How Andrade Gutierrez plans to conquer the mining sector

Brazilian infrastructure giant Andrade Gutierrez Engenharia is expanding its mining service business line through the recently created unit Movag, which entered into an alliance with Chinese heavy machinery manufacturer XCMG.

The agreement focuses on improving competitiveness, performance and mobilization capacity of operations requiring excavators and off-road trucks, and on decarbonization and energy transition solutions.

Andrade Gutierrez Engenharia CEO João Martins talks to BNamericas about the mining sector plans, the Movag-XCMG alliance and expectations for other segments.

BNamericas: How does Andrade Gutierrez plan to utilize Movag?

Martins: It's important to take a step back from this answer.

We realized that the mining segment has changed in a way that could generate very interesting opportunities for us, in addition to activities we already engaged in, related to the development of mines.

We noticed that several international companies entered Brazil offering mining services. Before, we focused on capex, the mine development phase, and now we look beyond that to the later phase when the mine is in operation.

BNamericas: How will the Movag-XCMG partnership work?

Martins: With our understanding of the sector's demands, we entered into this partnership with XCMG, which is one of the world's largest manufacturers of heavy equipment.

Our plans align with the fact that demand for heavy machinery requires prompt responses. The backbone of our partnership is XCMG's ability to have equipment available.

BNamericas: Will you stop working on any front in the mining area?

Martins: No. Movag is not a replacement for any of our activities. We will continue to provide mine development services, supporting our clients in the development of project capex.

We decided to create this company, more focused on services, so that it works under specific conditions and because we saw a lack of providers.

We are developing a new business arm within our group, capable of offering more specific services. But it is also important to say that previously operating in the [mining] sector is a competitive advantage.

BNamericas: What will Movag focus on?

Martins: In the short and medium term, our main market is Brazil because we see room for expansion since there are few service providers here with the focus we have.

So Movag will operate wherever there is demand for operations, regardless of the type of ore.

BNamericas: What is your revenue projection?

Martins: Currently, we have six projects in the pipeline that could be contracted within the next 6-10 months.

I believe it is realistic that in three years, we will have a company with annual revenue of 500mn reais (US$102mn).

BNamericas: Which segments are you targeting?

Martins: Clients that have copper, iron ore, gold or niobium operations.

BNamericas: Are changes at Andrade Gutierrez underway?

Martins: The company continues to follow its characteristics as a general contractor, operating in the most diverse segments, such as mining, infrastructure, oil and gas, energy, whether in the private sector or in the public sector.

BNamericas: Which sectors do you see gaining traction?

Martins: We have a vast pipeline, but I would highlight the resumption of investments by [federal oil firm] Petrobras, which is beginning to occupy an important space.

We also see investments in the energy transition, transmission lines, along with all infrastructure and mining areas.

BNamericas: What are Andrade Gutierrez’s revenue and backlog expectations?

Martins: We are still consolidating some numbers and some projects are still to be closed and can be completed this year, so I don't have a number to present.

But I would say that we have a backlog that points towards revenues for at least the next two and a half years.

BNamericas: What is the company's share of public and private contracts currently? Do you project changes?

Martins: Around 95% of our contracts are from the private sector, 5% are public.

We don't look so much if a project is public or private. We manage the general portfolio and see where it is interesting to act.

To attract our attention, projects must be well structured.