African Business Review - August 2017

August 2017

www.africanbusinessreview.co.za

TOP 10

AFRICAN TOU AT TR ACRIST TIONS EGYPTIAN DRILLING COMPANY: INVESTING IN SAFETY FIRST

PROJECT RUNWAY

MADAGASCAR’S AIRPORTS IN MAJOR REVAMP

PUTTING UGANDA ON THE GRID HOW UMEME IS USING TECHNOLOGY TO OVERCOME BARRIERS TO EFFICIENCY AND PROFITABILITY

FOREWORD WELCOME TO THE August edition of African Business Review.

First up, we talk to UMEME CIO Eamonn Furniss on how technological advances have turned around the Ugandan electrical company. “As a business, in 2009/10 we were haemorrhaging power,” remarks Furniss, CIO of Uganda’s principle electricity distributor. Furniss was brought in as part of a managerial overhaul to stem the flow of losses and bring UMEME – which provides 95% of Uganda’s power – back onto a profitable footing. It has been an incredible journey.

Also talking energy is Egyptian Drilling Company (EDC), as we talk to new CEO, Jeppe Jensen, regarding the company’s exciting new ventures and investments within employee safety. With a balance sheet which sits above $1 billion, EDC has come a long way since its establishment back in the 1970s.

Another exclusive insight comes from the mining sector, where Hummingbird Resources discusses its latest projects.

Enjoy the read, and as always, tweet your feedback @AfricaBizReview

Enjoy the issue!

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F E AT U R E S

PROFILE

PROJECT RUNWAY: MADAGASCAR’S AIRPORTS IN MAJOR REVAMP

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LIST

14 TECHNOLOGY

PUTTING UGANDA ON THE GRID 4

August 2017

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AFRICAN TOURIST ATTRACTIONS

C O M PA N Y PROFILES

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Hummingbird Resources

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Cupric Africa

MINING

Egyptian Drilling Company ENERGY

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MINING

50 Eskom ENERGY

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PROFILE

PROJECT RUNWAY:

MADAGASCAR’S AIRPORTS IN MAJOR REVAMP MADAGASCAR’S AIRPORTS ARE ALL SET FOR UPGRADE AND EXPANSION WITH THE HELP OF THE EMERGING AFRICA INFRASTRUCTURE FUND (EAIF). THE €215mn PROJECT IS EXPECTED TO GENERATE EMPLOYMENT AND DEVELOPMENTAL CHANGES ACROSS THE CONTINENT Writ ten by: POOJA THAKK AR

PROFILE MADAGASCAR, THE WORLD’S fourth largest island, is renovating its two international airports at the cost of €215mn ($245mn) with the help of the Emerging Africa Infrastructure Fund (EAIF).

The construction work has already commenced to upgrade the runways, passenger terminal facilities and allied infrastructure of the Ivato international airport in Antananarivo and the Fascene international airport in Nosy Be. “Any international airports are the symbol of the connection to the world,” said Hery Rajaonarimampianina, President of the Malagasy Republic when he visited the project site. “The work would reflect

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the modern and dynamic and friendly image of Madagascar,” he added.

Funding issue resolved Sub-Saharan countries in Africa have always found it difficult to find investment funding for their infrastructure projects, especially from the private sector. But this time around, it is different. After two years of struggle, the private sector operator Ravinala Airports consortium now has the necessary funds to complete the construction of the two airports.

EAIF has provided a €25m longterm loan over a 16-year term.

“The Madagascar airports projects represent a step change for the country’s economic development

P R O J E C T R U N W AY

drive,” comments EAIF Chairman David White. “Efficient and modern airports are one of the foundation elements of progress. They are significant employers in their own right and catalysts for growth in almost every sector of an economy.

In Ravinala Airports we have a highly skilled, globally experienced and strongly motivated private sector airport operator. This is very good news for Madagascar.”

“The Madagascar airports projects represent a step change for the country’s economic development drive” David White EAIF Chairman

Big name support Investec Asset Management (IAM), one of the largest third-party investors in private equity, credit, public equity and sovereign debt across the African continent manages EAIF. EAIF is also member of the Private Infrastructure Development Group (PIDG), which currently receives support from seven governments – including the UK, the Netherlands, Sweden and Switzerland – as well as private sector banks including the German development finance institution, KfW, and its Dutch equivalent, FMO. Additionally, a consortium of four international development banks have come together to support the development projects, including the 9

PROFILE

World Bank’s International Finance Corporation (IFC), Proparco Economic Cooperation (PPP), the Development Bank of Southern Africa (DBSA) and the OPEC Fund for International Development (OFID). Additionally, the projects are sponsored by the French companies Groupe Aéroports de Paris (ADP), Bouygues Bâtiment International and Colas Madagascar and Meridiam. Groupe ADP will provide support in the operation and maintenance of both airports 10

August 2017

FACTS Project cost: $245mn Annual passenger capacity at Fascene airport in Nosy Be post-expansion: 500,000 Annual passenger capacity at Ivato airport in Antananarivo post-expansion: 1.5mn Ivato airport Terminal size: 17,500 sq m

P R O J E C T R U N W AY

“Design Construction” joint venture.

The beginnings Since December 2016, Ravinala has been in charge of the operation of the airports as part of its economic reforms programme, signed for a period of 28 years with the Malagasy government. The island nation’s airport infrastructure was built five decades ago.

Rajaonarimampianina also believes that the launch of the project is a sign of consolidation of the confidence between the Malagasy government and foreign investors.

throughout the term of the concession.

