Fluor Daniel said Monday that it has won a $300-million contract to expand a copper mining operation in Indonesia but confirmed that another contract--estimated to be worth $450 million--for construction of a cereal plant in Tennessee has been put on hold.
The Indonesia project is the second major copper mining contract that Fluor Daniel, the primary engineering and construction arm of Fluor Corp., has won in 12 months. In 1988 the company was awarded a $300-million contract to construct a copper mine in Chile.
At the same time, Fluor said Kellogg Co. has delayed construction of a cereal plant in Memphis. While neither Fluor, the project’s general contractor, nor Kellogg has disclosed the size of that contract, Herb Hart, a securities analyst with S. G. Warburg & Co. in San Francisco, estimates its value at $450 million.
Fluor spokeswoman Deborah Land said Kellogg officials told Fluor that they are delaying construction of the cereal plant while they decide whether to scale down the project. “The client is making a reappraisal of the project scope,” she said. “Then they will make up their minds if they will go forward.”
Some industry analysts have said that Kellogg in the last year has lost market share to General Mills because it hasn’t been as successful in capitalizing on the public’s health-oriented desire for oat bran.
Land said other facets of the world economy are supplying new business to Fluor, which for several years has concentrated on customer diversification. The Indonesia copper mining contract is a case in point, she said.
Fluor has been hired by Freeport Indonesia, an 85%-owned subsidiary of Freeport-McMoRan Copper Co. Inc., to expand copper refining facilities in Irian Jaya, Indonesia. In addition, Fluor will build new warehouses, maintenance shops, roads, a power facility and two 75-mile pipelines to convey copper from the mine to the port at Tembagapura.
Dennis Bernhart, vice president of marketing for Fluor Daniel’s hydrocarbon sector, which includes mining, said the demand for copper has been increasing as the price has risen from about 75 cents a pound 18 months ago to $1.40 a pound. That, in turn, has stimulated the increase in copper mining, he said.
Bernhart said that currently Fluor Daniel is bidding on a number of domestic and international copper mining projects.
“I think for the next year to 18 months we expect the activity in copper to remain bullish,” he said.
Also on Monday Fluor said it had been awarded an engineering, procurement and construction management contract by Procter & Gamble to rebuild a citrus plant in Worms, West Germany. Fluor said the value of that contract is about $8 million.