Kerman Contracting
WA-based Kerman Contracting (Kerman) has been designing and constructing non-process infrastructure and bulk materials handling facilities for the mining and resources, agriculture and transportation sectors since 1981.
Need
To secure a contact with a major Australian miner and support its growing pipeline, Kerman required a flexible bonding facility to assist with performance and warranty contract security guarantees.
Solution
We provided a $25 million bond facility limit to support Kerman in meeting its performance and warranty contract security guarantee obligations, which also helped the business preserve liquidity needed for mobilisation and contract execution.
Kerman has been helping support Australia’s mining sector mine, process and transport its materials since 1981, when it first began building infrastructure the sector relies on to handle bulk materials and to service and maintain its mining fleet.
Since its inception, Kerman has played a key role in the design and construction of bulk storage and materials handling facilities and non-process infrastructure on-site at mines and portside, facilitating the export of Australian commodities around the world.
The business has carved out a niche developing materials handling facilities and non-process infrastructure close to export facilities which smaller competitors don’t have the capacity to deliver.
The thing that has struck me was the flexibility. There were several instances in establishing the facility with Export Finance Australia where I thought we may face a hurdle, but the team was creative, flexible and considered in their approach. Nothing was presented as insurmountable.
Mark Nagle
Managing Director, Kerman Contracting
Financing bonding requirements
To win contracts with major mining companies, engineering and construction firms like Kerman are often required to provide contract security to their clients, generally in the form of a bank guarantee or bond.
These securities “act as a deterrent” against contract performance defaults, Kerman Managing Director Mark Nagle explained.
“If we were to default, then the client would then have access to that security. It secures our performance under the contract,” he said.
To help the business cover these contract security requirements, Mark explained that Kerman maintains its liquidity by weighting its balance sheets heavily towards cash. But in 2025, as the business looked to continue its growth, Mark identified a possible challenge on the horizon.
“We already had a lending facility with a major bank and another with an insurance bond provider, and both were partially drawn down,” he said.
“While forecasting our revenue – and obviously with revenue comes the requirement for bonding or bank guarantees – we realised we would soon exhaust both of those facilities.”
This would have put a strain on Kerman’s ability to pursue new contracts in the future, and additional support was needed to underpin its plans for further growth.
Security to secure a larger contract
In light of these forecasts, Mark and his colleagues approached us to secure additional funding for several projects in Kerman’s pipeline.
“Around the same time we were having these discussions, a major miner was tendering for a contractor to build maintenance facilities to service large-scale mobile mining equipment, such as trucks, loaders and excavators,” Mark said.
To help the business secure this contract, we provided Kerman with a $25 million bond facility, which also meant the business was well positioned to take on future opportunities, Mark said. Without this support, the growth of the business would have been restricted.
Looking ahead, Mark said that Kerman will be very busy executing its current projects, with its orderbook expected to grow significantly by the end of 2025, providing two to three years of work to deliver opportunities that Mark said Kerman may not have been able to take on without our support.
“Export Finance Australia’s support was extremely important. Without it we would not be able to pursue some of the projects in our pipeline. So, it really underpins the future growth of the business.”
