Aspire Africa | Issue 1. by Aspire Africa

July / August 2015 · No. 1 www.Aspire-Africa.com Committed To Promoting African Synergy!

ABB Mauritius Facilitating Mauritius’ Renewable Energy Revolution

Innovative Energy Exclusive with Mark Tanton Red Cap Investments

Kenya

Realising Real Growth in the Real Estate Sector

eat r G The nyan Ke

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Projects of Scale JAMES MWORIA, CEO CENTUM INVESTMENTS

Discusses Increasing Assets Under Management and Growth of the Kenyan Economy Hummingbird Resources · Sam G. Russ, Deputy Minister · Kengas Group

Contents ARTICLES

MINING

18 PROPERTY

Kenya: Realising Real Growth in the Real Estate Sector By: Rachael Gitonga

22 RESOURCE

Sam G. Russ Deputy Minister for Operations, Liberia, on PPP’s and Liberia’s Growth.

26 OIL & GAS

The Great Kenyan Oil Discovery An exclusive with Gurjeet Phull Jenkins, Chairperson, Kenya Oil and Gas Association. By: Andrew Thompson

Hummingbird Resources From Producer to Explorer Overnight. An exclusive with Dan Betts, CEO, on their operations in West Africa.

COVER FEATURE

CENTUM INVESTMENT

Focusing on West African Growth.

Promoting Kenya’s mining sector.

A Q&A with Director, Jeremy Clark.

A Q&A with CEO, Monica Gichohi.

Paradigm Project Management

Kenya Chamber of Mines (KCM)

REGULAR FEATURES Editorial Note

Artists Corner

News in Brief

Appointments

Upcoming Events

Projects of Scale An Aspire Africa exclusive feature with CEO, James

Mworia

4 Contents

Contents POWER & AUTOMATION

LOGISTICS

RENEWABLE ENERGY

EVENTS

Red Cap Investment

ABB Mauritius An exclusive with Ajay Vij, Country Director, on facilitating Mauritius’ renewable energy revolution.

Welcome

Defining Moment! Welcome to the inaugural digital edition of Aspire Africa. What is behind African entrepreneurship? What are the challenges

Kengas Group Quality, Flexible and Reliable Transport Solutions.

they have successfully overcome? How are they making positive contributions towards collective growth and sustainability of the richest continent on Earth? These are some of the questions, successes and stories that we will bringing our audience. We seek to present exceptional business journalism by profiling CEO’s, entrepreneurs, leaders and innovative companies to discuss strategy, opinion, analysis, emerging trends and growth opportunities covering African

Innovative Energy An exclusive with Red Cap Managing Director, Mark Tanton.

8th Investing in African Mining London, UK Event Review.

Empowered Homes, Sustainable Communities.

Event Wrap-Up.

Ecovest Holdings

achievement that our readers will find highly engaging and valuable. In this editions cover issue, we spotlight Kenya’s investment powerhouse, Centum Investment! We exclusively travelled to Kenya to conduct an onsite interview with James Mworia, CEO of Centum, who was recently awarded the African Business Leader of the Year Award by the Corporate Council on Africa (CCN). We also highlight the Kenyan oil discovery by speaking to Gurjeet P. Jenkins,

4th MBI 2014 - Nairobi, Kenya

Chairperson - Kenyan Oil and Gas Association as well as discuss the recent acquisition of the Yanfolila Project in Mali with Dan Betts, CEO – Hummingbird Resources. I hope you enjoy reading this issue. Connect with us online on our social platforms and remember, “If you want to go fast, go alone. If you want to go far, go together.” – African Proverb.

Tabrez Khokhar @TabzKhokhar

Aspire Africa · July/Aug 2015

Publisher Sam Khan

Media Director Tabrez Khokhar

Associate Editor Nicholas Paul Griffin

Sales Director Yasser Khokhar

Editorial Contributors Andrew Thompson Rachael Gitonga Jessie Landry

Publication Layout Zahir Malik Web Production Raizwan Butt

UK Office 145-157 St. John Street, London, EC1V 4PW United Kingdom. Tel: +44 (0)20 7193 9001 Kenya Office Office C7 . Elite View . Githunguri Road . Kileleshwa . Nairobi. Tel: +254 (0) 704 927 737 Subscription: www.aspire-africa.com Feedback: communications@aspire-africa.com Our Digital Prescence >

ÂŠ Aspire Africa. All rights reserved. Reproduction in whole or in part is strictly prohibited without written permission. Opinions expressed in the Aspire Africa publication are not necessarily those of the editor or publisher. All reasonable care is taken to ensure truth and accuracy, but the editor and publishers cannot be held responsible for errors or omissions in articles, advertising, photographs or illustrations. Unsolicited manuscripts are welcome but cannot be returned without a stamped, self-addressed envelope. The editor is not responsible for material submitted for consideration.

6 Artists Corner: Alex Njoroge

Artists Corner Title: “Nyuma Yako”

Alex Andrew Njoroge is a self taught artist who holds a bachelor of commerce degree from the University of Nairobi. His painting career started in the year 2006 immediately after high school. He employs a dotted technique in his work which is derived from his inspiration of Carl Sagan’s poem ‘pale blue dot’. Click Here to see more of Alex’s work Aspire Africa · July/Aug 2015

#Fact China is Africa’s top trade partner with Sino-African trade volumes now nearing $200 billion per year.

News

Siemens awarded record energy orders boosting Egypt’s power generation by 50% grid to support the country’s rapid economic development and meet its growing population’s demand for power.

The signing ceremony was witnessed by Muhamed Shaker, Minister of Electricity and Energy of Egypt and Siemens CEO Joe Kaeser (front), the German Vice Chancellor Sigmar Gabriel and the Egyptian President Abdel Fattah El-Sisi (back) ©www.siemens.com/press

Siemens has signed contracts worth €8 billion for high-efficiency natural gas-fired power plants and wind power installations that will boost Egypt’s power generation capacity by more than 50 percent compared to the currently installed base. The projects will add an additional 16.4 gigawatts (GW) to Egypt’s national ENERGY

The signing ceremony was witnessed today in Berlin, Germany by Egyptian President Abdel Fattah El-Sisi and German Vice Chancellor Sigmar Gabriel. The orders expand on the memorandums of understanding announced at the Egypt Economic Development Conference (EEDC) held in Sharm El Sheik in March 2015. Together with local Egyptian partners Elsewedy Electric and Orascom Construction, Siemens will supply on a turnkey basis three natural gas-fired combined cycle power plants, each with a capacity of 4.8GW, for a total combined capacity of 14.4GW. Each of the three power plants –- Beni Suef, Burullus and New Capital – will be powered by eight Siemens H-Class gas

turbines, selected for their high output and recordbreaking efficiency. The plants will add power to the grid in stages. Plans call for an initial 4.4GW to go online before summer 2017 and the full 14.4GW to become available 38 months after the financing has closed and advance payments have been received. Once completed, the three power plants will be the largest in the world. Siemens will also deliver up to 12 wind farms in the Gulf of Suez and West Nile areas, comprising around 600 wind turbines and an installed capacity of 2GW. The company will build a rotor blade manufacturing facility in Egypt’s Ain Soukhna region, which will provide training and employment for up to 1,000 people. The facility is scheduled to go into operation in the second half of 2017.

Centum Investment receives CMA approval to offer and list a Kshs. 6 Billion Bond Centum Investment Company Limited has received Capital Markets Authority (CMA) approval for the public listing of Kenya Shilling Six Billion through the issuance of fixed rate and equity linked notes on the INVESTMENT

8 News in Brief

Fixed Income Securities Market Segments (FIMS) of the Nairobi Securities Exchange (NSE). The tenor of the notes will be five (5) years. The notes offer the public an opportunity be a part of

Centum’s growth strategy for the 2014-2019 period which focuses on development of investment opportunities in eight key sectors – Real Estate, Energy, Financial Services, Education, Health, ICT, Agribusiness & FMCG.

#Fact Over 55% of Africa’s labour force working in food production with vast areas of arable and pastoral lands supporting agricultural economies.

MasterCard becomes first international payments network to enter Somalia Partnership with Premier Bank sees MasterCard payment cards issued and accepted in Somalia for the first time. FINANCE

At the World Economic Forum on Africa today, MasterCard announced its partnership with Premier Bank, becoming the first international payments network to enter Somalia. As a result of the partnership, Premier Bank will now issue and accept the first MasterCardbranded payment cards in Somalia, a country that hasn’t had any form of formal banking service since the collapse of the government and financial services system in 1991. Premier Bank ATMs can accept cards for cash withdrawal, while the bank will also issue 5,000 MasterCard debit cards this year, followed by prepaid cards, and point of sale (POS) machines. The introduction of the MasterCard payments network means that government agencies now have an efficient platform through which to transfer salary disbursements. Foreigners, expatriates

and international aid organisations sending funds to Somalia can do so via a formal, traceable network that complies with international security standards, eliminating the risks of transferring and transporting cash. Remittances contribute well over US$1 billion to Somalia’s economy annually, or over 35 percent of GDP, funds that are an essential source of income for individuals and necessary for the development of the country. Premier Bank’s MasterCardbranded debit cards enable Somalis to withdraw funds from any MasterCardlicensed ATM globally, shop online, and pay for goods and services at millions of merchants that accept MasterCard payment cards around the world. Demonstrating the value of close collaboration in the banking and payments technology industries, this landmark partnership is a significant step towards reducing Somalia’s dependence on cash, increasing financial inclusion and ultimately contributing to the country’s financial stability.

News ‘The private sector is part of our societal fabric’, Nestlé CEO, Paul Bulcke

Nestlé CEO Paul Bulcke addressed the EAT Stockholm Food Forum on the role of the private sector in supporting the United Nations Sustainable Development Goals (SDGs). SUSTAINABILITY

The SDGs are a new, universal set of goals, targets and indicators that UN member states are expected to ratify in September, to use to form their agendas and political policies over the next 15 years. They follow and build on the Millennium Development Goals, which are due to expire at the end of the year. Mr Bulcke described how Nestlé will support the goals through its own Creating Shared Value commitments that focus on areas including water, nutrition and rural development. He also emphasised that all stakeholders: governments, companies, NGOs and other institutions, must combine to help deliver the agenda. Aspire Africa · July/Aug 2015

#Fact

News

The African continent has the largest reserves of precious metals with over 40% of the gold reserves, over 60% of the cobalt, and 90% of the platinum reserves.

Massmart reports increased total sales growth Management team delivers good result with strong sales growth in a difficult economic environment RETAIL

Key highlights • • • •

Total Sales up by 10.4% (R78.173 billion) Operating profit before forex and interest up 4.3% (R2.015 billion) EBITDA before forex up by 6.7% (R2.887 billion) Strong performance from three divisions, with Game South Africa showing improved trading in the second half of the year

Massmart announced its fullyear results for the 52 weeks to December 2014, reporting a total sales increase of 10.4%, while comparable

Image: MassMart

sales for the 52 week period increased by 7.5%. Group EBITDA of R2.9 billion, before foreign exchange movements, grew by 6.7% while operating profit, excluding foreign exchange movements and interest, grew by 4.3%. While the South African consumer environment improved towards the end of 2014, low economic growth, inadequate job creation and persistent inflation continued placing pressure

on consumers. Upperincome consumers remained resilient however, reflected in the robust demand at Makro and Builders. Excluding foreign exchange movements, total operating expenses increased by 11.7% over the prior year. Comparable operating expenses were well controlled and increased by 7.1%, which was below the growth rate of comparable sales.

Mango named one of the top 10 low-cost carriers in the world LOGISTICS Mango was named as one of the Top 10 low-cost carriers in the world by influential travel site Travelmath. The airline keeps company with some of the world’s biggest brands in low-cost travel including Virgin America, EasyJet, Southwest and Tiger Air among others.

Mango was ranked ninth in the world and is the only African low-cost airline on the list. Australia’s

10 News in Brief

JetStar was in pole position. Last week Mango was voted coolest low-cost airline in the Sunday Times Generation Next Awards and last year it was also awarded African Low-Cost Airline of the Year by Skytrax at the World Airline Awards. Nine years ago Mango was launched with objectives that included the availability of consistently affordable travel and innovation across all areas of domestic aviation. The site Travelmath credits Mango as one of the 7

carriers that changed travel around the world citing that “Budget airlines have changed the way we travel around the world. In the past decade we saw the rise of these airlines.

Image: Mango

#Fact There are fewer people with internet connections in Africa than there are in just New York City.

News

South African investment holders Brait SE aquire New Look Brait SE (“Brait”) and New Look announced that an agreement has been reached whereby Brait will acquire a c.90% interest in New Look Retail Group Limited (“New Look” or “the Company”) for c.£780 million, primarily from funds advised by Apax Partners and Permira (“the Acquisition”).

leading fast fashion retailer in the UK for the under 35s with more than 800 stores worldwide.

RETAIL / INVESTMENT

The Singh family interests and the current management of the Company will acquire the remaining 10% of the Company. Anders Kristiansen, New Look’s CEO, Mike Iddon (CFO) and Roger Wightman (CCO) will

Image: New Look

remain with the Company. The transaction places an Enterprise Value on New Look of c.£1.9 billion. Over the past 11 years, under the Apax and Permira Funds’ ownership, New Look has gone through a significant transformation and is now the

New Look has net financial debt of c.£1 billion. Brait and New Look’s management are comfortable with the company’s current leverage ratio given its strong cash flow generation. Subject to market conditions, the Company will review financing alternatives in order to optimise the capital structure within the same leverage range. Brait will fund the Purchase Consideration using available facilities and cash on hand.

SABMiller to enter UK craft beer market with acquisition of Meantime Brewing Company FOOD & DRINK SABMiller is to become the new owner of London-based modern craft brewer Meantime Brewing Company (“Meantime”).

Meantime is a pioneer in British modern craft beer, giving SABMiller an entry point into the fastest-growing segment of the UK beer market and complementing its imported super-premium lagers such as Peroni Nastro Azzurro and Pilsner Urquell. SABMiller plans to grow sales of Meantime’s beers nationally and explore

export opportunities in its European markets under the continued leadership of Nick Miller, Meantime CEO. Meantime was established by Brew Master, Alastair Hook, in 1999 with a brewery in Greenwich, London. The business has since created a successful range of British and international beer styles. Volumes of beer sales at Meantime grew by 58% in 2014, outpacing the UK beer market’s 1% growth during the same period and making it one of the top-performing modern craft breweries in the UK.

Image: Jason Alden / OneRedEye

The acquisition is expected to complete in early June 2015 and Meantime will be incorporated into SABMiller Europe’s accounts. The financial terms of the transaction are confidential. Aspire Africa · July/Aug 2015 11

#Fact Africa has the most extensive biomass burning in the world, yet only emits about 4% of the world’s total carbon dioxide emissions.

News

Ornico acquires Fuseware, South Africa editorial, brand, advertising, media and digital content tracking and analysis services across all platforms,” says Patricios.

