Breaking Ground: Debt Capital Challenges and Opportunities in Construction and Mining Services

This podcast episode was recorded live at our Breakfast seminar in Brisbane.

The seminar, titled "Breaking Ground: Debt Capital Challenges and Opportunities in Construction and Mining Services," featured a distinguished panel of experts who discussed a range of issues and opportunities within the construction and mining industries.

The seminar emphasized the capital-intensive nature of these sectors, underscoring the importance of securing quality contracts and addressing supply chain issues, which were particularly highlighted during the COVID-19 pandemic.

Panelists

• Nicholas Samios: Fund Manager and Director at Hermes Capital, discussed the private credit market and asset-based lending, particularly in contracting.
• Ian Hyman OAM: Founder of Hymans, shared insights on business valuations, project management, and the challenges faced due to government regulations and indigenous land issues.
• Mark Rainbird: Chairman and Founder of BlueMount Capital, addressed the impact of commodity price fluctuations, labour shortages, and cash flow management on capital raising and business operations.
• Harry Mostert: Independent consultant with extensive experience in mining, construction, and infrastructure, discussed operational challenges and market entry strategies.

The seminar highlighted several current challenges. Persistent supply chain disruptions have created a bullwhip effect, leading to overstocking and subsequent price drops. Increasingly complex government regulations are causing delays in project approvals, particularly in construction. Indigenous land issues, involving competing claims and legal battles, are contributing to significant project delays and increased costs. Additionally, labour shortages and inflation are straining budgets, while rising interest rates and economic uncertainties are impacting asset values and business operations.

Despite these challenges, the seminar also identified several opportunities. There is ongoing merger and acquisition activity driven by strategic growth needs and capital requirements. Positive developments in certain sectors, such as gas, where government support is facilitating growth, were noted. Opportunities for capital raising exist for businesses with strong management and strategic planning.

Expert Insights

• Ian Hyman highlighted the deteriorating business conditions due to governmental indecision and indigenous disputes.
• Mark Rainbird discussed the effects of commodity cycles and market volatility, using nickel as an example of market disruption.
• Harry Mostert shared his experiences with multinational and private companies, emphasizing the importance of operational efficiency and strategic market entry.

The seminar concluded with a focus on the importance of understanding market dynamics, managing cash flow effectively, and leveraging strategic opportunities to navigate the challenges in the construction and mining services sectors. Lunch Money is produced by Hermes Capital.