo (DRC), an underground diamond project and a new manganese project in the Northern Cape.

The company is also underway with a few process plant feasibility studies currently, which includes a new refinery in the DRC.

Pull quote:

“By potentially being bought by Worley Parsons, we leapfrog into the international mining industry space. It gives us an immediate global footprint, scale and the ability to inject our specialist mining skills into a much bigger market space.” – Digby Glover

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