Brand and media intelligence company buys SA digital monitoring and analytics market leader. TECH

Brand and media analysis company, Ornico, today announced that it had entered into an agreement with social media monitoring and analytics company, Fuseware, for the acquisition of its business for an undisclosed sum. Ornico’s Chief Executive Officer, Oresti Patricios, said the acquisition would now enable the Brand Intelligence™ company to offer a full suite of content

monitoring and analytics tools across all platforms. In terms of the acquisition, Wronski will be part of the team that helps to grow Fuseware’s service offering at Ornico, and into Africa. “The acquisition of Fuseware completes the last kilometre of our business, and means that Ornico now offers

Ornico currently operates from offices in Johannesburg and Cape Town , as well as in Nigeria, Kenya and Ghana, and has many other partnerships across the continent. Established in 1984 as a company that monitored television advertising, Ornico has grown organically and expanded beyond South Africa in 2008 by opening its Nigeria office, followed in 2014 by offices in Kenya and Ghana.

Liquid Telecom expands South African Satellite reseller base as demand continues to increase Liquid Telecom South Africa today announced an expansion of its reseller base in response to increasing demand for broadband connectivity over its awardwinning satellite network. TELECOMS

Liquid Telecom was named the 2014 VSAT Provider Of The Year at the SatCom Star Awards and its shared MPLS satellite service won the VSAT Innovation for Africa category at the 2014 AfricaCom awards. In South Africa Liquid Telecom sells satellite connectivity via its network of resellers and passes direct sales enquiries onto these resellers. 12 News in Brief

The past six months have seen an unprecedented number of direct queries from SMEs, corporations and financial institutions, government and public sector bodies as well as organisations wanting to connect remote rural communities. In response to this demand, Liquid Telecom is now looking to add to its roster of reseller partners. Scott Mumford, Head of

Liquid Telecom’s Satellite Services, said “We have a number of key differentiators, which means we can deliver a superior satellite service in South Africa. When compared to our competitors, Liquid Telecom delivers a service that is top-rated in speed, latency, capacity, cost and customer service.” Liquid Telecom is looking for resellers currently in the ICT sector with experience in offering value-added services. Preferably they would be an existing ISP with a good credit record and registered with WAPA or ISPA.

#Fact Africa has the most extensive biomass burning in the world, yet only emits about 4% of the world’s total carbon dioxide emissions.

VELUX Group and Plan International partner up to bring solar light to offgrid African regions

News Erin Energy receives government approval for license extension in the Gambia Erin Energy Corporation (“Erin Energy” or the “Company”) (NYSE MKT:ERN) announced that it has received executive approval to extend the initial exploration period for blocks A2 and A5 in The Gambia by 24 months to December 31, 2018. OIL & GAS

RENEWABLE ENERGY Leading window manufacturer, The VELUX Group and the social business Little Sun announce a partnership with the NGO Plan International to distribute a new solar lamp – the Natural Light solar lamp – in three African countries: Zimbabwe, Zambia and Senegal. The partnership with Plan International will deliver sustainable solar-powered light to people living off-grid in areas without electricity, through a program that involves and empowers local communities.

14,500 Natural Light lamps will be produced based on the competition’s winning design and will be distributed by Plan in Zimbabwe, Zambia and Senegal in late 2015 and early 2016.

Last year the VELUX Group and Little Sun joined forces to launch the Natural Light – International Design Competition, which challenged design students around the world to produce a design for the Natural Light solar lamp, in order to bring clean, reliable, affordable light to some of the 1.2 billion people worldwide living without electricity.

“There was a very strong sense of diversity, very different ideas. It seemed that the appeal of the competition reached a younger group, and this makes me optimistic that solar energy will resonate with the next generation.” Artist Olafur Eliasson, founder of Little Sun and chairperson of the Natural Light jury says.

The Natural Light – International Design Competition received 172 design proposals submitted from 65 different countries. The jury was impressed by the creative, innovative and complex ideas it saw from the participating students.

The work program includes the requirement to drill one exploration well in either block during the exploration period. The Ministry of Petroleum has also approved and will issue the necessary permits to proceed with the Company’s planned multiclient 3D seismic data acquisition on blocks A2 and A5. Erin Energy is operator of the A2 and A5 blocks with 100% interest. The A2 and A5 blocks are located approximately 30 miles offshore and ontrend with the recent FAN-1 and SNE-1 oil discoveries offshore Senegal by Cairn, Conoco, Petrosen and FAR.

Aspire Africa · July/Aug 2015 13

Appointments Akinwumi Adesina of Nigeria elected 8th President of the AfDB

“I have been given a great responsibility,” Akinwumi A. Adesina said upon his election as the 8th President of the African Development Bank Group. The President-Elect said he was “humbled by this remarkable vote of confidence” on the part of the Bank’s Board of Governors, who met during the Bank

Group’s 50th Annual Meetings in Abidjan, Côte d’Ivoire. His name was announced by Albert Toikeusse Mabri, Minister of Planning and Development for Côte d’Ivoire, and Chairman of the Board of Governors of the African Development Bank. The election process was concluded by voting among the Bank’s the Bank’s Board of Governors (54 regional member countries, 26 nonregional), whose voting powers are weighted. Currently serving as Nigeria’s

Minister of Agriculture and Rural Development, Akinwumi A. Adesina succeeds Donald Kaberuka, whose second term as President of the Bank ends on August 31, 2015, and to whom he paid tribute in a press conference, saying, “I salute the excellent work of President Kaberuka. It will be a big challenge for me to step into his shoes. He leaves a solid Bank behind him.” Akinwumi A. Adesina, 55, will assume office on 1 September 2015.

Thulani Gcabashe appointed Chairman of Standard Bank Group Thulani Gcabashe (57) was appointed Chairman of Standard Bank Group at the conclusion of the company’s annual general meeting on 28 May 2015, subject to his re-election as a director of Standard Bank Group at the AGM. He will be taking over from Fred Phaswana (70), who will be retiring at the close of the AGM. Mr Gcabashe has served as an independent non-executive director of Standard Bank Group (SBG) and The Standard Bank of South Africa Limited (SBSA) since 2003. In line with the significantly increased time commitment associated with his new role, Mr Gcabashe will be reducing his day to day executive involvement at BuiltAfrica Holdings, the renewable energy company that he founded. He will also over a period of time be stepping down as chairman of Imperial Holdings, chairman of MTN Zakhele and non-executive director of Togo Invest. “Fred has set an exceptional standard and I am excited by the opportunities that this new position brings. There is still a lot to be done to consolidate Standard Bank Group’s position as the leading African integrated financial services organisation and I am looking forward to the challenge.” Says Mr Gcabashe Mr Gcabashe has a Masters in Urban and Regional Planning from Ball State University in the USA as well as a Bachelor of Arts degree from the University of Botswana and Swaziland. 14 Appointments

Appointments AECI appoint acting Managing Director for AEL Mining AECI is pleased to announce that Edwin Ludick has been appointed Acting Managing Director of AEL Mining Services, a wholly-owned Group subsidiary, with effect from 15 May 2015. He will serve in this position until the process to appoint a permanent candidate has been completed. Edwin is a member of the AECI Executive Committee and an Executive of the Group’s specialty chemicals cluster. He is Chairman of a number of companies in this cluster and is also tasked with leading the growth of AECI’s chemicals businesses outside of South Africa.

Standard Chartered appoint new Group Chief Information Officer Standard Chartered announced the appointment of Dr Michael Gorriz as Group Chief Information Officer. He will join in the third quarter of 2015 and be based in Singapore, reporting directly to incoming Group Chief Executive, Bill Winters. Michael brings significant knowledge and expertise from a major international group as Vice President and CIO at Daimler AG, which employs around 280,000 people across Europe, North and South America, Asia, Australia and Africa.

Michael (aged 55) is a physicist and engineer by background and progressed through specialist research and design in aerospace to a general management role in Daimler Mexico. Over the past 14 years, he held various CIO roles with the group and since 2008 was responsible for strategy, planning and development of all IT systems, as well as the operation of all data centres and communication networks at Daimler AG. Over the past four years Michael has driven the

digital transformation within Daimler, both for employees and customers. He has won numerous awards – most recently the Global CIO award of the Indian NASSCOM – and is one of only three CIOs in Germany nominated to a list of the 40 most important people in IT in the last 40 years.

Merafe Resources appoint Glencore’s Shaun Blankfield as non-executive director The board of directors of Merafe is pleased to announce the appointment of Shaun Blankfield as a non-executive director of the company with effect from 13 May 2015. Shaun is the Head of Business Development for Glencore South Africa. Shaun is a qualified Chartered Accountant (CA (SA)) and served articles with Deloitte South Africa. Subsequently he worked as a manager in the Corporate Finance and Accounting Advisory Services team at Deloitte, Sydney, Australia. Aspire Africa · July/Aug 2015 15

The real estate sector is highlighted as one of the sectors that will give higher returns to investors this year in Kenya

Property

Kenya:

Realising Real Growth in the Real Estate Sector By: Rachael Gitonga

t’s very exciting how the real estate sector is highlighted as one of the sectors that will give higher returns to investors this year in Kenya. Other sectors expected to drive economic growth are the dairy industry, government tenders, security and cashless tech products.

Some wary Investors have been watching real estate from a distance wondering whether the growth will slow down and the “bubble” will burst. There are some factors at play here that are expected to have an impact on the sector’s performance and penetration by investors.

High land prices

A restrictive credit structure

Say for example, the affordability of land for development. A recent survey carried out by Hass Consult Real estate indicates that land prices have increased fivefold in the last 7 years. The land prices in the suburbs range from Kshs 40 to 470 million.

The only way to ensure increased penetration in this sector is to make credit facilities affordable. However in the past we have seen millions of Kenyans locked out of home loans. This has been mainly due to low levels of income, high cost of money being interest rates and initial costs.

Most of these suburbs are both residential and commercial with a number of office blocks coming up. These prices are high for individual investors hence making affordability difficult.

Take for example a home loan of KShs 5 million to buy a 2-bedroom house in the outskirts of Nairobi. The monthly repayment would be approximately KShs 52,000 (Approx. USD$ 526.00) for a 20-year term.

18 Kenya: Realising Real Growth in the Real Estate Sector

Property

The number of households that can afford this monthly commitment per month is very low. Before the bank lends this amount one would need to raise a deposit of 10% (Shs 450,000) and incur related costs totaling to about Shs 384,000. With the low levels of income the ability of individual Kenyans to own homes is very bleak. This explains why there is a very low uptake of mortgage loans even with increased demand for housing. It is commendable that some institutions such as Housing Finance Corporation have seen this as an opportunity and have now developed a product that provides 100% financing. The institutions provide financing for the total cost of the home including any incidental costs that an individual would otherwise be required to settle before obtaining the loan. Most of the population in urban areas will continue to rent houses for a long time unless the current lending regime makes a complete transformation to make home loans affordable. Never mind rent in most areas has risen significantly over the years.

Middle men cost The process of purchasing and selling of land in the country is largely controlled by middle men, a necessary evil. However this has led to incidental middle men costs which the purchaser often bears. The actual costs of property is loaded with these costs. The cost of corruption in this sector has also discouraged investors. Land scams have been common in the sector and this has slowed development of some large projects. This ranges from the irregularities of ownership of property to the poor service delivery of contractors.

Capital gains tax The introduction of Capital gains tax with effect from 1 January is expected to have an impact on property prices as owners pass the cost to investors. This increases the general cost of property by some margin. Aspire Africa 路 July/Aug 2015 19

A quick survey of rent levels across Nairobi tells a silent story. An opportunity. An untapped market.

Property The good news is that the government has realized some of the above matters, and is providing regulation in some of these areas in an effort to provide an enabling environment for players in the sector. In the recent past, the cabinet secretary for land ordered closure of a few land offices for a total cleanup of records. This has led to some interesting findings; irregular land dealings have been unraveled. Catastrophes involving collapse of buildings have been experienced in the country due to shoddy work done by contractors. Strict regulations have been put in place to ensure the quality of construction and process is monitored. But this is a more reactive approach and is yet to be implemented fully. The players together with the government should take a more proactive approach to realize real growth in the sector and solve the problems facing the sector. The sector is dominated by institutional investors and therefore not enabling for individual investors due to restrictive rules of the game. Institutional investors have more resources, greater negotiating power and are impersonal. However if the country does want to make millionaires in this sector then it has to put in mechanisms that make individual investors inclusive. Something needs to be done. This sector has great potential. A quick survey of rent levels across Nairobi tells a silent story. An opportunity. An untapped market. How do you explain households that can afford monthly rent of Shs 60,000 and above and canâ&#x20AC;&#x2122;t afford to own homes. Recall my previous example of a mortgage of Shs 5M (USD$ 50,546.00) (actually Shs 4.5M after you pay 10% deposit) the monthly repayment is Shs 53,000 (USD$ 536.00) for a 20 year term. So why cant a household paying rent of Shs 60,000 (USD$ 607.00) obtain a loan?

I have no single answer of where affordable housing for Kenyans should come from, all I know is we need to make a few changes in a number of places to come up with a comprehensive affordable housing program.

So what can the government of Kenya do? Require that Property developers include a number of affordable units in the housing projects while ensuring they cover their costs to ensure they remain in business. Currently, the government through the national housing corporation, a government agency, has built a number of affordable units, but these are not adequate for the growing demand. These have often been low cost housing units that attract a common economic class. But in the former you will get a mix of economic classes with some taking up units at the market rate while the others taking up unit at cost or below cost. The other option is for the government to designate certain areas as affordable housing zones and offer clear incentives for developers to put up affordable housing units. This could include offering subsidized construction material costs and subsidized

20 Kenya: Realising Real Growth in the Real Estate Sector

Property or even government funded amenities (water and electricity installation) for property development in these zones. These should also be geared towards developing locations outside the city. This will require infrastructure development in such areas to attract economic activity.

Read

Anywhere. Anytime.

The government could also regulate property prices. This could be zoned regulation where you have price limits dependent on location of housing units. This will need consideration of various factors, e.g. one would expect projects with better access to construction material to be cheaper. The other side of the coin is that these properties could be overpriced. With developers making super profits. No wonder the average pay back period for a majority of houses is approximately 15 years. This compared to other asset classes may not be an ideal investment for retail investors. I recently visited one of our neighboring countries and was amazed at the property market there. A single apartment unit in that country goes for $7,500 approximately in rent! Did I say per month! That was shocking considering it’s a very young economy recovering from political instability. Most of the construction materials are imported hence the high cost of construction and property prices. So why can’t we do better and provide affordable housing for the growing economy? ASPIRE

Rachael Gitonga Aspire Contributor

Rachael is a senior manager in a Big 4 firm in Kenya. She has worked in both Kenya and South Africa markets with clients in Investment management, Insurance and real estate property with over 11 years experience.

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Aspire Africa · July/Aug 2015 21

Resources: Q&A

Deputy Minister for Operations at the Ministry of Lands, Mines and Energy, Liberia

Sam G. Russ Aspire Africa had the chance to do an exclusive on-site interview with Liberian Deputy Minister for Operations, Sam Russ recently in London. Minister Russ gave us his thoughts on the development of the country, publicprivate partnerships, and the logistical issues facing Liberiaâ&#x20AC;&#x2122;s growth.

Local procurement is an important part. Employment, specifically local employment of our nationals is very important.” Minister Russ

spire Africa: During your talk today you outlined win-win relationships. Can you elaborate on what you mean by this?