Furthermore, ADP Ingénierie has been working on the design of the new Ivato Airport terminal.

Having vast experience in the design and construction, Bouygues Bâtiment International is putting its expertise into use for building new airport terminals. Based in Madagascar for the past 60 years, Colas Madagascar will contribute to the airfield roadways. Both the companies have entered into a 50/50

What will be new?

The funding issue has already been resolved and the engineers and technicians have already begun their work at Ivato airport in Antananarivo. While Ravinala Airports looks to complete the construction in December 2018, the Ivato airport is expected to go into commercial service in June 2020.

The passenger handling capacities will more than double to an annual capacity of 1.5mn passengers, which could be further extended to 1.8mn.

The Ivato airport will host a new 11

PROFILE

17,500 square meter international terminal, while its existing terminal will be renovated to deal with domestic traffic. The runway would be strengthened and resurfaced, so that it could accommodate widebodied aircraft for the first time.

Meanwhile, Fascene airport in Nosy Be, one of the country’s most used tourism airports, has its own improvements in store for its 12

August 2017

terminal and runway. The airport’s capacity will be able to accommodate 500,000 passengers a year. After the renovations, Ravinala is hoping to promote the airport to airlines and tourism operators worldwide.

In 2016, these two airports welcomed 845,000 and 147,000 passengers respectively, two thirds of which consisted of international passengers. Their

P R O J E C T R U N W AY

“This is the first airport infrastructure project EAIF has supported and one of the most significant in terms of macro and micro economic development.

Madagascar’s ability to compete globally, particularly in tourism and trade markets, will be boosted, as will its internal trade potential” Nazmeera Moola Head of EAIF at Investec Asset Management

expected average annual passenger numbers would rise by at least five percent over the coming years.

National benefits Madagascar has a population of 24 million people, 75 percent of whom live below the poverty line, making it one of the very poorest countries in the world. The project is expected to bring employment for locally engaged people in construction, retail and beyond. It is also expected to contribute $71.5mn (€61mn) in taxes to the Madagascan government.

Nazmeera Moola is Head of EAIF at Investec Asset Management and comments: “This is the first airport infrastructure project EAIF has supported and one of the most significant in terms of macro and micro economic development.

Madagascar’s ability to compete globally, particularly in tourism and trade markets, will be boosted, as will its internal trade potential.”

So, Africa is witnessing another period of growth thanks to disruptive investors believing in the country’s potential within the infrastructure sector.

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PUTTING UGANDA ON THE GRID Uganda’s electricity provider, UMEME, is using technology to overcome long standing barriers to efficiency and profitability.

We speak to CIO Eamonn Furniss Wr it ten by : TOM WA DLOW

TECHNOLOGY

TECHNOLOGY

“AS A BUSINESS, in 2009/10 we were haemorrhaging power,” remarks Eamonn Furniss, CIO of UMEME, Uganda’s principle electricity distributor.

Translating as power in Swahili, UMEME provides more than 95 percent of the country’s electrical supply, so any haemorrhaging of the network is not only a problem for the company’s balance sheet, but also the whole of Uganda.

And the problem eight years ago was a sizable one. “Out of every dollar, 35 cents was disappearing and it was obvious this was something we had to stop very quickly,” adds Furniss, who was brought in as part of a managerial overhaul to stem the flow of losses and bring UMEME back onto a profitable footing.

Pinpointing where electricity was being lost was no straight forward task, but this can largely be split into two segments – commercial and technical. The former includes billing inefficiencies and theft, especially from larger commercial customers - a problem that persists today, albeit to a far less critical degree. Technical losses derive from energy disappearing during 16

August 2017

the process of power distribution.

“I was hired in 2009 by MD Charles Chapman, who arrived originally as Chief Operations Officer, and he really started to make things happen,” Furniss continues. “He restructured the organisation and created a new senior management team, one of those recruits being myself, the first ever CIO the organisation has ever had.

“Charles wanted technology to play a large part in the company making efficiencies, though it wasn’t just

PUTTING UGANDA ON THE GRID

“Out of every dollar, 35 cents was disappearing and it was obvious this was something we had to stop very quickly” EAMONN FURNISS CIO, UMEME

about looking at technology, it was and still is about finding the problem and asking what the solution is.”

Turning point The new approach revolved around a very simple strategy. UMEME’s new 10-strong management team simply segmented customers into two streams – big and small – an important distinction given the largest five percent of its 300,000 account holders were responsible for 60 percent of revenues in 2010.

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PUTTING UGANDA ON THE GRID

From here, two major projects have proven to pay dividends in numerous ways. The first was the rolling out of automated meter reading, which helped UMEME to analyse consumption and theft and also allowed it to e-bill customers inside 24 hours, as opposed to 35 days.

“The project is still going strong today, and this has certainly helped achieved efficiencies and cost reduction in the large customer segment,” comments Furniss, who also describes the successful uptake of pre-paid metering, now adopted by 70%of the 95% of customers who are eligible.

Furniss reveals how these 500,000 customers enjoy the comfort of knowing what they pay for, something which they can do 24 hours a day thanks to a cashless system, now also available in 36 UMEME branches. “Mobile money technology has almost been adopted in Africa overnight, people are very much used to using it here, arguably

more so than in Europe,” he says.

This has led to fewer disconnections of customers who haven’t paid and has also helped to settle bad debts. Theft has also declined steeply since these two metering innovations came into practice, with company losses now under 20%, a marked improvement on the 35% suffered in 2010. This is all the more impressive a feat given UMEME now has more than a million account holders, a figure that is expected to double inside three years.

