The Cimic Group Ltd (ASX: CIM) share price is edging slightly higher today following a contract award announcement.
In mid-morning trade, the engineering company's shares are up 0.04% to $21.30.
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What's driving the Cimic share price today?
In its release, Cimic advised its subsidiaries, UGL and CPB Contractors, have entered into an early contractor involvement (ECI) contract with CuString Pty Ltd for works related to the Copperstring 2.0 project.
Based in Townsville, Queensland, CuString is a privately-owned company that delivers energy infrastructure needs to North Queensland.
The Copperstring 2.0 project is a 1,100km high-voltage transmission line that will stretch across Townsville to communities in north-west Queensland. The project is expected to have a capital expenditure of around $1.5 billion and employ 750 people during the construction phase. Once completed, electricity will be supplied to existing customers and open new opportunities for industrial facilities and agriculture projects.
Under the proposed agreement, UGL and CPB Contractors will conduct several services to begin the assessment stage. This includes scoping, designing, site investigations, pricing and finalising the engineering, procurement and construction contract for substations and high-voltage transmission lines. The deal's initial phase is estimated to be worth $7 million.
Once the ECI stage is completed along with relevant approvals and financing, the project will move to the delivery phase. Cimic noted that both of its companies are preferred contractors to follow through with works. If selected, UGL and CPB Contractors will start construction services over 3 years. The works are projected to generate $1.7 billion in revenue.
The delivery phase involves the design, construction and commissioning of four new substations, two substation extensions, and the 1,100km high-voltage transmission line.
What did management say?
Cimic group executive chair and CEO Juan Santamaria welcomed the agreement, saying:
UGL and CPB Contractors have proven experience in the delivery of critical infrastructure. We are pleased to support the delivery of this vital transmission line and will look to maximise the economic benefits and employment opportunities that this project can bring to regional communities in North and North West Queensland.
UGL managing director Doug Moss added:
UGL has solid experience delivering high voltage power projects in some of Australia's remote regions, including the HV connection that feeds Prominent Hill in South Australia.
We are delighted to be working with CuString Pty Ltd, the proponent of the CopperString project, to deliver power infrastructure that will support the growth of this globally significant resources region and export supply chain.
The Cimic share price is down more than 10% from the last 12-month period.
