TRANSFIELD Services has jumped into the South American market after taking a 50 per cent stake in a Chilean mining maintenance and capital works services company.
The $16.25 million acquisition of the stake in Instrumentacion Y Servicios S.A. (Inser) will provide the platform for future growth opportunities, Transfield said.
Transfield chief executive Peter Watson said Inser had a strong local presence with blue-chip clients in the fast-growing Chilean mining sector.
"This acquisition provides us with the opportunity to leverage our core skills in the mining industry to grow their existing business and expand into other countries, such as Peru," Mr Watson told AAP.
"Transfield Services' experience in building, operating and maintaining power stations provides us with the ideal opportunity to work with Inser and leverage their relationships to expand into this industry."
The maintenance and project management services group said the acquisition fitted in with the company's international growth strategy of expanding into new markets with favourable macro-economic conditions.
"Chile's growth has been driven by investment in the mining and infrastructure-related industries, both industries in which Transfield Services has core skills," Mr Watson said.
"The mining sector represents 63 per cent of Chile's export market and has the potential to grow as this industry expands to meet growing demand for iron, copper, gold, silver, zinc and lead."
Last year, the Chilean government said it was planning to inject $US17 billion ($A19.2 billion) on new gold and copper mining investment over the next five years to replace existing mines whose reserves are running out and to bolster output.
Copper is a key sector in the Chilean economy, with exports in 2006 reaching $US33.3 billion ($A37.7 billion), mostly driven by China's incredible demand for metals of all kinds.
According to a 2007 report from the Council on Hemispheric Affairs, the daily average copper price for the first half of 2007 was about $US3.06 ($A3.46) per pound on the London Metal Exchange.
This is 11.5 per cent higher than the corresponding figure in 2006, it said.
The Central Bank of Chile has estimated copper mining to account for roughly eight per cent of Chile's total gross domestic product(GDP), and mining employs approximately one per cent of total employment.
Transfield said the company would operate as Inser Transfield Services S.A., having more than 1,200 technically-skilled employees.
It has long-term contracts with clients including BHP Billiton, Xstrata and the the world's largest copper producer: the state-run Corporacion Nacional del Cobre de Chile (CODELCO).
BHP is the world's largest diversified mining company and owner of the world's largest copper pit, Chile's Escondida.
Transfield said the current shareholders will retain 50 per cent ownership and existing management team also will remain in place but work closely with Transfield Services New Zealand.
The company expects to complete the acquisition, which includes subsidiary company Ingeniera Ambiental Y Servicios S.A., next month.
In a separate announcement today, Transfield said it had won a $125 million joint contract with energy service provider, WorleyParsons, to develop two portable Brisbane River desalination facilities.
The Queensland government chose the companies to work on the facilities in order to address water supply problems following a devastating year of drought, Acting Premier Paul Lucas said.
"By starting work straight away, up to an extra 144 megalitres a day in contingency supplies can be added to the region by the end of next year, which will ensure water security even if the worst drought on record worsens," Mr Lucas said.
However, the full go-ahead on the plants would not be given until after the state government reassessed water security at the end of the wet season in March/April.
Transfield shares closed down 19 cents to $13.32 in a weaker overall market.
TSE Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
