June 2010 emea

Businessexcellence ACHIEVING

JUNE 2010

O N L I N E

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Feet ground on the

For ABB Group, improvement activities must be rooted firmly in fact— preferably of the numerical variety

Editor’s letter

EDITORIAL

Editor In Chief Martin Ashcroft mashcroft@bus-ex.com Managing Editor Becky Done bdone@bus-ex.com

DESIGN

Production/Creative Director Zachary Smith zsmith@bus-ex.com Production Designer Mallory Lindsley mlindsley@bus-ex.com

BUSINESS

Director of Editorial Research Scott Mason smason@bus-ex.com Director of Sales Sean Brett sbrett@bus-ex.com Assistant Research Directors Vincent Kielty vincent@bus-ex.com Sam Howard showard@bus-ex.com Richard Halfhide rhalfhide@bus-ex.com Robert Hodgson rhodgson@bus-ex.com Administration & Operations Alice Doran adoran@bus-ex.com Chief Executive Andy Turner info@bus-ex.com

A seismic shift On Tuesday 11 May, following five days of negotiations, the UK finally had a government once again—albeit in a very different form to that which might have been expected prior to the election. The whole campaign was full of surprises—not least the eventual appointment of a Deputy Prime Minister whose party gained only 23 per cent of the overall vote. This aside, the coalition does appear to be confident, with the new Prime Minister heralding a “historic and seismic shift” in British politics.

So when even the most unlikely of partnerships can find common ground, then it is probable that the ones bearing obvious synergies would experience their own seismic shift, were they to join forces—as is increasingly the case in the world of business.

Since becoming part of JSE-listed Stefanutti Stocks, one of South Africa’s leading engineering and construction groups, Stefanutti Stocks Marine—formerly Civil & Coastal Construction—has been able to draw on the reputation and size of the bigger

company to begin taking on projects worth over a billion rand. The buyout has also provided Stefanutti Stocks Marine with a more defined structure, much-needed funds for new equipment and a greater focus on health and safety.

Existing partnerships can also be beneficial.

South Africa-based Trans-Africa Projects is discovering the advantages of having on hand the expertise and resources of the sole shareholders in its company—South African power utility giant Eskom and the American company Fluor Daniel. “With the 50/50 shareholder situation as it is, we have at our disposal a vast amount of technical and engineering resources from Eskom, and financial management and project controls on Fluor Daniel’s side,” explains general manager Barrie Badenhorst.

When considering a partnership, the desire to preserve autonomy is understandable; but if the right strategic alliance is formed, then there is no reason why it should have to be surrendered.

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56 OPERATIONAL EXCELLENCE: ABB GROUP Feet on the ground For ABB Group, improvement activities must be rooted firmly in fact—preferably of the numerical variety.

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CUSTOMER FOCUS: The personal touch Why a close consideration of customer preferences should play a pivotal role when it comes to your communications strategy.

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SUPPLY CHAIN MANAGEMENT: The need for speed Technology can help improve supply chain communications, maximising the efficiency of this key business function.

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STRATEGIC MANAGEMENT: Optimising profitability Document governance can improve productivity while reducing cost, security risk and environmental impact.

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Highveld Steel & Vanadium Corporation Ltd. Changing times Currently the only South African producer of heavy steel sections, Highveld is making plans to boost productivity.

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Neotel The golden thread South Africa’s first converged communications network operator prides itself on its truly modern service offering.

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Fast ‘n Fresh Transport Services While you were sleeping Lateral thinking and innovation have helped this company keep its lead in the FMCG logistics sector.

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Stefanutti Stocks Marine Buoyed by success Since joining a larger company, this marine civil engineering division has taken on bigger projects than ever before.

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Technip Iberia Projects and people Keeping its customers happy while expanding its global activities will see this company into post-recession growth.

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Trans-Africa Projects Electrifying the nation Consultancy firm to the power industry is finding success across the African continent and beyond.

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Sekoko Resources Greener thinking This South African exploration company has plans to diversify into power generation and iron smelting.

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RioZim A foundation for renewal Zimbabwe’s leading indigenous mining group believes clarity, consistency and transparency to be vital.

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Tata Power The next generation More than 90 years after setting up India’s first power generation plant, Tata Power is expanding aggressively.

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Letšeng Diamonds Jewel in the crown This Lesotho-based company produces the highest quality white diamonds of anywhere in the world.

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Konkola Copper Mines Deep as a mountain With world copper prices rising, it has become worthwhile to invest in Zambia’s copper mines once again.

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Abosso Goldfields Ltd Extending opportunities Acquisition by one of the world’s largest gold producers has impacted positively on Ghana-based Abosso Goldfields.

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Central Rand Gold The shine is back With gold losing none of its investor appeal, mining prospects once considered uneconomical are now in favour.

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Bisha Mining The golden horn Eritrea’s economic prospects are looking up with the approaching opening of Bisha Mining’s operation.

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Lydian International The Midas touch The Amulsar gold project in Armenia is the prime focus for this mineral exploration and

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development company.

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E.ON Climate & Renewables UK: Robin Rigg Switched on to alternative power This wind farm has been successfully steered through the choppy waters of design, construction and final operation.

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Jaypee Karcham Hydro Corporation Limited Tapping hydro potential This hydroelectric project in north-west India is all set for commissioning and beginning to generate power.

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BAPCO Refining the business Bahrain-based petroleum company is honing its business for the rapidly changing global marketplace.

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Technip KT India Limited Based on technology Innovation and a determination to stay ahead of the competition has resulted in phenomenal growth for this company.

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NamPower Power to the people This Namibian power utility is working to secure the country’s energy supply, both for now and in the future.

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Autopax An African journey Coach transportation services company reaps benefits from the FIFA World Cup coming to South Africa.

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Lewis Group A growing group A new and dynamic CEO is overseeing an impressive growth programme at this 76-year-old retailing group.

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Taggart JHDA Part of the power chain During a period where most businesses have been content merely to survive,

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-this company has positively thrived.

Hwange Colliery Company Limited Rising to the challenge This mining company is committed to playing a key role in reviving the coal mining sector, and infrastructure, in Zimbabwe.

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Continuous improvement converts can get fixated on the idea of th miracle pill that promises to transform their business. But for ABB G improvement activities must be rooted firmly in fact—preferably of numerical variety—as Bill Black, Group senior vice president of Qua Operational Excellence, explains to Becky Done PHOTO CREDIT: ABB Group

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Operational excellence: ABB Group

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BB Group’s senior vice president of Quality & Operational Excellence Bill Black has seen past the deluge of continuous improvement trends and fads oft-touted by consultants as the Next Big Thing. Instead, he has successfully peeled back the layers of marketing hype to examine what really lies at the heart of operational excellence.

“Too many executives in Western companies believe that there is a quick fix to their problems,” he says.

“There’s a great attraction to listening to the many consulting companies who come knocking on your door every month; and I think today many Western companies are fooled by this.”

He lists the myriad of methods which have all enjoyed their time in the spotlight over the years. “Lean, six sigma, lean sigma, business process reengineering, total quality management—these are all conceptually excellent; but the problem is that people try to find the easy way, and they fail in 80 per cent of cases, in terms of the benefits they expect,” he says.

Many people assume, for example, that lean and Toyota are one and the same—and that if they just implement lean, then all their problems will be solved.

The same could be said of six sigma and GE. “Having done some significant analysis of Toyota and GE,” says Black, “what I can see is that any company who tries to implement lean imagining that it will somehow make them like Toyota is deluding themselves, unless they really understand what it is that makes Toyota great— which is relentless improvement and respect for people.

GE is similar. People try to run six sigma but they don’t spend enough time working with GE to understand that what is fundamentally behind their success is not six sigma—it’s what they have been able to develop over years through a succession of initiatives and a culture of continuous improvement. This desire for the drive for relentless continuous improvement is what makes GE succeed and is what made Toyota succeed; and if people just try to achieve that through the blunt use of six sigma and lean tools, they will fail.”

Clearly, a weighty commitment to continuous improvement is required in order for it to have the desired effect—not simply an enthusiastic nod at its principles.

Enthusiasm helps, of course—but how can that then be translated into a meaningful culture change that is taken seriously at all levels of the organisation? Black is convinced that cold, hard numbers are the only way to make it happen. “I really believe that the reason most quality initiatives like lean and six sigma fail is because the quality leaders have not been able to express themselves in financial terms. If you can’t express the size of the problem in financial terms, then you probably won’t be given the resources needed to do the job.”

ABB’s way of expressing its problems in financial terms is via its COPQ, or ‘cost of poor quality’ figure.

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Operational excellence: ABB Group

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Operational excellence: ABB Group

Doing so in an organisation the size of ABB—it employs 117,000 people across 100 countries—requires a standardized approach, as Black explains. “We have eight process areas that we consider, and we measure the COPQ based on those process areas—for example sales, product development, supply chain, aftersales and so on. And those eight process areas break down into 19 specific COPQ elements, against which we expect all of our units to report. We have a couple of thousand operating units in ABB, so it’s quite a big operation globally.”

The information is then gathered at all levels—from people working in the factories or from engineering teams or those running projects—where they can identify that something has gone wrong and cost the company money. “The cost is then extracted from their ERP system and inserted into our COPQ table,” explains Black. “And we have tools that simply add all of that up and tell us how much COPQ we have in total.

We report this every month, so that every month we know what the COPQ is.

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up s O p e r a t i o n a l e x c e l l e nCcues:t oAm B eBr Gf rooc u

“The COPQ measurement is not perfect, it is not exact and it is not complete, but it already generates a large enough number to be interesting right up to our CEO level. The principle we follow is to be roughly right rather than precisely wrong.”

Businesses are often accused of over-burdening their staff these days with excessive number-crunching and reporting. But Black insists that to build a case for continuous improvement, some knowledge of these basic facts is essential. “Continuous improvement can only be sustained when we can say, for example, we’ve got over $1 billion of COPQ, so we need to engage our people in fighting it every day in every process. It’s only when you make that number visible and robust that you can afford to invest in the improvement projects needed to reduce it.”

However, Black sees what happens next as more revealing than the score itself—the customer is invited to comment on exactly what ABB does poorly, as well as what it does well. “That information is much more valuable than the raw NPS score, as we then know which subject areas our customers are most upset about and where we have to prioritise our improvement actions. In addition to that, we invite the customer to make comments or statements we can also follow up on. The most important output from the NPS process lies in understanding these comments, so that we can then take action.”

Quantification of both customer satisfaction and COPQ creates an extremely powerful lever which ABB can use to drive continuous improvement. “Linking

“Consultants will tell you that you must find a ‘burning platform’ in order to drive any change initiative forward. But continually finding burning platforms is frankly something that is quite difficult for companies to do” At ABB, a proportion of that investment is made in the development of effective networks to lead and facilitate the continuous improvement process. “Getting somebody responsible for this at the highest level in the company, reporting to an executive committee member or the CEO, is a key step in the process, because that means it’s taken seriously,” explains Black. “But that individual, no matter who it is, will not succeed unless they’ve got a network of people across the company through which they can operate. In our case, it’s around 2,000 quality and op-ex people company-wide; and we also have a network of 2,500 project managers. One of our key challenges lies in animating those networks and giving them the leadership and direction needed to make sure they’re all worrying about how to improve customer satisfaction and reduce the COPQ.” Just as the COPQ must be quantified, so must customer satisfaction, says Black. This is achieved in ABB via a pragmatic approach to gathering customer feedback. Following interaction with ABB, clients are asked one simple question: ‘To what extent would you recommend ABB to a colleague?’ grading their answer on a scale of one to 10. Customers responding with grades of either nine or 10 are classed as ‘promoters’; and those responding with answers ranging from zero to six are grouped as ‘detractors’. A Net Promoter Score, or NPS, is then calculated by subtracting the percentage of detractors from that of promoters.

customer perception with the cost of waste or the COPQ is, for me, absolutely essential,” says Black.

“Those two things in combination will raise the level of interest right up to your executive committee and CEO level. If you’ve done that part properly, it’s easy then for the CEO to say, ‘We need somebody senior to focus on this full time.’”

Of course, identifying those areas of the business most in need of improvement is only the first link in the chain—ABB’s staff must be sufficiently equipped to then effect the required changes. The company’s ownbrand method of continuous improvement, ABB4Q, was arrived at after a close examination of Toyota methodology and GE’s six sigma methodology, DMAIC. Already an existing ABB tool for making improvements, ABB4Q has now been adopted from being just one of a basket of tools to being ABB’s primary problem-solving methodology. Training on the method commenced in June, following five pilot training courses in North America, Finland, China and India to ensure that the method could function effectively on a global scale.

Black says that just like the COPQ, staff training cannot simply consist of theory: it must be rooted in reality—in this case, the solving of real-life problems.

“We don’t want trainees. We’re not asking to be sent 100, or 1,000, or 10,000 people to be trained,” he says.

“What we’re asking is that our managers identify a serious problem in their area that needs to be fixed. That

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Operational excellence: ABB Group

problem then becomes the project, and they then must identify the best person in their organisation to be able to solve that particular problem, who then becomes the project manager. And that’s the ABB4Q trainee.”

The trainee is then taught the tools and techniques of basic 4Q methodology, which will enable them to solve their particular problem, Black says. “They’ll run the project and solve that problem, and they’ll involve others because they will have to build a project team. In order for the trainee to become qualified, they will also have to provide a fundamental level of training to the project team—what we call foundation level training, as they participate in the project to solve the problem.”

Training for basic level ABB4Q takes just one week— preferable, Black feels, to the four weeks required to become a traditional black belt, and a further example of how ABB trims waste. For those who want to learn more, however, there is an option to undergo an additional week’s training to rise to advanced level ABB4Q. Coaching is also provided beyond the initial one-week training period as the project unfolds. “It’s more than just sending people on a training course,” Black asserts. “You have to direct the training at something real and you have to provide coaching support to help the trainee succeed.”

ABB has a refreshingly logical approach to continuous improvement, a business process that some companies can make mind-numbingly complex. “Consultants will tell you that you must find a ‘burning platform’ in order to drive any change initiative forward,” Black says.

