KUALA LUMPUR: WCT Bhd has clinched a RM115.1 million earthworks contract from Brazil-based mining company Vale Malaysia Manufacturing Sdn Bhd.
In a statement to Bursa Malaysia, WCT said the job scope involves earthworks and drainage, besides roads and pavement, slope protection works and temporary sedimentation ponds at Vale’s project in Teluk Rubiah, Perak.
“The contract will contribute positively to the group’s earnings and net assets for financial years 2011, 2012 and 2013,” WCT said.
The job is due for completion in 2013.
In Malaysia, Vale plans to establish a regional iron ore distribution centre in Lumut, Perak. The raw material for steel production will be shipped from Brazil to Perak, from which the iron ore will be distributed to buyers across the region. The regional hub in Perak is expected to be operational by 2014.
The distribution hub in Perak is deemed pivotal for Vale to secure buyers in Asia considering that rival iron ore mining firms BHP Billiton Ltd and Rio Tinto Group ship most of the raw materials from Australia which gives these rival companies a geographical advantage.
According to news reports, Vale is forking out US$1.37 billion (RM4 billion) to set up the sea terminal in Perak. The hub is expected to manage 30 million tonnes of iron ore a year beginning in the first half of 2014.
WCT’s construction portfolio includes a 25-year build-operate-transfer (BOT) concession for the KLIA-2 Integrated Complex which includes 350,000 sq ft of retail space at the departure and arrival levels.
WCT co-owns three highway concessions in India on a BOT basis. These include the RM258 million Durgapur Expressway and RM219 million Panagarh-Palsit Expressway, undertaken in collaboration with Gamuda Bhd in West Bengal, India. The joint venture between Gamuda and WCT is on a 70% and 30% basis.
WCT also holds a 21.6% stake in India-based concession company Swarna Tollway Pte Ltd which owns a 30-year concession for a 157.8km highway in Andhra Pradesh.
WCT has earlier shown its interest in water concessions to grow the company’s recurring income portfolio.
Having a portfolio of investment properties and concessions offers a stream of recurrent income deemed crucial to the company to mitigate cyclical construction and property development earnings.
Shares of WCT fell one sen to finish at RM3.06 yesterday, valuing the company at RM2.46 billion.
This article appeared in The Edge Financial Daily, July 29, 2011.