Minister Russ: Quite clearly we need to recognize that investors are taking risks and they have expectations for a fair return. That can be in terms of direct flows from government to create an able environment to ensure that happens, or ensuring laws are put in place and enforced for access to land. We are working to facilitate investors in a number of different ways. AA: Why should business consider investing in Liberia over a neighboring West African country? Minister Russ: For a number of different reasons. First of all we know that we are very endowed, but virtually unexplored because of years of civil unrest. We’re disproportionally focused on iron ores because for 50 years we’ve had a lot of it. What we’re seeing now is a significant increase in exploration activities. We see that industrial minerals are acting currencies, and it suggests to us that better opportunities are the upside for this type of investment. Let’s include the fact that we’ve built a regime with laws that are rational, that provide security of tenure for investors, and an environment that investors can look forward to. AA: Tell us about the major highlights of your draft law that you were speaking about? Minister Russ: It’s very, what we say “zero draft”, meaning we will be looking at all of the components of it. It was intended to address issues of gaps in the system, and the system was implemented in 2000; a lot of changes have occurred since then. So first of all we want to make sure we are linking an appropriate level of new institutions and new laws.

Resources: Q&A Second of all, we want to be sure that issues like land rights are done in a more rational way. We recognize that land owner rights and land user rights are key, but without frustrating investors access to land, and use of land. We want to be sure we have enough safeguards in process that when a conflict occurs there is cover to ensure a fair resolution to issues including licenses and so forth. In addition we want to be sure local content is an important part of the process, that we have a structure and a rational local content plan. In effect, if we are processing locally, we are generating wealth within the country and in our communities. AA: Talking land owner rights and partnerships, how do you promote opportunities for Liberian citizens? Minister Russ: That’s really important as we review our regime. A key component of the whole strategy of the government is to look at and ensure that the inter-linkage between the mine development of the resources and all the communities is very clear. Local procurement is an important part. Employment, specifically local employment of our nationals is very important, including training, and capacity building. We will have a structure to ensure benefits are flowing to the communities. AA: How will you address the infrastructure issues you spoke of earlier today? Minister Russ: There are a number of different things. On the energy side, we are talking to the concessionaires, but because a lot of capital investment is involved, we are putting our transmission lines close to generate capacity where we are close to strategic areas for service distribution. We have to create an environment where the concessionaire has confidence that the Aspire Africa · July/Aug 2015 23

Resources: Q&A

www.molme.gov.lr

Dep. Minister Russ Speaking at the WAMIS Event, London - UK

service level that they expect for the project will be given to them. It includes dialogue with government. It includes good management to ensure the project is on time, not disrupted, and that pricing arrangements are fair and rational. In terms of rail issues, each investor has a right to rail, but with the case of ArcelorMittal rail, we’re hoping we can begin talking of partnerships and making sure that the investors get firm collaborations with other concessionaires. AA: Can you give us your thoughts on using hydropower as a renewable resource in the country? Minister Russ: It’s a huge part of our national strategy. We’re trying to rebuild an earlier hydro dam that was broken during the war. As you know, the cost for hydro is significantly lower. It will bring down our costs to use it as part of the power mix. We have small villages using micro hydro to supply power, so we’ll continue to use that strategy. AA: What about your initiatives to use unconventional energy resources? Minister Russ: We’re looking at other ways to generate energy, including solar. We 24 Liberian Deputy Minister of Operations: Sam G. Russ

increasingly see solar as a very valuable resource. AA: Are there any tender auctions for solar projects in the near future? Minister Russ: That’s a really good question. In our regime if we have the value of the resource, we have a law required to auction it. If solar comes along, we have to form a proper partnership (PPP). So we need to build the framework so that investors coming into solar have confidence they will get paid. It’s an arrangement we continue to look at. AA: How West African states work together for growth through a symbiotic relationship? Minister Russ: The time is very interesting because we can see for the first time convergence at the highest levels. Presidents are talking, and the discussions are at a technical, and tactical level. We’re talking about how we can collaborate on a number of different issues: infrastructure, power, and so forth. So I think we’re seeing a movement to be excited about, and once we get one or two projects underway, others will follow suit, showing the benefit of these collaborations. ASPIRE

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Oil & Gas: Q&A The Great Kenyan

Oil Discovery Part 1

An exclusive with Gurjeet Phull Jenkins, Chairperson, Kenya Oil and Gas Association and Country Manager, Anadarko Petroleum By: Andrew Thompson

ince the announcement of Kenya’s first major oil discovery by joint partners Tullow and Africa Oil caught the world’s attention in 2012, there has been considerable hype surrounding the frontier region’s potential. Of the 1.3 billion barrel estimated in

the South Lokichar Basin in North West Kenya’s Turkana County, 600 million barrels have been confirmed. The discovery in Turkana province now sits at an estimated 600 million barrels. Tullow and Africa Oil are now working towards its development and commercial viability.

26 The Great Kenyan Oil Discovery: Gurjeet Phull Jenkins

Oil & Gas: Q&A There are host of other companies now carrying out exploration work in Kenya across the highly prospective East Africa region, including Eni, Total, Anadarko and the BG Group.

Andrew Thompson: How much has the Kenyan oil sector grown over the last five years?

The Kenyan government is in the process of enacting a wave of regulatory reforms and legislations to ensure it capitalises locally on the developing industry.

I was with the sector in Kenya six years ago, in its initial stages of growth, where you had more of the small brief case companies looking at Kenya.

However, the process has not been smooth sailing, with uncertain regulations, benefit sharing arrangements, political disputes and local community tensions, security issues and a falling oil price ensuring that the road from discovery to production will need to be navigated carefully. In this first part of a two series interview, Andrew Thompson speaks to Gurjeet Phull Jenkins, Chairperson of Kenya Oil and Gas Association, which was established this year to support industry development within of the sector. She is also Country Manager for American Anadarko Petroleum, which is exploring for oil off Kenya’s East Coast.

Gurjeet Phull Jenkins: There has been massive growth.

It has now moved to Kenya having large and serious investors in the country, so you have the likes of BG Group, Total, Anadarko, Eni and others looking into investment in Kenya, so definitely it’s not just the number of companies that’s increased; it’s also the portfolio, the size of investment in Kenya. AT: How much potential is there in Kenya’s hydrocarbon sector? GPJ: The potential of the resource is there. We’ve seen what’s happened in the Northern side of Kenya, where they’ve had a couple of good discoveries, so we know there is a system there. Off shore as well, although there haven’t been any major significant discoveries, there have been a few discoveries that have at least displayed that there is a working petroleum system there. It’s really just a question of continuing the exploration program. It’s just going to take a lot of work. It’s going to take a lot of investors to come into the country. Definitely there is the need to build investor confidence, so companies can come in to the country and tap into the potential.

Gurjeet Phull Jenkins, Chairperson, KOGA and Country Manager , Anadarko

AT: The government has embarked on a wave of legislative reforms to the sector. How will it affect investor sentiment and the sector moving into the production phase? Aspire Africa · July/Aug 2015 27

One of the key factors a company will look at is the tax regime of a country”. Gurjeet Phull Jenkins

Oil worker at a water plant GJP: There is a general consensus that we are in a good place, in the sense that the government has started working on these bills and policies; and companies have not gone too far into exploration without these guidelines – however there is still a lot of work in ensuring that these bills and policies encourage the investors to come into the country and increase exploration. One of the key factors a company will look at is the tax regime of a country, which usually has a major impact on investor confidence both at the time that an investor is carrying out a risk assessment of the country, as well as what kind of fiscal stability there is while the company is operating in the country. When it’s not favourable it impacts on the cost of exploration. When a company has different countries and different opportunities and has a large investment portfolio, they are normally going to explore in regions that make more economic sense. We as the investors are still working with the

Government so as to ensure there is finetuning that balance between bringing in local income through its tax system, but at the same time managing a tax system that attracts further investment. Right now where we are at, we still need more investors to come in. We need more partners coming in. It’s spreading that risk, which is very standard in the oil and gas sector. AT: Are there fears that a developing oil sector could bring with it conflict and social and economic issues, as it has in other parts of Africa? GJP: There is that concern. The Government has outscored the development of a petroleum master plan and one of the components in that master plan is drawing examples from different countries, not just countries where it works, but also in countries where it hasn’t worked, so we can do things differently. Companies are dedicated to working with the host government as well as

28 The Great Kenyan Oil Discovery: Gurjeet Phull Jenkins

Oil & Gas: Q&A the local communities, so with the support of the Government we can avoid the conflicts. If that project is followed through and as the sector develops you are using a document like that as a basis, there’s less of chance of it going wrong. AT: There have been a number of terrorist attacks by Muslim extremist group Al Shabab in exploration areas recently, how could this effect the development of the sector?

Easily

AccessIBLE!

GJP: It does have an impact on operations, in extreme cases a company might not be able to access a certain area, because they are at high risk – we know some companies have had that issue here. On the other side, it also increases the cost of exploration. In some cases the security plan can be about a quarter of the entire exploration cost, which is a huge number. Some of the companies will look at the security situation in a particular area and that can actually determine whether they actually want to go into that region or not.

-In our next edition, we continue our focus on the Kenyan oil discovery as we speak to: Alex Budden VP External Relations, Africa Oil.

ASPIRE

Andrew Thompson Aspire Contributor

Andrew is a journalist, formerly with the Australian Broadcasting Corporation, now focusing on the mining and resources sectors in east Africa.

SUBSCRIBE TODAY www.Aspire-Africa.com

Aspire Africa · July/Aug 2015 29

Cover Feature

Projects of Scale

CENTUM

INVESTMENT An exclusive feature with James Mworia, CEO, recently awarded the 2014 African Business Leader of the Year by the Corporate Council on Africa (CCA) and considered to be one of the top ten youngest power men in Africa, discusses increasing assets under Centum’s management and growth of the Kenyan economy. By: Nicholas Paul Griffin

Aspire Africa · July/Aug 2015 31

stablished in 1967, Centum Investment is a leading East African investment company, listed on the Nairobi Securities Exchange and cross-listed on the Uganda Securities Exchange. The company’s inception 48 years ago was intended to create a vehicle to mobilize capital from Kenyan citizens to invest in the country. It has since grown significantly, embarking in 2009 upon an aggressive five-year Pan African strategy that saw the company re-organised into three distinct business lines: Private Equity, Quoted Private Equity and Real Estate & Infrastructure. This was followed in 2012 by the company’s repositioning to better manage third party funds and growth by reorienting the three business lines to become wholly owned subsidiaries of the parent company Centum.

James Mworia Centum Investment is now the largest public quoted investment company in Kenya, boasting a market capitalization of $450 million and total assets in excess of $1.3 billion. The company invests across a range of sectors critical to the growth of the economy, and has been the best performing listed stock in Kenya for the last two and half years, offering a seven times return on investments since 2009. The company’s plan is to increase assets under management to $8-9 billion by 2018. This will be achieved through the development of investment grade opportunities, and the 32 Centum Investment Company · Kenya

Investment creation of assets that will lead to investment products aimed at attracting investors from all over the world. Centum’s CEO, James Mworia, says the process is “not just about making investments, it’s about making investments of scale, that have significant developmental impact, besides the investment impact.” Assuming the role of CEO at Centum in 2008, Mr. Mworia has over ten years work experience, including Investment Management at Trans-century, and on his appointment became the youngest CEO of a listed company in Kenya. He is a CFA Charter holder, Certified Public Accountant, and holds a Bachelor of Law Degree from the University of Nairobi. He is also an Advocate of the High Court of Kenya. Speaking at Centum’s Kenyan offices at the start of 2015, Mr. Mworia outlines the company’s intent to provide its clients with “access to inaccessible investment opportunities—and that’s what we’re doing. We have investment grade opportunities of scale, that investors, not just in Kenya, but also across the region and across the globe, can participate in.”

James Mworia receives the CCA Leader of the Year award

In 2011, Mr. Mworia was named by Forbes as one of Africa’s youngest power men, an impressive honour, which he admits was a humbling experience. He believes such an award is not only reflective of the achievement of his generation, which he describes as a “generation of leadership”, but also goes some way to highlighting a change in the narrative of Africa, a narrative which has for so long been one of aid and assistance, but is now telling the tale of the continent’s move into an age of business and enterprise. Mr. Mworia’s recognition highlights the growing understanding that there is high quality private sector leadership on the continent. “My advice [to aspiring African enterprises],” Mr. Mworia says, “is that there is a significant Aspire Africa · July/Aug 2015 33

It’s an obligation upon us to help create opportunities for many of our brothers and sisters who do not have formal employment opportunities.” James Mworia

opportunity in Africa, for those of us who are fortunate enough to be in a position where we can make a difference.” He speaks of his role as the head of Centrum as a “calling”, driven not only by the returns made by the company and its obligations to investors, but also by a wish to be involved in helping rewrite the story of Africa. “It not only makes business sense, but I think it’s an obligation upon us to help create opportunities for many of our brothers and sisters who do not have formal employment opportunities.” Centum’s mission statement promises the creation of real, tangible wealth by providing the channel through which investors can access and build extraordinary enterprises in Africa. Mr. Mworia speaks of the focus being on creating high quality investment in companies and enterprises, ranging across many different sectors—from motor vehicle manufacturing to real estate & infrastructure. The company vision is to be Africa’s foremost investment channel, and from the results so far, it seems Centrum is well on its way to achieving this lofty goal.

Investment

Kenya Kenya’s economy has been touted as one of Africa’s current shining lights, with growth for 2013 registered at 5.7%. But Mr. Mworia is adamant that there is plenty of room for further improvement: “I actually believe that the potential growth for Kenya specifically is a lot greater than the 5%,” he says, believing it should soon be moving into double figures, which would be in line with the potential of the economy regarding its recent performance. But there have been significant problems over the last few years that have restricted growth, problems such as quality of infrastructure. The poor transport infrastructure in particular has represented a major challenge. The good news is that these problems are now on the verge of being solved. Projects such as the expansion of the Port of Mombassa, and the introduction of a highspeed Standard Gauge Railway link between the Port and Nairobi, as well as noteworthy power capacity expansion projects, are key developments guaranteed to have a positive impact on the growth potential of the economy. In addition to these industrial projects, law reforms and the harnessing of administrative support from the public sector have played an equally vital role in the ability of the country to produce goods and services competitively.

James Mworia Speaking at the CCA Awards ceremony

Mr. Mworia attended a high level meeting last year where the competitiveness of the country as a whole was discussed at length by captains of industry and the Head of State, reflecting key national issues surrounding land reform, dispute resolution and licensing. “All those issues have been addressed so we can make this country a better investment destination,” he declares. When asked about the current level of Kenyan

34 Centum Investment Company · Kenya

Two Rivers project construction underway

investment, Mr. Mworia once more identifies room for improvement. “Investment is a function of savings,” he says, “and savings are a function of income. As a country our savings rate is growing, but it’s below the current global average. However, if one looks at the trend over the last ten years, there’s been significant increase in the scale of investment, the market capitalization of the Nairobi Securities Exchange has increased considerably; the quantum of foreign direct investment into this country has increased considerably. Given that we are still below the global average, I still see significantly greater volume for growth.”

bankable opportunities that are investment ready. And this is where Centum comes in— not content with waiting for others to develop these opportunities, the company acts as an institutional sponsor to help such projects get off the ground. Mr. Mworia believes there is still sufficient appetite from local investors, retail and institutional, for high quality investment opportunities such as Centum’s projects of scale.