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TECHNOLOGY

Supporting the state One of the most important organisations working with UMEME is the Ugandan government and its associated institutions, including prisons, factories and hospitals.

Just in December of last year, another pre-pay scheme was launched to help these sites economise. While pre-pay consumers use Standard Transfer Specification (STS) based on tokens equivalent to energy units, the government is testing Currency Transfer Specification (CTS), 20

August 2017

“I think the elephant in the room is how to manage these enormous networks.

We expect to double our customer base in three years, so managing this exponential growth is paramount�

EAMONN FURNISS CIO, UMEME

with tokens holding a monetary value.

The distinction is important, as consumers’ energy prices are fixed, while the CTS system is based on variable rates depending on the time energy is used. This is to help institutions like hospitals which require heavy power usage 24 hours a day – energy is cheaper for them in off-peak periods when there is less strain on the network.

Application Furniss and his team have also been

busy developing award-winning apps for internal and external use.

UMEME’s customer app has proven a hit since going online in 2016, with more than 13,000 users subscribed and using its functions such as billing and customer service.

This was a key priority for Furniss, who points to the surge in mobile uptake in Africa as a major driver behind the urgency to develop smart ways of connecting to the grid.

“Things are changing,” he says. “You can go and pick up a smartphone 21

TECHNOLOGY for less than $100, so uptake is going up and up all the time.”

Furniss also mentions the development of internal engineering apps, designed to gather customer data when used in the field, helping to integrate technical and commercial functions. “This helps us to have greater visibility over the network, which has many benefits,” he explains.

“For example, we are able to shutdown certain parts if necessary, which in the event of an accident could save lives.”

Social media is another vital channel of communication with customers.

UMEME now has a team of 15 managing various accounts on WhatsApp, Facebook and Twitter, accounting for 40% of all call centre activity, which in turn is making more efficient use of time.

Demand While the 2010 restructuring and ensuing technology projects have transformed the fortunes of UMEME and Uganda’s electricity provision, the challenges that lie ahead are about to magnify, not least because of an imminent surge in supply and demand thanks to a massive hydroelectric dam being built on the Nile.

“That’s another interesting 22

August 2017

thing about Uganda,” comments Furniss. “We’re virtually 100% hydro electricity generation at this stage. At the moment our maximum demand is about 520MW, and we have about 600-620MW available.

“In 2018/19 we have additional 1,000 MW coming online thanks to the Simba Dam on the Nile. This will mainly feed industry, as domestic electricity use among Ugandans is generally still very low.”

Simba represents a huge step forward in terms of being able to provide affordable, sustainable power for Uganda, but the challenge for Furniss very much lies in how to handle this extra capacity in a way that is efficient and smart.

He concludes: “The journey is not yet over. If you look at the world over technology is infiltrating utilities with the likes of smart metering and advanced metering, which allows you to see usage across entire networks.

“I think the elephant in the room is how to manage these enormous networks. We expect to double our customer base in three years, so managing this exponential growth is paramount and acting on all of that information that comes in.”

PUTTING UGANDA ON THE GRID

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TOP 10

Top 10

AFRICAN TOURIST ATTRACTIONS

Africa boasts some of the most incredible natural scenery on the planet, backing up a tourism industry that has seen quite considerable growth over the last 10 years. African Business Review looks at some of the most popular attractions on the continent right now‌ Written by: ANDREW WOODS

TOP 10 TOURISM IN AFRICA is booming. The World Travel and Tourism Council projects the total contribution of tourism to Africa’s Gross Domestic Product will amount to $296 billion by 2026 and most of its countries are experiencing some kind of growth. Here are just some of the biggest draws to the ‘dark continent’…

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T O P 1 0 A F R I C A N T O U R I S T AT T R A C T I O N S

Lake Malawi National Park (Malawi)

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Visitor numbers to Malawi have spiked over recent years although 2016 experienced a slight downturn.

In a bid to counter the trough and to keep the trend upward, the tourism industry is currently targeting the super wealthy who they believe will attract 1.2 million tourists a year; a significant rise from its average of 900,000. Malawi has a lot to offer the high-net worth individual. A beautiful lake more akin to a luxury beach resort with white sand everywhere and turquoise waters that rival the look of the most expensive hideaways across the world, Lake Malawi also has more tropical fish than any other freshwater lake on the globe.

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TOP 10

The Pyramids of Giza (Egypt)

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These pyramids were constructed in 2650 BC from pure limestone and according to recent statistics, there were more than 2.5 million blocks that went into the creation of the pyramid of King Cheops.

You can also marvel at the Chephren Pyramid that functions as a burial chamber of the king of the same name or pay a visit to the Pyramid of Mycerinus that is slightly smaller, but no less inspiring, surrounded as it is by many other tombs and pyramids that speak of the technological prowess of the ancient people. The number of tourists visiting Egypt has plummeted from 14.7 million to just 5.4 million in 2016, according to the United Nations World Tourism Organisation, costing the country billions. Russian flights to Egypt, which have been suspended since the Metrojet bombing in 2015, could resume soon, though. Nearly two and a half million Russians visited Egypt in 2014, making up roughly a third of the country’s visitors.

