Suppliers News (July 23, 2007)

Caterpillar profits skyrocket

Caterpillar (CAT-N) says quarterly profits rose 45% and predicts even better things at fiscal year-end, thanks in large part to continued demand for commodities.

The Peoria, Ill.-based company posted a first-quarter profit of $840 million, or US$1.20 per share, up from $581 million, or US81, in the corresponding period of 2005. Sales tallied to US$9.39 billion, an increase of 13%.

On the strength of the robust quarter, Caterpillar now forecasts that its full-year earnings will clock in somewhere between US$4.85 to US$5.20 per share, a boost of US20 either way over earlier predictions. Sales are expected to hit US$40 billion for the full year.

Shares in the company trade in a 52-week range of US$40 to US$80.

Caterpillar builds heavy equipment for mining and construction companies, as well as diesel engines and gas turbines for power generation. These days, mining and construction companies need more earth-moving equipment to increase production and take advantage of record commodity prices, including a gold price exceeding US$600 per oz.

Quadrem does deals worth $1M every hour

The number of purchase orders flowing through Quadrem, an Internet-based transaction hub for suppliers of all shapes and sizes, reached an all-time high of 180,000 orders worth US$1.1 billion in March, a sharp increase from 117,000 orders worth US$489 million placed during the same month a year earlier.

“We’re supporting transactions worth more than one-million dollars (US) every hour,” says Quadrem CEO Charles Jackson.

The company recently reported two consecutive years of revenue growth exceeding 60%. All the orders placed through Quadrem in 2005 were worth a combined US$7.2 billion.

Quadrem was launched in 2000 and has locations in Australia, Brazil, Canada, Chile, Mexico, Peru, Saudi Arabia, South Africa, and the U.S.

Aker Kvaerner to help expand Boddington

Norwegian engineering firm Aker Kvaerner and Aussie contractor Clough Murray & Roberts (CMR), through their AKCMR joint venture, will expand the Boddington gold project in Western Australia, situated about 130 km southeast of Perth.

The contract is worth A$111 million (US$82.5 million), with Aker Kvaerner subsidiary, Aker Kvaerner Australia, taking home about 60% — roughly A$66 million (US$49 million). The contract comes on the heels of a completed pre-engineering contract worth A$4 million (US$2.9 million).

Aker Kvaerner will design and build facilities at the largely oxide operation for treating primary ore at a rate of about 35 million tonnes per year to produce around 850,000 oz. gold and 200,000 tonnes copper annually. Part of the expansion will include the use of high-pressure grinding rolls.

The bulk of the engineering work for the process plant at Boddington will be done through Aker Kvaerner’s office in Chile.

“This is a great opportunity for CMR and Aker Kvaerner to develop a significant international-scale project in Western Australia for major resource clients,” says Tom Quinn, managing director of Aker Kvaerner Australia.

Two-thirds of the Boddington project is held by Newmont Mining (NMC-T, NEM-N), with the balance owned by AngloGold Ashanti (AU-N). Initial production is expected in late 2008. The project has an estimated mine life of more than 15 years, with Newmont’s share of annual production expected to be about 700,000 oz. gold for the first five years of production, and average around 600,000 oz. over the life of the project, with cash costs of about US$210 per oz.

Thiessen Team to sell drilling business

Langley, B.C.-based Thiessen Team will sell its global rotary and raise-bore drilling business to Atlas Copco, one of the world’s largest suppliers of mining equipment. The acquisition gives Atlas Copco yet another product to offer its customers.

Thiessen Team has supplied the mining industry with drilling equipment for about 50 years. The new company will likely be called Atlas Copco Thiessen.

Thiessen says its operations will continue as before and that existing sales staff and other contacts will remain the same.

The Thiessen business unit that sells breakers, booms and mobile equipment is not part of the sale, and neither is Thiessen Team USA, which operates a shotcrete manufacturing operation south of the border.

Fluor to build power plant in Nevada

California-based engineering firm Fluor (FLR-N) will design and build a 200-MW, coal-fired power plant in Eureka Cty., Nev., for Newmont Mining (NMC-T, NEM-N). The contract is worth US$400 million.

Some employees in Fluor’s Greenville, S.C., office began initial work on the project in 2004 after getting the go-ahead from Newmont. The recent announcement made everything official.