Mr. Mworia reiterates the need for projects of scale, of the kind Centum is working specifically to implement.

There is the potential for investors to do well in any sector, as the level of competition in the country is a lot lower than the rest of the world. The difference is in the execution, so the quality of the local investment partner and management team on the ground is perhaps the single biggest factor in what makes or breaks a good investment in Kenya

There is still a lot of capital interested in participating and investing in East Africa, and Kenya specifically. However, some constraints still exist, particularly in the availability of 36 Centum Investment Company · Kenya

The key to successful investment in Africa is comprised of several issues, but Mr. Mworia believes the quality of local partnerships is critical.

Investment Development Sectors In line with company goals, Mr. Mworia explains how Centum has identified seven sectors likely to prove critical in terms of the country’s continued economic development. Centum has made it a priority to be involved in all of these sectors, and to help push the economy forward through the development of key projects in each. In the area of energy, one of the biggest development opportunities identified, the company has worked hard to oversee the generation of around 1100 megwatts of power, which will go some way to helping the power generation capability of the country. Another key area of involvement is real estate and infrastructure. Nearly half of Africa’s

nation’s cities are not yet built, and this represents an opportunity to provide the infrastructure and development guideline for well governed cities, as well as presenting opportunities to develop asset backed securities. Another area of focus is financial services, where Centum has recently acquired a bank, as well as being involved in microfinance and insurance brokerage. The company is now the second largest asset manager in the country in terms of managing pension fund capital, handling a portfolio in excess of $1.2 billion. In addition, the company is heavily involved in fast moving consumer goods, not just distribution but also manufacturing. Centum is one of the largest investors in Coca-Cola bottling facilities

Aspire Africa · July/Aug 2015 37

The Two Rivers development is the next evolutionary step in Eastern Africa for investment and lifestyle.

Carrefour Group signs up at the Two Rivers Lifestyle Centre in Kenya, as well as having a vested interest in the alcohol industry. Further opportunity lies in agriculture, which for a long time in Africa has been geared towards the production of cash crops, primarily for export. There has not been enough focus on developing capital and expertise in the commercial production of food crops. The final sectors the company is looking to improve are education, healthcare and ICT. One of Kenya’s strengths is the quality of population and innovations, and Centum’s projects are geared towards supporting technological innovation in the country. All of these endeavours are indicative of the company’s transition from being simply a portfolio manager to being a developer of investment grade enterprises with significant catalytic impact across the country 38 Centum Investment Company · Kenya

Investment Key Developments Over the last few years, Centum has been involved in several projects of scale aimed at encouraging Kenya’s economic development, particularly in the area of Real Estate & Infrastructure. One of these is the Two Rivers development, a real estate project comprising 100 acres of development space, located in the affluent Runda/Gigiri area of Nairobi, and comprising of a state-of-the-art shopping centre, large water front, residential apartments, two hotels and a hospital. Centum describes the Two Rivers development as the next evolutionary step in Eastern Africa for investment and lifestyle, and the company has already been successful in attracting various international brands to set up offices there. “We are literally building a new city,” Mr. Mworia says. Work is well underway on the development, which is set to open in October of 2015. But perhaps the company’s most significant move has been into the power and energy sector. Centum is currently involved in two large-scale power projects, acting as sponsor in both cases. The first is the Lamu Coal Power project, a 980MW base root power project representing one of the cheapest sources of power being introduced into the economy. The second is the Olkaria Geothermal project, a 70MW project, expected to rise to 140MW in the near future. Kenya is in the bottom twenty countries in East Africa when considering the current per capita installed generation capacity of power, which means there is a substantial need for more power, a need which will help create future investment opportunities. Centum’s approach has been to enter the industry Aspire Africa · July/Aug 2015 39

www.centum.co.ke

The Centum Team with Carrefour Group representatives at an early stage, creating investment grade opportunities beneficial both to investors and the country as a whole. It might seem unusual for an investment company to be foraying into the energy sector, but Mr. Mworia explains the motivation behind the move: “We see an opportunity to play a role in unlocking one of the biggest bottlenecks that we have had in our development, which is access to affordable power at scale. You cannot develop industry if you don’t have affordable power at scale.” Both of these power projects will be base root sources of power and will provide a considerably cheaper energy option for the company and the country in general. The move into power represents a low risk enterprise, an opportunity to have a longterm revenue stream backed by government support, helping to create asset-backed

securities which many different kinds of investors can invest in. The company sees considerable scope to continue playing this role across many other sectors in the future. It is clear to see that Centum are leading the way in developing investments and projects capable of carrying the Kenyan economy forward, but perhaps even more impressive is the socially conscious intentions behind the company’s business. “What is for me more satisfying is the opportunities that we are able to create for the people we employ directly,” Mr. Mworia says, “but also for the businesses that then connect with the businesses that we are developing. I believe this generation has a significant responsibility to play a role in changing the destiny of this continent.” It is fair to say that Mr. Mworia and Centum Investment are more than playing their part in this responsibility. ASPIRE

CLICK HERE TO WATCH OUR EXCLUSIVE INTERVIEW WITH JAMES MWORIA 40 Centum Investment Company · Kenya

Mining

HUMMIN Hummingbirdâ&#x20AC;&#x2122;s Dugbe Camp, Liberia

Mining

NGBIRD RESOURCES From Explorer to Producer Overnight

An Exclusive Interview with CEO Daniel Betts

oming from a family history in the mining sector, Hummingbird Resources CEO Dan Betts knows better than most how to uncover value. Having discovered Africaâ&#x20AC;&#x2122;s largest gold find in 2012, the West African focused gold explorer

has expanded its operations beyond Liberia with their first acquisition. In this exclusive with the Aspire Africa, Dan discusses the companyâ&#x20AC;&#x2122;s acquisition of Gold Fields interests in Mali, what this means for shareholders, and the transition from a gold explorer to producer.

By: J. Landry

DAN BETTS

CEO, Hummingbird Resources J. Landry: Dan, you come from strong family history in resources - can you tell us about some of the industry insights and lessons learned while growing ? Dan Betts: It’s difficult to summarise all of the lessons learnt over the generations but I think the key insight is that you need to plan longterm and not be knocked off course by short term gold price volatility. Long-term, the price trend is going to be upwards. 44 Hummingbird Resources · Mali - Liberia

JL: How was the decision made to look into Liberia in 2005? DB: It was an opportunity that the Liberians brought to us. They had an area that they thought could be prospective but absolutely no commercial gold mining activity had occurred in the country. They knew us from trading gold in the 1980’s and offered us the chance to come and pick up exploration ground there in 2005. Initially we looked to

Resource of 1.8Moz at Yanfolila Project in Mali

partner with established miners but ultimately took the decision to branch out vertically and develop our own gold company. This obviously culminated in an AIM listing and the discovery of just under 1Moz in 2010, before growing the resource to over 4Moz. JL: Can you talk about the conditions in Liberia, its stability and working with government? DB: Logistically it is good, especially by West African standards. We are only 40 miles from a deep water port, and there is a good road linking us. The pro-mining government was democratically re-elected in 2011 and the mining code is based on Australian mining regulation code. The fiscal terms are set to encourage investment with an expected Royalty of 3% and a 25% basic tax rate. JL: You also had Africa’s largest gold find in 2012 didn’t you? DB: Yes. We announced our maiden resource of 812Koz in 2010 and had increased that to 1.8Moz by the end of that year, and to 3.8Moz in 2012. An infill drilling campaign was completed in March 2014 which resulted in a further increase to 4.2Moz, including 2Moz at Tuzon with a grade of 1.5g/t. This resource is built on 2 deposits but we have already identified a further 3 deposits and 140 targets that require further exploration and have only really just started to scratch the surface of our 3,000 km squared Liberian licence acreage. JL: You recently acquired the Yanfolila Project from Gold Fields in Mali. Can you tell us about this? DB: We have agreed to acquire all of Gold Fields interests in Mali which comprises of over 3,000 square kilometres of highly prospective belt scale exploration operation in two groups of licences. Yanfolila being one, and Kangare being the other.

Mining Within the Yanfolila package is the Yanfolila Project which is a well defined, fully permitted project. It consists of 1.8Moz of gold grading 2.6g/t, and it has significant upside in both near pit and further afield resources. The reason for Hummingbird acquiring this project is it’s a perfect fit with our large world-class project in Liberia and it will give us the ability to get into early cash flow and production very quickly. The project Gold Fields were trying to build was a 2Mt/y plant and we believe the opportunity is in building an oxide only plant that will process around 850,000 tonnes of ore/year, for an average gold production of 5560,000 ounces per year and the capital cost will be in the region of $50M and we believe we’ll be in production next year. We’re extremely excited, we think it’s a transitional and transformational deal for Hummingbird and it’s a perfect opportunity to exploit the current gold market where there is tremendous value out there. To put this in perspective, Gold Fields themselves have spent in the region of $105M on the Yanfolila Project and there was significant money spent before they took control of it. So it really is one of the best defined, ready to go, fully permitted projects I’ve seen and we’ve looked at a lot of projects. We’re very happy to be at this point. JL: What was the rationale behind the Yanfolila acquisition? DB: That’s a good question. There are a couple of reasons for the strategy and the acquisition. In Hummingbird, we had a single project in Liberia. The project is a large-scale open pit gold mining project. We’re completing our DFS studies on the Dugbe 1 Project at the moment. The Dugbe 1 Project which has a 4.2Moz Aspire Africa · July/Aug 2015 45

We’re extremely excited, we think it’s a transitional and transformational deal for Hummingbird .” Dan Betts

Mining

resource and will get significantly bigger over time. It has no option to really start with a small scale, small capex project. I think in this current gold pricing market, challenges for accessing capital are going to be significant. What we don’t want to do is find a world-class gold project and be in a position like many other juniors where we can’t fund it. Over the last two years we’ve been looking to either find a way to bring Dugbe 1 into production for a small capex or to find another strategy to do that, and this Yanfolila Project fits the bill perfectly because we can bring the whole project into production for about $50M of capex. The second reason for the purchase - it is our belief at Hummingbird that the current gold market presents almost a once in a generation opportunity to access quality projects for very cheaply. Over the last two years we’ve looked at dozens and dozens of projects, and for various reasons we haven’t liked them. There’s been problems with the resource or the permitting or the politics, but the Yanfolila Project is as complete as any project I’ve seen. The work done by Gold Fields is worldclass. They’ve drilled almost 500,000 metres of drilling and the project is fully permitted with a thirty year mining permit and all the tax and fiscal regime in place. It’s a perfect fit for Hummingbird to build a gold company off of the back of it. JL: How close is Yanfolila to production? DB: The simple answer is we believe we’ll be in production in 2015. This is a very short time frame. The project Gold Fields envisaged was a 2M t/y plant and the project is fully permitted. There’s no licencing issues or anything. It’s ready to go; it’s ready to start. Now before we start building the project we’re going to right-size it. What we mean by this 46 Hummingbird Resources · Mali - Liberia

Work on primary access is we’re looking to build an oxide only plant and build a smaller scale plant as phase one of the development. We image a 4-6 month optimisation period at the start of the project, and a twelve month build. So by the end of next year we’ll be in production. JL: Hummingbird Resources transitioned from a gold explorer to producer almost overnight. What does this acquisition mean for the Dugbe 1 Project in Liberia? DB: It’s outstanding news for the Dugbe 1 Project in Liberia because it de-risks it significantly. I’ve said previously, one risk in this market is that we bring out a DFS on-time and on budget and it shows a very robust project at Dugbe 1, but you have a large capital challenge to raise the finance to build the mine. With the Yanfolila Project coming onstream with a more manageable capital cost, it totally de-risks the development pipeline to bring Dugbe 1 on stream. We can use the cash flows from the Yanfolila Project to help assist with the development of Dugbe 1.

Infill Drilling December 2013

With the Yanfolila Project some of the key members of the Gold Fields team are coming across, so it’s not like Hummingbird will be understaffed or under resourced to manage both projects. We fully anticipate motoring ahead with the DFS on the Dugbe 1 Project and not delaying it at all. JL: Did you always envision Hummingbird Resources to be a multi-faceted operator with a West African focus? DB: The answer to that question is that I’ve always envisioned building the best possible gold company that we could. It seems that at the moment we have a West African position, but I wouldn’t rule out looking at the right asset in any jurisdiction. I think that this market is unique and that 48 Hummingbird Resources · Mali - Liberia

there are opportunities everywhere, but yes, I always envisioned building the best possible company that we could and creating shareholder value through either buying or discovering assets that could make a significant economic return. JL: Why have you chosen this time for your first acquisition? DB: A lot of these acquisitions happen when they happen, you can’t choose everything. Gold Fields have their own strategy looking to divest of certain assets in Africa and the opportunity arose now. So I think the key is being ready to react to the market and to opportunities as they arise. As I’ve said, we’ve had a strategy of looking for a suitable project for about two years now, but the worst thing you can do, is do a deal for

3,200km2 of exploration potential in Liberia

the sake of it. We’re infinitely patient, we have a world-class project in Liberia and we didn’t need to do anything. But this opportunity arose and its clearly a fantastically robust project. It’s got an RRR of 54% at the current gold price. It was really too perfect for Hummingbird not to do the deal. So in answer to that question, we’ve been ready but we didn’t specifically choose now. The time almost chose itself.

Mining It diversifies your political risk to two countries; it utilises our skillset operationally in West Africa. I think that the project itself is so robust at the current gold price and the capital required to bring it into production is manageable, particularly with Hummingbird’s extremely supportive existing shareholder register.

JL: What does this mean for Hummingbird shareholders?

I think it will not only deliver value in itself, but it will unlock the value in Dugbe 1, because it’s my opinion that Hummingbird is significantly undervalued compared to its peer group, and the stage of development its at.

DB: As a significant shareholder myself I hope its good news, otherwise I wouldn’t have supported the deal! I sincerely believe it derisks Hummingbird in terms of its ability to deliver, and the ability to become autonomous and self-generating with cash flows.

A lot of the reason for that underrating is that the market perceives a potential capital challenge to build a project. This acquisition eliminates that capital challenge and shows a clear pipeline to production for both projects. It’s a great deal for Hummingbird shareholders.

Aspire Africa · July/Aug 2015 49

www.hummingbirdresources.co.uk

Bridge to camp JL: What is the structure of the deal? DB: The deal we’ve agreed with Gold Fields is that we will acquire the Yanfolila package. Glencar Mining is the company we’re acquiring off Gold Fields with their Mali interests. We’re paying $20M of Hummingbird paper – it’s an all share deal at 56 pence/share. It means Gold Fields will become Hummingbird’s largest shareholder.

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50 Hummingbird Resources · Mali - Liberia

That has obvious strategic benefits for us having a world-class gold major on our share register. It also means we don’t have to find the cash to acquire the asset and we can use cash to develop it. The deal’s structure is real straight forward. Hopefully extremely value accretive to shareholders, as we unlock the value and prove the economics of the oxide only plant, and how quickly it will come in to production. You will see a lot of value coming through off the back of that deal.