“But continually finding burning platforms is frankly something that is quite difficult for companies to do, and it’s impossible for their people to believe in when it happens every year or two.

“My view is that there are only two things which are useful in providing the drive for continuous improvement. One is the customer, because they need to have a very powerful voice inside any company. The second is money—just as Juran used to preach his whole life. It’s a pity so many companies still don’t get it.” www.abb.com

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person touch Richard Burdge, CMO of customer communications firm Thunderhead, explains why a close consideration of customer preferences should play a pivotal role when it comes to your communications strategy

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Customer focus

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ompanies that can quickly deliver personalised, relevant content using the channel that customers prefer—whether that’s print, email, web, mobile or social networks—can capture greater loyalty and reduce the chance that customers will take their business elsewhere. In fact, personalised multi-channel communications can be the cornerstone of a strategy to build revenue growth through improved customer retention, increased customer advocacy, and better up- and cross-sell opportunities. In short, it’s a way to build competitive advantage.

If there is one business principle that has re-asserted itself over the last 18 months, it is the importance of the customer. Customer focus, customer engagement and customer experience are very current topics. In today’s competitive times, building revenue growth through customer retention and maximising cross- and up-sell opportunities is an important objective for marketing, sales and line-of-business teams. These teams are also under increasing pressure to find better ways to connect and communicate with each customer on a personal level.

Meanwhile, the commercial environment is becoming more complex thanks to empowered customers (armed with a much greater ability to compare offerings); increasing competition; and growing regulation. Businesses need to pay attention to managing the customer experience through customer communications. Customers will be having positive customer experiences in other spheres of their lives, and will be less tolerant of poor experiences.

Personalised communications The bottom line benefits of personalised communications are compelling. Industry research delivers some interesting rules of thumb that underscore the bottom line impact of customer retention. The cost of acquiring a new customer can be five to 10 times more than the cost of retaining one, while a five per cent increase in customer retention can produce a 25 per cent-plus increase in profit. In addition, customers where there is a strong relationship are 40 per cent-plus more likely to remain a customer, 75 per cent more likely to make recommendations to a friend and 50 to 60 per cent more likely to buy more.

High quality communications are the key to building customer relationships and reinforcing good service, and there are three key overlapping elements: • Personalisation: a personalised communication is tailored to the individual customer and takes into

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account the full profile of the customer and customer history, preferences, language, even idiom.

• Relevance: a relevant communication has a genuine purpose and level of appropriateness in terms of the customer’s expectations. Communications that are not relevant may be regarded as an intrusion and lead to a negative brand impression.

• Context: being aware and understanding the situation surrounding the customer contact and shaping the communication appropriately. Context becomes more critical in the multi-channel world, and is absolutely critical with real-time and mobile communications.

In the end, the goal is to be able to give the customer exactly the information they need, at the time that they need it, using a communication channel that is both preferred by the customer and appropriate for the communication. While personalisation is a key part of the context, there are a number of other important factors that come into play in shaping the content, timing and delivery of the communication; for example, the nature of the transaction, channel preferences, timing, location, demographics, language/jargon preferences, customer history and compliance.

The multi-channel factor Once upon a time, there was print and the telephone.

Now, customer relationships must be managed over an increasingly diverse range of communication channels, with mobile internet and social media being the latest additions.

For many organisations, just providing personalised communications using print media has been challenging enough. Ironically, while personalised print has been around for many years, interest in what is now called transpromo (using transactional documents for marketing and promotional purposes) has peaked in recent times as the print industry feels the impact of substitution from electronic channels and looks to exploit the potential of digital printing.

The advent of the internet brought the on-line channel, and mobile phones introduced SMS messaging. And now, with the real-time web, social media, smart phones and 3G+ mobile networks, there are a wide range of potential customer touch-points, each with their own nuances, user interaction characteristics and possibilities. Strategies must be expanded to incorporate social media, mobility and markedly different consumer cultures.

The challenge with multi-channel is not the growing number of channels per se, but the fact that the interactions must be managed across all channels, and

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that interactive real-time channels change the dynamics of customer communications.

• The choice of channel depends on customers’ preferences and on the context of the interaction.

• The customer, not channel, drives the interaction.

Customers have preferred channels, and as the number of alternative channels increases, customers will not accept being forced to use a particular channel or being limited to one or even a few.

• It’s not just about which channel, it’s which channel when. Furthermore, it’s necessary to maintain consistency across each channel that is part of the extended conversation. Each channel cannot operate in isolation—the customer’s experience must be consistent across channels.

• There is the need to control the content of communications across all channels—in many cases, there are legal and compliance issues, and there is always the issue of quality control and brand protection.

• At the same time, with web services, companies have the ability to integrate real-time customer communications with business processes.

Maintaining context “The right information, in the right place, at the right time.” It’s a time-worn adage, even a cliché, but it remains a promise that is hard to deliver on.

Without context, the immediacy and relevance of dynamic communications is lost. As the level of personalisation in customer communications increases, so does the risk of losing customer confidence if it is not done right. To maintain context, it’s not enough to manage a single customer view of enterprise data.

It’s also necessary to maintain a single customer view across all communication channels and communication history. This customer-centric view is key to any effective CRM strategy. It has major implications for the way communications (and campaigns) are developed and managed across the enterprise.

A decade of customer-centric thinking and best practice has not had the impact we might have expected on the quality of customer communications. Looking around at the state of play in customer relationship management, it is obvious that there is a big gap between the potential offered by the sophisticated technology available for CRM, marketing automation and analytics and the actual ability of enterprises to convert ‘customer intelligence’ into meaningful customer communications.

Furthermore, as communications move toward being conversations, context becomes critically important.

Customer focus

The theme of ‘customer conversations’ has been talked about for some years, but the immediacy that characterises digital touch-points such as mobile and social media demands a conversation. So does the shift in the balance of power away from marketing and towards the customer, whose attention must be earned through conversation.

Six steps to engaging customer communications • Work on breaking down the silos within your organisation. Develop a customer-centric focus that spans the enterprise and encompasses all aspects of the customer journey. Without the right management focus, no amount of technology will help—this is one of the big lessons from CRM over the last 15 years.

• Devolve control and responsibility for customer interactions to front-line business users. Decentralise as much as possible—but maintain centralised control of enterprise concerns: regulated content, compliance, brand protection and integrity controls. Put line-ofbusiness users in control of the templates, content and rules that drive customer communications—and get the IT specialists out of the loop. Look for technology solutions that will support this approach.

• Look for tools that enable separation of presentation from content and that support appropriately crafted communications to any channel from the one source.

Interest in content-component management is growing, with XML becoming the preferred technology for content reuse.

• Build agility and immediacy by integrating communications with business processes.

• Support your customer-centric focus with the right data resources. Acquire the capability to store and analyse customer interactions across all touchpoints for the whole enterprise—not just marketing, but call centre, customer services, sales, business units and portals. Use this information to shape customer interactions and build context.

• Be realistic in your plans. Look for the capability to support an incremental approach: one that will support what you need to do today but will allow you to add new and emerging communication channels when you are ready.

With the right approach, personalised multi-channel communications can be the cornerstone of a strategy to drive growth through customer retention and customer advocacy. Businesses should be developing their customer communications capabilities and platforms as a key element of their overall strategy.

Richard Burdge is chief marketing officer of customer communications firm Thunderhead. www.thunderhead.com

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John Redfern, managing director of Inovis EMEA, look in improving supply chain communications and exa utilise technology to maximise the efficiency o

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ks at the role of technology amines how businesses can of this key business function

Supply chain management

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usiness efficiency has been placed firmly under the spotlight as challenging market conditions have forced organisations to reassess their future financial plans. Making cutbacks around project roll-outs may be tempting, but subsequent short term financial gains can be heavily outweighed by the long term consequences which could have a significant impact on critical business processes. While mass investment in technology may not be on the agenda, smarter working strategies and streamlining critical processes are vital to maintaining the high quality of service customers continue to expect. Intelligent investment in technology can therefore lead to a solid competitive advantage, providing companies with a much needed edge to help them ride out the storm and remain ahead of the competition.

Today, conditions for businesses are tough. Couple the effects of a crippling recession with vast competition among suppliers and retailers and it becomes clear that the efficient running of key business processes, such as the supply chain, should be a primary concern for organisations at all levels. Fast and effective communication of purchase orders, invoices and other product data can often make the difference in preserving healthy working relationships with valuable customers and partners. By ensuring these relationships are strong, businesses can avoid losing out to competitors.

Having the right technology in place to communicate quickly, correctly and directly is crucial, not only to satisfy and retain existing customers, but also to win new business.

Client expectations around standards of service continue to grow despite tough market conditions, and in order to satisfy these requirements, manual processing and legacy supply chain procedures simply cannot compete with innovative technology which automates communications and avoids simple, unnecessary and unacceptable mistakes and inefficiencies.

Electronic data interchange (EDI) has had a large impact on the efficiency of data transfer and communication in the supply chain, and is today widely regarded as the de facto standard for supplier communications. However, some smaller suppliers still choose to exchange data with their customers via fax or telephone. Not only is this process cumbersome, but also time-consuming especially when considering the manual input of data into back-end ERP systems. Entering data this way is not only a drain on valuable resources, but inevitably results in data accuracy issues which can lead to lost or incorrect orders. Missed or inaccurate orders lead to penalty fines from customers, meaning that the cost of manual data input added to the damage to reputation can often outweigh the initial investment in technology. From a long term perspective, the growth of

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Supply chain management

“Smarter working strategies and streamlining critical processes are vital to maintaining the high quality of service customers continue to expect” businesses can also be affected if the correct technology is not in place to support expansion. This could prove to be seriously restrictive, especially for smaller suppliers or retailers who may be looking to expand their business by trading with larger partners who utilise electronic systems for the trading of product data as standard.

The arrival of EDI and latterly the internet means that suppliers and retailers now have more reliable channels for the exchange of data. By delivering purchase orders and other documents electronically, EDI removes a layer of manual input, cutting out potential user errors and improving the efficiency of the entire supply chain process. New-breed EDI platforms are also helping organisations overcome other traditional problems by providing visibility of the sales order environment across the business through user-friendly web portals rather than traditional ‘green screen’ systems that require expert input from trained IT staff. Users from nontechnical departments can now be given real-time access to the invoicing platform, for example, enabling them to make quicker decisions and be alerted to potential problems before they are able to cause real issues. Such tools have immeasurable value when considering the number of businesses which operate round the clock due to differing time zones. Previously, problems might have been left unresolved for hours until dedicated staff returned to the office, whereas improved transparency across the platforms means staff across the business can now easily address issues as they arise.

Many organisations are outsourcing their B2B programmes to manage their trading community for round-the-clock availability of the supply chain and to protect them from the speed at which technology changes. Outsourced solutions can manage the dayto-day trading activities and enable fully automated ordering systems which are available 24/7 on platforms facilitating easy trading across time zones.

Such technology has a strong value proposition for businesses looking to expand across Europe and beyond. B2B outsourced service solutions consistently meet changing customer demands around how data is exchanged and the format in which the information is communicated. As standards including AS2 and XML become the preferred format, suppliers will need to look to technology to meet these requirements; therefore solutions that can automatically translate data between suppliers and their customers are becoming increasingly

popular. The ability to communicate in multiple language formats could be a determining factor as to whether or not a new contract is won. The end goal is, of course, to deliver the right product to the right place at the right time and with minimal fuss.

Outsourcing your EDI environment may seem like an extreme option, as traditionally, turning to third party providers for critical business processes was viewed as something of a risk. After all, what if the system became unavailable or the company housing the technology went bankrupt? But as the evolution of such technology now means that datacentre availability moves beyond 99.999 per cent, and Software as a Service (SaaS) offerings have become increasingly commonplace, many organisations are now exploring the possibility of outsourcing their B2B EDI environment. With third party expert suppliers providing 24/7 management and maintenance of the entire platform, including incoming and outgoing messages and all data format translation and transport protocol issues, suppliers and retailers can significantly reduce the complexity associated with data exchange.

The benefits are plentiful as the affordability of supply chain technology allows businesses of all sizes the opportunity to reduce in-house costs associated with EDI, including labour and management. SaaS can also take the headache out of supplier/retailer communications, by reducing the total cost of ownership, including IT and other dedicated equipment.

Nowadays, when every procurement decision is subject to close scrutiny, the rapid return on investment and wealth of positive benefits for business efficiency that technologies such as Software as a Service can deliver makes this a real opportunity to transform capital expenditure into easy-to-digest operating expenditure.

In a tough economy, removing complex and convoluted business processes is vital for communicating effectively and maintaining good relationships. The numerous advantages third party managed services can offer make it an interesting and beneficial avenue for businesses of all sizes and scopes to explore.

John Redfern is managing director of Inovis EMEA and Freeway Commerce. Inovis provides software and services that enable companies to do business electronically across their entire trading community.

Founded in 1983, the company is based in Atlanta, Georgia and has offices across the United States, the United Kingdom and Hong Kong. www.inovis.com

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Optim profi

Document governance is an of improving productivity while and environmental impact, and CE

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Strategic management

mising fitability

ften overlooked fast track to e reducing cost, security risk , as Simon Sasaki, chairman EO of Ricoh Europe, explains

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treamlined operations are a hallmark of a successful business, and senior executives spend countless hours strategising on how to optimise workflows across their organisations. An often overlooked area that is simple to address is document governance—the process of how documents are managed across all areas of a business.

However, not all European business leaders are aware of the benefits that can be gained through optimised document governance within their organisations. A recent study by Coleman Parkes Research, titled the Ricoh Document Government Index, reveals that only a third of the companies in Europe have a strategy in place to oversee their print and document environments. This is despite the fact that the majority of European businesses spend up to five per cent of annual turnover in this important area. As a result, a significant number of companies

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are missing out on a wide range of benefits including improved profitability and efficiency, increased document security and enhanced sustainability.

Adopting a centralised approach Despite the existence of document production at all levels in European businesses today, the management of the costs involved tends to be both sporadic and uncontrolled.

Almost half of the organisations questioned in the research recognise that their investment in document governance is increasing year-on-year, yet the monitoring of these costs is unstructured, and the full potential to measure their investment is not being realised. Less than half (43 per cent) actively monitor document costs on a regular basis; and a sizeable minority of nearly one in five (17 per cent) do not monitor costs at all.

