Murray & Roberts (M&R) CEO Henry Laas has described the group’s loss of control over RUC Cementation Mining Contractors as a consequence of its Australian holding company, or MRPL, having been placed into voluntary administration as a particularly “tragic” consequence of recent “devastating” developments.

MRPL and its subsidiaries together with Clough, previously M&R’s largest business unit by far, entered voluntary administration on December 5 after Clough experienced serious funding pressures as a result of factors such as Covid disruptions and a surge in working capital requirements at two key projects, Traveler and Waitsia.

Clough exited administration in mid-February when Webuild, of Italy, reached an agreement with administrators to acquire the Australian organisation and certain projects; a development that represented the final loss of Clough to M&R.

“But the most tragic part is that RUC, which is also a subsidiary of MRPL, was then caught up in this administration and we essentially lost control,” Laas explained during a presentation to investors, indicating that RUC had previously contributed about one-third of its mining platform’s earnings.

He reported that M&R intended to participate in the bidding process under way in an effort to regain control of RUC, which remains in administration, but expressed pessimism about its prospects for success.

“We think the possibility of that happening is remote,” he said.

M&R was considering launching a startup mining business in Australia and had already registered a company in the country known as Cementation Apec, while the CEO of its mining platform, Mike de Costa, had recently relocated to Perth.

“The difficulty with that is if you want to start a business from scratch, it will require working capital.

“So, it's not something that we will be able to do in the immediate future,” Laas said.

For now, the mining platform would comprise two regional businesses in Africa and the Americas, specifically the US and Canada, and orders worth R14-billion had been secured across both regions.

M&R’s far smaller power, industrial and water platform, meanwhile, had an order book of R2-billion, arising mainly from renewable energy and transmission projects in South Africa.

At R16-billion M&R’s order backlog is, thus, significantly smaller that it was in June when Clough underpinned its energy, resources and infrastructure. At that stage, Clough made up R37.2-billion of M&R’s R59.5-billion order book.

Laas said the group’s immediate focus had shifted to stabilising its remaining platforms and reducing debt, which stood at R2.6-billion.

Part of the debt would be reduced once M&R received the R1.3-billion payment in either late March or early April for the sale of its shares in the Bombela Concession Company, which operates the Gautrain.

Laas did not rule out the prospect of a rights issue in future to address its funding constraints but said it was unlikely that shareholders would support such a course of action it the sole purpose was to settle debt with the banks.

“If we are to be realistic, the focus first has to be to stabilise the group … get our debt down to more controllable levels … and make sure that we are as lean and mean as an organisation as we can be.

“How do we grow the business beyond that?

“I think the mining industry and the mining platform is a platform that has been good for the group for many, many years and that would be an obvious focus area for us to see whether we can grow the business.”

The other opportunity emerging, he said, was in the renewables sector where projects arising from South Africa’s public procurement programme had already been secure and there was an intensification of activity from the private sector.

M&R was participating in renewables tenders currently worth a combined R9-billion in potential orders and was keeping close tabs on transmission projects, particularly given the intensifying need to expand the grid to unlock new renewables generation.