T O P 1 0 A F R I C A N T O U R I S T AT T R A C T I O N S

The Sahara Dunes (Morocco)

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A total of 10.3 million tourists visited Morocco in 2016, an increase of 1.5 percent compared to 2015 and many are targeting the Sahara Desert on their holidays. You can make camp at Zagoura or Tazzarine and watch one of the most famous marathons in the world during the springtime – the Marathon des Sables takes place over a week.

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TOP 10

Draa Valley (Morocco)

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One of the most beautiful landscapes in all of Morocco stands here in the Draa Valley, a culture of date farming that cultivates red soil that contrasts incredibly against the natural sky. You are also incredibly close to Zagora, so will not miss out on any of the exquisite luxuries of the area, including the amazing food. You can also marvel at the Atlas Mountains, which give you a jaw-dropping lead into the beautiful valley structures in one of the most extraordinary road trips you will ever take. Morocco wants to attract 20 million visitors annually by 2020, which is roughly double the current figures.

T O P 1 0 A F R I C A N T O U R I S T AT T R A C T I O N S

The Sphinx (Egypt)

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A holiday wish-list would not be complete without one of the greatest wonders of the world – Egypt’s Sphinx. Modern archaeologists still have trouble determining how this beautiful structure was built, and aside from the missing nose – shot off out of spite by some jealous Europeans – the 70 by 20 meter human/lion structure still stands beautifully today with its 9,000 years of history behind it.

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TOP 10

Horse-back safari (Kenya)

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Kenya is a popular tourist destination and arrivals rose by over 16 percent in 2016. Arrivals from the US to Kenya, despite the lack of direct flights, reached 97,883 during the same year, overtaking the UK as Kenya’s top source country for tourists. Kenya is on the up. One of the best ways to go through the country is on the back of a horse, where you can get the closest possible view of the savanna lifestyle.

You will be able to gallop in stride with zebras in the Maasai Mara; these animals are capable of covering over 100 km every week. Throughout the safari, you can partake in local culture and cuisine, all of which is absolutely exquisite.

T O P 1 0 A F R I C A N T O U R I S T AT T R A C T I O N S

The Sossusvlei Dunes (Namibia)

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Tourism in Namibia is a major industry, contributing “Namibian dollar” N$7.2 billion to the country’s GDP. Annually, over one million travellers visit “Namibia”, primarily to sample its ecotourism.

Although the word Sossusvlei literally means ‘the dead-end marsh,’ there is actually no water here at one of Namibia’s most famous and arguably most beautiful attractions: the Sossusvlei Dunes, which took millions of years for nature to create. Rocks, sedimentation and water flowed into the Atlantic Ocean from the Orange River, coloring the surface of the land and creating the beautiful, symmetric landscape. One of the most beautiful sites here is the Deadvlei; a huge landscape of white clay, haunted by skeletons of camelthorn trees.

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The mountain gorillas (Rwanda)

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Rwanda plays host to one of the world’s most incredible up close and personal encounters with natural wildlife. Although you will be closely tracking silverbacks as they move throughout the dense forests of Rwanda, you will never be in danger. The tour guides that have been cultivated over years are masterful at proper angling and distancing to give you the best view without getting in nature’s way. You will be treated to the best of Rwandan culture and cuisine in the off time too, as the area is surrounded by some of the best accommodation the country has to offer. Tourism in Rwanda is rapidly increasing since the genocide that took place in 1994, with tourism revenue often in excess of $200 million.

T O P 1 0 A F R I C A N T O U R I S T AT T R A C T I O N S

Victoria Falls (Zambia and Zimbabwe)

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This cascading, gorgeous waterfall is, without a doubt, one of the most beautiful water features in the world. It is known as ‘the cloud that thunders’ because of the sound the water makes as it courses its way to the bottom of the falls. Water flows here at more than 12,800 cubic m/s, double that of the famous Niagara Falls at its highest peak.

The interplay between light and water also creates beautiful rainbows and light structures that change with your perspective. The Victoria Falls – one of the Seven Wonders of the World and Zambia’s flagship tourism product – recorded 141,929 tourists in 2015. Neighbouring Zimbabwe attracted 2,167.686 visitors in 2016, according to its tourist board.

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T O P 1 0 A F R I C A N T O U R I S T AT T R A C T I O N S

Lake Nakuru National Park (Kenya)

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The resident flamingos are the main draw of this youthful national park, but the lake itself is an incredible sight; the flamingos attracted to it due to its breadth and clarity. Lake Nakuru National Park is one of Kenya’s protected sites that safeguard the flora and fauna and it helps draw more than a million tourists a year to the East African country.

Thank you to Saadiyah Hendricks, PR Manager at Carlson Rezidor

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EGYPTIAN DRILLING COMPANY

INVESTING IN EMPLOYEE SAFETY Written by: Catherine Sturman Produced by: Greg Churchill

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We speak with Egyptian Drilling Company’s new CEO, Jeppe Jensen, regarding the company’s exciting new ventures and investments within employee safety

O

btaining a balance sheet which currently sits above $1 billion, Egyptian Drilling Company (EDC) has come a long way since its establishment back in the 1970s. Employing around 4700 employees, EDC is one of the largest drilling contractors in Egypt, Africa and the Middle East, harboring 71 onshore and offshore units, expanding into Libya, Qatar, West Africa and Gabon.

For 20 years, the company has built a setup in Saudi Arabia that has grown exponentially - so much so that its operations in the region are close in revenue to half of EDC’s main business operations. “We’re covering the Egyptian market with almost 65 percent, so that’s our market share,” explains Jeppe Jensen, CEO of EDC. “So, quite a solid position, and a very interesting business to be part of.”