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Closer examination reveals that responsibility for document governance is decentralised, with no single function accountable for this area. Most respondents reported that several people within their business are responsible for the document environment and 57 per cent devolve ownership to individual staff members. Sixty-one per cent say at least partial responsibility sits with a variety of department heads including HR directors, office managers, sales and marketing.

The implementation of a centralised strategy can be easily addressed. The next step for business

Strategic management

leaders is to move away from the short-term view of managing documents to a long-term governance model that complements the business needs. A document governance strategy can be integrated seamlessly into an organisation’s existing infrastructure. It simplifies business processes and offers both short and long term benefits such as cost savings of up to 30 per cent, reduced environmental impact and increased security. This enables business leaders to focus on

Supporting environmental goals Sustainability goes hand-in-hand with effective document governance. From the study we can see that just 41 per cent set targets with regards to the energy usage, CO2 production and environmental responsibility of their document processes.

Businesses can make a real difference by taking advantage both of the tactical ‘quick wins’ available to them and by combining these improvements into the wider context of a

“By implementing a strategy that assigns clear responsibility and accountability for the overall document workflow, businesses can reduce the risks and support their efficiency and sustainability goals at the same time” driving the growth of their core business.

Strengthening document security Most business leaders will be able to cite a publicised example of how personal information such as health records or bank details and even classified government strategies have been lost or left in a public place. However, the research findings show it is just the minority that is taking actions to protect their confidential information.

Less than half (47 per cent) have a strict policy in place to control the printing of customer information and even less—41 per cent—for other confidential documents. Only 44 per cent have a strict policy in place to prevent employees from leaving the company and taking confidential information with them.

The lack of policies can also be linked to the decentralised approach to document governance. A fragmented approach to managing documents across the business means that businesses are not gaining a full insight into all the areas where security needs to be addressed. The result? Companies are more vulnerable to security breaches, whether accidental or intentional.

By implementing a strategy that assigns clear responsibility and accountability for the overall document workflow, businesses can reduce the risks and support their efficiency and sustainability goals at the same time. Document assets need to be seen as an integral part of an organisation’s overall security strategy and managed alongside all other properties within the business network.

document governance strategy. Businesses can act now and benefit immediately through quick wins such as duplex printing, recycling and employee education programmes.

Business leaders can also make a significant impact on the business, both in terms of reducing overall environmental footprint and financial efficiencies into the future Overcoming the challenges One of the biggest challenges in this marketplace is changing the mindset of business leaders and supporting them to better recognise the role document governance plays within their business and how they can play a part in its success. There is a tendency for companies to miss the opportunities that lie beyond the short term benefits. If governance is viewed only as a way to cut costs, it will certainly deliver savings in the short term but is not addressing the longer term impacts of cost savings over time, security and sustainability.

What is required is greater control and centralisation of document governance and for business leaders to step forward and take ownership of this area so that an effective solution can be closely integrated into the organisation at all levels.

Only when companies truly recognise the strategic importance of optimised document governance, and view it as a key driver of efficiencies and productivity both in the short and long term, will they be able to realise the true long term benefits. Ultimately, it’s the right balance of people, processes, tools and the latest products that helps businesses to uncover inefficiency and implement solutions to drive their business forward.

Simon Sasaki is chairman and CEO, Ricoh Europe PLC. www.ricoh-europe.com/research

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Strategy

ofsteel

As if a change of ownership wasn’t sufficient, one of South Africa’s most important businesses has had to contend with volatile conditions in the market—but its long-term business strategy remains unchanged, as Jeff Daniel learns

T

he Highveld Steel and Vanadium Corporation has long been recognised as one of South Africa’s most successful companies. The annual Top 100 Companies Survey carried out by Business Times has had Highveld in the top 20 best performers for the best part of two decades. In November 2008, the company had reached third place, up from 10th the previous year.

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H i g hve l d S t e e l a n d Va n a d i u m C o r p o ra t i o n

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H i g hv e l d S t e e l a n d Va n a d i u m C o r p o ra t i o n

Unsurprisingly, then, when majority shareholder Anglo American announced its intention in 2006 to sell its stake in Highveld (one of its non-core businesses), it attracted the attention of Evraz—a Russian group registered in Luxemburg with a reputation as one of the world’s largest vertically integrated steel and mining businesses. In 2007 Evraz produced 16.3 million tons of crude steel, making it one of the 15 largest steel producers in the world. Evraz has iron and steel plants, and iron ore and coal mining interests, in Russia, Ukraine, the US, Canada, Italy and the Czech Republic, as well as South Africa.

The transition was completed in 2008 when Highveld met all the conditions set by the Commission of the European Communities by divesting its vanadium assets—and just in time to experience one of the most successful and volatile years of the company’s history.

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H i g hve l d S t e e l a n d Va n a d i u m C o r p o ra t i o n

“The annual Top 100 Companies Survey carried out by Business Times has had Highveld in the top 20 best performers for the best part of two decades” In the first three quarters, demand for commodities surged. By October, the market had peaked, after which prices slumped on the back of extremely weak demand.

Despite infrastructural challenges centred around ongoing problems with electricity supply disruptions and a lack of adequate rail transportation (necessitating the use of expensive road transport), results for the nine months ending 30 September 2008 were the best ever— however, the last three months of the year were shrouded in uncertainty. Nonetheless, as a result of the initially buoyant market conditions, Highveld’s full-year turnover increased by 30 per cent and headline earnings per share by 82 per cent. Final year results declared sales of R9.3 billion with operating profits of R3.7 billion.

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H i g hve l d S t e e l a n d Va n a d i u m C o r p o ra t i o n

Vesuvius SA The

Vesuvius

SA

team

works

in

a

successful

partnership with Highveld Steel, with the common objective to optimise total refractory performance in all the Highveld divisions. The latest Vesuvius materials and designs are continuously introduced in all areas.

Vesuvius development and service at Highveld is not only aimed at reducing refractory costs, but also improving steel throughput and quality.

Like Evraz, Highveld Steel is one of South Africa’s most vertically integrated producers of steel and steel products, including rolled and flat steel profiles and a limited number of finished products, such as steel cages and other enclosures.

Magnetite iron ore is supplied to Highveld’s iron plant

from its Mapochs open cast mine near Roossenekal, 140 kilometres north-east of Witbank. The ore body lies in two seams, the first narrow but close to the surface while the main, two metre-thick seam is separated by a shallow layer of waste. The mine lends itself to strip mining methods after which the ore is crushed, washed and screened before being railed to Highveld.

Highveld’s iron and steel works annually produces around one million tons of steel blocks. Of this, 40 per cent is used to manufacture structural sections, engineering rounds and rails; and 45 per cent to manufacture plates and coiled plates and sheets. The balance is used to cast billets to be sold for re-rolling but provides a useful reserve to satisfy extra demand for its own sections.

Other products of the iron and steel works are titaniferous slag and high grade vanadium slag. The former is used effectively in blast furnace operations to prolong furnace life. The steel plant produces vanadium

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H i g hve l d S t e e l a n d Va n a d i u m C o r p o ra t i o n

Harsco Metals Harsco Metals has a long and proud association with Highveld Steel, providing resource recovery services on site. Highveld Steel’s innovative solutions for steelmaking echo our own solution-driven approach to metal recovery and slag recycling around the world.

Mukundi Mining Resources An aspirant global leading mining company.

MMR’s vision is to create superior value and benefits on a sustainable basis for all its stakeholders, ensuring that everything we do and deliver today will enable others to realise their vision tomorrow. Striving for excellence and looking after our people are firm commitments in ensuring sustainable growth; and for us “excellence” is an attitude not a skill.

slag which is used to produce high-strength steel alloys.

Owing to the high titanium content of the magnetite ore Highveld receives from its Mapochs mine, it cannot be smelted in the same way as more common iron ores in a conventional blast furnace, which relies on the presence of a large excess of carbon to reduce iron oxide to metallic iron.

Should this process be used to smelt magnetite ore, the carbon reduces the titanium dioxide content to titanium sequioxide, which then combines with the air blast to form titanium nitrides and carbides. This results in the precipitation into a solid agglomeration which shuts down the furnace by choking up the blast passages.

Highveld’s own innovative method of smelting the magnetite ore involves a preliminary ‘pre-reduction’ stage.

The ore is mixed with coal and fluxes, fed to rotary kilns and heated. This effects a degree of oxygen removal from the iron ore and complete charring of the coal; the danger of a titanium reaction is then eliminated. The pre-reduction stage, because it makes use of coal and not coke and has the effect of lowering the power requirements of the

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smelting, results in a cheaper iron-making process.

The hot pre-reduced charge from the pre-reduction kilns is smelted in submerged arc furnaces. The titanium separates from the molten pig iron and forms a dense slag which can be drawn off at the start of tapping. The molten pig iron contains about three per cent carbon and about 1.25 per cent vanadium. In Highveld’s steel plant, the hot metal is agitated and oxygen blown in shaking ladles to remove the vanadium. In all, the Witbank steel works consists of an iron making division, a steel plant equipped with four shaking ladles for vanadium extraction, three basic oxygen furnaces, four continuous casting machines, a universal structural mill, a plate mill and a hot strip mill.

Iron and steel plants have a great capacity for producing pollutants and Highveld goes to great lengths to remain a good neighbour. All plants which could discharge effluents are fitted with equipment to prevent this occurring. The functioning of the equipment is monitored constantly and Highveld liaises on an ongoing basis with the relevant government departments. It has also invested heavily in the most modern technology to prevent noxious fumes being released—each furnace, for example, is equipped with wet gas scrubbers that clean the gas generated during the smelting operation and collect it into holders—from where it is used as fuel for heating purposes in the works.

Steel making Molten iron is delivered from the iron plant to the steel plant in rail-mounted hot metal transfer cars for charging into a series of shaking ladles. After scrap has been added, the ladles are transported by crane to one of four shaking emplacements which are equipped with water-cooled hoods to collect the waste gases and fumes generated during the vanadium separation process. Wet scrubbers are installed to clean the fume emission.

After the extraction of vanadium as a solid slag, the metal is taken to one of three basic oxygen furnaces. A scrap metal charge is added and oxygen is blown on to the molten metal through a water-cooled copper tipped lance. Hoods fitted with a tubular water-cooling system and positioned immediately above each furnace collect the waste gases for delivery to a dry-plate electrostatic precipitator where pollutants are removed.

The

steel

is

transferred

by

car

and

crane

to the continuous casting plant via the ladle refining stations, where temperature adjustment, desulphurisation and final composition adjustments are carried out.

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Rolled steel flat products Plate is rolled in the plate mill section of Highveld’s flat products complex. The continuously cast slabs are cut on flame cutting rolled beds to the sizes required for rolling and heated in a gas-fired pusher-type reheat furnace. On discharge from the furnace, the slabs are subjected to high-pressure descaling sprays, after which they are formed in a four-high reversing mill stand to plates of the required dimensions.

Coils of plate and sheet or ‘strip’ are produced in the hot reversing strip mill section of the flat products complex. Slabs which will eventually become strips for coiling are first rolled in the plate mill down to a thickness of 35mm, then transferred to the strip mill by roller table after descaling.

When the desired gauge of strip is achieved it is run out of the stand on a roller table where it is cooled from above and below by water sprays to a carefully controlled temperature in order to achieve the required mechanical properties. An up-coiler situated at the end of the water spray system then winds the strip into the final coil form.

Although the recession and general market uncertainty forced Highveld into suspending some of its capital projects, the plant nevertheless is still undertaking a number of projects designed to upgrade and modernise those areas directly linked to increasing output and efficiency. The longterm business strategy remains unchanged. Highveld will continue to increase production efficiencies and quality and rationalise products in terms of market demand and expectations, while actively seeking a wider international customer base. www.highveldsteel.co.za

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The goldenth 44

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Neotel

hread Dr Angus Hay, head of Technology with Neotel, South Africa’s first converged communications network operator, talks to Jayne Flannery about the golden thread of converged connectivity that runs through the company’s service offering

N

eotel’s head of Technology Dr Angus Hay sometimes likes to use the tagline “South Africa’s first converged communications network operator” to describe the company, which was launched in 2006.

“It is important that we define ourselves carefully,” he states. “We are an infrastructure based provider with a national network, but the real differentiator is our focus on delivering national and international services over fibre. At present

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Nokia Siemens Networks Nokia Siemens Networks supports Neotel in delivering superior

services.

Nokia

Siemens

Networks

and

Neotel share a long-standing relationship, having worked together to deliver high-quality voice and data services to Neotel subscribers since its inception in 2006. As a leading telecommunications infrastructure provider in the Middle East and Africa region, one of the most strategic markets for fixed and mobile operators, Nokia Siemens Networks has demonstrated unwavering commitment to Neotel. It has provided the operator with world-class offerings, including solutions for internet protocol, transmission networks and optical fibre deployments, and managed services.

Nokia Siemens Networks takes this opportunity to wish Neotel continued success and growth.

we are the only IP player that is infrastructure based and making a direct fibre connection to customers, offering voice, corporate data and internet through a single connection. We may have a strong focus on IP for our services, but we go far beyond the internet.”

So Neotel provides everything from a telephone handset at home, to state-of-the-art data warehousing and transmission for some of Southern Africa’s largest companies. Other services include virtual private networks, hosting and satellite services. The company holds various telecommunications licenses as well as the Electronic Communication Network Service License.

As a relative newcomer to South Africa’s telecommunications market, Neotel is unburdened by the outdated legacy technology that characterises older market players. Then there is the powerful advantage derived through a close relationship with India’s globally renowned Tata Group, which is Neotel’s largest

“At present we are the only IP player that is infrastructure based and making a direct fibre connection to customers, offering voice, corporate data and internet through a single connection”

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Neotel

Spescom Telecommunications Spescom

Telecommunications

is

a

systems

integrator providing solutions for fixed and mobile telecommunications

network

transportation

government

backbones,

and

and

for

carrier

operators,

utilities,

communications

network

operators’

transmission and access networks. It has presence in the major centres of South Africa and is targeting the Southern African Development Community for further growth.

