North American Construction Group Profile
North American Construction Group Ltd., through its subsidiaries, provides a wide range of mining and heavy civil construction services to customers in the resource development and industrial construction sectors within Canada and the United States. A significant portion of the company’s services are primarily focused on supporting the construction and operation of surface mines.
The company’s work typically begins with the initial consulting services provided during the planning phase, including a review of constructability, engineering and budgeting. This leads into the construction phase during which the company provides an expanded range of services, including clearing, road construction, site preparation, underground utility installation and mine infrastructure construction, including construction of tailings ponds, access roads, stabilized earth walls and earth dams. As its mining customers move into production, the company supports the long-term operation of the mine by providing ongoing site maintenance and upgrading, equipment and labour supply, overburden removal, material hauling and land reclamation. During these lifecycles, the company is increasingly providing rental equipment to the site either directly to the customer or indirectly to a joint venture which holds the contract with the customer.
More specifically:
The company provides construction and operations support services in the Canadian oil sands region through all stages of the various mine's lifecycle. The company’s services are typically provided pursuant to non-exclusive master service agreements or multiple use agreements that set out contractual terms over three-to-five year periods. At present, the company has such agreements with existing terms expiring between 2023 and 2027 with Suncor Energy Services Inc., for its Millennium and North Steepbank projects, Fort Hills Energy LP, for its Fort Hills Mine, Syncrude Canada, for its Mildred Lake Mine and Aurora Mine, and Imperial Oil Limited, for its Kearl Mine. The majority of services provided in the oil sands region are being completed through the Mikisew North American Limited Partnership (MNALP). In general terms, this Indigenous joint venture, of which the company has a 49% ownership interest, performs the role of contractor and sub-contracts work to it as needed.
The company provides heavy equipment maintenance, component remanufacturing and full equipment rebuild services to mining companies and other heavy equipment operators. The company’s maintenance personnel have specialized skills in working with equipment subjected to the difficult operating conditions of the mining industry. Those specialized skills, combined with the company’s new purpose-built facilities, provide it with the ability to provide a high level of maintenance services in a cost effective manner to its external customers.
The company provides mine management services for thermal coal mines in Wyoming and Texas, USA. Multi-year service agreements are in place to provide the framework for the supply of mind and management services, as well as labour, equipment and back-office supplies and services.
DGI (Aust) Trading Pty Ltd. (DGI), an Australian-based subsidiary, serves the mining and construction industry by supplying production-critical components. DGI is vertically integrated with the company’s maintenance programs and therefore is also able to support its equipment rebuild and component remanufacturing processes.
Nuna Group of Companies (Nuna), of which the company owns 49%, is a well-established incumbent contractor in Nunavut and the Northwest Territories. Nuna’s construction revenue relates to commodities, such as base metals, precious metals and diamonds, as well as infrastructure-related projects that involve major earthworks. Nuna continues to successfully complete major projects in Ontario, Saskatchewan and British Columbia. Nuna’s peak business activity occurs during the summer months generally from June to September.
As a result of the Fargo-Moorhead flood diversion project award in June 2021, the company entered into two joint ventures, each with specific roles & responsibilities. First, the company owns a 15% interest in the Red River Valley Alliance, LLC (RRVA), which entered into an agreement with the Metro Flood Diversion Authority to design, construct, finance, operate and maintain a diversion channel and associated infrastructure that forms part of the Fargo-Moorhead Metropolitan Area Flood Risk Management Project. Second, the company owns a 30% interest in ASN Constructors which entered into the design and build contract for the project with RRVA.
Fleet and Equipment
As of December 31, 2022, the company directly operated a heavy equipment fleet of 637 units; 62% were owned, 32% were leased and 6% were rented. This fleet is supported by over 850 pieces of ancillary equipment. In addition to this, the joint ventures the company operates has a combined owned fleet of approximately 302 pieces of heavy equipment.
The company has a modern, well-maintained fleet of equipment to service its clients' needs. The company operates a significant number of trucks larger than 240 tons in capacity which gives it a distinct advantage over competitors with respect to both specialized skill base and equipment availability. The company’s equipment strategy allows it to meet its customers' variable service requirements while balancing the need to maximize equipment utilization.
Major Suppliers
The company has long-term relationships with the following suppliers of equipment, parts and components:
Finning International Inc. (over 52 years), the Caterpillar heavy equipment supplier in Alberta for the majority of the company’s mining fleet, including repair parts;
Wajax Corporation (over 27 years), the supplier of the company’s mining and construction Hitachi excavators and shovels;
Brandt Tractor Ltd. (over 37 years), the Alberta supplier for the company’s construction John Deere excavators;
SMS Equipment Inc. (over 12 years), the Canadian supplier of the company’s Komatsu mining trucks;
Brake Supply Inc. (over 12 years), the company’s prime supplier of Caterpillar powertrain components, hydraulic cylinders for its Caterpillar mining fleet of haul trucks, ranging in carrying capacity from 100-tonne to 400-tonne and for dozers, ranging from D8T to D11T models.
Hydraulic Repair and Design (over 12 years), the company’s prime supplier of hydraulic cylinders and pumps for its Hitachi mining shovels and excavators;
SRC of Lexington (5 years), the company’s prime supplier of Caterpillar re-manufactured engines for its Caterpillar mining fleet of haul trucks, ranging in carrying capacity from 100-tonne to 240-tonne and for dozers, ranging from D10T and D11T models;
Independent Rebuilders (4 years), the company’s prime supplier of Caterpillar re-manufactured engines for its Caterpillar 793F and 797B fleet of haul trucks, ranging in carrying capacity from 240-tonne to 400-tonne;
Imperial Oil (over 17 years), the company’s prime supplier of lubricants for its mining and mobile equipment fleets; and
BNA Re-Manufacturing (4 years), a joint venture providing remanufactured and refurbished final drives and front wheel assemblies for the 100-tonne to 400-tonne haul trucks and D8T to D11T dozers.
Finning, Wajax, Brant and SMS are also major suppliers for equipment rentals and service labour.
Seasonality
The company generally experiences a seasonal decline in its oil sands mine site support revenue, such as reclamation and muskeg removal services, during the three months ended June 30 of each year (year ended December 31, 2022) as weather conditions make performance of this heavy equipment intensive work difficult during this period.
History
North American Construction Group Ltd. was founded in 1953. The company was incorporated in 2003.
