Contractor Decmil has received some rare good news, with a subsidiary being named as the preferred proponent for the $175 million Albany Ring Road.
Contractor Decmil has received some rare good news, with a subsidiary being named as the preferred proponent for the $175 million Albany Ring Road.
In a joint statement released late Monday afternoon, the Australian and WA governments said work on the project would commence in September after the selection of Decmil Southern Pty Ltd.
The project is expected to run for three years and employ about 1,000 people over its life.
The contract win comes after a tumultuous year for Decmil, which has seen its share price collapse from 36 cents last December to around 5.5 cents currently.
Its problems have included shutting down its New Zealand subsidiary, after it became mired in an expensive contract dispute with that country’s prisons department.
Decmil has also written down the value of its Homeground workers camp in Queensland and continues to battle contractual disputes with other parties including Southern Cross Electrical Engineering.
The company has put in place new leadership in recent months, with Dickie Dique appointed chief executive in May and Peter Thomas brought in as acting chief financial officer.
Former chief executive Scott Criddle stepped down from the board in June and will leave the company at the end of July.
To bolster its balance sheet, it recently completed a $50 million capital raising priced at just 5 cents per share.
Prior to Monday’s government announcement, Decmil had announced only two contract wins this calendar year, worth a total of $36 million.
Those wins lifted its total order book to $411 million, meaning the Albany contract will provide a very large boost.
Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack said the Albany Ring Road was a critical piece of infrastructure for the region.
"The completed Albany Ring Road will link the existing major roads and highways radiating from Albany,” he said in a statement.
"It will bypass urban areas and provide unimpeded road access to the Port of Albany, underpinning its future economic viability.
"The first phase of the connection to get underway will be the new interchange at Albany Highway and Menang Drive, as well as construction of the section of the Ring Road south to Lancaster Road.
"Detailed designs for the second phase of the project, from Lancaster Road to Princess Royal Drive, will also take place over the next 12 months, enabling construction to begin subject to environmental approvals being received.”
Western Australian Transport Minister Rita Saffioti said the project would provide opportunities for local workers and businesses.
“We have invested an unprecedented amount into regional roads and I'm pleased to see that this project will commence construction within months," Ms Saffioti said.
"Decmil Southern is a fantastic WA-based company and I'm pleased to see them named as the preferred proponent to deliver this major project.”
Ms Saffioti said the project would seek input from local businesses and Aboriginal businesses.
Federal Member for O'Connor Rick Wilson said the project will deliver significant safety benefits.
"This project will include grade-separated (bridged) interchanges at the intersections of Albany Highway and Menang Drive; Albany Ring Road and South Coast Highway; Albany Ring Road, Hanrahan Road and Frenchman Bay Road; and Frenchman Bay Road and the freight railway line," Mr Wilson said.
"By reducing the number of heavy vehicles on Albany Highway, South Coast Highway and Chester Pass Road, the project will relieve congestion for the freight industry and enhance safety outcomes for local and tourist traffic."
The Australian government is providing $140 million towards the project, with the Western Australian government contributing $35 million.
Meanwhile in a market update released on Monday prior to the Albany project announcement, Decmil disclosed its framework agreement with Queensland gas producer QGC will end one year early in September 2020.
The company said the project was expected to contribute a minimal profit in FY2021 and it would incur about $500,000 in redundancy costs.
Decmil also reported progress with its Yandin wind farm and Drysdale Bypass projects, which are both nearing completion.