Products and services include NG SDH, DWDM, carrier Ethernet, IP transmission, xDSL, GPON, VSAT, WiMAX and other solutions for compression, optimisation

and

protocol

conversion.

Spescom

Telecommunications has the skills and expertise to plan, engineer, build, install, commission and support the transmission and access networks, thus allowing operators to focus on providing connectivity and broadband services to businesses and consumers.

shareholder with a 56 per cent holding. Tata Group is highly diversified, but as part of its communications portfolio, it is one of the world’s leading contenders in submarine fibre networks. Tata Communications is also a Tier One internet services provider operating on a global platform and carries the largest number of voice minutes of any international wholesale voice carrier.

“We benefit enormously from Tata Communications’ global communications network which in itself has a unique capability. Not only can we leverage a very powerful shareholder, but we can also integrate into its global network,” says Hay. The majority of Neotel’s revenue comes from corporate enterprise and wholesale services to other carriers, but the company also serves consumers and small businesses directly. The current infrastructure extends to a national optical fibre network that measures more than 10,000 kilometres, with a further 4,000 kilometres in major metropolitan centres.

When it comes to state-of-the-art, metro ethernet services, Neotel is a leading provider and has the highest

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speed and performance service in the South African market, offering speeds of one gigabit per second which is on a par with the fastest services to be found anywhere in the world. It was also the first provider of metro ethernet in the market. “We run a DWDM optical transmission backbone,” Hay explains. “On that backbone, we then have multiple circuits and offer an IP network on one side and synchronised digital transmission services on the other. We aim to provide as many corporate services as possible via fibre in preference to old-fashioned technologies. We make no use of copper fibre, DSL, or any of the older voice technologies. Neotel places tremendous emphasis on delivery via optical fibres.”

For corporate clients, there is also the additional value of Neotels’ substantial data hosting capability.

“We offer amazing data services, but we also offer tremendous savings and value for money in our voice services” One data centre in Johannesburg is already live and another one is due to go live very soon in Cape Town.

“It will give us a very substantial hosting capability that is connected not only to national networks, but also internationally,” he adds.

Drilling further down the customer base, some use is made of wireless platforms. The aim is to use a blend of technologies in line with the nature of demand, but Hay emphasises that Neotel would never want to be viewed purely as a mobile operator or restricted to any one activity. “The golden thread to all our services is the mix of services we offer down to our smallest customers who can take advantage of both high speed internet and voice services,” he says.

Hay wants Neotel to be seen as a company that challenges the established order and overturns the status quo. “We offer amazing data services, but we also offer tremendous savings and value for money in our voice services. We are not a mobile operator, but we can still offer the cheapest calls to mobile phones, for example.

Previously there was limited competition in the voice market which meant high prices. Now that is no longer the case and we are very aggressively reducing prices.”

Meanwhile, Neotel is consolidating its first mover advantage. A new optical fibre loop is under construction as the company launches a fibre based broadband

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Neotel

Urwees (Pty) Ltd PowerTrip™ Surge Protective Devices incorporate advanced voltage responsive and frequency responsive circuit

technology.

Utilising

proprietary

electro-

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business direct to the building for corporate customers.

“This will change the paradigm for broadband in South Africa,” he states. “At present no such service exists in South Africa but we firmly believe that fibre based broadband services must become the norm in future.”

Hay explains that as well as pioneering a new optical fibre infrastructure, Neotel was also the first telecommunications company to break the monopoly on South Africa’s submarine cable network. It is still the only player connected to all three existing submarine cable networks, as well as those that are planned in the future.

Neotel has invested R80 million into the Eastern Africa Submarine Cable System (EASSy) consortium— the cable goes live around August this year. Then in

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Neotel

2011, the West African Cable System (WACS) network goes live. The addition of EASSy in particular will significantly boost international bandwidth capacity and redundancy and increase internet connectivity competition in South Africa. “When we have access to five cables, we will look much more like Western Europe; and it will change the way South Africa integrates into the global internet,” he comments.

At present, Neotel is licensed only in South Africa and Hay does not envisage taking out further national licenses

in the foreseeable future. However, he is committed to seeing Neotel leverage its optical fibre backbone to gain market share as a cross-border services provider within the wider SADC market.

“Our target market is very much Southern Africa, not South Africa; and we already have a number of very large clients in other countries using our services. It is because we have taken such an active stance to connect to all the available networks that so many companies want to work with us,” he concludes. www.neotel.co.za

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you weresleepi

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F a s t ‘ n F r e s h Tr a n s p o r t S e r v i c e s

Fast ‘n Fresh Transport Services transports today the perishable goods South Africans will buy tomorrow. Managing director Gavin Wilson tells John O’Hanlon how lateral thinking and innovation has helped the company keep its lead in the fast moving consumer goods logistics sector

ping

F

ast ‘n Fresh is a wholly owned subsidiary of the Imperial Group of companies, the holding company being listed on the Johannesburg Stock Exchange.

An operating company within the Consumer Products division of Imperial Logistics, Fast ‘n Fresh has its headquarters in Cape Town. It services the entire country from there and from a large and very modern distribution and fleet maintenance facility that was commissioned in Centurion, Gauteng, early in 2007, as well as a smaller depot in Durban.

Gavin Wilson has been leading the company for 10 years, having joined at the crucial moment in its history when it won a contract to supply fast moving consumer goods (FMCG)—mainly food but including some textiles—to South Africa’s leading retail chain, Woolworths. Over the years this has developed into a key relationship: the original five-year agreement was renegotiated in 2006, and discussions are underway

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to extend it further. “We had to change our entire company mindset to comply with their very stringent service-level agreement,” Wilson says. “Woolworths has the country’s most efficient and cost-effective retail supply chain—and we play a large role in that.”

As well as benefiting this key partnership, Fast ‘n Fresh’s 24/7 culture plays an important part in the relationships it has developed with some of South Africa’s most demanding food manufacturing companies, from Famous Brands, with its large range of fast food outlets, to Nestlé ice cream, Nature’s Choice, Tiger Brands and The Real Beverage Company.

To keep all these customers happy, Fast ‘n Fresh currently has a fleet of 245 trucks and refrigerated trailers. Of the mixed fleet, the majority of the trucks are Mercedes-Benz products because of their reliability and environment-friendly attributes. “Most operators in this country have just about reached the Euro 3 standard for diesel emissions,” Wilson explains. “But we have taken a bold step. In an agreement reached with Woolworths and Mercedes-Benz we are importing more technically advanced and environmentally-friendly Euro 5 vehicles from Germany this year, way ahead of all our competition.”

The first batch will arrive in July/August. In addition to significantly lower emissions, the Euro 5 engines will also give better fuel consumption. Fast ‘n Fresh has been driving a policy of environmental responsibility for some time, Wilson adds. For the last two years it has been operating its fleet on a five per cent biodiesel blend—the maximum currently allowed by the vehicle manufacturers. Now it is turning its attention to its trailers, by commissioning four ecoFridge refrigerated trailers.

The Ukraine-manufactured refrigeration units are nitrogen powered and completely harmless to the environment. They will be emission free, silent running, virtually maintenance free and up to 30 per cent less expensive to operate than competing systems. Once again, Fast ‘n Fresh is the first to introduce these to the roads of South Africa, and the benefits will be apparent to the customers as well as to the operator.

It’s an important part of Fast ‘n Fresh’s strategy to operate round the clock, says Wilson, and to encourage its customers to accept deliveries at night as well as during the day. “By travelling at night when the roads are less congested we can stick more closely to our schedules and gain better fuel efficiency, as well as reduced emissions.

But many of Woolworths’ stores are in residential areas, so noise reduction is an important issue. You can kill the truck engine while you unload, but the refrigeration unit

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F a s t ‘ n F r e s h Tr a n s p o r t S e r v i c e s

“Woolworths has the country’s most efficient and cost-effective retail supply chain—and we play a large role in that” has to go on running: so these completely silent units make out-of-hours delivery much more acceptable.”

While flexible working hours make sense commercially, many companies still have a five-day week, nine-to-five mindset, so Fast ‘n Fresh is endeavouring to convert its customers to the undoubted benefits of change. “Our culture is to take advantage of every opportunity. We incentivise customers to also operate this way.” Fast ‘n Fresh will help with offloading, for example, and now 80

per cent of its business is on a 24/7 basis. This means optimal utilisation of assets and improved productivity for both parties: from the customers’ point of view, it enables them to carry less inventory and at the same time carry a wider range of products and so improve sales and customer retention. Everybody wins.

Still, operating like this comes with some challenges.

It’s not easy to get drivers to work the unsociable hours; and it is unfair to expect them to get to work or

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back home again when public transport is not readily available. Fast ‘n Fresh’s solution in Gauteng—its busiest area with 215 Woolworths stores—is to outsource driver transportation to a BEE (black economic empowerment) company. “Whatever the time, we collect our drivers from their homes and take them back at shift change. They don’t get excessively tired and they don’t lose time. The customers benefit from a much more reliable service.”

Any modern logistics company needs a fit-for-purpose transport management system (TMS) to manage driver and asset scheduling and utilisation, payroll and the like. Fast ‘n Fresh has its own IT department which developed the bespoke system it uses. At its core is the transport operations and planning module; and it also has a maintenance module for all the trucks and trailers. “Now we are developing software tools to give us dynamic scheduling capabilities: while we would normally plan seven days in advance, updating that every 24 hours, there are situations where things change and

the need arises to urgently create a dynamic schedule for just one day. In addition, we are developing software to plan tactically by simulating different scenarios.”

All this management information helps Fast ‘n Fresh’s efficiency and also benefits the customers, Wilson emphasises. “We use it to provide customers with management information about movement of their stock, and trends.

“I would attribute our overall and financial success over the years, with double-digit growth year-on-year, to our excellent team of people,” Wilson asserts. Fast ‘n Fresh believes its investment in training is money well spent and is very proud of its ‘Mini MBA’ management development programme—classroom training linked to projects across the company’s disciplines. The trainees, as a result, are better equipped and more knowledgeable in managing the company’s strategies.

“If you have happy staff, you have happy customers,” he concludes. www.fastfresh.co.za

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Stefanutti Stocks Marine

yed

success

by

Since joining forces with a larger company, Stefanutti Stocks Marine (previously known as Civil & Coastal Construction) has continued to thrive, taking on bigger and more lucrative projects than ever before. Andrew Pelis talks to Simon Allen about the many benefits that have arisen from the change in ownership

B

ecoming part of a big family in the corporate sense can be quite daunting; and it is essential that the benefits outweigh the challenges. Such was the thinking for one South African company back in 2007, at a time when it had reached a commercial crossroads.

Simon Allen, managing director at Cape Town-based Stefanutti Stocks Marine, takes up the story: “The original business, Civil & Coastal Construction, had reached a point where we were on the cusp of two major projects and realised that they were too big for a two-man business to take on. My colleague Greg Moore (who founded the business in 1992) and I needed more help on the financial side and it was time for us to bring

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Stefanutti Stocks Marine

WML Coast WML Coast has partnered with Stefanutti Stocks Marine on several turnkey projects. We continuously strive to add value by providing creative engineering solutions towards the execution of civil, coastal and marine construction projects. From winning concepts to focused attention to detail we make the difference in our service.

“We now have the feel of a large entity and our outlook is much more structured in areas such as the tendering of bids and financial reporting” a big brother on board, to help with our methodology, systems and technical and commercial infrastructure.”

It was JSE-listed Stefanutti Stocks, one of South Africa’s leading engineering and construction groups, that took up the challenge. With an annual turnover in excess of R7 billion and the drive to operate as a multi-disciplinary leader in the construction economies of Africa and the Middle East, the Stefanutti Stocks Group was the perfect match for Civil & Coastal’s aspirations and by September 2007, the change in ownership had taken place.

“Today we are essentially a specialised marine civil engineering division offering turnkey solutions to clients,” Allen explains. “We are a one-stop design and civil engineering construction contractor and have delivered successful solutions not just here in South Africa but also across the continent in locations such as Angola and Tanzania, working on technically challenging projects.”

The input from Stefanutti Stocks has led to major changes that Allen feels needed to happen, which have had a profound and beneficial effect. “Back in 1994 when I joined the company we were a very small business and a R50,000 project constituted significant work for us. Today, we are operating on projects valued at over R1.2 billion.

“Back then our workforce stretched to no more than ten people and today we employ hundreds,” he continues. “But the main change was in our approach to business—we now have the feel of a large entity and our outlook is much more structured in areas such as the tendering of bids and financial reporting. We have also focused more attention on our systems, health and safety and methodology.”

Allen says that the safety aspect in particular has been an important development. “Within the group we have to hold our own financially; but equally, our safety record is essential to our success. Prior to the buyout we did not have a NOSA grading (for occupational risk management) but the culture of the organisation has seen us increase the number of safety officers on each site and each tender includes safety methodology, while we carry out hazard mitigation every day. Another initiative has been to attain ISO9001:2008 accreditation, a feat achieved last month and one which further enhances our prospects.”

The buyout has also provided much-needed funds for new capital equipment and investment has been made in upgrades to cranes and specialist marine (floating) plant and machinery. This, he says, gives the business an advantage once the client gets to hear of its capabilities, as such equipment is not always readily available in Africa. “The group realises that now is a good time to invest and upgrade and we will hopefully see the return over the next couple of years,” Allen suggests.

Stefanutti Stocks Marine became the new name for the division in March and Allen and his team are busy ensuring existing and prospective clients are aware of the team behind the new brand—crucial given the group’s excellent reputation—as it carries out its work.

“We have worked on a number of high-profile projects,” Allen states. “Perhaps our flagship fullycompleted project to date has been what we call the Gravity Base Project in Simonstown, where we built a large block of concrete in the naval dry dock for Dresser Kellogg Energy Services. We then floated the 2,500 ton box out of the harbour and put a lid on it; the block was then towed offshore and successfully sunk to the seabed, 100 metres underwater. This was a world-

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“Now is a good time to invest and upgrade and we will hopefully see the return over the next couple of years” first project and we were awarded with the SAFCEC President’s Award that year. We have also been building a large dock and jetty in Angola for the Cabinda Gulf Oil Company which is now nearing completion,” he adds.