Joining the company this year, Jensen explains that developing strong partnerships with stakeholders,

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alongside National and International Oil Companies remains a key priority.

This is on top of undertaking internal governance as a result of sitting in a public-private partnership, so shareholder interests need to be a heavy focus. “It is also about having a finger on the pulse and seeing what is happening in such a competitive market,” explains Jensen. “My role involves talking to our team, visiting our rigs and seeing what is going on the ground and getting inspiration from our people, in addition to meeting with our customers and understanding the temperature of the market.”

Stakeholder engagement Delivering a long-term, sustainable business model,

ENERGY

Jeppe Jensen CEO Jeppe Jensen comes with a background in Business Administration and a specialisation in Finance from Copenhagen Business School. He holds an MBA from the New York Institute of Technology. Jensen has been with the Maersk group for 29 years, where he had spent the past 10 years with APM terminals.

His last assumed position was CEO of APM terminals in Jordan. Jeppe has taken up the position of CEO of Egyptian Drilling Company in February 2017.

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wless, trouble-free operation was the norm, not the exception? r productivity reached peak performance?

p of Mobil™ lubricants, it can. uilders worldwide rely on our lubrication solutions to protect their equipment.

s the World’s leading synthetic lubricants manufacturer. t for 115 years, we are a key strategic partner to some of Egypt’s ial businesses, including the Egyptian Drilling Company (EDC).

™ advanced lubrication solutions, we help EDC optimize operations, uctivity and reduce costs. We are proud of this partnership, n at the forefront of our priorities for decades.

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E G Y P T I A N D R I L L I N G C O M PA N Y ( E D C )

“It is also about having a finger on the pulse and seeing what is happening in such a competitive market” JEPPE JENSEN, CEO

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EDC ensures that heavy emphasis is placed on guaranteeing recurring business, as well as providing significant financial returns to shareholders. Jensen adds: “Besides International Oil Companies, we also have a host of suppliers; one key strategic partner for instance is ExxonMobil Egypt, which is our sole supplier of oils and greases lubrication solutions. EDC has long and successful strategic partnerships

ENERGY

with a number of suppliers, enjoying a wide range of benefits, both technical and commercial, which contribute to the world class performance that we deliver to our customers”.

“The International Oil Companies (IOCs) see us as their preferred partner, and we are very proud of that.

We are receiving good feedback.”

The company’s five core values have been embedded since its establishment in 1976, in order to remain competitive and provide quality drilling services. These are: Uprightness, Humbleness, Constant Care, Employees and Company name. Such values are also shared by EDC’s shareholders.

Jensen explains: “There is a meaning behind all of those values and it is about being a good corporate citizen; doing things right today, while preparing for tomorrow. What it also translates into in a business like ours, is our number one priority - Safety.”

Equipment investment EDC adopts strict criteria in order to remain competitive in the market.

w w w. e g y p t i a n - d r i l l i n g . c o m

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E G Y P T I A N D R I L L I N G C O M PA N Y ( E D C )

A member of the International Association of Drilling Contractors (IADC), the company commits to regular maintenance and performance checks, ensuring all drilling rigs and associated equipment are of the highest standard in order to reduce risk and guarantee employee safety.

“We are working with heavy equipment and in an environment where we have to be careful, follow processes and know what

our colleagues are doing,” says Jensen. “Following our values is an integral part of how we are undertaking the transactional part of our operations, which is very important for us. It also means our stakeholders can put their trust in us.”

Although the company has not bought any new rigs for over five years, EDC is continuously working on improving its technologies and processes in order to keep up with the

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6/26/2017 9:29:35 AM

ENERGY

market and the ever-changing needs of its clients.

Consequently, over the last 10 years EDC has heavily invested in the maintenance of all its drilling rigs, and upgraded them where necessary, in order to cater for specific customer requirements. Jensen explains that all partners have specific needs which are much more than the standard requirements, which the company strenuously meets.

“It is not unusual to upgrade a land rig in excess of $5 million, and it could be all the way up to $50 million for offshore rigs,” he says. “Those

4,700

The number of Egyptian Drilling Company staff

w w w. e g y p t i a n - d r i l l i n g . c o m

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E G Y P T I A N D R I L L I N G C O M PA N Y ( E D C )

“There is a meaning behind all of those values and it is about being a good corporate citizen; doing things right today, while preparing for tomorrow�

JEPPE JENSEN, CEO

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August 2017

ENERGY

are heavy investments, but that’s done to maintain standards and be a competitive market player.”

EDCs partnership with key international oil companies has led the company to house the best performing rig worldwide at one of its clients’ global portfolio.

Internal training With a training centre built specifically for employee development, EDC has invested in sophisticated equipment, offering advanced drilling, safety and technical training to support staff.

Although it is only used for internal purposes presently, Jensen adds that it has potential to provide training to external companies in the future.

Furthermore, EDC has acquired a state-of-the-art simulator, DS-5000 six years ago through a $500,000 investment. This has given the company the ability to train staff at any given time to work in the field through a safe training environment.

Regional challenges Whilst the oil market is competitive, EDC continues to thrive, with

the ambition to retain its market share in Egypt. Its success has led the company to look at further opportunities throughout the whole MENA region, both onshore and offshore, and invest outside of Egypt.

EDC is also looking at how to allocate its capital and maintain its position in the domestic market, giving priority to domestic clients in the process.

