Annual report 2008
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Construction & engineering

Henry Laas   Roy Slack   Barry Upton     
Henry Laas
Roy Slack
Barry Upton
Gary Wells Gary Wells
Paardekraal 2 shaft
The Groupís mining construction and development operations in South Africa, Canada and Australia continued to benefit from growth in demand for natural resources and the ongoing move to underground mining.

Each operation is independently managed with specific responsibility for an extended geographic market: Africa from South Africa, North and South America from Canada and Australasia from Australia. There is a high level of direct cooperation between the operations with leadership coordination through Sean Flanagan in Johannesburg and Peter Adams in London. 
Executive director Sean Flanagan holds group responsibility for the South African and Australian operations with Henry Laas as managing director of Murray & Roberts Cementation. The company is fully empowered through its shareholding partnership with AKA Capital and has strengthened its mine development and HR leadership capacity during the year.

International director Peter Adams holds corporate responsibility for Cementation Canada, with Roy Slack as president. Four of the five top executives have been with Cementation Canada since its start in 1998 and the fifth joined in 2002. During the year, the company commenced leadership training as part of the group leadership pipeline program and has committed significant time and resources to training throughout its ranks.

RUC Mining Contractors, under Barry Upton as managing director, strengthened leadership capacity in safety management and tendering during the year, and plans to strengthen financial and business development capacity to accommodate growth in the new financial year. 
Dave van der Merwe   Tim Wakefield   George Parker     
Dave van der Merwe
Tim Wakefield
George Parker
Allan Widlake   Mike Wells   Theunis Mienie     
Allan Widlake
Mike Wells
Theunis Mienie
Theunis Mienie
Financial performance
Murray & Roberts Cementation reported strong growth in revenue to R3,0 billion (2007: R2,3 billion) and an operating profit of R140 million (2007: R115 million.) The operating margin was below expectation due largely to the impact of industrial action at the Kroondal project. There was limited impact by the power crisis in South Africa but it may delay the commencement of future projects.

Cementation Canada delivered 75% growth in revenue to R1,84 billion (2007: R1,05 billion) as it increased its market share in Canada. Strong project performance boosted operating profits by 151% to R206 million (2007: R82 million).

RUC Mining Contractors in Australia recorded another year of impressive growth with revenue up 74% to R425 million (2007: R245 million) and profits up 68% to R60 million (2007: R35,7 million).

Collectively, the cluster represents almost 20% of group revenues, about 17% of operating profits and a combined margin of 7,7%. 
South Africa is the primary market of Murray & Roberts Cementation. There was ongoing growth in the base metals and precious metals sectors as existing gold and platinum mines were expanded and new capacity expansion initiated. The company also serves the rest of Africa and targets established markets in Botswana (diamonds), Zambia (copper), Ghana and Tanzania (gold and nickel).

The company will re-establish a permanent presence in Zambia to access growing investment in the copper belt of Zambia and the Democratic Republic of Congo. The company is still active on the Bulyanhulu Mine in Tanzania. A growing number of Australian contractors with expertise in mechanised mining have entered the African market. Murray & Roberts Cementation and RUC Mining Contractors are currently preparing to bid in joint venture for mechanised mining opportunities in Africa.

Mine development contributed 40% of the revenue of Murray & Roberts Cementation. Work progressed on vertical shaft sinking at Impala Platinum No. 20 shaft and the project has proceeded to the more challenging stage of off-shaft development. New technology electro-hydraulic shaft drilling was introduced on Anglo Platinumís Paardekraal 2 Shaft, but had to be reengineered before being reintroduced to the project. This new technology drill rig will substantially reduce safety risks in shaft sinking operations.

Two new mine development projects were secured during the year: Amandelbult 4 shaft project for Anglo Platinum and Wesizwe project for Wesizwe Platinum, a mining junior. Murray & Roberts Cementation was nominated as a preferred supplier on some of the Lonmin expansion projects and is well positioned to undertake underground infrastructure work on pump storage schemes.

The revenue contribution of contract mining increased to 45%. A number of new projects commenced during the year, including work on the greenfields Blue Ridge mine where the production build-up to a planned 120 000 reef tons per month is proceeding on schedule. Agreement was reached with Eastplats to mobilise for work on the R1 billion Spitzkop mine to open up UG2 and Merensky platinum reefs in the Eastern Limb of the Bushveld Complex. A new agreement was concluded with Aquarius Platinum South Africa to achieve a more appropriate sharing of risk on the Kroondal and Marikana mines.

The remaining 15% of the business is focused on mining services, comprising smaller specialised projects such as exploration drilling, raise drilling and cementation work. Growth during the year reflects the industry growth trend and the company is uniquely positioned to provide a complete range of mining services to greenfield projects and established mines in the domestic market and the rest of Africa.
David Setchell   Lois Henderson Campbell   Mike Nadon     
David Setchell
Lois Henderson Campbell
Mike Nadon
Mike Nadon
Nickel Rim South Project main shaft
North America
The North American market continues to grow with major mining commodities all exhibiting good pricing and long term prospects. Cementation Canada achieved further growth in market share in Canada, and established a physical presence in Salt Lake City, Utah, having operated in the USA for the past few years. The company secured three major projects to quickly become a significant contractor in the USA market.

Design-build shaft sinking projects continue to be an important part of the companyís service offering with major shaft projects underway in Sudbury for Vale INCO and Xstrata Nickel and on the Canadian East Coast for PCS. The company was successful in securing the Lucky Friday internal shaft project in Northern Idaho. This added a second shaft project to the USA operations, with work ongoing at Resolution Copper in Arizona.

During the year, the Nickel Rim South team completed the main shaft without a lost time injury.

