Parma,
If this post is long, that is because I started writing it before I checked the facts that I quote below. Although I think NWH will win this tender, and I write this post with that thought, NWH may not win at the lowest bid tendered, and it would rather not win at a silly price. RIO too know that a tendered price is not the only valid consideration – reliability is more important.
How long it will take to announce the winning tender?
In essence, I do not know the answer. The actual selection and fine-tuning can be completed fairly quickly if the work is clearly defined, the negotiators are competent, and there is a stand-out tendered offer that renders the decision a no-brainer. However, these negotiations will not be allowed to preempt prerogatives of the board of directors, especially in respect to CAPEX commitment. Consequently, a decision may stay on ice until the funds have been formally approved. With costs rising for this sort of work, I would expect RIO to want to finalise this matter quickly, and hence I still hope we may get an Announcement this calendar year, and the quoted information below seems to support this hope.
The FY17 Annual Report reads:
The study is assessing a number of options, including a 40 million tonne per annum capacity dry crushing and screening plant, nonprocess infrastructure, product stockyards, a rail loop and load-out and a 170 kilometre rail link to the main line. It has a suggested capital requirement of approximately US$2.2 billion, with the potential for construction to begin in 2019. The feasibility study will build on this work and consider a range of capital, timing and scale options.
. . . Around US$2 billion has been allocated for replacement mine capital over the next three years, the majority of which is still to be approved and includes some spend on Koodaideri.
We can assume that tenders would not have been requested without the imprimatur of the Board, and RIO's financial year is the calendar year, so 2019 means calendar year 2019. The Half-Year presentation reads, in part, “. . . sustaining capital guidance of $2.0 to $2.5 billion per year, including . . . Pilbara replacement capital of ~$2.7 billion includes Koodaideri development from 2019”. This suggests that formal approval for the Koodaideri project should be uncontentious.
How long does it generally take?
I do not know – my working experience with contracts was with IT, and these typically took a few months. In this case, I would expect that the parties have been working on the matter for many months before the request for tender was issued, so the parties have probably clarified and resolved most of the issues months ago. Also, the factor that often occasions delay is what delay the service receiver wants to cause. There is no evidence that RIO wants to delay this matter further (RIO has already done its delaying, as the Koodaideri is not a out-of-the-blue project.
Work involved is clear cut or complex?
For the likes of RIO and service suppliers of NWH's ilk, the work involved is not complex. In respect to RIO and NWH specifically, the parties have evolved a working relationship over may years, so this project should not fall beyond the pale of what is normal.
PS I have never allowed ignorance and fallibility to deter me from developing an opinion, and, if the facts as I know them change, or my thinking changes, I invent a new opinion. That is, read this post with caution.
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