Australia's Downer EDI Wins $750 Million Contracts in Rail, Resources, Energy and Infrastructure Sectors

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Australian engineering and infrastructure firm Downer EDI Limited (ASX:DOW) (Sydney, Australia) announced that it has won contracts, worth a total of $750 million, across a variety of sectors, including road, rail, energy and infrastructure.

The company, which operates in four segments (Mining, Works, Rail and Engineering), provides engineering and infrastructure services in the Asia-Pacific region, the United Kingdom, New Zealand and Australia.

Of the $750 million, the largest proportion, which is more than $400 million, covers contracts to supply both standard- and narrow-gauge locomotives for coal haulage in New South Wales and Queensland, and for iron ore haulage in the Pilbara region of Western Australia.

Downer's Works division also has secured contracts worth $160 million and covering Australia, New Zealand and the Pacific Islands. The company has also won consulting contracts with the Victorian government road transport authority VicRoads (Melbourne, Australia) and AbiGroup (Gordon, Australia), a subsidiary of Bilfinger Berger Australia Pty Limited (BBA) (North Ryde, Australia), which in turn is a subsidiary of Bilfinger Berger AG (ETR:GBF) (Mannheim, Germany), although Bilfinger announced its intention to sell BBA last month.

Within the energy and power sectors, the Downer Engineering division has won contracts worth $120 million from significant clients in Australia, including the New South Wales state government-controlled TransGrid (Sydney, Australia), which is responsible for the operation and management of the 12,500-kilometer, high-voltage electricity grid in the state.

Another $77 million contract has been won from Felix Resources (Brisbane, Australia) to supply blasting services for a three-year period for the Yarrabee and Minerva coal mines in Queensland, and the Ashton and Moolarben coal mines in the Hunter Valley in New South Wales. Felix was acquired by Yanzhou Coal Mining Company Limited (SHA:600188) (Zoucheng, China) in December last year.

The award of the new contracts is further proof of the expanding economy in Australia. Of the world's major economies, Australia was the only one to avoid a technical recession in 2009, and after five months with interest rates held at a record low level of just 3%, the country was the first among the G-20 group to begin a gradual rise in interest rates. In October 2009, the Reserve Bank of Australia (RBA) began a series of interest rate rises to a level of 3.75% by the end of the year.

Due to large reserves of key minerals, Australia is in a strong position for growth in the coming year. The country's major trading partners in the region, China, South Korea and Japan, are all expected to show steady growth. Major investments in projects in the country, such as the Gorgon gas project in Western Australia, are expected to add to the expanding economy.

Some experts have forecast that the nation's economy will experience a growth rate of 3.75% in 2010, with the housing, construction and public infrastructure sectors also contributing heavily to the growth.

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