Training and labour group RBR set for role in $90b Mozambique LNG boom

Australian investors are likely to notice a wave of media reports about the $90 billion LNG construction industry about to take off in Mozambique...
7th February 2020
By a Correspondent

Over the next few months, Australian investors are likely to notice a wave of media reports about the $90 billion LNG construction industry about to take off in Mozambique.

Until now, this massive investment in what will be four world-scale LNG projects has received virtually no coverage in Australia because they do not involve the usual ASX-listed petroleum companies such as Woodside and Santos.

Instead, these projects are being developed by the multi-national giants such a Total, Exxon and Eni.

But their impact on the global LNG market, their demand for workers and the sheer size of the construction industry about to get underway means Australian investors can expect to hear a whole lot more about them in the near future.

Which begs the question: how do they get an exposure to this massive industry on the ASX.

One of the few answers lies in RBR (ASX: RBR) With a market cap of just $10 million, this labour hire and training company is the only ASX junior set to generate business from Mozambique’s LNG construction industry.

A handful of Australian investors got a taste of the opportunity this week when RBR did an investor roadshow on the east coast. At the time of writing, RBR shares looked like ending the week 20 per cent higher, suggesting investors liked what they heard.

So what did they hear?

Essentially, RBR is now reaching the mining industry’s equivalent of paydirt. In this case, it’s the culmination of five years of strategic planning and investment aimed at providing crucial labour hire and training services to the LNG construction industry in Mozambique.

RBR says these projects will need 50,000 workers and extensive training as well as creating countless indirect jobs.

Given that RBR specialises in assessing workers’ pre-existing skills, training them further and hiring them out, the company is perfectly placed to help meet these needs.

In preparation for this huge opportunity, RBR has established a large database of Mozambican workers and acquired the necessary labour broking licence and training accreditations.

RBR has also established the facilities required to train workers in the five key required areas of scaffolding, rigging, pipe fitting, steel erecting and non-critical welding.

“These people must be identified, trained for the role they will fill (and all will need health and safety training) and placed into roles in the most safe and efficient way possible,” RBR says.

“It is simply not feasible to depend solely or primarily on expat labour, nor on Mozambican migrant labour.  Securing the participation of the local population is the only solution.”

In an outline of its financial model provided to investors this week, RBR said that it was hopeful of providing 10 per cent of the LNG construction industry’s peak workforce, equal to 5000 workers and  it would generate a daily margin of $10-$20 per person.

In addition, RBR said it could generate even higher-margin revenue from training prospective workers and providing other services such as payroll administration, assisting with visas and “meet and greet” services.

RBR says it is poised to win its first contracts to supply its labour hire and training services, with initial construction of the first LNG project underway.

As part of this process, the company says it is holding advanced negotiations with several large companies which are in turn preparing to enter into contracts in respect to the LNG projects.

RBR also held advanced discussions with aid agencies, whose funding would be paid to RBR in return for RBR training Mozambicans in some of the core skills required by the construction projects.

In preparation for these contracts, RBR has secured an immediate lease at established camp site in the Mozambican town of Palma.

The camp site will provide RBR with a key strategic operations base less than 10km from the LNG construction site and close to Palma airport and marina.

RBR will establish a training centre on site and ramp up preparation of employment-ready construction workers.

RBR says its tenancy in this unique site provides accommodation for trainers, catering, classrooms and both undercover and open-air facilities for training in health and safety, work-readiness and practical skills such as scaffolding and rigging.

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