“We are definitely looking at keeping our competitive edge in Saudi Arabia,” Jensen says. “We are also participating in bids for business in the Gulf, including Qatar and Kuwait.”

Providing an edge over competitors, EDC’s operational uptime has been continuously over 98 percent, while maintaining the highest safety standards of 0.21 LTIFR, which is 0.55 less than International Association of Drilling Contractors (IADC) averages, enabling the company to be a preferred choice for IOCs. Jensen concludes: “We apply very high safety standards, while maintaining high uptime, which is what IOCs are looking for. I think we deliver on our promises and that is our edge, and we have proven records of that.”

w w w. e g y p t i a n - d r i l l i n g . c o m

49

ENERGISING

AFRICA

WITH SEAN MARITZ,

How is South Africa’s largest energy company surging forward to turn the country into a technological hub?

E

skom enjoys a captive market in South Africa, generating and supplying 95 percent of the electricity across the country and 45 percent in the entire African continent. Technology is the most vital component of the business, and as such, IT and its evolution is a huge focus; Sean Maritz, Chief Information Officer of Eskom, explains how and why in greater detail.

“From a CIO point of view, at Eskom we’re responsible for the delivery

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of the IT systems, including the technology and the infrastructure,” he says. “In the past we had many different roles and different verticals within IT, but now it’s one streamlined organisation. We actually have a seat at the table, so we’re all directly influencing the business direction.”

Being CIO of a utilities business comes with its own unique set of differentiators and challenges. One such focus of the energy sector has to be corporate responsibility, and

ENERGY

balancing that with the necessary development of Eskom’s economic growth. As such a large company, it takes its duties seriously.

“For a company like us, we have to manage the energy mix that we supply to ensure that we are creating a valuable planet for the future, so that’s a responsibility on our side,” Maritz states. “We have a continuously evolving business model and we are currently focussed on ethics and the environment. We look at the way we use power at data centres, how we use water at power stations, and whether we can reduce coal burning emissions, as well as smaller things like capturing endangered snakes on-site and releasing them in the wild. We want to be a responsible organisation.”

Technology and the economy Keeping up with technological innovations is a challenge in all countries and every sector, so for Maritz and his team, a key priority is consultation with the rest of the industry. Being involved in every part of the business – not just the portion any one worker

42k

Number of staff working for Eskom

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ENERGY

“What makes us unique is the full value chain we offer, right from generating the energy to delivering it to the customer” SEAN MARITZ CIO, Eskom

is a part of – is paramount, to ensure that everybody is equipped with the ability to understand the landscape around them.

Eskom has an advantage as such a pervasive presence in Africa, “but the fact is that carries a lot of responsibility to ensure the right value of the product that we deliver to people,” Maritz says. “Eskom has been a sound organisation for so many years because of our strong engineering capability. This company uses a mix of coal, hydro, and nuclear energy, and not a lot of companies can say that. This is why we’re one of the top 10 utilities in the world.

“Of course we have strong knowledge content, but we should not sit back and relax because we have to grow the economy in Africa.

We have a big influence on it, and we aim to rectify some problems of the past. We are trying to play a huge role in changing the economy of South Africa by improving things and creating jobs – things that have made Eskom what it is today.”

All of this effort is slowly being funnelled towards the ultimate goal of

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making Eskom a key player in a South African equivalent of Silicon Valley. The main focus for Maritz is on peoples’ skills and their ability to innovate, as this is what will push the company ever closer to being able to compete technologically on a global scale.

“The challenge lies in creating the capabilities of people,” he explains.

“We can overcome challenges by using what we have. We need to think outside the box and be a little more innovative, create innovation maps and hone our industry. This really is just the start for Eskom. We are creating IT technologists and industry experts to take the work forward, and there’s no reason our people can’t continue to innovate. They just need confidence and we need to give that to them.”

To work its way towards the advancements required for Eskom to make a sizeable impact, the business needs to adopt cloud “at a speed of knots,” in Maritz’s words.

“Our big focus this year is the IT organisation, and by next year we want to turn our landscape into an infrastructure service landscape.

That means lots of cloud adoption

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for us, and a lot of organisational initiatives that the business is undergoing and driving. For now, in the early stages, we must deliver a lot of foundational components soon for use in the future.”

Beyond the competition This dedication to being as strong a force as possible is part of what differentiates Eskom from competitors. It extends beyond a desire to simply be the biggest, as it strives to prove itself as a positive force within South Africa.

“We need to keep on saying to our customers that we are dedicated to the country and its economy first of all,” Maritz states. “Whatever we do is actually to deliver value to the citizens of South Africa.”

Eskom works hard to prove this via its campaigns and initiatives in the market, and aims to create the kind of talent in its people that will further enrich the nation.

This brings further value to South Africa, and the more innovative the business can be, the more savings it can offer to customers. The more

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money customers save, the more confidence they will have in Eskom.

“What makes us unique is the full value chain we offer, right from generating the energy to delivering it to the customer,” concludes Maritz.

“Unlike a lot of utilities companies who need to keep things cheap, we have the ability to innovate. We are in a country that is still developing, but we can do great things because we have a captive market.

“We’re currently thinking about electric vehicles, on energy storage, and looking at what the competition is doing. We have such a lot of knowledge and expertise, and we will provide services worldwide if we can get it right. Africa is going to experience a lot of changes in the future, and that too will open a lot of opportunities for Eskom. We can always make a change, because we have great partners, and they will help us to deliver these things. In two or three years, it will be a different picture for Eskom and for Africa.”