Mining For $20M of Hummingbird paper, we’re acquiring an asset that has had $100M spent on it. Over 500,000 metres of drilling, and we get a $65M tax credit against future profits for the work done to date. And with a 54% RRR at the current gold price, it’s a very attractive deal for us. JL: What is Hummingbird’s current cash position and what are your deliverables over the next six months? DB: Hummingbird currently has nearly $8M of cash in the bank and we’ve also got a number of other facilities and options available to us for further funding should we require it. But we have enough money in the budget to conclude an optimisation study on Yanfolila and continue with the Dugbe 1 feasibility studies. During the next six months our objective is to complete the optimisation studies at Yanfolila. Everything has been fully permitted and fully done on the Yanfolila Project for the scale of project Gold Fields envisaged. All we need to do is make amendments. There’s no permitting or licencing issues at all. It’s purely internal workings, and we’ve already started that. Through the due diligence period we’ve already started optimising the resources for the project we imagine. We’re looking at a project with a cash cost of just about $500/ oz of production. The main purpose now is to prove it’s real and get into construction as quickly as possible. JL: Can you talk about Hummingbird’s responsibility to the local community and the activities you’ve undertaken? DB: Working with the communities is key and will become more so as we go into production. We run a comprehensive range of community

Community Engagement projects with initiatives in areas such as healthcare, education, and infrastructure. We are proud to have a good working relationship with our host communities. JL: Lastly, can you explain what the Pygmy Hippo Foundation is? DB: The Zoological Society of London estimates that there are less than 2,000 pygmy hippos remaining in the wild. The majority of these are believed to be located in southeast Liberia’s Sapo National Park. In July 2011 we founded the Pygmy Hippo Foundation, a UK registered charity, dedicated to improving conservation in Liberia. Through the re-development of the Sapo National Park, enabling broader conservation initiatives in the surrounding forest areas and facilitating education programmes, the Pygmy Hippo Foundation aims to promote the conservation, preservation and protection of endangered species such as the pygmy hippo in their natural environment. ASPIRE Aspire Africa · July/Aug 2015 51

Mining Services

Focusing on West African Growth An exclusive with PPM Director, Jeremy Clarke By: J. Landry

aving been in business for nearly ten years, Paradigm Project Management (PPM) have a wealth of experience in diligence work, concept, pre-feasibility, and feasibility studies. Working in 18 countries in sub-Saharan Africa, the organisation is well positioned to discuss the current issues facing the region.

In our exclusive with Director Jeremy Clarke, he candidly discusses their efforts to focus on West African growth, and PPM’s success in mine and project management for clients including Sierra Rutile, Nimini Gold, Stellar Diamonds, Taurus Gold and Kumba Iron Ore. 52 PPM · South Africa

Mining Services off-grid communities pay more for their energy than on-grid households! â&#x20AC;? JC

Jeremy Clarke Director

Marropino Mine, Mozambique

J. Landry: Can you tell us about your background? Jeremy Clarke: I started in mining in 1977 by leaving the UK for South Africa and joining the Anglo American Corporation as a trainee process engineer, or metallurgist as we called them then, and went through various parts of the Anglo American and De Beers Group doing some work in gold, some in copper but mainly in diamonds. I then went to work in mining in Botswana, Namibia and various mines in South Africa before being appointed as the Consulting Metallurgist at De Beers. In 1997 I left De Beers and moved to Toronto where I was involved in the startup and subsequent public listing of various junior mining companies. All three of these

companies are still operational, but I decided to return to South Africa in 2002 in order to start my own consultancy company, Metcon. This company started to undertake a lot of work with PPM, and therefore it seemed sensible to merge the two companies around seven years ago and thatâ&#x20AC;&#x2122;s when I started playing a more significant role in PPM. My background therefore started in operations, moved through executive management within De Beers, then into the junior mining industry, including the financing, listing and ownership of mining companies, and now contracting back into the mining industry as a service provider with PPM. This experience therefore covers the majority of the potential sectors of the global mining sector. Aspire Africa Âˇ July/Aug 2015 53

JL: Can you talk a little about when you came on board with PPM and how that changed the dynamic of the business and its service offering? JC: At the time the consulting company Metcon was just me. I had a large network within the junior industry but my work was purely consulting and I couldn’t undertake work in the downstream sectors. PPM however was positioned to undertake a much broader scope of services including due diligence work, concept, prefeasibility, and feasibility studies, and moving into EPCM implementation. So we just linked the two. PPM was doing implementation work with companies I was in consulting to, and they provided a bigger engine room for me and I brought in a larger client base for them. Now we’ve done over a hundred projects for 18 countries across Africa, covering 17 commodities. So, it’s been a synergistic merging of the two. JL: What are the changes you’ve noticed in the industry from when you started to present day? JC: That’s the tricky one. PPM is now eight years old and started at the tail end of one recession, has benefited and grown though the past resources boom, seen through the global financial crises, and now we’re hopefully just getting out of this. The business has therefore been up and down in-line with global mining cycles. I believe that there has been a change with this latest financial crisis and downturn. Previously, mining ventures were generally driven by growth for long term value in the companies, but the recent serious downturn, especially in the mining industry, has been driven more by the perceived need for 54 PPM · South Africa

investors to gain quarterly returns, rather than understand the high costs of entry to mining and the need for a long term vision. The mining industry is a long term industry. It can take ten years for a project to come to fruition. Trying to supply quarterly returns to investors in this industry is extremely difficult and I think that eventually reality has set in; unfortunately there have been many casualties along the way. Hopefully the right investors are now getting into the market where people are not chasing instant returns and understand the industry better. This is having an impact on solution providers like us. PPM tries very hard to increase the value of projects. We have proven examples where we’ve taken what we consider to be non-viable projects and made them economically viable. We believe that’s a niche market we want to stay in and grow.

Mining Services mine operations for clients putting our own operating teams on site. PPM has also been very successful in the areas of Business Rescue which is a new South African law designed to minimise company failures that allows for an experienced management team to be parachuted into a failing company in order to rescue it from liquidation. We also do project management consulting whereby PPM develops and integrates project management systems into companies: one recent success being Kumba Iron Ore. We have a broad spectrum of services that can help clients.

Letseng Diamond Mine, Kingdom of Lesotho JL: When facing down turns in the mining cycle, what does PPM do to try to diversify their offering and differentiate itself in order to continue to find new projects to undertake? JC: We look at the number of different scenarios in the mining industry. PPM undertakes a lot of studies: concept, prefeasibility and feasibility. In this latest downtown, we moved into business optimisation work streams for current and operating mines. Due to our operational and executive management experience, we are able to go in and assist clients with modifying plants, equipment and infrastructure, in order to improve availability and overall utilization thereby increasing the revenue stream with limited investment, thereby immediately improving their bottom line. PPM has also moved into managing the overall

JL: Are there any common issues that clients tend to overlook? JC: We have found that there is often lack of integration in some companies approach to their projects. For example, some companies will try to save money by getting numerous organisations to look after different aspects of a feasibility study. Unfortunately there is often no internal capability to ensure that these disparate services are correctly integrated throughout the study which can significantly reduce the veracity of the final document. Some design parameters will not be consistent between disciplines due to the inevitable changes of scope during the study, and some things will fall between the cracks all together. This leads to errors in both the scope of work and the estimate which, when subjected to the financiers due diligence, leads to a reputational risk as well as additional time to rectify and therefore also more costs. Very few people in this day and age are looking at new and innovative ideas. It is Aspire Africa 路 July/Aug 2015 55

PPM tries very hard to increase the value of projects.” Jeremy Clarke

Kalagadi Mine, Thembeka Myedi Shaft. South Africa

56 PPM · South Africa

Mining Services one of the biggest problems of the mining industry. The financiers are generally extremely risk adverse and want “proven technology”; however proven technology is inevitably old technology.

innovations which don’t necessarily change the functionality of the mine.

When this approach is adopted, the capital cost risk may be mitigated, but the mine’s operational costs will increase due to this old technology and will generally not be able to so easily ride out price fluctuations as other more modern mines due to not being in the lowest quartile of operating costs.

JC: It’s through numbers of factors. One is definitely streamlining, that’s a good word for it.

Thus in many cases, current financiers are condemning new mines to a long and difficult life. The solution is the correct application of innovation. JL: Do you have an example of PPM using your innovative solutions to address this? JC: Yes. Utilising a unique project tool that PPM calls Strategic Value Management (SVM) we were able to re-vitalise a project in Botswana with a project that was previously seen as uneconomic. We were able to reduce the capital expenditure by approximately 60%, as well as reducing the operating costs, when compared to other similar operations, by about 40%, whilst retaining the mines functionality. This mine has been built to these standards and is currently operating very well. Another example, currently at pre-feasibility study level is a junior mining company’s project in West Africa. PPM has reduced the capital expenditure by 30% on just the plant design alone compared to our competitors. The operating costs will also be considerably lower as there is 40% less power required saving the client over a million dollars per annum on power costs alone. All these changes can be made with

JL: Is that typically through the streamlining of these processes?

The other thing is using technologies that are proven, but not necessarily currently used in the same industry. If you look at the copper industry they’ll do things one way, the platinum industry in another way, the gold industry also have their own standard methodologies. Sometimes you can crossfertilise between industries. So it’s not necessarily taking brand new ideas off the shelf, rather taking proven technologies and moving them across to other applications. JL: PPM has been active in immersing itself in other opportunities across Africa. What is the theory behind this? JC: As you know South Africa has been going through a bad time in the mining industry. There is a general lack of investment in the country due to political and labour instability, including the recent talk about mine nationalisation and the more regional debate concerning resource nationalism. New projects have therefore been few and far between. West Africa on the other hand is seen as a more exploration friendly area in terms of geology and to some extent in terms of the fiscal and the political regimes. So, there’s been a move by a lot of investors into this area, and PPM follows the investors and their projects. JL: What sort of on the ground knowledge does PPM have that would make our readers consider you first and foremost? Aspire Africa · July/Aug 2015 57

www.ppmprojects.co.za

JC: PPM’s focus is sub-Saharan Africa as we have experience of operating in 18 countries in this region. We understand the difficulties of managing mines and projects in remote and difficult locations including the ever more challenging area of logistics. We also understand the localisation needs of providing jobs to the communities as well as proper training, healthcare, and services such as potable water. PPM staff have all worked in those operations and know the difficulties that will be faced by the mining companies and this allows us to build this experience into our feasibility studies and the overall mine design such that a complete solution is derived that will last for the total life of the mine. A lot of projects in Africa don’t fall over because of technical issues. They fail or become more difficult because of environmental, social and sustainability issues. PPM has experience of managing those types of operations and can therefore assist our clients in better understanding the project requirements. JL: What are you doing with Sierra Rutile? JC: That project is now finished. We completed the feasibility study for their dredge 3 that involved looking at a complete new dredging operation including final treatment plant, modifications to the land plant and additional on-site infrastructure. That project was completed about two years ago, but was a major one for us in the area. We’ve also done work with Nimini Gold in Sierra Leone. We completed a preliminary economic asset done in conjunction with the MSA Group. Nimini Gold is now looking at increasing the mineral resource before it moves into the feasibility study, and we obviously hope to be an integral part of that ongoing project. 58 PPM · South Africa

Also in Sierra Leone we’ve done a lot of work with Stellar Diamonds. PPM completed a conceptual study for a new diamond project in the area. This project is now moving forward to the next stage of deriving the mineral resource such that a feasibility study can be completed. Finally, we’ve also done a project in Cote d’Ivoire for Taurus Gold on their Afema project. This pre-feasibility study was finished for them about a year and half ago I believe. There’s therefore been a good mixture of projects and commodities for us in West Africa. JL: When undertaking projects like these for clients, what sort of problem solving is required to find the best solutions? JC: I think all the projects require a proper

Mining Services recommended utilising much higher percentages of local labour and local skills than has been done before with regard to developing the required surface infrastructure. This will help to provide skills and ensure sustainability for the local communities. JL: Is growing the local economy important to you in these emerging economies that are seeing a lot of investment? JC: I don’t think it’s important, I think it’s absolutely essential. I don’t think you will get a license to operate in Africa unless you undertake the effort to benefit the local area and local economy. I think that mining companies ignore that at their peril. JL: Is there anything else that you’d like to share with our readers?

Afema Mine, Cote D’Ivoire analysis of the problem areas and if this is not done it can lead to future difficulties. PPM’s SVM model is a powerful tool for brainstorming possible innovative solutions. These concepts are not just valid to the mining and processing aspects of a new project but must be carried through into areas such as infrastructure, power generation, HR, etc. PPM believes that, for remote operations, simplicity is the key. This has a massive impact on difficult operational problems such as logistics which is the most underestimated problem-child when working in West Africa. The less you have to take in to the mine, the better. On the Stellar Diamond project we looked at very innovative ways for shaft thinking and getting early access to ore. We also

JC: I think that there are two things that we try and push as hard as we can in PPM: First, is adding value to the projects that we undertake. We always see the project itself as the client. If we believe that the project needs specific attention in certain areas, then we strongly recommend this. Sometimes that can lead to initial difficulties with our clients but as long as both parties see the project as their end client, these will always be adequately resolved. Secondly PPM is a solutions provider to projects. We have a track record of taking projects that other companies find difficult to do and make them viable through the innovative routes that we take. Not just in technology, but also in the methodology, costs and time taken to do the studies themselves, and hence the solution that they generate. We’re always aiming to ensure the industry can move faster, and with more value from a greenfields position to an operating mine than has been done previously. ASPIRE Aspire Africa · July/Aug 2015 59

Mining Association

Kenya Chamber of

MINES We speak to Monica Gichohi, CEO, KCM on promoting Kenyaâ&#x20AC;&#x2122;s Mining sector and lobbying the Kenyan government By: Tabrez Khokhar 60

Mining Association Monica Gichohi, CEO, Kenya Chamber of Mines

spire Africa sat down with Kenya Chamber of Mines (KCM) CEO, Monica Gichohi to give us an overview of the Chamber, challenges being faced by the organization and lobbying with government agencies for the mining bill and mineral policy. Though Kenya is not generally known as a mining investment destination, recent developments have proven that the country actually holds a significant potential for mineral development, which is largely unexplored. Kenya currently produces soda ash, fluorspar, cement, coloured gemstones and gold, the latter two mainly from artisanal mining activity. A heavy mineral sands (titanium) operation is being developed in the Coast

Province, and there has been a recent increase over the last years of the activity of gold exploration companies. The Kenya Government, in hand with KCM, is currently putting in place a Mining Policy and revising its out-dated Mining Act in order to encourage development of the mineral industry in the country. -Tabrez Khokhar: Give us a brief history of KCM and its establishment? Monica Gichohi: The Kenya Chamber of Mines (KCM) was established in 2000 with the goal of representing the interests of Kenya’s mining companies, exploration companies, mineral traders, equipment suppliers and professionals in the sector.KCM endeavours to lead the industry as a representative, lobbyist Aspire Africa · July/Aug 2015 61

and preferred interlocutor for the government, communities, and other stakeholders. KCM is focused on resolving the country’s mineral sector issues and growing it sustainably. TK: Highlight KCM’s track record and how the combined experience of the team contributes to its success. MC: Since its establishment, KCM has consistently represented the industry’s interests, gaining recognition as the central representative body of the sector in the country. Currently, the organization represents over 100 companies with vested interests in the Kenyan mining scene. KCM is led by an executive council made up of the leaders of selected member companies including African Barrick Gold, Kenya Flourspar Company, Tata Magadi, Base Titanium, StoutMin and Kilimapesa Gold. The executive council members are accomplished and experienced miners who include a former Commissioner of Mines and the former chairman of the Chamber. TK: What are the key services provided by KCM and priority activities you’re involved with at the moment? MC: KCM focuses on growing the mining industry in Kenya through creation of a conducive business environment for mining. The organization has been heavily involved in lobbying with government agencies for the mining bill and mineral policy. Community outreach is also a key activity that the chamber has been involved in with the goal of disseminating information to the smallscale miners whose livelihoods are dependent on mining. KCM also holds numerous corporate events aimed at strategizing on the industry’s growth 62 Kenya Chamber of Mines (KCM) · Kenya

Demsas Faloppa MBI, Chairman

and attracting investors into the local mining industry. KCM partners widely with like-minded organizations to structure Kenya’s business environment into an investor destination, with an emphasis on mining. TK: What are KCM’s major milestones achieved to date? MC: KCM advocated for the outdated mining laws in Kenya to be updated since the regulatory framework currently in operation has been in place since 1940 and no longer governs the sector efficiently. The law in place limits the profitable exploration and extraction of minerals in the country and has not been effective in encouraging the exploitation of these resources. KCM recognized Kenya’s mining potential and

Mining Association set out to ensure its realization, successfully convincing the relevant government agencies to review the regulations. The Mining Bill is currently undergoing debate in parliament. During the development of the Mining Bill 2014, KCM has been at the center of the consultation and drafting of the clauses, with the members taking part by submitting reports to the committee tasked with the development of the bill. KCM also managed to educate and constantly update the members and the public on the proceedings and on the specific clauses in the bill that will affect their operations. TK: Tell us about the challenges being faced by the organization?

