Saunders International (ASX:SND) riding high on $165M defence contract

November 23, 2021 01:45 PM AEDT | By Team Kalkine Media
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Highlights

  • Saunders International has secured a new contract from Crowley to design and build 11 jet fuel tanks.
  • The fuel tanks will be constructed in the Darwin region for the US defence forces.
  • Saunders will also deliver engineering, procurement and construction management services.
  • The Company will be responsible for the end-to-end project delivery of the fuel storage facility.
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Scaling up its position in the Australian defence sector, Saunders International Limited (ASX:SNDhas won a contract for Crowley Solutions’ US defence fuels facility in Darwin. The contract covering professional management and tank construction services is valued at AU$165 million.

Triggered by the upbeat update, SND shares jumped more than 19% on the ASX to close at AU$0.930 on 22 November 2021. The stock was trading flat in the early hours of 23 November 2021.

The award of this contract further strengthens the Company’s position as a well-renowned multi-disciplined engineering services provider in the bulk liquid storage sector.

Related read: Here’s how Saunders International (ASX:SND) is tapping Australian defence space 

Contract details

Of the total contract value, AU$140 million is for the design and construction of 11 tanks for the jet fuel storage facility in Darwin. For another AU$25 million (circa), Saunders will deliver Engineering, Procurement and Construction Management (EPCM) services for the delivery of the entire fuel facility and marine loading and unloading facility at Darwin Port.

The U.S. Defence Logistic Agency-Energy had awarded a contract for the provision of fuel management and storage services for Pacific military operations to Crowley Solutions, a U.S.-based global solutions provider.

Crowley subcontracted the designing and construction work to Saunders, along with EPCM services.

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Related read: Saunders International (ASX:SND) set for excellent FY22 with strong order book  

One-of-a-kind tank farms in the Northern Territory

The new fuel storage facility is slated to be built at East Arm at the future bulk liquids area site of Land Development Corporation in Darwin.

The 11 tanks will have a total capacity to store 300 million litres of ship aviation-grade JP-5 turbine fuel and commercial grade Jet A-1 fuel. The project will be completed in around two years. Once built, it will be the largest fuel storage project in the Northern Territory.

The project will support the US defence operations in the Indo-Pacific region. The project is expected to support 400 construction jobs and 20 ongoing roles.

Related read: Saunders International’s upward trajectory to continue well beyond FY22

Commenting on the development, Mark Benson, Managing Director and CEO of Saunders, highlighted that Saunders delivered advisory services to Crowley over the past several months. The two companies worked in collaboration to develop this project. This has helped in developing a strong relationship with Crowley, whose values and culture are aligned to Saunders, Benson added.

Related read: Saunders International (ASX:SND) closes FY21 with 2.5cps dividend

Design, construction and EPCM services

Data source: Company update, 22 November 2021

Saunders has an extensive track record in delivering major tank construction projects. In the last 70 years of its operations, the Company has undertaken several bulk liquid storage tank projects and completed them successfully. Saunders will deploy an expereinced team of professionals to undertake this project.

Also read: Saunders International (ASX:SND) races past revenue milestone, triples net profit in FY21

 

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