ENERGY

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Singing to the tune of success Written by: Dale Benton Produced by: Richard Deane

HUMMINGBIRD RESOURCES

With the acquisition of the high grade, low cost Yanfolila Gold project, Hummingbird has set its sights on becoming a major player in the Malian gold market

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“

Mali has had a gold mining industry for hundreds of years, but in terms of commercial gold mining, the country has really come along way predominantly through the development of Randgold Resources over the last two decades,” says Robert Monro, Head of Business Development, Hummingbird Resources.

Hummingbird Resources is another West African gold explorer that was founded in late 2005, listed on the London Stock Exchange (AIM) in 2010, and entered the Malian gold exploration space in 2014 through the acquisition of the Yanfolila Gold Project.

The Yanfolila Gold Project, a high grade open pit gold operation, predates Hummingbird Resources and was brought to a significantly advanced stage through the investment and previous ownership of Gold Fields, one of the largest gold producers on the global stage.

It was this advanced development, coupled with the geographical

significance of Mali as the third largest gold producing country in Africa, that attracted Hummingbird to Yanfolila and the company acquired the project for $20m of stock back in 2014.

“What attracted us to it was the ability to finance and get into production, a very high margined low-risk gold project in a proven gold jurisdiction,” says Monro.

Hummingbird will continue the development and construction of Yanfolila and bring forward a 1.2 MTPA gold project, which upon completion will produce an average of 110,000 ounces a year.

Advanced project For any exploration company, a significant hurdle that must often be overcome very early on in the process of developing an operation like this is financing the project and raising the necessary equity.

For Monro, Yanfolila’s reputation as a significant lowcost high-grade operation played a key role on this front.

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“What attracted us to it was the ability to finance and get into production a very high-margined, low-risk gold project in a proven gold jurisdiction” – Robert Monro, Head of Business Development

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Our philosophy at CIS is to be fully involved in the local economy through local content projects.

From day one, CIS has provided a full range of services to Hummingbird and its 500 employees on the Komana mine. On top of core services, CIS has been providing catering equipment over a long-term leasing contract, as well as full camp maintenance.

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MINING

“The biggest initial challenge was definitely the financing and fundraising,” he says.

But the company overcame this challenge, raising around $75 million in 2016, the largest fundraising on AIM in the last four years in the mining space.

“We acquired a very well run project and the fundraising is a testament to the quality of it,” Monro adds. “We have a world class asset and are extremely proud to have come through and make some real inroads with the construction.”

Hummingbird has earmarked a Q4 2017 production date, with the pre-production mining of the ore commencing in Q3 and stockpiling until the official production date.

Hummingbird did not acquire the project to simply sit on it and rely on the work already done to get to where it is today. Through two feasibility studies, Hummingbird has optimised the project and has set the all-in cost at $700 per ounce. In the current market, this will generate a significant amount of profit and be further proof as to that low-cost high-grade reputation.

“We are due to make around $75 million of free cashflow in the first full year of production,” says Monro. With commodity prices continuously fluctuating, Hummingbird has accounted for any sudden price drop and will remain resilient.

“If the gold price was to retreat we’d still have security and the ability to operate because we are

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such a low-cost producer,” he adds.

African expansion For Hummingbird, Yanfolila is not the company’s first foray into Africa. The company also has exploration and development projects in Liberia and Ghana.

“We are an acquisitive company,” says Monro. “We bought Yanfolila, we have a huge asset in Liberia [4.2 million oz. of Gold] and we have the ability for organic growth as well as looking for any further acquisitions.”

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With an eye on the future of the company, Monro stresses that right now 100 percent of the company’s focus is centred on bringing Yanfolila to production over a mine life of seven and a half years. That life of mine, however, is subject to change, and with further exploration and investment Hummingbird will look to move the goalposts beyond those initial seven years.

“We have well over a million ounces of resources at Yanfolila not in the mine plan and we are looking to

MINING

convert those resources to reserves and increase that life of mine well into the teens,� says Monro.

Licence to drill For any mining company, a key goal is to earn a social licence and the right to mine. This is a barrier that can play a significant role in the path to achieving success: lose the social licence and the mine may never see the light of day.

Hummingbird has community engagement engraved right into the core nature of the company. Inheriting a mine from Gold Fields, which had made some major community investments over the years, Monro was keen to ensure that Hummingbird built upon such a strong foundation of social responsibility.

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“We bought Yanfolila, we have a huge asset in Liberia [4.2 million oz. of Gold] and we have the ability for organic growth as well as looking for any further acquisitions” – Robert Monro, Head of Business Development

“We exist within a community and want to be a part of that community.

There are no big barriers where we operate,” he says. “We run our own clinic as well as help other clinics in the local community, and we’ve just completed a major malnourishment programme across the local area.”

But the company’s social licence does not stop at providing infrastructure and healthcare support for the local community,

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as Hummingbird works to provide opportunities for Malian people to obtain work and develop their skills and career paths.

“It’s a Malian mine, so we work as a Malian company,” says Monro. “There are certain skills that you have to bring in from the outside, but the hope is that you are training a Malian employee as their number two, providing them with the skills in order to one day replace that outsourced expertise.”

MINING

Throughout the construction of the Yanfolila Project, Hummingbird can stand tall against other mining operations throughout Africa and the world due to a company-wide commitment to the health, safety and wellbeing of its employees.

A commitment that has seen the company reach a very significant milestone.

“We are well over 50 percent complete on the construction of Yanfolila and we have had zero Lost Time Injury (LTI),” Monro reveals.

