Mining services group Diversified Mining Services Limited (DMS) has today made a number of acquisitions as it seeks to diversify its portfolio of services to the Australian mining, mineral processing, energy and infrastructure industries and create a new powerhouse in the mining services sector.
Under the share purchase agreements DMS, an unlisted public company, will acquire the six separate businesses through a combination of debt and equity.
DMS, which primarily supplies maintenance and operations support services, expects to make further acquisitions in the sector and will consider a listing on the Australian Securities Exchange (ASX), when appropriate.
The acquired businesses include the Anderson Group of Companies, Ausgroup Industries, Ausscaffold, East Coast Engineering, AllSteel Fabrications and MachineTek Engineering (full business profiles provided in Appendix A).
DMS will have combined revenue in excess of $100 million for the full year to June 30, 2009.
Most of the acquired businesses are focussed on servicing the coal industry with a particular focus on Queensland’s Bowen Basin and the New South Wales Hunter Valley. DMS businesses already hold preferred supplier status with most major mining companies as well as the mineral processing companies in Gladstone.
DMS Managing Director Terry Young said the acquisitions would give DMS a highly diversified product offering at a time when major mining companies were looking to consolidate their supplier lists.
“Each of the businesses acquired is a well respected and firmly established business which will further enhance the scope of services we are able to provide to the market,” he said. “The Australian coal industry is undergoing a period of cost and skills rationalisation and there are substantial opportunities for any firm that can offer mining companies a comprehensive, competitive range of operating services.”
Mr Young said DMS intended to work with existing owners and management who are all remaining with the businesses, to continue driving the growth of the businesses as they seek to extend their penetration in their respective industry.
“Each business has strong, committed owners who have established their company as a leader in their individual area of speciality. I look forward to working with them and their management and staff as we consolidate their already strong market position.”
DMS is pursuing similar agreements with a number of other established and profitable mining services businesses and which have a dominant market position within their specialist areas and provide a substantial competitive advantage to underpin further growth.
“This is an exciting time to be working in the mining services industry and I hope that together we can create one of the most dynamic mining services companies in Australia,” he said.
Mr Young said this was the ideal time to be expanding the company’s service offering as the sector remained highly fragmented and dominated by small to medium-sized companies which lacked the financial and management resources to seize the opportunities available in the sector.
DMS Chairman Chris Rawlings said the company had a unique opportunity to create a nationally significant mining services group with an underlying foundation of firmly-established, successful businesses.
“The mining services industry is poised to undergo some major structural changes over the next few years and companies with sufficient skills, scale and diversity will be the major beneficiaries,” Dr Rawlings said.
“The major mining companies will increasingly be looking for efficiencies from the highly fragmented mining services industry. We believe DMS will be in a solid position to grow further in this environment.”
“Other opportunities to grow the business are being actively sought.”
Dr Rawlings said the company would consider alternative capital structures when market conditions were more stable.
“In the short term we have the full support of our banks and existing shareholders. We are concentrating on consolidating the opportunity that has been created through these acquisitions,” he said.
Other board members of DMS include former KPMG partner Ian Fraser, experienced company director Howard Stack and Anderson Group of Companies founding director Darren Anderson.
APPENDIX A – COMPANY PROFILES
Anderson Group of CompaniesAnderson Group was established in 1994 by Darren, Greg and Craig Anderson to provide specialist services specifically geared to support the underground coal mining industry. These services include the design, manufacture, maintenance and repair of underground machinery and components, specialised fabrication services, supply of spare parts, general engineering, manufacture and supply of underground hire machinery and attachments and the provision of underground mining contract labour and outbye services. The company has grown rapidly over the past 15 years as it established a strong reputation for providing a diverse range of specialist services with the highest professional standards. The group is now strategically positioned to service the Bowen, Galilee and Surat Basin’s in Queensland plus the Hunter Valley, Western Districts, Gunnedah and Illawarra Coal Fields of New South Wales. Over the past 15 years the Anderson Group has expanded to include Anderson Industries, Anderson Mine Services, Anderson Mining Hire, Coaltec and Mining Repairs.
AusscaffoldAusscaffold was established in 2003 by Jon Byrnes with the goal of providing specialist construction and maintenance services to the mining industry both onshore and offshore. The company has grown rapidly over the past five years and now has facilities in both Mackay and Gladstone and is now the largest employer of industrial scaffolders in the region. It has an extensive inventory of scaffolding and offers a full service to clients including delivering, erecting, dismantling and removing scaffolding. The company has an excellent reputation with clients because of its personal service, focus on safety, positive staff attitude, new equipment and responsiveness.
MachineTek EngineeringMachineTek Engineering was established in 2002 by Kevin Webb and Steven Wright to provide specialist maintenance of mobile mining equipment. The Mackay-based company is known by its customers for high-quality work, quick turnaround and the ability to deliver difficult jobs. It specialises in earthmoving component reclamation, mobile (on-site) line-boring machines, vibratory-stress relieving, general turning and milling and the manufacture of machined products.
East Coast EngineeringEast Coast Engineering was established in 1970 to manufacture steel and aluminium products requiring specialised engineering. The Gladstone-based company is lead by owners Greg Upton and Jeanette Matslofva. East Coast Engineering is known for its dependability, quality workmanship and quick turnaround and is an integral supplier to a range of blue-chip customers. Its services include the manufacture of high-tolerance machined products, CNC turning and milling, machining of dies, moulds and castings.
Allsteel Fabrications
Allsteel Fabrications bases its operations in Gladstone and has been in the metal industry for the past 35 years, owned by Greg Upton and Jeanette Matslofva. An industry leader in the fields of fabrication, repair and reclamation of components utilising robotic welding, metal spraying, pressing, rolling, forming and welding. Their customer base includes companies such as Boyne Smelter Limited (BSL), Queensland Alumina Limited (QAL) and NRG Power.
Ausgroup IndustriesAusgroup Industries was established in 1994 by Victor and Elizabeth McCullough in Mackay with the goal of providing specialist maintenance of large scale plant and equipment. Ausgroup Industries is valued by its customers for its diverse package of core services, high quality standards and ability to cater for projects of any size. It is comprised of four integrated companies: Ausblast Protective Coatings, VMS Services, Austruck Auto Refurbishing and Austruck Heavy Towing & Salvage.
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