- Fortescue's expansion deferral impacts on NRW's revenue forecasts
- Brokers do not see guidance reduction as material
- NRW offers service diversification and a very good yield
By Greg Peel
Mining and energy services provider NRW Holdings ((NWH)) has completed discussion with Fortescue Metals ((FMG)) in light of the deferral of the final stage of Fortescue's Pilbara expansion, and yesterday announced the impact to the market. NRW is contracted by FMG and work on the final stage was included as part of NRW's contract pipeline.
The contract cancellations relate to the tailings dam construction at the Kings Valley mine and also for general civil works at FMG's Solomon hub. NRW is treating the cancellations as just that at this stage, albeit FMG may reinstate its expansion plans down the track were the iron ore price climate to improve. The impact is a reduction in NRW's secured order book to $1.2bn from $1.3bn, and a reduction to the company's active tender & framework agreement pipeline to $2.6bn from $4.6bn, removing Christmas Creek II. The former $100m represents a specific loss of expected revenue, while the latter amount represents a less certain forecast.