MC: Kenya’s mining sector received a major boost in the last decade, with mining companies announcing discoveries of minerals in several parts of the country. Minerals such as gold and titanium have since been certified as commercially viable and extraction started. In February 2014, Base Titanium, Kenya’s biggest mining operation started exporting Ilmenite and Rutile to Asia and is expected to ship about 330,000 tonnes of Ilmenite and 80,000 tonnes of Rutile annually. This makes up 10% and 14% of the global supply of the two minerals respectively. Other notable operations in the country so far include African Barrick Gold, Karebe Gold, Kilimapesa Gold, East African Copper.

MC: Being a non-profit organization, Kenya Chamber of Mines faces financial challenges in implementing its strategies for growing the mining sector in Kenya. Activities such as community outreach programs require the organization to spend on logistics and facilitation costs and so the chamber has to limit the number of sessions held. As Kenya’s mining sector is still young, there is limited data on mining. Information such as the types of minerals present in the country and their locations is unavailable. The chamber is therefore unable to accurately advise members, the public and investors on the minerals.

The Kenyan government has also started making efforts to boost the mining sector by improving the sector’s regulatory framework through the Mining Bill that is currently in parliament.

KCM also faces difficulties in attracting investors into the country due to an underdeveloped sector. Several African countries have been involved in large-scale mining for decades, making them more attractive mining investment destinations. Further, the country faces insecurity and political instability that increases investor risks.

MC: Kenya’s Vision 2030 is geared towards the country’s continuous development into economic success. KCM has been instrumental in promoting miners in Kenya and enabling their operations to be successful and profitable. These mining operations provide employment for Kenyan locals, advance the country’s infrastructure and greatly improve the skills of the workers. Additionally, the chamber represents small-scale miners whose mining activities provide their main source of income.

TK: Discuss the potential of the Kenyan mining sector?

Additionally, universities in the country have started offering mining courses with Taita Taveta University College, a member of the chamber, opting to specialize on mining courses. TK: How is KCM supporting/helping to facilitate the mining sector in the country in line with, Kenya’s Vision 2030 initiative?

Aspire Africa · July/Aug 2015 63

www.kenyachambermines.com

Mining Association

The KCM Team KCM solely advocated for mining activities to be included in the Vision 2030 initiative, raising the awareness of mining as a potential high GDP contributor. TK: Highlight the various key projects or events KCM is involved with and has implemented in the country. MC: KCM is a co-organizer of the Mining Business and Investment Conference (MBI 2014), which is the regions premier forum on the mining sector. The MBI is an Eastern African event intended to grow the mining sector by addressing the major challenges in the industry, discussing the investment opportunities available and raising the regions profile as a mining destination. The chamber has also endeavored to provide the region with relevant, up to date and 64 Kenya Chamber of Mines (KCM) 路 Kenya

objective information through the EA Mining Review, a project that is underway. KCM regularly holds community outreach missions to reach the small scale miners to provide information and empower them to exploit the minerals within their reach profitably. TK: How does KCM plan to keep expanding its future outlook? MC: KCM intends to continue growing its membership towards representing the entire mining fraternity in Kenya. The Kenyan extractives sector promises to be the next economic frontier and holds great potential for business. With this in mind, the Kenya Chamber of Mines continuously strives to ensure a suitable business environment for all the stakeholders in the country. ASPIRE

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Power & Automation

ABB MAURITIUS Facilitating Mauritiusâ&#x20AC;&#x2122; Renewable Energy Revolution By: Nicholas Paul Griffin

ith a current GDP growth rate of around 4%, the remote Indian Ocean nation of Mauritius is on the brink of further promising expansion of its infrastructure in support of its growth potential.

Power & Automation

AJAY VIJ

Country Director, ABB Mauritius The country has seen a tremendous improvement in its standing on the World Economic Forum’s annual competitiveness index, with July’s index release gaining them top position in Africa and a steady world rise from a previous position of 54th up to an impressive 45th. As well as being recognised as one of the world’s top 25 outsourcing destinations, the country is known for its businessfriendly environment and a low tax jurisdiction with investment opportunities in several areas. Aspire Africa takes a closer look at one of the companies instrumental in helping forward Mauritius’ current socioeconomic development.

ABB Mauritius “Mauritius remains one of sub-Saharan Africa’s economic success stories,” says Ajay Vij, Country Manager of ABB Mauritius, a global leader in power and automation technology boasting a mix of environmentally friendly products, systems and services, in addition to expansive experience in emerging economy development projects—a platform that sees them well-positioned to support the nation in its development endeavours. Mr. Vij attests to the fact that accessible, reliable energy has been a critical element of Mauritius’ steady growth in the industry, finance and tourism sectors since the shift from a largely agricultural economy just decades ago. However, the country is still only able to meet Aspire Africa · July/Aug 2015 67

new.abb.com/southern-africa

around a quarter of its energy needs through local generation. As it lies kilometers from the mainland, the remaining balance—more than 75%—must be imported in the form of diesel, coal and fuel oils.

Scale Distributed Generation project for businesses, residents and communities to install photovoltaic (PV) panels to meet their own needs and to sell surplus energy back to the local grid.

Demand for electricity in Mauritius is expected to grow by 60% over the next ten years. In 2008 the country announced its “Maurice Ile Durable” (MID) initiative, a program designed to ensure this higher demand is met in an economically and environmentally sustainable way. MID is composed of five balanced pillars—education, environment, employment, equity and energy—with the aim of making Mauritius a world model for sustainable development.

According to Mauritius’ Central Electricity Board (CEB), this process will add over 2 MW of additional renewable capacity. Some 40,000 people will also participate in a program to provide solar heated water in homes. On a larger scale, the CEB has also invested in 60 MW of new solar and wind capacity to be added to the grid by 2015.

Mr. Vij is extremely optimistic about ABB’s participation in the Mauritian economy: “It is certainly our plan to even further expand our local engineering capabilities,” he says, “while working with our customers to develop custom-made solutions that will benefit both the people and the environment.” ABB’s business model looks to forge close relationships with local partners for onthe-ground operational delivery, aided by a wealth of global knowledge, expertise and experience.

ABB has an impressive track record when it comes to supporting the Government, businesses and local communities in achieving key objectives in a sustainable manner. The company has already delivered seventeen central inverters for a 15.2 MW PV power plant at La Feme, which was developed by the Tauber-Solar Group from Germany. The PV plant was successfully connected in February 2014 and will produce approximately 24 gigawatt-hours of clean energy a year, saving roughly 15,000 tons of CO2 emissions annually.

Local Renewable Generation

But ABB by no means intends to rest on its laurels. Having served the Mauritian market for over 15 years, the company has identified huge potential in the country’s vibrant and growing economy, recognised worldwide for its prudent macroeconomic policies.

The energy pillar of the MID initiative includes a number of policies and incentives designed to reduce energy consumption and to shift Mauritius’ energy mix more towards renewables.

ABB’s comprehensive packages include competencies, products and services for the complete primary production chain in the power, mining and mineral processing industries.

The country’s goal is to meet 35% of demand through local renewable generation by the year 2025. Part of this plan includes a Small

The company delivers power distribution equipment, integrated process control, optimization and information systems, and a

68 ABB · Mauritius

Power & Automation

ABB’s PVS800 central inverters number of other world-leading technologies, utilizing these services alongside its in-depth knowledge of its customers’ processes to provide long-term cost effective solutions. ABB’s philosophy is to employ its global network to provide local support and engineering facilities that are convenient and effective in supporting its customer base.

La Ferme Bambous In line with the MID initiative, ABB and its local partner, SARAKO PVP Co., recently completed a major project in support of the Mauritian Government’s vision of a sustainable island. The $6 million turnkey solution delivered the country’s largest solar power plant to date, designed to add an additional 15 MW of electricity from 62,000 modules of photovoltaic solar panels to the national grid per year. The electricity generated through this power station, located at La Ferme Bambous, just south of the La Ferme Reservoir, will be used solely as an extension of the electricity produced by the CEB. This will reduce the importation of fossil fuels, thus having a direct positive impact on the country’s carbon emissions.

The site selected for the power station does not contain any endemic or indigenous fauna and flora, as it consists of mainly barren land. It is also devoid of any hydrological features such as rivers, springs or wetlands. The turnkey solution developed for the Bambous project draws on ABB’s longestablished position as a market leader and technology pioneer in solar energy conversion. ABB supplied a number of essential technological components to the project, including AC/DC cabinets, dry type transformers and Unisec switchgears, a concrete container, PASS module, center solar invertors and SCADA. The completion of the La Ferme Bambous project can be regarded as a major milestone for ABB. “We see this project as much more than the generation of clean energy to be added to the grid,” Mr. Vij says. “It is also contributing to the sustainable island ideal of the government through the socio-economic development of the Bambous community.” In the wake of this project, ABB is currently working through its partners in Mauritius on various other solar and wind projects which are part of the Government’s MID initiative. ASPIRE Aspire Africa · July/Aug 2015 69

Oil & Gas - Logistics

Kengas Group Quality, Flexible and Reliable Transport Solutions By: Nicholas Paul Griffin

engas Group Ltd started with Bulk Petroleum Products Supply and Delivery Services within the Great Lakes region, including Southern Sudan, and has over 25 years’ experience, operating in some of the world’s most demanding locations. Offering total logistics solutions in East and Central Africa, Kengas firmly believes in putting the needs of the customer at the forefront of its concerns, 70 Kengas Group · Kenya

promising to increase productivity for its clients with the efficient management of multiple services and delivery requirements. By bringing greater synergy to daily business, maximizing the efficiency of businesses and providing specialized services across countries, Kengas strives for continuous improvement, bringing positive change for its client base.

Oil & Gas - Logistics

Hassan Kassim, General Manager with Valerie Otieno, Sales & Marketing Manager of Kengas Group

Kengas Link transport service Since remote environments require specialized services, Kengas, along with its experienced partners, provide a plethora of services designed to meet its clientsâ&#x20AC;&#x2122; varying needs. Those offered include fuel logistics and supply, logistical support to move cargo, food procurement and catering services, camp design, construction and management, fleet management and much more. The company vision is to be the regionâ&#x20AC;&#x2122;s leader in terms of offering these specialized

services, confident in its ability to do so based on sound success in the oil industry and its Social Development programs. With the aim of efficiently and reliably providing services which fuel the national economy and improve quality of life for its citizens, Kengas employs integrity, teamwork and great communication to achieve its goals On the business end, the company aims to create maximum value for shareholders and stakeholders, as well as empowering its employees by embracing its core values. Aspire Africa Âˇ July/Aug 2015 71

The strict adherence to safety guidelines is one of the company’s core values, and has proved essential in the business they undertake.” Hassan Kassim

Safety and Social Responsibility With a consistent increase in profits since its inception seven years ago, and a workforce increase of five times its original employee base, it is clear to see Kengas are a company on the up. The company now operates 360 trucks, with 160 company owned and the rest subcontracted out, shared between roughly 60 subcontractors. This growth is a significant increase from the company’s starting position in 2007. The business generated by the company means Kengas is the preferred transporter for many small-scale truck owners. This growth has continued with the opening of a chain of petrol stations in the last two years, helping to establish a retail chain under the name Kengas Energy, and a support services division to target the logistical needs of the oil and gas sector called Kengas Support Services (KSS). These new subsidiaries of the Kengas Group join the long-established Kengas Link, the group’s transport arm. Since the company predominantly operates in remote areas of Africa, which are often harsh and hostile, ever-present dangers such as banditry, accidents, loss of network coverage, climate, war, rampant corruption and many more very real concerns must always to be taken into consideration. In these areas a well-trained and prepared staff base has proved to be one of the company’s biggest strengths. It goes without saying that a certain type of employee is needed to excel in such hazardous environments, and Kengas prides itself on making sure it has a team equipped to handle these unique challenges. At any given time there are forty to fifty assets in dangerous 72 Kengas Group · Kenya

areas, with twice that number of ground personnel. In December 2013, when hostilities broke out in South Sudan, the company had 25 trucks in Juba and around 25 further north, either servicing clients or returning to base. Many returned with footage of the awful destruction, highlighting the risks the company’s employees were taking just by doing their job. The team of staff at the office and petrol station at Juba remained throughout, and are still stationed there today. Without their support and resolve, Kengas would not be the company it has worked so hard to become. Kengas’ health and safety record goes some way to highlighting the strength of its employment base in these areas, with the company registering high in the annual SHEQ reports, with less than four major and minor accidents per year since its registration in 2007. Which, considering the terrain the company operates in (South Sudan and the Democratic Republic of Congo primarily), represents an impressive record. All accidents are followed up with a root cause analysis and the issue of CARs. The company is committed to high-quality staff training, placing particular emphasis on preparing drivers, turn boys and workshop mechanics for these potentially difficult conditions. The strict adherence to safety guidelines is one of the company’s core values, and has proved essential in the business they undertake. The safety performance of the company is monitored, proactively and reactively, to ensure key safety goals continue to be achieved. Monitoring by audit forms a key element of this activity and includes both a quantitative and qualitative assessment.