Allen is hoping that opportunities to expand internationally will continue to increase. “We work closely with Transnet here in South Africa [the port operator for the country] and they know our capabilities, the quality we deliver, the safety aspects and our methodologies.

“However, the South African market constitutes around half of our business and the other half (overseas) is largely private sector at present. At the moment, there is a major focus across Africa to deepen, widen and upgrade existing ports and we have tendered bids in countries like Kenya and Tanzania, while there are also plans for development in Ghana and Sierra Leone. The key issue is going to be the availability of funds, in order

to keep these projects going. Lots of ports are dependent on container volumes and that of course is determined by market forces and the state of the economy.”

That said, Allen feels the current lull in the marketplace has enhanced competition: “There is probably more rivalry out there today than three years ago,” he admits.

“We have seen new entrants from the civil engineering sector competing to broaden their services as the economy has taken a downturn. We therefore guard our designs and methodologies carefully as we believe these are essential components of our bids.

“Times are quiet but this is the time to regroup and get ready for the upturn. Our parent company is engaged in the Middle East, but while these locations give us further hope for the future, our focus is to get into the rest of Africa first.” http://www.stefanutti.co.za/Home/ BUSINESS-UNITS/Structures/Marine.aspx

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Projec an Technip Iberia sees its clients counting their pennies, or cents, but it has a plan. Keeping its established customers happy while expanding its global activities will see it safely into post-recession growth, as Jerónimo Farnós, director general of this major Spanish engineering and construction company, tells John O’Hanlon

W

hen you look at the list of completed projects on its website, you’d be forgiven for thinking that Technip Iberia (TPI) has single-handedly built the entire industrial part of Barcelona. When I put it like that to Jerónimo Farnós he demurred; but there’s no denying that Technip has had a hand in a very large number of developments over its 38-year history.

TPI’s headquarters is in Barcelona where it employs some 250 people; there is a production office in Tarragona employing a further 100 staff; and a small commercial office in Madrid. From these offices, TPI is active throughout Spain, having completed projects in almost all industrial sites in the country.

TPI is the Spanish arm of the international Technip Group, headquartered in Paris but with major operations on every continent. These days it is no longer involved in lump sum turnkey construction as such, but specialises in project management, planning and cost control, procurement and inspection, design and engineering, site management and all the complex work necessary for the delivery of complex installations and building on time

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and on budget. “We are focused on two main areas,” says Farnós. “The first is working directly with our principal Spanish clients, such as Repsol, Cepsa or Enagás. The second is our international clients with facilities in Spain like Dow Chemical, BP, BASF, BAYER and many more. We are active in nearly all industrial sectors, but especially chemicals, food, fuel storage, gas, industrial gases, energy, petrochemicals, pharmaceutical and refining.”

But TPI is increasingly involved in the Technip Group’s global activities too, providing personnel and support to far-flung EPC jobs like the recently opened Dung Quat oil refinery—the first in Vietnam—for Petrovietnam, and a ConocoPhillips project in Germany. Such projects now take up to a third of TPI’s resources, he says. “These are usually multi-centre projects with a hub that coordinates project management and everything else with the collaboration of other centres.” TPI is very experienced in this, and frequently undertakes the detailed engineering and procurement parts of the project, he says.

Like all firms that depend on the spending decisions of clients, TPI has been noticeably affected by the recent credit crisis. Industrial production in Spain is down to under 70 per cent of its maximum capacity. After a boom year in 2008 with a turnover of around €35 million for engineering services, TPI got though most of 2009 in good shape, though the workload began to fall off in the fourth quarter, and 2010 is going to be more difficult, Farnós predicts. “The longer term projects are now complete, or in the final phase, and we didn’t secure any really big new ones last year. But it’s not all bad! We have a sound basis of technical work from our regular clients, and many small projects of up to €1 million. We have won some medium-sized jobs and are hoping to tie up others in the second half of this year.”

The emphasis domestically has shifted from major new construction to revamping existing facilities as clients focus on cost efficiency and in a few cases, capacity extension. “We have adapted to this in two ways: by giving our existing clients the best support we can for the work they have to do and by moving into the export market, where there are longer term, larger contracts. We are also trying to enlarge our base and work in more diversified markets.” No particular sector seems to be booming at the moment, he says regretfully, so it is imperative for TPI to cover all the bases and increase the amount it is doing in the energy sector, get involved with waste treatment units in Spain and become more involved in foreign markets.

There are regions in the world—the Middle East is an example—where investment has continued apace; and others where it is already picking up after the recession.

TPI is already very active in the global Technip operations, with 10 per cent of its personnel located overseas at any one time. “This gives them good exposure to international projects and techniques, and working with international clients. Our international activity is especially important for us today.”

He emphasises that a consulting and engineering organisation like TPI stands or falls by the quality of its staff. Each year, it runs an extensive training plan to bring its team of professionals up to date with the latest technical knowledge.

These training courses and seminars—in-house or at external organisations—cover both general and technical aspects, such as specific courses for optimum handling of available tools (with special emphasis on the PDS-3D system and auxiliary modules). “We have a lot of HR initiatives in the company, one of which—Human Resources Without Borders—helps us to be more ‘global’ than we already are.

It develops people and skills from an international and not just a local viewpoint, and has a very innovative programme that delivers training and assessment over the internet. At a corporate level, the Technip University is open to the worldwide family of companies.”

The strategic objective is to train people better in the legislation, safety requirements and regulation they will encounter in different projects as well as giving them the technical tools for engineering, project management, financial control and the like. Equally, Technip feels that it is essential to expose its people to best practices on a global scale by fostering mobility and equal opportunity, says Farnós.

And TPI is still very much involved in flagship projects in Spain. A good example is the EPC contract to build a hydrogen plant at the Spanish oil company Cepsa’s Huelva refinery, in collaboration with Technip’s operations and engineering centre in Zoetermeer, Holland. This is an upgrading project of the type Farnós was talking about, but one sector that is still attracting new investment is liquid natural gas (LNG), brought in by tankers from overseas and regasified locally for the grid. TPI is in the middle of a four-year contract, due to complete in 2011, to upgrade the huge Enagás LNG terminal at Barcelona.

“They are building a new jetty and four new LNG tanks, each of them having a capacity of 150,000 cubic metres.”

It’s not an easy time, Farnós concludes, but Technip Iberia is a solid company within a solid and well financed group, and he is confident that its continued investment in training, as well as its impeccable track record, will secure its future profitability and expansion. www.technipiberia.com

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Electrifyi the

nation Barrie Badenhorst, general manager of Trans-Africa Projects, speaks to Jane Bordenave about the company’s successes in the power industry across the African continent and beyond

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Tr a n s - A f r i c a P r o j e c t s

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onsultancy firm to the power industry TransAfrica Projects (TAP) was formed in 1995 as a joint venture between the South African power utility giant Eskom and the American company Fluor Daniel. It was originally founded for the sole purpose of executing the refurbishment and reconstruction of the ±533 kV HVDC transmission line from the Cahora Bassa dam in Mozambique to Pafuri at the South African border for Hidroelectrica de Cahora Bassa.

“The project was finished two years later and was a huge success,” says Barrie Badenhorst, general manager at TAP. “We returned to Eskom and Fluor Daniel and at this point, seeing the results we had achieved on this project, the two decided to keep us in business and look for new projects.” To this day, Fluor Daniel and Eskom remain the sole shareholders, each having a 50 per cent split of the company.

What makes TAP different to other project management and ECPM consultancies is the resources and expertise at its disposal. “With the 50/50 shareholder situation as it is, we have at our disposal a vast amount of technical and engineering resources from Eskom, and financial management and project controls on Fluor Daniel’s side,” says Badenhorst.

This situation means that TAP can offer clients a ‘onestop shop’ for transmission and distribution services.

It also allows the company to offer its customers fully customised designs, rather than taking a standardised approach. “The designs we do can be very detailed—even more so than normal, depending on our clients’ needs,” explains Badenhorst, “and with the full access we have to Eskom’s mechanical and electrical testing facilities for lattice steel towers and conductor configuration, high voltage lines and transmission towers, we are able to enhance our design solutions and offer optimised designs specific to our clients’ requirements. We also have access to a great arsenal of existing towers design which has been proven in the field. This kind of caseby-case research and development capacity is very unique in our business.” When considering the fact that TAP’s specialism is high and extra high voltage projects ranging from 132 kV to 765 kV, the benefits of this kind of facility become all the more clear.

Until recently, the company had not carried out any projects within South Africa and had done little work for Eskom. However, in 2003 when the capital expansion market picked up, it began working to support Eskom

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at a local level. “We were able to bring nearly ten years of competitive experience in the outside market to the table,” says Badenhorst. “When Eskom needed help to grow projects, we cut back on our external marketing and brought ourselves back in house.”

Nevertheless, the firm’s main business focus currently and for the future is in overseas markets—it has already seen great successes in African countries such as Botswana, Namibia, Mozambique and Democratic Republic of Congo; as well as further afield in India, Australia, China, Indonesia and others. “We have created an international reputation for ourselves and this is something that we want to build on, not abandon,” asserts Badenhorst.

One area that is of particular interest to the organisation is wind energy, which it first ventured into in 2009. “This is a growing market around the world, and one in which we want to increase our activities,” he says. “We are currently carrying out studies in South Africa for several wind farms totalling 6,500 MW and we hope to be

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involved in more projects of this kind.” In addition to this, the company also offers clients the most efficient models of energy transmission, using a probabilistic design approach for the various design components at the very earliest stages of a project. Taking this approach at the planning stages of the task, where the blueprint is based on the actual factors that will affect the final product once it is in place, has the additional benefit of reducing costs. It is another example of TAP’s customised approach to commissions, rather than the ‘off the peg’ attitude taken by some competitors.

Another important factor setting TAP apart from competitors is its training schemes, which it offers not only to its own staff, but also to people from outside the company. It is so well regarded and offers training in such desirable skills that companies from all over Africa send their employees to attend—including Eskom itself. The courses on offer include planning, design and construction of overhead lines, substation engineering, operations and maintenance of lines and substations, site supervision for lines and substations, PLSCADD and PLSPOLE. “We consider our people to be our most valuable assets; and clearly with the kind of work we’re doing, we need skilled people,” says Badenhorst. “We run the courses two to three times a year and use them for our own staff as a continuous professional development and continuous skills development scheme, as well as inviting other outside utility companies to attend. These training sessions are very popular and we have had uptake from companies based in all the countries bordering South Africa.”

TAP is fairly unique in having access to the resources, skills and expertise of its shareholders, while at the same time maintaining its autonomy. It has built a standalone reputation for skilled work that precedes it in most countries around the world, with potential clients approaching it for work on new projects, as well as the other way around. And it has gained a foothold in the green and renewable energy market as it is beginning to take off—another valuable string to its bow.

The company prides itself on offering its customers a comprehensive service—right down to engaging in the procurement aspect of a project if so desired.

Firms like this are so few and far between that TAP has found that, having fully cornered its market, it is able to take advantage of opportunities around the world. As a growing company with an eye on emerging markets, TAP will certainly continue to provide the best in consulting and more to the power industry for a long time to come. www.taprojects.co.za

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Greener

thinking Black-owned South African exploration company Sekoko Resources has a far reaching vision and ambition. Moss Radingoana talks to Gay Sutton about coal, platinum and iron exploration in Limpopo Province, and the plans to diversify into power generation and iron smelting

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Sekoko Resources

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ne of the first things that South African exploration company Sekoko Resources did when it was launched in 2004 was to establish a solid foundation for long term growth through the acquisition of a significant portfolio of exploration interests in Limpopo Province. Six years down the line, those interests range from coal bearing properties in the Waterberg, Tuli and Mopane coal fields in the north of the province, through to platinum group metals (PGM) on the eastern and western limbs of the Bushveld igneous complex in the south, and iron ore in the Capricorn region, north of Polokwani.

“Our mission is to explore, develop and operate coal, magnetite iron ore, PGE and associated base metals mining operations with key partners, and to do this in a sustainable way,” says Moss Radingoana, VP of Corporate Support Services and Sustainable Development. For each of its projects, Sekoko’s strategy is to establish joint venture partnerships on both the financial and technological level, through which it can progress from exploration to mine development—either with a view to continuing the asset development, or for sale or IPO. Sekoko’s flagship project is the Waterberg coal joint venture project, located on eight farms in the Waterberg coal field, an area of just under 8,000 hectares. Since announcing its partnership on the project with Firestone Energy and Uzalile Investments in 2008, exploration and development have progressed quickly.

A bankable feasibility study on the project is currently in preparation, and engineers have been appointed to design and build facilities for mining and processing coal from the proposed open pit. Environmental and engineering firm Cabanga is taking care of the environmental permitting and regulatory compliance processes, and a study is currently in progress examining the railway system for transportation of the coal to the Port of Richards Bay, either for export or for transportation to locations in South Africa.

In the meantime, permissions are in place for small-scale production to commence, with delivery in the initial stages either via conveyor belt or road transportation.

“Through focused exploration, our Waterberg project is rapidly becoming established as one of South Africa’s largest undeveloped coal deposits, and long term forecasts suggest demand will increase strongly,” Radingoana says. Historically, washed coking coal from the Waterberg coal fields has been sold to the national and international steel industry, but as the recovery sets in, demand is expected to rise substantially, particularly in China, and India. “Once we reach full production we expect to produce approximately three million tonnes per annum of washed export-grade coking coal.”

Sekoko has a number of other projects at various stages of development. The Tuli coal project, for example, is still at initial exploration stage. Considerable resources are also being invested into initial exploration at two PGM projects. One, at Sekhukhuneland on the eastern

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Earth Resources (Pty) Ltd Earth Resources (Pty) Ltd is a private company incorporated in South Africa. Earth Resources carries out mineral exploration drilling in sub-Saharan Africa for mining and exploration companies. The techniques offered are as follows: diamond drilling to 2000m depth (BQ – PQ), airflush drilling and coring (ZWF – 165mm Ø), reverse circulation and aircore drilling (drill fluids and pneumatic), simultaneous casing, large diameter percussion and rotary (470mm Ø) and geotechnical drilling.

