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TWP eyes growth in mining services
Allan Seccombe
Posted: Mon, 26 Nov 2007

[miningmx.com] -- TWP Holdings, the mining engineering, construction and project management group, will use capital raised in Tuesday’s listing on the JSE towards acquisitions in the first half of 2008 and bolstering much-needed capacity, said CEO Nigel Townshend.

It will also open an office in a year or more in London to deal with the mining companies based on the bourses there.

“We are working on projects with a capital value in excess of R55bn. We are actually turning work away on a regular basis now, which we don’t like to do. But we have limited capacity,” Townshend told Miningmx.
the big-project, glamour end of the business
The capital will go some way towards addressing that capacity but also money will be spent on acquisitions that will complement the existing services offered by the business, he said.

The Australian operation in Perth will be expanded into the Brisbane area to reach into Asian countries like China.

“There are a couple of smallish acquisitions which we are looking at on the local stage and a couple of bigger ones too,” Townshend said. Some of these are likely to be companies TWP is already working with, but he declined to be more specific.

“We’ll also look in the Australian environment. We want to grow Australia fairly aggressively. There’s a huge demand for our services.”

TWP is looking towards the Zambian market too for growth. There are the massive copper belts in that country and neighbouring Democratic Republic of Congo, which is a veritable treasure chest of barely exploited mineral wealth.

TWP’s shares shot up to R20.05 each shortly after the market opened on Monday, from an issued price of R15.69. It raised R435m in a private placement ahead of the listing. It traded 2.1 million shares worth R42.7m late in the session. It has a market capitalisation of R2.25bn.

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TWP’s contract book serves as a bellwether for investment coming to Africa, where the company is the largest of its kind with 1,100 staff and adding 40 more a month. Nine out of every ten employees is on the technical side.

“If I could find another 1,100 staff I’d employ them,” Townshend said.

TWP is affected in a small way by the churn in skilled employers caused by the commodity boom, but less so than other companies.

“We are at the top of the food chain. We are in the big-project, glamour end of the business,” he said. “Key skills would rather work in our environment than a pure contracting environment. We are working on big, exciting projects that can make people’s careers.”

TWP offers services from shaft sinking and infrastructure, to hydro- and pyrometallurgical expertise and environmental assessments.

TWP has been invited by the Turkish government to assist in bringing investors to the country as it relinquishes state control of mineral assets as it moves into the European Union. Turkey is adapting the South African model around mineral exploitation to its own circumstances.

"Turkey is the flavour of the month," said Townshend. "It's an easy area in which to operate and it's a good point of departure when talking of the surrounding countries, the 'Stans."

Turkey has large coal deposits, gold, uranium and base metals and TWP has been taking some large companies through the country. "It's a prospective country. It's fairly early days in Turkey but that's where the opportunities are."

Interestingly, TWP has a full dance card in Zimbabwe where it is working on Bindura Nickel’s Shangani mine, the R1.5bn Unki platinum project in the Anglo Platinum stable and potentially the Zimplats expansion project by Impala Platinum.

The gold projects in Zimbabwe are small and have been severely hampered by government policies there. However, platinum and nickel are seen as more strategic and is a growing sector.

“If the regime turns, the prospects for the mining sector can change very quickly. Look at how in three to five years Zambia has really turned around,” Townshend said, adding the infrastructural base in Zimbabwe was more advanced than that of its northern neighbour.

This is a sentiment often expressed by Greg Hunter, CEO of Central African Gold, which has bought mines in Zimbabwe, citing a first-mover advantage in the economically and politically distressed country.

Looking at Africa overall, TWP was receiving positive feedback from its clients regarding the future. “We are getting very positive feedback. Africa’s changing and the governments are more open to foreign investments.”

The feasibility studies TWP is involved in are being done at very conservative prices, depending on the client, which means it would take a large fall in commodity prices for any of those projects to be cancelled, he said.