Oil & Gas - Logistics

Eldoret Petrol Station, Kenya The results of all safety performance monitoring are documented and used as feedback to improve the system by identifying systemic weaknesses and accident precursors, and either eliminating or mitigating them. In line with these values, Kengas is developing an Operations Excellence Program, whose primary objectives will be to improve asset and workforce productivity as well as providing disciplined definitions and service standards. Kengas group also employs a Community Social Responsibility program, responding to the social needs of the residents of regions within which it works, ensuring that the company operates as a privilege in the community where it will serve, and not as a right. In addition, the scheme serves to promote and participate in a wide variety of social

development programs to improve the quality of life in the area, promoting the spirit of volunteerism and encouraging employees to take active roles in communities. In the DRC and South Sudan, which are prime markets, the company donates books, clothes, stationary, building materials and more, to boost the well being of the community.

Looking to the Future The discovery of oil in East Africa is a positive step towards self-reliance for the region in regards its energy needs. With the opening of new refineries, the cost of fuel will drop, reducing the logistical cost of essential commodities. In this respect, Kengasâ&#x20AC;&#x2122; business will likely grow further, as transport of fuel will still be required to remote areas. Aspire Africa Âˇ July/Aug 2015 73

www.kengasgroup.com

Kengas fleet navigating rough terrian It may also lead to the establishment of more petrochemical-based manufacturing and other associated industries, which will result in an increase in transport requirements for local and international distribution. Since the pipeline from South Sudan will originate in Juba, towards the port of Lamu, transport of crude oil from the drilling sites will be required, meaning the future for a company like Kengas looks bright. The company has already begun to work towards this next chapter in several key ways, starting with the achievement of an ISO 9001:2008 certification, a major milestone for the company which happened in the space of a single year, beginning in August 2012, with gap analysis conducted in Sept 2012. The intention is to achieve an ISO 14001 by the end of next year. Further improvement in the company’s SHEQ processes is also in the works, for which a new team has been assembled. 74 Kengas Group · Kenya

Oil & Gas - Logistics The recently opened office in Mombasa will see a significant increase in dry cargo, oversize cargo and humanitarian cargo distribution, and the registration of the Dar es Salaam office in Tanzania will reach both the dry cargo and fuel logistics market, catering for Zambia, Rwanda and South DRC. Many other plans for expansion are already in motion, including the redesigning of the truck yard in Eldoret to meet international standards, the installation of an ERP system for better coordination, upgrade of IT infrastructure, installation of tracking devices on the entire company fleet, and partnerships with established international companies to look for support services business. By becoming members of PIEA (Petroleum Institute of East Africa), which is the focal body when it comes to all up stream, mid-stream and downstream activities in that part of the world, Kengas has made sure it is ready to be involved in the coming developments in the region. In addition, the company has become a member of KCM (Kenya Chamber of Mines), another important body when it comes to the extractives industry, a market making huge progress in East and Central Africa. Kengas will continue to expand, with Kengas Link, the transport arm of the company to start operating in Tanzania shortly, and Kengas Energy to open another four petrol stations by the end of 2015. Kengas Support Services is still under development, with one client in South Sudan. The company is looking at major contracts in 2016, when drilling will begin in Kenya. All this points to a bright future for the Kengas Group and the region, and the group’s professional values put them in the perfect position to continue moving forward in the industry. ASPIRE

Juba Petrol Station, South Sudan

Kengas Mission To efficiently and effectively provide logistics solutions for our clients using customer tailored solutions.

Corporate Values Integrity Teamwork Communication Customer Focus Compassion and Understanding Continuous Improvement

Memberships Kengas Group has endeavored to remain the market leader. Kengas Group memberships include: KTA (Kenya Transporters Association) KCM (Kenya Chamber of Mines) PIEA (Petroleum Institute of East Africa)

Aspire Africa · July/Aug 2015 75

Renewable Energy

Innovative

ENERGY With Red Cap Managing Director, Mark Tanton By: Tabrez Khokhar

Kouga Wind Farm Turbines 76

Renewable Energy

ed Cap is an innovative and dynamic South African company that develops renewable energy businesses and projects.

Red Cap Head Office Location, Hout Bay, Cape Town

Established in 2009, Red Cap is currently focused on developing a portfolio of large-scale wind energy projects across Southern Africa. Aspire Africa caught up with Managing Director Mark Tanton to discuss Red Cap’s successful bids in South Africa’s REIPPP program and the progress on the Kouga Wind Farm project. Mark was recently selected by the Recharge 4040 initiative as one of the world’s foremost young energy pioneers.

Tabrez Khokhar: Give us a brief outline of Red Cap Mark Tanton: Energy shapes our world and drives our economy. Over the last decade, renewable energy has become a financially viable alternative to conventional energy and the sector has experienced unprecedented growth internationally and locally, with renewables expected to fill the need for new power and to displace hydrocarbon-based generation. Red Cap was founded to lead this transformation within the South African energy landscape. TK: How has Red Cap taken successful advantage of SA’s IPP programs? MT: Red Cap is one of the few 100% South African developers in the South African renewable energy sector, and has successfully bid two large-scale onshore wind projects in

the REIPPP programme, with both projects having a large Broad Based Community Trust ownership for the benefit of the local communities, far exceeding the Renewable Energy Bid minimum threshold of 2.5%: •

•

The 80MW Kouga Wind Farm bid project in Bid Window 1 of the South African Renewable Energy Independent Power Producer Procurement Programme, and The 111 MW Gibson Bay Wind Farm Project in Bid Window 3 of the South African Renewable Energy Independent Power Producer Procurement Programme in partnership with Enel Green Power.

We have an innovative management team that balances relevant technical and financial experience with policy facilitation, project development and management capability. As a privately owned company, we are able to operate as a project developer, offering Aspire Africa · July/Aug 2015 77

In 2014, Mark was selected by the Recharge 4040 initiative as one of the world’s foremost young energy pioneers.

MARK TANTON

Managing Director, Red Cap Investments

78 Red Cap Investments · South Africa

Renewable Energy investors and stakeholders the comfort of unbiased expertise. We are also able to engage the market independently, as we are not owned by a utility or tied to any specific manufacturer. Our experience in both the private and public sectors gives us insight into genuinely sustainable current and future opportunities in the energy sector. As a result, we know how to structure business models to best take advantage of these opportunities. Over the years, the team has interacted with many of the key players in the sector and has developed an extensive high-level network. Our partners have a successful track record in the financing and development of renewables globally. TK: Progress of the Kouga Wind Farm (KWF) project and critical milestones achieved MT: All construction on the KWF is now complete and is due to achieve commercial operation. The next step is connection to the national grid. Once operational, these 32 turbines will generate approximately 300 million KWh per year, enough to supply approximately 50,000 average households with electricity. This clean energy works towards powering South Africa’s low carbon future by mitigating over 300,000 tons of greenhouse gas emissions annually. In addition, via the Kouga Wind Farm Community Development Trusts 26% ownership and the Project Company’s socio economic development projects, the wind farm will inject in excess of R250 million into local upliftment projects that will directly benefit members of historically disadvantaged communities in the region. TK: Any current projects involved with or upcoming?

MT: We are currently involved in the financial close for The Gibson Bay Wind Farm in partnership with Enel Green Power. •

•

The Gibson Bay Wind Farm is a R2.25bn on shore wind renewable energy project that consists of 37 turbines each capable of generating 2.5MW of power, delivering 111MW of new grid connected capacity. The Gibson Bay wind farm is located in the Kouga region of the Eastern Cape and once commissioned the 37 turbine project will enter commercial operation in early 2017, generating in excess of 424GWh per year The Gibson Bay Community Trust owns 40% of the wind farm.

Khana Energy is participating in the round 4 REIPPP bidding process for wind energy generation projects. Red Cap has a 49% ownership in Khana Energy. TK: Give us an overview of Khana Energy and your partnership with Gamiro Investments, how will this facilitate Red Cap? MT: Red Cap strongly believes the SA Renewable Energy industry profile needs to transform and the skill transfer needs to take place in a sustainable way. As such Khana Energy was founded to participate as a co-investor in projects successfully bid in the South African Renewable Energy Independent Power Producer Procurement programme. Khana Energy is a black owned and controlled renewable energy company with the vision to become a fully integrated, fully operational black, South African independent power producer with the skills and capacity to deliver every aspect from project bidding to successful implementation. Aspire Africa · July/Aug 2015 79

www.red-cap.co.za

Red Cap Team (L to R) Erica Morgan, Christelle Roy, Lance Blaine, Mark Tanton, David Nicol, Sam Parenzee, Jadon Schmidt Khana Energy is committed to transformation and development in the Renewable energy sector in a sustainable and meaningful way, as such Khana Energy aims to build an operational entity that houses the best South African and global skills in the sector and is committed to creating jobs and transferring capability that will eventually be owned by young, capable and appropriately qualified South Africans.

which we are involved, and are committed to transformation within these communities and the industry as a whole. In line with this commitment we work to build relationships with the community, facilitating community participation in our wind farms through large broad-based Community Trust ownership for the benefit of the local communities, far exceeding the Renewable Energy Bid minimum threshold of 2.5%.

Through a partnership between Gamiro Investment Group and Red Cap, the executive team consists of a diverse and skilled group of South African professionals with proven renewable energy, project finance and economic development capabilities to meaningfully add value to projects in which they are invested.

By involving all stakeholders, we are able to develop successful projects that benefit and support local communities.

TK: Outline impacts Red Cap has had recently – on communities, economic development, environment, etc. MT: As a 100% South African developer we are committed to the communities in 80 Red Cap Investments · South Africa

All of Red Cap’s wind energy projects are developed in partnership with landowners, the local community, environmental groups and public stakeholders – with the aim of benefitting all parties involved. Closer to home, Red Cap has initiated a programme of maths numeracy in the local community, donating 10 tablets to the Silikamva High School in Hout Bay.

Renewable Energy This school is situated next to the informal settlement of Imizamo Yethu and the school primarily serves this disadvantaged community. This Tablet Maths programme, taught by a Red Cap Director, uses various maths APPS to teach basic maths numeracy to scholars moving from junior to senior school. This is a pilot programme, taking place weekly for an hour in a facilitated class

Kouga Wind Farm Landscape

TK: What is Red Cap’s roadmap for the near future and expansion priorities? MT: We want to focus on growing Red Cap’s portfolio of innovative and progressive projects within South African renewables & clean energy. Establishing Khana Energy as the empowerment partner of choice and successfully developing Khana into SA’s leading fully-fledged local black owned IPP over 5-7 years. TK: What is the Recharge 4040? MT: it is a diverse group of energy pioneers from major wind and solar companies, banks, investment funds, crowd-funding platforms and governments from across the globe. TK: Give us your closing thoughts MT: Red Cap has an exemplary success record within the Renewable Energy Independent Power Producer Procurement Programme in South Africa. It has a highly skilled and experienced team and is able to identify and resolve issues prior to bid to ensure projects are best positioned to be successful in both enticing investors and becoming a preferred bidder. ASPIRE

Innovating Energy in South Africa to create a Cleaner Future Red Cap’s vision is to identify and develop business opportunities within the renewable energy industry. We aim to set the industry standard and drive best practice, ensuring sustainable socio economic benefits to the communities involved. We are currently focused on developing a portfolio of large-scale wind energy projects across Southern Africa, all in close partnership with the local community, environmental groups and public stakeholders. We have a strategic, long-term view to project development. Our business model is to be involved in the entire project process, from early stage scoping through to permitting and operation of the wind farm. We cover the full range of development activities, including land acquisition, site engineering, project finance, stakeholder engagement and overseeing plant construction and operation.

Aspire Africa · July/Aug 2015 81

Renewable Energy

Empowered Homes Sustainable Communities An exclusive with Ecovest Holdings Managing Director, Christiaan Taaljard By: Tabrez Khokhar

stablished in 2006, Ecovest Holdings has grown to become a key player in Gauteng’s custom home solar solutions market. Recently shortlisted by the South African National Energy Development Institute (SANEDI) for the SANEDI RECORD RERE ENERGY AWARDS 2014,

Aspire Africa spoke with Managing Director Christiaan Taljaard to give us an indepth look at Ecovest’s innovations and discuss the establishment of their Off-Grid Manufacturing Plant (OMP). 82 Ecovest Holdings · South Africa

Renewable Energy off-grid communities pay more for their energy than on-grid households! ” CT

Chris Taaljard, Managing Director

Tabrez Khokhar: Give us a brief history of Ecovest and the company’s values and its mission. Chris Taljaard: The lack of European type marketing, supply chain and distribution channels makes the African market unique in industrialized countries – it also highlights the need for custom African design and inclusivity. Established in 2006 Ecovest commenced to research the developmental value chain that would commercialize and deliver, not evolve, a custom African solar home lighting solution product. There are basically two schools of thought to provide Africans with energy. The first, grid energy, like Eskom does in South Africa to the community and the second, developing point solutions, i.e. product-by-product solutions, thereby powering households.

Ecovest realized that grid would not be possible because of the attitude and the lack of rural infrastructure in South Africa. Hence, we chose to develop point solutions and commenced to design the products. We quickly realised it was a very comprehensive delivery that we were facing, because we didn’t have the grid as well the distribution. To date, we quote our local manufacturing capability as the grid of point solutions into African communities. TK: Highlight Ecovest’s track record and how the combined experience of the team contributes to its success. CT: Well again, if you stand back and the see the magnitude of the market, about 600 million Africans are without energy and probably another 200 million with Aspire Africa · July/Aug 2015 83

The ECOlite Kit intermittent power supply which is regularly interrupted, plus, it is a huge market.

TK: Highlight the product range and solutions of Ecovest

Our business philosophy is not to partner, is to perish. We integrate capable partnerships into our designs that are supported by community driven manufacturing. Reduced price points and business enrichment modularity by design is followed by a custom African retail distribution network.

CT: If you analyse the need of off-grid unelectrified households, you will note that the primary energy requirements are lighting and cooking. You have to eat! You have to see! Based on these obvious requirements we proceeded to develop our products.

