The Australian extractive industry is dominated by 3 main companies namely Holcim (formerly Cemex), Hanson (part of Heidelburg Cement Group) and Boral. It is considered that these companies control approximately 75% of the market for aggregates, pre mixed concrete and cement. Other major listed operators include Adelaide Brighton, with more diversified companies such as Fletcher Building also playing a role and with private companies such as Barro Group, Buckeridge Group, Wagners, having strong impacts within regionalised markets.
The valuation of quarry assets requires expertise in a number of disciplines that include geology, mining rights, planning, valuation, environmental issues, business valuation, plant and machinery, infrastructure and market analyses. There are few independent valuers who have expertise and experience in all of these disciplines.
In the first instance you cannot value a quarry without having any geological understanding, and this is the first requirement prior to considering other elements. Without the resource, then there would not be an opportunity. Following on from this then if there is a resource, then it must also have planning and there must also be a market demand for that resource. The resource ownership may be vested in the State and there may also be a surface land owner which further complicates the valuation process. A clear understanding of the various rights to ownership needs to be established to provide an accurate valuation. The conditions of the Planning consent can have a significant impact on any valuation. Often environmental constraints within a planning consent can involve capital costs that need to be reflected over the life of the operation. The processing operation also needs to be assessed to consider the capability of the plant to produce the right products for the market. Other important factors involve the location of the quarry to the market, the capacity of the market, the level of competition and the pricing structure of the products. All of these factors will determine the level of output which in turn has the main impact on the value of the quarry.
We believe that we are the only quarry valuers in Australia that provide market sales and lease evidence within our valuation reports. Any valuer that does not provide supporting sales and lease evidence within their reports, may not understand the local market. We analyse every transaction to derive an equivalent market royalty for use within our valuations. We have an extensive data base of market sales and leases for quarries throughout NSW and South East Queensland and are continually compiling additional market evidence within other states as we carry out valuations. As a consequence we consider our valuations to be the most accurate and up to date and fully reflect the current market circumstances.
Valuation and consultancy advice is available for a range of asset classes within the extractive and quarrying industry and we would be happy to discuss your requirements.
Some Key Factors required to perform a Quarry Valuation
Geology
Understanding of Geology, faults, fissures, overthrows, nature of deposit etc
Interpretation of boreholes, trenches, material testing, and product structure
Extent of Overburden and costs of removal and storage
Evaluation of reserves into proved, probable and possible
Services
Provision and availability of services to the site
Sterilisation of resources by the provision of services
Legal
Ownership of the surface land for access to the minerals (Intangible Assets)
Ownership of the minerals (Tangible Assets)
Planning Consent to extract, Zoning and other Local Government constraints
Environmental Impact Assessment and EPA licensing. Pollution Control
Easements, restrictions, covenants, wayleaves, caveats and other legal constraints
Native Title and Water Management issues
Restoration, Rehabilitation, After Care. Liabilities, costs or benefits
Royalties, minimum or certain rents, site rents
Economic Factors
Overview of the Australian extractive, cement and pre mixed concrete markets
Overview of State extractive, cement and pre mixed concrete markets
Relationship to housing market trends and population changes
State of the national, regional and local economy
Nature and number of competition within a given area. Market share
Size of the market and pricing policy. Market Capacity
Niche products that operate in a regionalised or national market
Processing Operation
Winning, working, crushing, grinding, screening. Types of plant, machinery and equipment
Market output, capacity, obsolescence, constraints to expansion, product mix
The market output will derive the Life of Mine / Quarry
