Mining Services: NRW nabs new $70m Fortescue Metals deal

New contracts from Fortescue Metals (ASX:FMG) are helping keep mining services company NRW Holdings (ASX:NWH) busy in the new year.

The company announced today it had won the earthworks contract for the Iron Bridge magnetite project — a joint venture between FMG subsidiary Iron Bridge and Formosa Steel IB Pty Ltd.

The parties need to dot a few more I’s and cross some T’s on the contract, but until then NWH has been instructed to “commence mobilisation”.

The contract is worth around $70m, and will take 45 weeks to complete utilising a team of around 200 staff.

Located 145km south of Port Hedland, WA, the Iron Bridge magnetite project is the development of a new mine, along with associated transport and infrastructure.

The mine is expected to have capacity for 22 million wet metric tonnes per annum of high-grade magnetite concentrate.

NWH — which has a market capitalisation of around $1.2bn — said the scope for this contract would include “bulk earthworks and drainage for roads, processing plant and infrastructure for the new mine site development”.

The latest deal follows another major contract with Fortescue, awarded just before Christmas and valued at around $140m, for the development of a railroad in connection with Fortescue’s Eliwana project.

ALSO READ: Mining services stocks are liking their 2020 prospects

In other ASX mining services news today:

Perenti Global (ASX:PRN) took the opportunity to address some media speculation, following an article in the AFR this week which referred to Perenti’s involvement in the sale of Downer EDI’s mining services division.

The company confirmed it was “currently giving consideration to the potential purchase” of the Downer assets. However, Perenti said the proposed transaction value highlighted in the article is “significantly above the level Perenti may consider offering”. While advising there’s no guarantee of a transaction, if a deal proceeded Perenti said it would consider a range of funding options, including a share entitlement offer. Shares in Perenti were up 5 per cent at $1.48 in morning trade.