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Macmahon Holdings has won a $700 million contract for an expansion and three-year extension of its work at the Byerwen coking coal mine in the Bowen Basin.

The company said the new contract significantly expanded production to 10 million tonnes of hard coking coal per annum.

This will see Macmahon invest $16 million on ancillary equipment in addition to two extra 800-tonne hydraulic excavators worth $37 million that it has procured for the project.

Macmahon has been providing open-cut mining services at Byerwen since the establishment of the mine in November 2017, and employs more than 430 people on site. 

The mine, 20km west of Glenden, is owned by a joint venture between QCoal Group and Japanese steel manufacturer JFE Steel.

Macmahon snares $700m contract as Byerwen ramps up

Production is lifting to 10Mtpa from about 6Mtpa after recent practical completion of the site’s second coal handling and preparation plant.

Macmahon said the new contract would extend to November 2023 with forecast revenue of $700 million, plus a two-year option.

QCoal Group managing director Christopher Wallin said it was very satisfying to be able to confirm increased production from the Byerwen mine.

This was testament to the favourable economics of the project and the work of the QCoal staff and contract partners involved in developing the mine over several years, he said.

“The development of the Byerwen project is a great success story for the industry, with the mine now emerging as a very low cost producer of hard coking coal,” Mr Wallin said.

“I am very proud that this expansion will enable us to further contribute to the Queensland economy with additional local employment and opportunities for regional communities.” 

The extra operational workforce due to the production expansion amounts to about 180 across the CHPP and mining operations.

Meanwhile Macmahon says the COVID-19 crisis is having minimal impact on its overall financial performance this year.

The company is on track to finish the financial year within its
upgraded FY20 guidance of $1.3-$1.4 billion of revenue, and $85-$95 million of EBITA.

Confirmation of the Byerwen expansion and extension increases Macmahon’s work in hand for FY21 to more than $1.2 billion, excluding
expected revenue from civil and short term underground services churn work which has recently been around $120 million per annum.