When RUC Mining needed finance at a competitive rate for key equipment purchases, they turned to Export Finance Australia.
Australian company RUC Mining started out in 1991 as a 50/50 joint venture. Its sole focus was raisebore drilling in Australian copper and gold mining projects – creating a hole between two underground mine shafts at different levels for ventilation or access.
Then in 2004, one of the owners, Byrnecut sold their share to Murray & Roberts, and the company changed name and strategy. John Walters, RUC’s Finance Director explained:
“We decided to become a more diverse mining company and to eventually expand overseas. In 2010, the company obtained its first three overseas contracts.”
The first was a three-year project that marked a significant change in direction for the company – putting in shafts for sewage works on Hong Kong island.
“Working in a built-up city like Hong Kong is very different to a remote mine site, so it was a big learning curve,” said John. “But it was successful, and it helped us show our capability when tendering for other works.”
RUC Mining’s philosophy was to follow their clients to wherever their work was. So having worked with Rio Tinto in Australia, they followed them to the world’s largest copper-gold mine in PT Freeport, in Papua, Indonesia (formerly Irian Jaya). RUC now has six separate contracts in different parts of the mine, employing over 1,300 people.
“In 2004, our total workforce was about 120 people – all based in Australia,” said John. “Today, we have over 2,000 employees, and we’re a $300 million revenue company.”
Then in 2018, the company set up a joint venture holding 30% ownership, with 30% owned by sister company, engineering-firm Clough, and 40% by Gobi Infrastructure Partners (GIP). The new company, GCR Mongolia LLC, was formed to take on a large number of tenders from Mongolian copper and gold mine, Oyu Tolgoi.
The company successfully tendered a $30 million construction project contract. They were then successful in winning a 30-month contract worth about $400 million to build two shafts at Oyu Tolgoi. To complete the work, they needed special hoists, or winders, used to raise and lower conveyances within the mine shaft.
“Given that RUCs business is underground mining services, it made sense for us to buy the four winders we needed, rent them into GCR, then redeploy them back to Australia at the end of the project, for other work,” explained John.
However, Australian banks had little appetite to finance equipment for use offshore. And while funding was available in Mongolia, it came with very steep interest rates. So RUC decided to approach Export Finance Australia for a US$12 million loan instead.
“Export Finance Australia went through the application details carefully, going out of their way to help us pull their financial plan together,” said John.
“Without Export Finance Australia funding it would have been extremely difficult to have a commercial solution to purchase the winders.
“By the end of the project we'll have fully paid off our loan, and we'll have a depreciated asset – hopefully allowing us to tender for other jobs with a lower cost burden within the tender price.”