Mine development contributes most to the revenue and profit of Cementation Canada. Significant development projects include the Diavik diamond mine in the North West Territories, the new Afton project in Southern British Colombia, and the Nickel Rim South lateral program in Sudbury. Work continued on a number of other projects where Cementation crews continue to exhibit superior performance coupled with safe work practices. North Mine in Sudbury, the 777 project in Manitoba, and the Brunswick project on the East Coast, are all examples of this. Recently, the company was awarded the Eagle development project in Michigan, USA.

Engineering is a critical part of the service offering, and Cementation Canada specialises in shaft and mine infrastructure engineering. Cementation Engineering has grown considerably and had become a leader and an authority in mine shaft engineering in North America.

Raise boring projects were completed at Red Lake during the year and major projects for Vale INCO and FNX commenced in the Sudbury area. Cementation Canada operates the two largest raise bore machines in North America. The raise boring business has achieved new records for largest diameter and longest raises in hard rock in North America. 
Lawrence Newnham
Lawrence Newnham
Lawrence Newnham
The new Strata 850 raise borer
The Australian mining market continued to benefit from strong global demand for metals and minerals. RUC Mining Contractors maintained its position as the premier raise drilling company in Western Australia and increased its market share in the year. The company achieved an Australian raise boring record at the St Barbara Gwalia Mine at Leonora. The raise of 800 metres deep and 5,52 metres in diameter was completed in 11 968 work hours without an incident. Another key development in this niche market was the award of the A$11,6 million Zinifex project for Rosebery Mine in Tasmania, which involves raise boring of two shafts, each 650 metres deep and 4,5 metres in diameter.

Work on the two year A$60 million Carnilya Hill project for Mincor Resources in Kambalda, near Kalgoorlie, continued during the year. The project, secured early in the financial year, is the companyís first venture into mine development. Plans are underway to secure an additional mine development project during the new financial year. Bids are currently under adjudication for the construction of a 1 300 metre deep, seven metre diameter vertical shaft for BHP Billitonís Perseverance nickel mine in Western Australia.

RUC operates the most powerful surface and underground raise bore rigs in Australia. The company recently designed and manufactured the Strata 850 raise drill in its Kalgoorlie workshop bringing the number of raise bore machines currently operating in the Australasian market to 12. The Strata 850 is the most powerful raise borer in the world, capable of constructing underground shafts of up to six metres in diameter, and has already completed its first project at Gossan Hill. A second larger machine, the Strata 950, is currently under manufacture. 
Human capital
Murray & Roberts Cementation invested R60 million in training during the year, primarily to ensure sufficient and adequately trained skills for new projects. Much of this was done through the new Training Academy outside Carletonville which has been registered as a training institution by the Mining Qualifications Authority. A further R60 million will be invested in the new financial year in training and development, including the completion of a physical shaft sinking training facility equipped for the various production phases of shaft sinking. The company will mobilise the work force for the Amandelbult 4 project three months ahead of schedule to ensure that the workers are adequately trained by the time they start on site.

Murray & Roberts Cementation has customised two project management programs in partnership with Wits Business School and the LR Group. The first group of 40 students graduated from the programs in July 2008. The company also provided support to 35 bursars, 120 apprentices and 15 graduates on the graduate development program.

In a year in which Murray & Roberts Cementation continued to strengthen its focus on safety, it suffered seven fatalities (2007: four) on mine development and contract mining sites at Kroondal (4), Paardekraal 2 Shaft (1), Doornkop Shaft (1) and South Deep (1). The company lost a further eight employees in a shaft accident at Gold Fields South Deep Mine on 1 May 2008.

The companyís LTIFR declined to 3,94, below its 2007 level of 6,37 and also below the Canadian Ontario benchmark of 4,05, which reflects an underlying trend in safety improvement. The company has made a significant investment in the development of an improved safety culture and has now initiated a program of direct engagement with its 14 000 employees. This program will identify and address current weaknesses in safety management processes.

Cementation Canada has been recognised for the past two years as one of the top 100 employers in Canada. The company is a Canadian leader in mine safety and in 2008 achieved the lowest injury frequency rate among the major mine contractors, well below the national average. Its most notable achievement was the completion of the Nickel South twin shaft project with no lost time incidents. In the USA, the company qualified for the Sentinels of Safety award which recognises companies that achieve no lost time injuries in their operations.

To accommodate market growth during the year, RUC in Australia increased staff from 160 to 220 and expects this number to grow to 270 in the new financial year. This growth has made it necessary for the company to relocate to larger premises. Training expenditure increased during the year, another indicator of growth, and there is a greater focus on staff retention in a highly competitive and globally mobile employment market. The business recorded just one minor injury during the year.
Lawrence Newnham
Resolution Copper
Murray & Roberts Cementation started the new financial year with an order book of R3,2 billion (2007: R3,3 billion), of which R2,7 billion is for the 2009 financial year. Competitive dynamics in South Africa continue to challenge operating margin improvement but negotiated commercial arrangements increasingly limit downside risk without sacrificing competitiveness. 

The Canadian and Australian mining operations started the new financial year with a combined order book of R2,6 billion (2007: R1,6 billion).

In line with its strategy to develop long term relationships with key clients, Cementation Canada has secured an ongoing flow of repeat work involving expansion or continuation of existing contracts that will continue for the next few years. Maintaining a dominant market share in Canada with major projects and clients, coupled with new growth in the USA market, will provide a platform for growth for the years ahead.

The growth of opportunities in vertical and decline shaft sinking will continue to be a key contributor to future prospects for RUC Mining Contractors in Australia. The company has secured R461 million of its order book for 2009. While ongoing growth is anticipated in the core activities in Australia, the business is also pursuing raise drilling opportunities in the Philippines and Indonesia. 
Henry Laas Roy Slack Barry Upton
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