“We remain on time and on budget and that speaks volumes to our approach – we are running Yanfolila extremely well and we are not pressuring people to work overtime or create a difficult environment that could put their lives at risk.”

A premier producer Looking beyond Yanfolila, Monro believes the company can become a much bigger player in the global gold industry and Yanfolila will be the very foundation on which this reputation can be built on.

“The vision and strategy is to become a multi mine producer with a suite of assets from production development and exploration and that will be largely driven by the gold prices,” he says.

“The goal is to become a significant gold company with multiple mines. 100 percent of our effort is on delivering Yanfolila on time and on budget, without delivering that, it’s all irrelevant.”

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CUPRIC AFRICA:

BOTSWANAN COPPER, AFRICAN AMBITION Written by: Dale Benton

Produced by: Vince Kielty

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Cupric Africa looks set to become a major player in the Botswanan and African copper market with its Khoemacau Project

C

upric Canyon Capital, through its mining arm of Cupric Africa, owns one of the most significant high-copper discovery zones in recent years. With sulphide resources of around 100.3 million tonnes, Cupric has set its sights on becoming a major player in the Botswanan mining market.

The area, known as Zone Five, was acquired through the acquisition of Hana Mining back in 2013 and falls within the Khoemacau project. This has since become the company’s flagship operation. The Zone Five starter project is the first phase of a major expansion and exploration development of the zone.

This initial phase will look to average around 50,000 tonnes per annum of copper and in excess of 1.4 million tonnes per annum of silver. Cupric will look to mine around 10,000 tonnes per day through an underground mine that can be accessed via three

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interconnected underground mines.

Following the completion of the starter project, Cupric will move onto a major expansion project, one that will see the annual mining output rise to 80,000 tonnes per annum of copper and 2.4 million tonnes per annum of silver. Such a significant expansion will no doubt cement Cupric as not only a major player, but potentially the major player.

Having a significant mining operation, with a significant capacity for production, is one thing but a mining operation is nothing if it is not worth it with regards to costs and revenue.

Well, Cupric has that covered. With production earmarked for a 2019 start date, Cupric has estimated capital costs at around $350 million for the Starter Project. Looking beyond that, Zone Five has a mine life of 27 years and cash costs over those 27 years are estimated at around $1.00 per pound of copper.

MINING

With production earmarked for a 2019 start date, Cupric has estimated capital costs at around $350 million for the Starter Project

80k

2.4m

Predicted copper output in tonnes per annum

Predicted silver output in tonnes per annum

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MINING

Zone Five falls under the company’s Kalahari strategy and Khoemacau Boseto exploration work. The strategy centres around the Kalahari Copper Belt, a 1,000-kilometerlong belt which extends from Northern Botswana in Namibia.

Cupric has an “extensive package” containing a number of licences along this belt, with in-place mining infrastructure, JORC compliant resources and numerous additional high-grad copper exploration targets.

This package presents Cupric with a “near-term” opportunity to create and operate a lowcost copper production from a

long-lived operation with substantial exploration and production upside.

With Botswana being ranked as number one in in the “investment attractiveness” index for Africa, and the country being a pro-mining jurisdiction, Curpic is well placed to capitalise on this and continue to operate as a key player not only in Botswana, but also wider Africa.

Cupric continues to grow. In February of 2017, the company announces that it had secured a $50 million term loan facility agreement to provide funding for the Khoemacau coppersilver project. The loan will specifically fund development costs as well as

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front end engineering in advance of the construction phase, which will begin in the second half of 2017.

“Proceeds from the term loan will enable us to continue development work at Khoemacau as we prepare to begin full scale construction of the Starter Project in the second half of 2017,” says Dennis Bartlett, Cupric’s Chief Executive Officer. “All design, engineering and permitting work is progressing well and on schedule, bolstering our confidence that production will commence in 2019.”

The project, upon completion, could stand as the most attractive new copper project, not just in Africa.

“We continue to believe that Zone 5, combined with the expansion potential offered by the other deposits within our license areas, represents perhaps the most attractive new copper project in the world today, with the potential to ultimately achieve copper production in excess of 120,000 tonnes per annum,” he says.

As a firm commitment to focusing on bringing about the project and realising that low cost high-grade operation, Cupric has brought in a Head of African Operations.

Johan Ferreira, Head of African Operations and Managing Director of Khoemacau Copper Mining, has

He brings the underground mining expertise necessary to transition the project from studies to mine development and operations Dennis Bartlett, Cupric’s Chief Executive Officer, on the appointment of Johan Ferreira

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been brought in specifically to lead the development of the project.

He comes with over 20 years’ experience in the global mining industry, working with Anglo American on two African mines and was the president of the Ghana Chamber of Mines.

“We’re excited to welcome Johan to the Cupric team,” says Dennis Bartlett, Cupric’s Chief Executive Officer.

Bartlett stresses that a key element of Ferreira’s appointment is his experience within underground mining.

“He brings the underground mining expertise necessary to transition the project from studies to mine

development and operations,” he says.

With a targeted construction date aiming for the latter part of 2017, Cupric seemingly has all the right pieces in place for the project to truly become a major operation in Botswana and Africa.

The company has committed to its Khoemacau copper/silver project, with plans for further expansion that will increase annual production to well over 100,000 tonnes of copper and in advance of 3 million ounces of silver.

Cupric is saying and doing all the right things that will get the company through its 27-year mine life and be hugely successful along the way.

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