The plant will provide a low-cost and reliable supply of electricity to Newmont’s Nevada mining operations, including the Midas, Lone Tree and Twin Creeks mines. The power plant will go on-stream in 2008 and is designed to exceed the Environmental Protection Agency’s stringent guidelines for emissions.

Headquartered in Aliso Viejo, Calif., Fluor reported revenue of US$13.2 billion in 2005.

Alcan goes ahead with Saguenay pilot plant

Alcan has signed a US$130-million contract with the French energy company Areva (arvcf-o) to design and construct a new high-voltage sub-station that will power an Alcan pilot plant in Saguenay, Que., part of Alcan’s planned 10-year, US$1.8-billion investment Quebec’s Saguenay-Lac-Saint-Jean region.

The AP50 pilot plant will develop the company’s proprietary AP50 smelting technology.

Work is under way in Saguenay with the demolition of the plant’s old-technology Svderberg potlines. With those potlines out of the way, the new potlines will be installed early next year.

Alcan is touting the pilot plant as the cornerstone of the company’s industrial strategy for Quebec, which has received a large amount of funding from the provincial government.

Jean Simon, president of Alcan’s Primary Metal Group in North America, says signing the contract with Areva is a “demonstration of our commitments to our local and provincial stakeholders.”

Alcan plans to build the US$550-million pilot plant at its Complexe Jonquiere site. About 60,000 tonnes of aluminum per year will come from the plant, where Alcan wants to roll out future versions of the AP50 technology.

Meanwhile, on the other side of the country, Alcan continues work on a plan to bring its B.C.-based Kitimat complex up to date.

Alcan has hired engineering firm Bechtel to produce a detailed feasibility study and conduct preliminary engineering work for a planned expansion of its Kitimat smelter. Terms of the contract were not disclosed.

The project still needs environmental permits and a new deal with B.C. Hydro to proceed. Alcan avoided one possible stumbling block when it reached an agreement with the Canadian Auto Workers union in May.

Bechtel’s work will include the tendering process of long-lead purchases for the planned smelter, such as busbar, cathode shells, potroom cranes and pot gas scrubbing systems.

The modernization of the Kitimat smelter would increase Alcan’s annual global primary aluminum production by more than 4% and make Kitimat not only one of Alcan’s largest wholly owned smelters, but also one of the three largest in North America. Kitimat’s aluminum production capacity would increase by 40%, while reducing greenhouse gas emissions by 500,000 tonnes annually.

Alcan recently received a US$38-billion takeover offer from London-based Rio Tinto (rtp-n, rio-l). No rival suitors are likely to emerge.

Aker Kvaerner subsidiary to build Poracota autoclave

Engineering and construction firm Aker Kvaerner, through a subsidiary in Arizona, will design and build a gold autoclave for Compania de Minas Buenaventura (bvn-n) at the miner’s Poracota gold mine in
Peru.

Aker Kvaerner Metals of Tucson, Ariz., will conduct basic engineering for the Poracota gold autoclave project. The 500-tonne-per-day Poracota plant will use whole ore pressure oxidation of sulphides to recover gold.

Poracota is situated 20 km west of Buenaventura’s wholly owned Orcopampa gold-silver mine, in the Peruvian Andes.

Aker Kvaerner’s work will include processing circuit design, equipment sizing, preparation of bid packages, and production of layouts to support the capital and operating cost estimates.

The basic engineering work is expected to take 33 weeks.

New Gold goes with AMEC at New Afton

New Gold (NGD-T, NGD-X) has chosen AMEC Americas, a subsidiary of U.K.-based engineering and consulting firm AMEC (AMEC-L), to design and build infrastructure and a mining complex at the New Afton copper-gold project, near Kamloops, B.C.

New Gold president and CEO Chris Bradbrook says he liked AMEC’s “excellent track record of working with companies to move from the mine feasibility through the construction phase, combined with their significant experience in British Columbia.”

New Gold recently completed a debt and equity financing that provided the company with the necessary cash, it says, to place the mine into production by 2009. The company has about $400 million in the bank.

The contract with AMEC covers the engineering design and procurement work for the underground infrastructure, along with the processing plant surface buildings. The contract is thought to be worth about $12 million, about what was budgeted in the April feasibility study.

AMEC will get familiar with the scope of the project and then develop some conceptual designs, with the appropriate cost estimates for each.

New Gold has already placed orders for a semi-autogenous grinding mill, as well as ball mills, and has an underground mining contractor in place.