The coronavirus has impacted two projects being undertaken by JSE-listed engineering and construction services group Murray & Roberts (M&R). One is in South Africa and the other in Mongolia.

Sappi’s Saiccor Mill in Umkomaas in KwaZulu-Natal. Image credit: Sappi

Sappi’s Saiccor Mill in Umkomaas in KwaZulu-Natal. Image credit: Sappi

M&R group chief executive Henry Laas said on Thursday the affected project in South Africa is a contract for the rebuilding of a boiler at Sappi’s Saiccor Mill in Umkomaas in KwaZulu-Natal where it is using specialist welders from Thailand.

“With travel restrictions [because of coronavirus] it’s a bit problematic to maintain that skill on the project,” he said.

Laas said M&R still needs to work out and understand the exact impact of this on the project but doesn’t think it will mean more than a slowdown in its implementation.

He said this impact has not yet been quantified, but the roughly R600-million contract should be completed by the end of June, which means the risk is limited.

Rio Tinto project

Laas said the second project that has been impacted is a contract for Rio Tinto at its Oyu Tolgoi copper and gold mine in Mongolia. He said M&R’s oil and gas and underground mining platforms have a 66% stake in a joint venture with a local partner in this project.

Peter Bennett, chief executive of M&R’s oil and gas platform, said the coronavirus has impacted the supply chain side of this contract, with a lot of owner-supplied equipment being quarantined at the border and some of M&R Clough’s shaft sinking equipment also impacted.

Bennett said the bigger challenge is around the movements of their personnel because of limited access routes.

“If you travel through Korea, there is a 21-day self-quarantine requirement through Bangkok and through just about any route there is some element of that.

“Our ability to maintain our supervision on site is being impacted. We are working with the client there to consolidate our work areas into some more defined space such that we can manage that more effectively.

“But at this stage we don’t know what the long term impacts will be,” he said. “There will be a slowdown in work on site but that is about as definitive as we can be at this point.”

Laas said the challenge for M&R under circumstances where it is impacted by the virus is to come to some sort of arrangement with the client because they do not want to incur the cost impact of the delay. He said this is still subject to negotiation.

Impact assessment

He added that M&R is aiming to conclude its internal work on the coronavirus impact by Friday next week and by then should have a better feel of what the potential impact might be.

Laas said the impact on M&R in Australia is very minimal at this stage even though the supply chain links back to China.

Webster Mfebe, chief executive of the SA Forum of Civil Engineering Contractors (Safcec), said on Thursday he has not received any reports from Safcec members about them being impacted by the coronavirus. “That does not mean they have not, but they have not reported it,” he said.

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Source: Leads2Business