Gemecs Gemecs delivers geological consulting services to the mining industry. Our team of consultants has experience in coal, platinum, manganese, chrome and uranium. We are familiar with all the coal fields within the Southern Africa region. Gemecs successfully assisted Sekoko Resources with exploration, core logging, training and geological modelling to ensure the success of the Waterberg coal project.

limb of the Bushveld complex—the world’s largest known reserve of PGMs—is located mid-way between two well established and productive PGM mines. The exploration is being managed as a joint venture with Khumo-Bathong and Lesego Platinum and its aim is to identify geological terrains with the potential to produce several million ounces of PGE deposit at an economic grade.

The second PGM project, on the western limb of the Bushveld complex near Thabazimbi, is run as a joint venture with Peloton Capital and Nkwe Platinum.

To date, the efforts have been focused on assessing, exploring and evaluating the mineral resources for commercial exploitation.

Finally, Sekoko has reached the initial exploration and pre-feasibility study phase on the magnetite iron ore project in the Capricorn region. The company is targeting an unweathered magnetite quartzite resource of between 300 million and 600 million tonnes, which is thought to be capable of producing and bringing to market 20 million tonnes of magnetite concentrate per year. “Preliminary metallurgical tests have delivered excellent results,” Radingoana says, “showing high recoveries and low contaminant levels.”

If further exploration is successful, the site could

have the potential to produce economic resources of high quality magnetite iron, from which export grade iron pellets and pig iron can be produced.

Perhaps the most exciting and forward-looking of all Sekoko’s activities, however, is its examination of new sustainable technologies which could see it diversifying into oil production and power generation. The company has already committed to developing a sustainable iron ore smelter facility and export business alongside the Capricorn project, and this focus on the environment is a key element in the company’s strategic planning.

“If oil becomes too expensive, what are the alternatives? This is an important question for Sekoko and for South Africa,” Radingoana says. The issues, he believes, are threefold. Firstly, production of conventional oil has been struggling to keep pace with rapidly rising world demand, and as a result, oil prices have more than doubled since 2002. Secondly, South Africa depends on oil for over half of its consumer energy and 70 per cent of its transport energy—and most of this oil is imported. Thirdly, there is climate change. If there are economic alternatives to oil, will they be environmentally acceptable?

“To address this question, we have commissioned a ten-month feasibility study exploring the development of an integrated standalone greenfield coal-to-liquids (CTL) and co-generation power facility that would produce approximately 50,000 barrels of synthetic fuel and 300 megawatts of power per day based on our coal assets at the Waterberg project.”

CTL is a proven technology capable of converting coal into gas and synthetic fuels, and the associated combined-cycle power units have been shown to produce around 20 per cent less CO2 than conventional coal fired plants—a figure that can be further reduced with carbon capture technology. However, the company believes that future generations of carbon capture technology could potentially reduce CO2 emissions to zero, and it has therefore commissioned a team of consultants to explore the possibilities of future technologies.

Keen to play a part in securing South Africa’s energy independence while taking strides to reduce its environmental impact, Sekoko is currently examining the options for financing a private greenfield combined CTL/power project in South Africa, including possible risk sharing arrangements with the national power company Eskom. If successful, such a harnessing of locally produced coal and new technology could pave the way for a greener and more secure future. www.sekoko.co.za

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RioZim

foundation

A

renewal

for

Mining is a long term, high risk business that requires a stable regulatory environment.

RioZim, Zimbabwe’s leading indigenous mining group, believes that a certain level of clarity, consistency and transparency on these key issues is a must for the country if it is to attract investment into the mining industry

R

ioZim dates back to 1956, when it was incorporated as Rio Tinto Southern Rhodesia, set up initially to exploit the Empress Nickel deposit in Kadoma. In 2004 it span off from its global parent and is now a listed company on the Zimbabwe Stock Exchange. RioZim currently operates the Renco Gold Mine in south-east Zimbabwe and the Empress Nickel Refinery (ENR) near the city of Kadoma in central Zimbabwe. The group also owns 50 per cent of the Sengwa coal mine in Gokwe North and retains a 22 per cent interest in Rio Tinto’s Murowa Diamonds, Zimbabwe’s largest diamond mine.

In common with much of Zimbabwe’s industry base, RioZim has had problems in recent years with maintaining its assets and has been affected by the poor state of the country’s roads and its unreliable power supply. Nevertheless, since the establishment of the government of national unity in February 2009, there has been a greater feeling of optimism, RioZim’s chairman Dr T R Masaya has said; and a number of factors that have

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RioZim

Boltgas Industrial and Mining Supplies Corporation Boltgas Industrial and Mining Supplies Corporation specialises

in

mining,

industrial

and

general

procurement for export and export logistics. It supplies mechanical products, electro mechanical products and diamond sorting x-ray tubes. The corporation has over 10 years of combined knowledge and experience. This includes extensive project management capabilities and the ability to source and manage industry wide skills as required. The corporation provides general procurement and cross border logistics solutions for mines in the Southern African

region.

Boltgas

Industrial

and

Mining

Supplies Corporation also has knowledge of business imperatives in South Africa and the SADC region.

“The payment of wages in stable currencies, in our case the US dollar, enabled employees to enjoy a reasonable and stable standard of living” restrained business, such as the exodus of skills and the breakdown of law and order, have started to improve.

RioZim recorded a turnover of $43.7 million in 2009, and is now in a position to recapitalise its operations and to start to realise planned expansion, for example a project to start power generation near Sengwa.

The core activity of the group is mining, where it has been active in exploring for potential new resources and developing existing resources throughout 2009. RioZim actually lost $16 million in the year to December 2009, largely because of escalating administrative expenses, distribution costs and finance charges. Notwithstanding, productivity improved, with gold production up to 708kg from 456kg the previous year; and world prices for both gold and nickel firmed up as the year went on.

To finance continuing expansion, the group is planning a rights issue to raise $40 million in the near future.

The economic liberalisation at the beginning of 2009 brought profound changes to Zimbabwe, with the gold industry among the biggest beneficiaries. According to Josh Sachikonye, RioZim’s managing director, the removal of interference by the Reserve Bank in the refining and marketing of gold was a welcome relief.

“The company was able to make its own arrangements and receive full value for its production.” Nevertheless, astronomical interest rates and a lack of liquidity in the

money supply have stalled industrial activity and the ability to attract investment from overseas, he noted.

Operationally, things went reasonably well last year.

Although Renco Gold Mine operated in a difficult environment caused by frequent power outages, inadequate working capital and frequent plant breakdowns, it managed to produce more gold than in 2008. Although short of its target, the mine recorded a 56 per cent increase in gold output. The Empress Nickel Refinery recorded an output of 8,844 tonnes of combined metals compared to 7,562 tonnes in 2008. However, this represented only 52 per cent of its installed capacity of 17,000 tonnes, since production at the refinery was hampered by oxygen shortages and power supply interruptions.

For extended periods in the second half, said Sachikonye, the operation was receiving only 10 to 12 tonnes per day of liquid oxygen against a requirement of 25 tonnes per day. The oxygen supply problem will be reduced when the PSA (pressure, swing, adsorption) plant refurbishment is completed in April 2010. “The plant will be able to produce at least 17 tonnes of oxygen on site at the nickel refinery,” said Sachikonye.

A new transformer was installed late in 2009, resulting in a considerably more reliable power supply; work to secure the 33kV power line is in progress and should be completed in the first half of 2010, he added.

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RioZim

Meanwhile, Sengwa Coal continues to be a vitally important part of RioZim’s activities. It need hardly be said that locally mined coal is certain to be a key strategic asset if Zimbabwe’s industries are to be re-established and grown, not to mention its domestic power supplies.

Land at the mine site adjacent to Gokwe North Power Station has been designated for the construction of a new 1,400 megawatt coal fired power station; the plant could provide a quarter of the country’s needs, drastically reducing the amount of power Zimbabwe imports from South Africa. There would certainly be no lack of coal to supply it, as reserves at Sengwa are reckoned to be good for at least the next 100 years.

So the picture is one of hope for the future. Industrial relations have generally been helped by the advent of the inclusive government, which ushered in a revived sense of hope and purpose among employees. “The payment of wages in stable currencies, in our case the US dollar, enabled employees to enjoy a reasonable and stable standard of living compared to the hyperinflationary environment of the previous years,” said Sachikonye.

He has acknowledged that the wage levels will remain under upward pressure as long as they lag behind regional levels and as long as productivity and capacity utilisation remain low.

This remains the major threat to harmonious industrial relations; and the group is trying to manage this threat through increased productivity which, when achieved, will create the capacity to improve earnings. At the same time, apart from wage stability, RioZim’s employees have the satisfaction of knowing they work for a company with an excellent safety record and a great record in corporate social responsibility. The RioZim Foundation was founded in 1974 to spearhead community development throughout the country: though strapped for cash right now, it has funded many projects in health, sport, education, the arts and agriculture.

RioZim’s future looks brighter than for many years, buttressed by a number of projects that, if successfully implemented, could transform both its size and fortunes.

“The Group is pursuing projects in gold, chrome and nickel with the gold projects at an advanced stage,” Sachikonye has said. The company will embark on a capital raising project in the first half of 2010 in order to strengthen the existing operations and at the same time create capacity to implement the growth projects.

This optimism can only be sustained if the political and economic environment continues to improve and remains attractive to both internal and external capital, he stress. www.riozim.co.zw

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n

Ta t a P o w e r

The

next

generation More than 90 years after setting up India’s first power generation plant, Tata Power is expanding aggressively.

Ben Sansom discovers how it plans to maintain its position as India’s largest private power utility

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f any single entity could lay claim to the credit for powering India’s rise in the global economy it could—quite literally—be Tata Power. Supplying just under 1,800 megawatts to Mumbai alone, the company powers the nation’s commercial and industrial capital, providing reliable and low cost energy through a unique mix of thermal and hydroelectric power.

Tata Power has a long and distinguished history of innovation. It pioneered power generation in India, beginning more than 90 years ago by building and operating the nation’s first power generation plant: the thermal

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power plant at Trombay, Mumbai. Among the long list of interesting firsts under the company’s belt are the construction of the first 150 megawatt pumped storage unit at the hydroelectric power station at Bhira, and a whole range of environmental control systems such as flue gas desulphurisation.

Today, Tata Power is India’s largest private sector power utility with an installed generation capacity across India of about 3,000 megawatts, and significant interests in power transmission and distribution. The Mumbai Power division, its largest, not only operates the thermal power station at Trombay, but also hydroelectric power plants at Bhira, Bhivpuri and Khopolit, and it has been steadily increasing its capacity through a long-term programme of new plant construction and rehabilitation and expansion of the existing infrastructure.

The company has a reputation for sound environmental thinking, and has been increasing its mix of green energy, both as part of its corporate sustainability policy and as part of the nation’s attempt to decrease reliance on fossil fuels. In addition to hydroelectric power, it currently has India’s largest installed capacity for wind generation, with 300 megawatts of capacity distributed across three states—Maharashtra, Karnataka and Gujarat. Solar power forms an increasingly significant

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Invensys powers Tat Backgound India’s power consumption has grown by about 700 per cent in the last four decades and is rising rapidly with growing demand from a burgeoning population and industrial growth; while the generation capacity expansion is unlikely to keep pace because of limited energy resources. The majority of the power sector remains in public ownership, while the private sector consists of independent power producers (IPPs) and industrial producers generating electricity for their own captive use and controlling around 13 per cent of India’s total installed capacity. As per India’s eleventh five-year plan, which includes the creation of over 78 GW of additional capacity by 2012, greater private sector investment will be crucial in meeting the goals set by the Government of India.

Powerful partnership: Invensys-Tata Power (CGPL project) Tata Power is not only a pioneer in electricity generation in India but also the largest private sector power utility in the country. Invensys has enjoyed a business relationship with Tata Power for over two decades, which started off with the supply of furnace safeguard supervisory systems at its first Trombay generation facility in Mumbai. Since then, Invensys has been the first choice of Tata Power in all its major energy projects in India.

In October 2008, Tata Power signed a multi-million dollar agreement with Invensys for its subsidiary CGPL (Coastal Gujarat Power Limited) located in Mundra in the western state of Gujarat. CGPL is India’s first ultra-mega power project of 4,000 MW capacity (five x 800 MW units) which will drive the largest single location power generation capacity in India, with a focus on efficiency and environmental sustainability for which Invensys will provide the end-to-end control system and safety solutions, performance optimization and integrated services. This is a very prestigious project for Invensys globally, and Invensys is proud to be associated with a power project of such magnitude.

Why Invensys?

Invensys was chosen as a solution provider by Tata Power after evaluation on certain key parameters.

Tata Power needed a partner with major project execution experience in the power industry, global expertise for control design with long-term after-sales support capacity and an ability to deliver advanced applications to optimize overall performance. Invensys offered a one-stop-shop to meet all the above specified requirements.

Invensys helps drive operations management improvements through true integration and collaboration that breaks down operational silos and enables teams to work together to achieve goals with real-time results.

Invensys’ scope of work Invensys’ business expertise includes end-to-end services from design, engineering, manufacturing, testing, supply and erection to commissioning services like the distributed control system for boiler controls and balance of plant controls (BOP), Triconex fail safe system (FSS) for burner management system (BMS), performance analysis and diagnostics optimization (PADO), advanced process control (APC), operator training simulator (OTS) and field instruments.

Invensys’ value proposition to Tata Power for CGPL Invensys’ expertise helped CGPL to develop the basic design and critical control philosophy, including design validation, testing and fine tuning of the control system with the use of a dynamic simulator. The reduction of commissioning time by tuning and finalizing the control schemes of up to 60 per cent during the factory acceptance test was one of the key achievements of the project.

ta’s energy business Other Tata projects where Invensys participated Apart from CGPL, Invensys was also responsible for the upgrading of the furnace safeguard and supervisory system (FSSS) at the Trombay facility of Tata Power, with its Triconex system solutions. The project was commissioned in February 2010 and it has resulted in reduction of execution time by 15 per cent which helped Tata Power reduce the shut down time. It also helped in a 30 per cent reduction in site commissioning work and a substantial saving of project investment.