It is one thing to claim the capacity to supply once you’ve developed, but the supply chain needs a consideration. We realised this and knew that we could not do it alone, hence we partnered with capable manufacturers in South Africa, which enabled us to stand next to, promise the capacity, and supply these developed products. That is the theme that has developed as they are committed to us; we have been working together for over 5 years now and each are specialists in their respective fields. We believe that is what makes a company work in a modern world, which is very competitive and for us to deliver competitive products that are capable and sound. 84 Ecovest Holdings · South Africa

Parallel to what we researched, we were going to need a distribution network which would have off-grid manufacturing capabilities and distribution in a custom African network. These factors influenced our product design. After our initial introduction of the solar lighting and cooking products, we identified another primary lifestyle product, the television. If you look at TV in a European context, it is a used for relaxing, but, here in South Africa, we believe, it is an absolute necessity to uplift Africans. Hence, the solar TV is now included in our product range. Ecovest is securing the delivery of lifestyle with the manufacturing of solar home systems (lighting, television, electronic station and multi cell phone charger) and two cook stoves

The money remains within the community without the use of middlemen who are taking out the profits.” Chris Taaljaard

(biomass and biofuel). Those are our primary products that we lead with and have fully commercialized. TK: What are the benefits of the your products? CT: The best way to answer that is if you analyze a typical rural household. The strange thing is that off-grid communities pay more for their energy than on-grid households! Lighting, cooking and communication are recognized to be primary need by both African decision makers and the International Community. Lighting a shed rurally will cost more than lighting a ‘gridded’ house with normal power supply. The rationale here created the opportunity from a business perspective. Offgrid households pay more for their cooking and lighting then others and therefore an excellent business prospect arose. Un-electrified families currently spend 25 to 30 percent of the household income on cooking and lighting – the introduction of eco-friendly technologies can save R275 per month. In South Africa the potential saving on primary energy is 15 Billion Rand pa. This is the real benefit, which is real and tangible. There is an immeasurable social benefit that also follows. Another is the communication capability into these communities; with our products they can enrich themselves with knowledge and not be so exploitable. TK: What impact has Ecovest had in off-grid areas? CT: We are at the coal phase of implementation and are one of the first companies (in South Africa) with this delivery. We never entered the market with irrational claims touting to have found a solution, throw some money at us and will change the world. We have partnered with several companies

Renewable Energy and institutions that understand the opportunities of African energy as well as the complexities. This includes The Innovations Hub South Africa and the University of Johannesburg. In our seven years we have delivered our own value systems as well as the opportunity to look into other developments, combined these, and sharpened our own initiatives. That is where we have played a bigger role and have had successful impacts - in partnerships, development fronts, social deliveries, and ultimately entering the market successfully. We started off by delivering our low cost products to homes where they proved reliable. To date, we have successfully installed our commercialized product in 23 informal settlements in Gauteng each with 2000 households on average. TK: Tell us about Ecovest’s manufacturing plant, its use of local labour, and facilitating the socio-economic development of the area? CT: Our Off-grid Manufacturing Plant (OMP) answers the essential question, what about human energy? Ecovest has delivered a unique metals manufacturing technology that delivers an un-electrified off-grid factory (business-in-a-box). As an example, our competitors utilize plastic components for their products, whereas ours are fashioned wholly from stainless steel at our plant. We did this knowing full well, from the outset, that South Africa has limited distribution networks once your product is developed and commercialized. What OMP enabled us to fully rely on our manufacturing capability at the plant without having to rely on poor distribution and supplier networks. Thus, answering our own Aspire Africa · July/Aug 2015 85

www.ecovestholdings.co.za

Ecovest at a local exhibition

a 1-day training course in household energy management as well as educate them on offgrid manufacturing rationale, so they can go back to their communities and tell others what they have learnt and seen. The parent OMP plant is vital to us. We are proud of the accomplishment that we can show it instead of just talking about it. We will now be setting up OMP sales offices in Gauteng, KZN, Vereeniging and Witbank. TK: What are some of the company’s major achievements? CT: Having now established our OMP plant, it’s not such a battle to market our solution and products. You cannot blame investors for being sceptical, which they are. Along with the South African government, we are manufacturing 15 plants for installation across continental Africa.

question on how we can design our products so that we can manufacture off-grid, and create our own distribution network. Our labour is wholly local, tools are designed and created within the country, research is done using local partners and it all comes together as a product in our OMP plant. The Ecovest OMP employs and sustains three factory workers, 25 informal retailers and ten sales technicians. Plus, we have a capacity of sustaining 175,000 off-grid end users. TK: Can you tell us about some of your recent projects? CT: The main project, if it can be considered that, is that we have successfully completed our parent OMP plant in Pretoria, which is now delivered; it is fully functional and operational. We bring in communities, put them through 86 Ecovest Holdings · South Africa

Having shown the model of the OMP to the government including its success, an agreement was reached that they will market our solution across Africa on a government-togovernment level starting regionally, and then onwards to East & West Africa. Further, Ecovest has a Mining CSR and CSI marketing initiative using the same model of the OMP plant. We are specifically targeting the mining industry to invite them and show the OMP model and illustrate its benefits and uses. Having put a practical solution forward, we are actively seeking to market our OMP to the American-African Energy Consortium that is spearheading President Obama’s power initiative and investment into the continent. TK: What are the corporate social responsibility activities Ecovest is involved with locally?

Renewable Energy

Products being manufactured at the Ecovest OMP

CT: If you know the African marketing style, then you would also know that the youth always play a big role in the society. We are assisting a Canadian social objective (Solar for Life) to install solar charging stations to support students in 7000 KZN schools with modern lighting solutions. With Solar for Life we have established the Ecovest Schools Project (ESP) Africa. The initiative commenced with the manufacturing of battery charging stations that are installed at schools to support poor students with lighting energy for LED lamps sponsored by affluent students. The working principle is simple and pragmatic â&#x20AC;&#x201C; the student returns a used rechargeable battery for a unit that is re-charged in a solar charging station at the school by paying a nominal fee. Everybody wins. The household

saves money and the school earns a perpetual income from the station. We have presented it successfully and are now installing a further 3 stations in rural schools within the KZN province. TK: What can we look forward to in terms of new technology and products? CT: We are looking at increasing the life cycle of our products as well as expanding our product range by introducing solar ovens, water warmers, even home system coolers. We have a 45-55 litre fridge which we have researched and are now capable of commercializing. By the end of this year you will be able to purchase the solar oven too! ASPIRE

Aspire Africa Âˇ July/Aug 2015 87

Events

Andaz Hotel, London - UK

8th Investing in African Mining London, 2014 - Event Wrap Up By: J. Landry

rganised by Bruce Shapiro and Wayne Floreani, the 2014 edition of MINEAfrica took place Monday, December 1 in the Great Eastern Room of London’s Andaz Hotel.

The one day conference is a great leadin to the larger Mines & Money program taking place in London the same week. A less crowded atmosphere, and more intimate environment than Mines & Money, the one day program provides the perfect setting to engage with a number 88 8th Investing in African Mining · London, UK

of key industry personnel. With this year’s event showcasing over 15 speakers in the mining industry it was evident that despite the downturn in the industry, there are still opportunities across Africa including key countries like Ethiopia and Zimbabwe.

Events Here’s a snapshot of who was there and what they had to say: TSX Graham Dallas, Head of Business Development, EMEA, TSX and TSX-V Exchange Formerly of the London Stock Exchange (LSE), Graham used his time at the platform to discuss the access that companies have by being listed on the Toronto Stock Exchange (TSX). In particular, he made note of its ability to reach a larger audience than its nearest competitor, the Australian Stock Exchange (ASX). Caledonia Mining Mark Learmonth, VP, Corporate Development and Investor Relations Since his arrival at Caledonia in 2008 Mark has made a point of presenting his company’s benefits including in his belief that, “we are significantly undervalued.”

of the country’s food self-sufficiency and used the example of Saskatchewan Canada where the largest solution mining project in the world is based. The company’s total CAPEX is $642m USD. Hatch Goba Craig Simmer, Regional Director: Infrastructure EMEA Speaking about sustainability and community engagement, Craig touched on creating sustainable growth relating to business. This included the involvement of local suppliers for activities including building homes around mining sites. With some of their projects relocating complete communities for mine expansion, there is a concerted effort to work with local suppliers to enable more localised prosperity opportunities. In Craig’s own words, “We’re effectively building a brand-new town… we try to match supply development sustainably”.

Since 2009, Zimbabwe has started using the US dollar as the functional currency. They are currently paying out dividends of 0.015 cents per quarter with more and more of the company being held by UK and Swiss investors. Under a more stable Mugabe government, Mark also made note, “don’t leave this room thinking the dividend is under threat.” Allana Potash Farhad Abasov, President and CEO Focused on Ethiopia, Farhad paid particular interest to North Eastern Ethiopia with its hot and dry climate that allows them to utilise solar technologies to enhance their ability to extract “one of the shallowest deposits in the world.”

J. Landry, with Mine Africa President, Bruce Shapiro

At only 100 metres depth, Farhad made note Aspire Africa · July/Aug 2015 89

Kefi Minerals Harry Anagnostara-Adams, Executive Chairman Mining in Ethiopia, and floated as a junior, micro-cap explorer on AIM 7 years ago they have planned for construction less than 12 months from now. With significant numbers of Australian staff, Harry promoted the fact that in his eyes the company is “very, very tightly run… we don’t run head offices in London or elsewhere.” Ethiopia, as Africa’s only country not be colonised has a population of 93 million with half the land size of Western Australia and is the world’s 5th fastest growing economy. The Ethiopian government is now overtly encouraging the minerals sector for the first time. Additionally, in December 2013, they acquired 75% of Tulu Kapi and set out a revised development strategy.

with its main project in the Horn of Africa. They are specialists in the supply of remote turnkey power solutions and mine utilities. With 20 years experience on international projects their presentation addressed fuel and power being the most expensive issues at a mine site. Diesel generated power is what most mines currently use because it is reliable – especially for remote applications, but it is expensive. Many organisations would need to find cleaner fuel options or face a review of their environmental impact assessment. During their presentation a case study was presented discussing their tender for a new power plant for a project in Tanzania. The end product is a solar-hybrid EV power farm with overall fuel cost savings of 26%. Importantly, it is the first solar pv/hybrid heavy fuel oil power plant at a mine.

MCD International Energy Solutions Manuel Duggal, MD

Control Risks Roddy Barclay, Senior West Africa Analyst

The company, which has been in operation for almost two years is a TSX listed junior miner

Control Risks is a global risk management firm specialising in political strategic risks

90 8th Investing in African Mining · London, UK

South Sudan is a completely new gold province, 96% of the South Sudanese economy is oil.” Mark Parker, CEO, Equator Gold Holdings

including crisis and security planning. Roddy spoke of a number of issues, in particular: Political instability and conflict Resource nationalism and contractual instability. A greater focus on local content heightens the risk of political interference and corruption Islamic militancy is likely to persist in affected regions as we’re seeing with new terrorism in certain countries like Nigeria Interestingly, the terrorism threat is nuanced and many mining areas are unaffected – even in countries like Mali with Roddy calling Islamic militanantism a “generational issue”. More positively, overall conflicts in SubSaharan Africa are declining and the risk of an African “Arab Spring” remains low. In South Africa, the issues include the continuation of unrest in South Africa that will continue to constrict the sector’s growth and raise operational costs. Competition between unions is continuing to drive increased assertiveness. Issues with local engagement will remain a spark for discontent and disruption.

Events

They have three gold targets with two of them nearing production. In Equator’s opinion the country represents great opportunity since nothing has been done in the country in 60 years. Mark is the former MD of African Eagle with 40 years of prospecting and corporate experience. Nedbank Capital Mark Tyler, Head of Resource Finance Mark used his time to address the topic of how to finance an African Mining Project. In his view, what’s been surprising is “the recovery of the juniors over the past few years.” Much of this contribution to recovery has been through Canada in the Toronto Stock Exchange. However his assessment was blunt, “Equity markets are tough. They’re not going to get better in the short-term.” In his opinion, “All of the South African banks have an interest in debt funding.”

Ebola will most likely be a major issue well into 2015 after the declaration of force majeure in some Ebola stricken countries like Liberia, Sierra Leone and Guinea. Ministries have been closed, and there are ongoing issues of employees not turning up to work. Equator Gold Holdings Limited Mark Parker, Executive Director and CEO The company was founded in 2011 in South Sudan with Channel Islands based key shareholders including Sprott and Richmond (South Africa). In the company’s view, South Sudan is a completely new gold province since “96% of the South Sudanese economy is oil”.

Nancy Eastman, Partner Fasken Martineau

Aspire Africa · July/Aug 2015 91

Events

www.mineafrica.com

(L to R) Wayne Floreani, Robert Friedland, Bruce Shapiro, Graham Dallas, Nancy Eastman iNHEMACO (International Health Management Consultants) Albie de Frey, Director Albie provided a historical background to the Ebola virus and some of its key differences to other diseases as part of their topic on Ebola in West Africa. With the first case being identified in 1976 in Zaire, Ebola is an animal based disease that occasionally jumps to humans during the process of animal preparation for human consumption. Albie addressed the misconceptions about the disease and its relationship with other diseases like malaria, rabies and yellow fever. Sunridge Gold Corp Michael Hopley, President, Director & CEO With their feasibility study completed in 2013, they expect a mining permit in 2015. They have 210 million outstanding shares and point to Eritrea as a place of interest, being independent from Ethiopia for the last 22 years. GB Minerals Luis da Silva, President and CEO 92 8th Investing in African Mining · London, UK

Working in Guinea Bissau which has a new government on hand, and with the company offering all new Directors, GB Minerals offers very low liquidity with significant shareholders. Their Greenfield project is of the highest grade phosphate rock and they are connected with the capital city Bissau by 120km of paved roads. Ivanhoe Mines Robert Friedland, Executive Chairman and Founder Ivanhoe is currently involved in African projects including South Africa’s Platreef Project which is the only project in the world the Japanese have invested in. They also have interests in Congo’s Kamoa Discovery with Robert making note that Congo produces more copper than Canada. Additionally, Ivanhoe is also involved in Mongolia’s Oyu Tolgoi project which is designed to be the largest underground mine in the world, where they have been working with the local people to have part and parcel in the operation. ASPIRE

Events

Safari Park Hotel, Nairobi - Kenya

Stephen Mallowah, Snr. Partner, MMC Africa Law

MBI 2014 EASTERN AFRICA

MBI 2014 Eastern Africa Mining Business & Investment Conference - Nairobi, Kenya. Event Wrap-UP. By: Tabrez Khokhar

The Mining Business and Investment 2014 (MBI 2014)Conference was held at Safari Park Hotel Nairobi Kenya for two days, the 16th and 17 of October.

he conference was organised by Prescon Ltd in partnership with the Kenya Chamber of Mines, UNDP and UK Trade and Investment. The event was well attended with a turn up of more than 300 delegates and a host of issues were discussed in the seven sessions, ranging from: 94 MBI 2014 Eastern Africa · Nairobi, Kenya

• • • • • •

Mining Policy and Registration Infrastructure Development in E.A in relation to mining Fiscal Frameworks Finance Case Studies Technology Advancements in Mining

Events

www.prescon-int.com

Some of the keynote speakers included: Hon. Stephen Julius Masele, Deputy Minister for Energy and Minerals, United Republic of Tanzania Dr. Melba Wasunna, Co-founder and Vice President of Thamani Trust Cliff Otega, Managing Director & Head of Energy & Natural Resources, Standard & Mutual Andre Olivier, Project Manager, Mining and Industrial Development Finance and Advisory Service Gachao Kiuna, CEO, Trans-Century Ltd.

Stephen Mallowah, Senior Partner, MMC Africa Law Amish Gupta, Director Corporate Finance, Standard Investment Bank Dr. Tim Sharp, Exploration Manager, Discovery Group, African Barrick Gold Exploration Kenya Ltd. Arthur Ndegwa, Taita Taveta University College Scott Mumford, Group Head of Satellite Services, Liquid Telecom Group

David Scott, President & CEO, Tembo Gold

Tarn Brereton, CEO, Tancoal Intra Energy, Tanzania

John Bosco Kangoga, Rwandan International Trade Lawyer and Independant Consultant

Nisheet Devani, Head of Business Development, Tancoal Intra Energy, Tanzania. ASPIRE

Aspire Africa 路 July/Aug 2015 95

Upcoming Events June Mines & Money Africa

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