Another Tata Power project where Invensys partnered is NDPL (New Delhi Power Limited), where Invensys helped NDPL with the plant control system for a 108 MW combined cycle power plant with two gas turbines. The project is set to go live by July 2010. Some of the highlights of the project include migration to gas synchronization and unified control architecture.

Invensys’ solutions helped Tata Power drive measurable performance improvements in real time apart from meeting environmental and safety regulations. The company was also able to schedule power demand to optimize generation level and cut costs. This helped Tata Power empower its employees to make better decisions and achieve interoperability with legacy systems.

Invensys’ role in India’s power sector Invensys has played an important role in the growth of India’s power sector. The company is known for supporting India’s first ultra-mega power project at CGPL Mundra. Invensys is currently involved in over 18,000 MW of power generation capacity in India with the deployment of its control systems for station control and instrumentation. Invensys is bringing its global leadership in the automation of power projects in India by providing high performance applications which includes information software architecture that allows optimization and true interoperability for plants.

Invensys has a strong presence in Asia-Pacific and India, with global expertise in power applications which help build highly reliable systems with cutting edge technologies for combustion optimization, heat rate improvement, soot blowing and load management, thereby helping to improve efficiency, response time to change on demand and further lower environmental emissions, leading to overall plant optimization.

Conclusion Invensys is looking forward to strengthening its partnership with Tata Power for a secure tomorrow in the field of power. This partnership will give a significant opportunity to Invensys, as it knows the Indian power sector closely and understands its needs; which will also help it to serve the industry in an enhanced way in years to come.

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element of the mix, along with CHP fuelled by waste heat and coke oven gases. Meanwhile, research is being done into micro-wind power as well as PV, biomass and agriwaste. Ocean tidal and wave energy are being watched for the future.

Since the early 1990s, the company has been expanding its footprint across India. Investments include the construction and operation of four coal fired power generation plants in Jojobera in the state of Jharkhand, which provide a total of 520 megawatts. In the state of Karnataka, the company has built one diesel and two steam turbine power generation plants located at Belgaum and Wadi respectively. Finally, a major investment has been made in the pumped storage unit at the Bhira hydroelectric plant in Maharashtra, which was opened in 1997.

leading power trading companies in India, playing a major role in the development of the rapidly expanding Indian electricity market.

Buying and selling power across India, TPTC has successfully formed a bridge between power suppliers and consumers, matching supply and demand. The vision, however, is not confined to India. The company is currently examining the potential for cross border trade with neighbouring countries such as Nepal and Bhutan, and has plans to expand its horizons to Bangladesh, Myanmar and Sri Lanka.

Looking to the future, Tata Power has ambitious plans for expansion, and is exploring possible projects in Asia, the Middle East and Africa. Meanwhile, it is reinforcing its position as India’s largest private sector power utility. Its most prestigious project to date is the

“Tata Power is India’s largest private sector power utility with an installed generation capacity across India of about 3,000 megawatts” The company has also been growing through joint ventures (JVs). Delhi North Power Limited is a JV set up in 2002 between Tata Power and Delhi Vidyut Board to supply up to 1,050 megawatts of power to some 800,000 industrial consumers in the north of the city, and here too the company is pioneering new technology for its billing and services.

Power transmission plays a significant part in Tata Power’s portfolio of interests. The company owns and operates 1,200 circuit kilometres of high voltage transmission network. More recently it became a partner in Powerlinks Transmission, a JV with the Power Grid Corporation of India which was formed primarily to evacuate power from the Tala hydroelectric plant in Bhutan, and to carry surplus electricity from the north-eastern states to the northern Indian belt. The new transmission network began commercial operations in 2006.

Finally, the majority of Tata Power’s distribution business is centred in Mumbai, where it owns and operates a 935 kilometre high tension and low tension cable distribution network connecting 17 major receiving stations and over 85 sub stations. In north Delhi, the company holds the majority interest in distribution for its NDPL JV. Innovation also powers company strategy. In 2004 it ventured into power trading with the launch of a new subsidiary, Tata Power Trading Company (TPTC). TPTC was the first company in the country to be awarded a power trading license by the Central Electricity Regulatory commission, and has become one of the

construction of India’s first ultra mega power project (UMPP) at Mundra in Gujarat, originally scheduled to go on-stream in 2014. Ultimately capable of delivering a massive 4,000 megawatts of power, the construction work is currently two years ahead of schedule, and the plant is expected to begin generating power from the first of its five 800 megawatt units in 2012.

When fully commissioned, this massive 1.7 billion-rupee project will supply Gujarat with 1,800 megawatts of power while 760 megawatts will be supplied to Maharashtra, 475 megawatts to Punjab and 380 megawatts to each of Rajasthan and Haryana. The plant is expected to consume around 12 million tonnes of imported coal per annum. Contracts have already been negotiated with KPC and Arutmin of Indonesia—partly owned by Tata Power— for the supply of a portion of this. Meanwhile mines in Australia, Mozambique and South Africa are currently being scoped to supply the remainder.

Also in progress is the construction of a 1,050 megawatt mega power plant, a JV with Damodar Valley Corporation, located at Dhanbad, Jharkhand State. Costing an estimated 44.5 million rupees, the first 525 megawatt unit is due to be commissioned in October 2011.

Through the generation of reliable and low cost power, Tata Power is playing its part in simulating business and industry in India. And through its aggressive expansion plans, is also a key player in fulfilling the nation’s ambition of supplying power to the entire population. www.tatapower.com

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Letšeng Diamonds

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Letšeng Diamonds produces the highest quality white diamonds of anywhere in the world.

Jane Bordenave investigates the challenges associated with extracting them and how the company is working to overcome these

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etšeng Diamonds was registered in 1995 and granted the mining lease in 1999. The Letšeng Diamond mine is the highest diamond mine in the world at over 3,000 metres above sea level. It is also the producer of the highest quality kimberlite diamonds globally, with an average market value of over $1,700 per carat—nearly 20 times the market average.

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While commercial production began at the site in 2004, Letšeng Diamonds is not the first company to carry out extractions in the area. Initial exploratory work was carried out at the mine in 1936 and until 1986, it was operated by diamonds giant, De Beers.

When the facility closed due to adverse economic and market conditions, it spelled the end of the diamond mining industry in Lesotho for 13 years, until Letšeng Diamonds was granted the mining lease in 1999 and began commercial production in 2004. The company has two shareholders, Gem Diamonds Ltd and the Government of Lesotho.

The whole operation, managed by an experienced management team, is overseen by Mazvivamba Maharasoa. “I have been involved in Letšeng Diamonds since its inception, working as part of the government legal team and later sitting on the board as a government-appointed director,” she says. “I came on board full time in 2007 in the position of resident director and am now the CEO.” Despite the fact that the mining industry is largely male dominated, Maharasoa

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Matekane Group of Companies The Matekane Group of Companies (MGC) builds the capacity of everyone with whom it forms alliances.

Individuals will leave the company with more assets than before through empowerment of knowledge and skills, which will benefit them and enhance the standing and reputation of the company, the industry and the country. MGC acquires profitable work and delivers quality, to ensure success and customer satisfaction.

Our people set us apart within a culture that emphasises a passion to deliver innovative solutions with a competitive edge. Passionate commitment, creative energy and teamwork allow us to plan, design, implement and operate programmes effectively and efficiently, and cultivate successful relationships.

showed herself to be the right person for the job and was appointed CEO in 2009.

Although the Letšeng mine is characterised by a low-grade ore body, producing less than two carats per 100 tons, it is also renowned for producing some of the largest diamonds, such as the 603.5 carat Lesotho Promise, the 493 carat Letšeng Legacy and the 478 carat Light of Letšeng —the thirteenth, sixteenth and seventeenth largest white diamonds ever found, respectively. There are, however, certain difficulties associated with extracting diamonds from the Letšeng mine.

The location of the mine itself presents some logistical challenges due to its geographical location and altitude.

The facility is subject to severe bad weather, particularly during the winter months. At these times, temperatures can reach minus 30 degrees Celsius, which can present technical problems, as well as being potentially uncomfortable for the workforce. To overcome these

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Econet Telecom Lesotho Econet

Telecom

communications

Lesotho, service

a

leading

provider,

converged

congratulates

Letseng Diamonds. A strategic partner to Letseng Diamonds, we provide cutting edge services and technology to underpin its business success. With our new next generation network, we offer the very best triple play services; and with the skills and experience of the Econet group, we tailor solutions that deliver world class value.

problems, the company has implemented various systems, such as ensuring that the site is self sufficient in terms of water supply and that it has back-up power.

Additionally, the site only has one main access road, which is very mountainous and is shared with the entire northern district of Mokhotlong. When moving heavy equipment into the site this can cause logistical challenges; but fortunately, bringing heavy machinery onsite is not a day-to-day occurrence.

Processing ore and liberating the diamonds is the company’s core business, and thus Letšeng’s most recent large capital investment was the construction of a second ore processing plant at the mine. The $50 million project ensures that the diamonds are liberated and processed carefully but rapidly. The diamonds are then sorted and securely transported for sale in global markets.

Most of the management’s energy is focused on geological surveys and monitoring the ore body.

“Keeping an eye on the resource is an important part of any mining plan,” says Maharasoa. “However, due to the grade and resultant margins, we have to pay very close attention to this area and allocate additional resources.”

Aside from the geology and geography of the mine, another challenge that the company has faced is a severe skills shortage in the country. “There are two reasons for this problem,” says Maharasoa. “Firstly, there is a lack of adequately qualified and experienced engineers globally. While we are a Lesotho-based outfit, we compete on the global diamond market and all of our competitors are looking for the same skills

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sets to work in their mines. The number of skilled engineers has decreased significantly in the past few years, so it really is a problem for everyone.” This is compounded by the second issue—a local lack of experience in commercial mining. When the mining business dried up in Lesotho during the mid 1980s, the skilled workers moved into other areas such as South Africa, leaving Lesotho high and dry. To overcome this issue, Letšeng Diamonds invests in the skills set of the local Basotho to increase the pool of human resources available. “Currently we have 23 students who we are putting through tertiary education,” explains Maharasoa. “They are being trained in mining-specific

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Maseru Business Machines Maseru Business Machines (the official and only Xerox distributor in Lesotho) has been a supplier of office automation to Letšeng Diamonds for more than a decade. When quality is paramount and no compromise can be made on service, isn’t it good to know that one company in Lesotho can deliver on all its promises—continually taking your business to new heights.

skills such as mining engineering, geology and so on.

We have reached a stage in this programme where we are beginning to reap the rewards, and have recently employed four graduates from the scheme.”

The company has also set up several community investment schemes to benefit the population as a whole, not just those employed by the mine. The north of Lesotho is particularly known for its wool and mohair farming, so Letšeng Diamonds has decided to invest in this area to assist commercial enterprise. Additionally, it has developed infrastructure to enable a local community to develop a thriving eco-tourism business. “Education and enterprise development are sustainable and extremely

important to us and we aim that, when the mine eventually runs out, these businesses will be around for a long time afterwards,” says Maharasoa.

So where does Maharasoa expect to see Letšeng Diamonds in five years’ time? “We are working to optimise our business right now to enable future growth. In five years, I hope to have seen growth in the region of 30 to 40 per cent and the business working as a highly efficient operation. We are also looking into the opportunity of adding value to our own product, by participating downstream—cutting and polishing our own stones to sell as a finished product. This is something I hope will be an established contributor to our bottom line by 2015. And, of course, we are looking for the opportunity to increase production.”

A diverse company indeed, providing a diverse future for both itself and the wider community. It’s not a claim every diamond mine can make; but it is a claim that this jewel in the crown of diamond production certainly can. www.letsengdiamonds.co.ls

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Konkola Copper Mines

samountain The Zambian economy has historically been based on the copper mining industry. With world prices rising, it has become worthwhile to invest in the mines, and the Konkola Deep Mine Project is a case in point.

John O’Hanlon speaks to general manager Raj Kulkarni

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onkola Copper Mines (KCM) has been a major producer since the days when copper mining was consolidated under the parastatal umbrella organisation Zambia Consolidated Copper Mines (ZCCM). Following privatisation, and the disposal by Anglo-American of its shares in KCM, Vedanta Resources—an Indian company quoted on the London Stock Exchange—acquired a controlling interest in 2004. This was a big shot in the arm for the company, which was then able to proceed with some major expansion projects that had been on hold for lack of investment.

Among these was a new sulphur based acid plant at the Nchanga mine with a production capacity of 500 tonnes of sulphuric acid a day, refurbishment of tank houses at the same location and, very significantly, the final realisation of the Konkola Deep Mining Project (KDMP). KDMP will expand the production of copper ore at Konkola Mine from two million to 7.5 million

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TWP TWP was awarded the design of the headgear, shaft steelwork and underground and shaft rock handling systems for the new 1,490 metre deep No. 4 Shaft at KCM in June 2006, and successfully achieved the first hoist of rock from a depth of 1,050 metres in March 2010.

This achievement is the culmination of four years of preparatory work including the design, shaft sinking, shaft equipping, conveyor installation and underground development.

TWP completed the design and scoping of work for one of the two largest steel headgears in the world in 2008, as well as the shaft and new underground infrastructure needed. The contract’s scope was extended to include shaft infrastructure additions such as piping, cabling and general services.

tonnes per annum by accessing a rich ore body lying below the current operations. It’s estimated that this will extend the life of Konkola Mine by 23 years.

‘Deep mine’ means just that: the main production shaft will go down to a depth of 1,500 metres, making it the deepest new shaft sinking in Africa. In addition, the project involves deepening some existing shafts and sinking three new ventilation shafts, a new dewatering shaft and the construction of a new pump chamber.

The existing mine was getting worked out, says Raj Kulkarni, general manager of KDMP. “We have known for a long time that there were huge reserves of ore deeper down, and that is why we are going deeper.”

On March 26 this year, a ceremony in the mining town of Chililabombwe attended by the President of Zambia Rupiah Banda and the chairman of Vedanta Resources Anil Agarwal marked the completion of Phase 1 of the project and the commencement of ‘mid shaft loading’.

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Grinaker-LTA Mining Grinaker-LTA Mining has played an integral part in the success of numerous mines in Southern Africa for many decades. Our company offers solutions from mine design, feasibility studies and construction in metalliferous and coal environments. Shaft sinking, tunnelling and contract mining including operating the full mine is our forte. We strive to add value for our clients and tailor-make solutions that best meet their requirements. Our client relationships are essential to the success of every project we undertake. We strive to deliver in a safe manner within our logo, which states: “Home Without Harm, Everyone, Every Day”.

“Sinking the 1,500 metre shaft will take some time,” explains Kulkarni. “What we are doing in the meantime is to give the mine some additional capacity quickly, so with the shaft at a little over half way, we have created a loading capacity at about 1,000 metres where we can crush and load the ore and hoist it from that depth to the surface while the rest of the shaft is still being sunk.”

The main shaft sinking (Shaft 4), the deepening of existing shafts and the construction of the pumping chamber are contracted to Grinaker-LTA Mining, a member of the Aveng Group of South Africa. Grinaker is also responsible for creating the rock crushing and loading stations. The four other pumping and ventilation shafts, with a combined depth of 2,400 metres, have been entrusted to a Chinese company, the China Nonferrous Mining Company. All of that work is now complete, and these shafts are currently being equipped and made ready for use.

This is a very complex project as well as a very ambitious and long-awaited one, says Kulkarni. “We are

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“We have known for a long time that there were huge reserves of ore deeper down, and that is why we are going deeper” sinking seven shafts, which is by any standard within the mining industry a large amount of shaft sinking to undertake at any one time. That is why the work was split into more than one contract.”

The mid shaft loading will give the mine the capacity to hoist an additional four million tonnes of rock; and a similar amount will be added once the shaft and its associated works are commissioned in 2012. However, the ancillary services should not be forgotten. A mine this deep takes a lot of ventilating, and though figures like this don’t mean too much, it is worth noting that the work so far has added 250 cubic metres capacity to the total air circulation requirement in the mine of 1,500 cubic metres per second.

Konkola is famous for being the wettest mine in the world, currently pumping 300,000 cubic metres of water every day. By going deeper, the amount of water in

the mine is expected to rise to around 430,000 cubic metres, then come down to around 350,000 day when the project is complete and the six million tonnes a year production level has been achieved. KCM considered that the safest and most secure method of dewatering would be to have a pump chamber near the bottom of the main production and service shafts. One advantage of the increased pumping requirement will be that more water will be discharged into the Kafue river. This will help the communities living downstream.

Despite its size, the project has proceeded smoothly, Kulkarni says. “The only real challenge I can think of came when we encountered unforeseen problems and the presence of water when sinking the shaft. We overcame that; though it added to the time, since we had to put in more ground support than we thought we’d have to.”

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A less tangible challenge came from the rather interesting mix of people thrown together to realise the deep mine project. Kulkarni is clearly pleased with the way they were all able to work together despite cultural, language and other differences. “KDMP is an African company; the majority of the ownership is in the hands of an Indian company which is nevertheless listed on the LSE; one of the major contractors is from South Africa and the other from China; and most of the large equipment and machinery comes from Germany, France and other European countries. To get all these working

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Konkola Copper Mines

SIEMAG TECBERG SIEMAG TECBERG offers comprehensive solutions from

project

consulting,

engineering,

delivery,

assembly and erection to commissioning of complete plants, automation and after-sales service, mine and tunnel-cooling systems, complete and partial shaft hoisting solutions, e.g. brake systems, rope changing installations and mobile winches. Focus is placed on hoisting machines: Koepe, drum, Blair hoists and bobbins.

together in one pot, as it were, stir it up and get a product at the end was definitely an interesting challenge!�

Of course, the South Africans are well used to working in the Copperbelt. So are the Chinese, who built the Tanzania to Zambia rail link that carries much of Konkola’s copper to the port of Dar es Salaam and

who have invested much in the Zambian copper mines.

Nevertheless, this was quite an achievement, since the engineers all had to set aside the way they are used to working in their own countries and get used to working together under local conditions and under Zambian regulations. www.kcm.co.zm

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Acquisition by one of the world’s largest gold producers has impacted very positively on Ghana-based Abosso Goldfields Ltd. Executive director Mike Ezan talks to Andrew Pelis about the improvements made and stability gained

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he rise and fall of a gold mining business can be as swift as it is dramatic; and when a country’s economy depends largely on its natural resources, the stakes are raised that bit higher. Such is the case in Ghana, where Abosso Goldfields Ltd is now capitalising on the twin benefits of higher gold prices and parental guidance.

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Abosso Goldfields Ltd

Hyspec Africa Ltd Hyspec Africa Ltd, having operated on the Damang Mine site with Abosso Goldfields for over 10 years, provides

round-the-clock

services

for

hydraulic

hoses, greasing, lubrication and fuelling equipment to the mine site and its contractors. Hyspec has enabled the mine’s production group to reduce open pit machinery downtime due to hydraulic failures.

Hyspec services include the provision of preventive maintenance operations and daily equipment surveys to establish a ‘replace before failure’ culture. Hyspec is

committed

throughout

to

Africa,

supporting and

mining

wishes

to

operations congratulate

Abosso Goldfields and its partners on the constant development of the mine site in Ghana.

The Damang-based company, which produces around 250,000 ounces of gold each year through its surface mining operation, was originally established back in the early 1990s by an Australian mining company, before being purchased by South African mining giant Gold Fields in 2002.

Mike Ezan, executive director since 1994, takes up the story: “When I joined we were still in the pre-mining phase and my role was as director for the external affairs of the company. There were a lot of regulatory issues that needed to be addressed and we required all kinds

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Abosso Goldfields Ltd

Balfos Limited Balfos Limited, based in Obuasi in the Ashanti Region of Ghana, supplies heavy wheeled and tracked equipment to the mining industry. Balfos supplied a Terex Crushing Plant 1000SR to Abosso Goldfields’ Damang open cast mine and is still supporting the company with spares and working closely with it to deliver a superior after-sales service.

The Government plays an important role for any mining company in Ghana. The 52.9 square miles of land that Abosso mines in the western part of the country is retained on a 30-year lease. “We are now fifteen years into our agreement,” says Ezan, “and we will need to go back to them to extend the lease if we find further gold deposits.”

The open-cast mine is located in Damang, close to the renowned Tarkwa mine, and was previously owned

by Rangers of Australia. “Originally the plan was to re-mine an old site that was previously owned by TNA

“Gold Fields has invested around $100 million, which has played a significant part in extending the life of our mine” of permits in addition to an operating license from the Mineral Commissioner. We also had to liaise with the central bank [Bank of Ghana] to ensure that our external accounts were in good order; and we needed to ensure there was a clear focus on social responsibility and well-maintained relationships with the Government.”

Mines and produced cyanide, but they found gold deposits around the area and decided to build a new mine from scratch,” Ezan explains.

Production got underway in 1996 but by the end of that decade the price of gold had fallen sharply, resulting in much thinner profit margins.

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Rana Motors Rana Motors is a leader in the tyre distribution network in Ghana, with a 35 year-history. It is spreading its reach all over West Africa through its newly launched venture, West Africa Tire Services Ltd (WATS).

The regional outfit would support its West African business ventures, viz as a regional distributor for Goodyear Earthmoving tyres and as the retail partner of Goodyear by being the principal franchise holder of its premium retail stores, VULCO. WATS Ltd offers tyre sales, on-site service provision, tyre consultancy and repairs (REMA Tip Top) in its pursuit of being a total solution provider to the West African mining industry.

Ezan suggests that the challenge to continually operate at a profit with low prices may have been one of the contributory factors behind the sale of the business to Gold Fields in 2002. The South African company, which has a long and distinguished pedigree in mining, has regularly targeted acquisitions; and having already acquired the Tarkwa mine, the purchase of Damang and creation of Abosso complemented its portfolio.

“Barely a year later, gold prices went up and since then, Gold Fields has invested around $100 million, which has played a significant part in extending the life of our mine.

The company is now looking around the area for new deposits to further increase production,” Ezan adds.

The new company—Abosso Goldfields—currently ranks fifth in size in Ghana, but its combined weight with Tarkwa’s production gives the company the

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highest gold output in the country.

Damang boasts a workforce in excess of 1,200 currently, including contractors, with the vast majority sub-contractors from African Mining Services. With such numbers comes greater responsibility, however; and rigorous training is designed to ensure the safety of all employees. “For every mine you need to ensure safety measures are in place so that people’s lives are safe,” Ezan asserts. “We undertake lots of training to make sure that everybody does the right thing. The company will not mine unless it can be sure that everyone is aware of their responsibilities, particularly given the amount of mechanical equipment involved in production.

“To lose one life is a lot; so we continuously train people as injuries or worse affect production time (we have to stop to hold an enquiry if there are any incidents) as well as lives,” he continues. “Our supervisors are trained externally and bring knowledge into the company and to a very large extent we have mitigated lost time through injury. We can honestly say that we have succeeded in improving our safety standards; but we must continue to work on training.”

Much of the initiative to improve safety is driven by the parent company, and further impact came through the extensive investment which saw the expansion of the Damang CIL (carbon in leach) plant. Thanks to an upgrade of machinery, the plant has improved its operating capacity and recovery processes through a system that crushes the ore and then uses a cyanide solution which dissolves the gold. That solution is then

treated with carbon and a series of further chemical processes produces gold.

Ezan explains that the involvement of Gold Fields has also added invaluable resource through knowledge. “Becoming part of Gold Fields has been very helpful to us and we can now do things like exploration, which is costly and takes time. We have been able to utilise their geologists and exploration experts—which led to the new deposits being found, and this in turn has extended the life of the mine.”

Social responsibility initiatives have seen the company build schools and develop clean water and health systems to help foster excellent relations with the local communities. Ezan recognises the concerns that the use of dynamite raises, particularly its propensity to cause structural damage, but says that the company works hard to discuss issues with residents through a series of forums. Further challenges come from the use of cyanide and Abosso takes great care to ensure the water systems do not become polluted.

So how much longer does Ezan think the Damang site will produce gold? “It is hard to say,” he admits, “but what I can say with certainty is that while gold prices remain high, we can expect to obtain a return on our investments in a shorter time period.

“Ultimately, our aim is to improve and extend the life of the mine by looking for more deposits through exploration. This gives rise to a stable life for the company and is good for Ghana as the country’s earnings from mineral resources improves, as well as employment.” www.goldfields.co.za

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Central Rand Gold

With gold losing none of its investor appeal, mining prospects once considered uneconomical are once again in favour, as Alan Swaby learns

I

t’s certainly not true to say the streets of Johannesburg are paved with gold but just over 100 metres below some suburban streets, gold could soon be mined in substantial quantities.

South Africa has long lost its place as the most prolific gold producer—these days, China, Australia and the US are all ahead. But gold still exists and with a price of around $1,200 an ounce, old mine lease areas once considered unprofitable are once again viable concerns.

Around Johannesburg, gold is found in an area known as the Witwatersrand Basin which was once an enormous inland sea, with many rivers and streams feeding it from its vast margins. Gold deposits in the hinterland are thought to have been eroded by these feeder river systems and swept along until they reached the Witwatersrand sea in the form of pebble bed conglomerates.

The initial gold discovery in 1886 became known as the Main Reef Leader and was remarkably consistent in terms of its grade. The Main Reef Leader is one of the most important ore bodies of the Central Rand Goldfield, giving up 9,000 tons of gold between 1897 and 1984, when escalating costs and declining gold prices finally brought the industry to a virtual standstill.

“The reefs we are now mining,” explains Patrick Malaza, CFO of Central Rand Gold, “were worked until the 1970s by Rand Mines. In those days, gold was $35 per ounce and Rand Mines was only interested in high grade ore, delivering up to, say, eight grams of gold per ton of ore. We are mining reefs that have an average of four grams of gold and we would still be profitable if the yield was as low as 1.5 grams.”

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Central Rand Gold

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Although most of the mines around Johannesburg suffered the same fate and were closed down in the 1960s and 1970s, geological students of the University of Witwatersrand led by Professors Viljoen and Viljoen were still given access to the workings in order to receive a hands-on, practical aspect to their university studies. It was on such a field trip that attractive quantities of gold were discovered below previously worked levels. In 2002, Viljoen and Viljoen introduced the concept of a reinvigorated Central Rand Goldfield to Rand Quest Syndicate (RQS).

In 2007, RQS—an Australian venture capital concern— confirmed the data and applied for prospecting and mining rights, raising £75 million on the London Stock Exchange.

The following year it was restructured into what we now recognise as Central Rand Gold (CRG).

CRG’s holdings are extensive, stretching along a 40 kilometre line running south to north-east around six to eight kilometres to the south side of the city. In total it has new order rights to prospect and mine a 200 square kilometre area. So far, only one small zone has been tackled in order to prove the viability of the reserves, establish mining costs and, above all, verify that the ore could be extracted safely.

Most of South Africa’s gold is mined at deep levels but as the reefs lie at an angle of about 35 degrees, they naturally enough, have to strike the surface at some point. CRG’s operations are unique in the area, in that the ore is accessed via a 900 metre spiral incline that intersects the reef at around 125 metres below ground.

Historically, gold mining has relied on vast numbers of labourers drilling shot holes into the rock face and then clearing the blasted material. CRG uses a highly mechanised underground mining method, where very

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Central Rand Gold

Mintek Mintek is an autonomous research and development (R&D) organisation specialising in all aspects of mineral

processing,

extractive

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little of the work relies on manual labour. The reef is accessed via a five metre wide tunnel, 5.3 metres in height, with cross-cuts developed from the incline to intersect the reef at about 11.5 metre vertical intervals.

With approximately 50 per cent of the run-of-mine feed made up of low grade ore or waste and an absolute capacity of 18,000 tons per month in the gold extraction metallurgy plant, CRG has opted for a process of ore beneficiation where waste is removed on surface and the low grade feed is upgraded prior to being processed.

In this way, the plant is achieving 95 per cent recovery of gold and reducing operating costs per ton of ore.

On top of the £75 million raised in 2007, CRG is currently

“The rock above us is honeycombed with tunnels and it was necessary to prove there was sufficient stability within the rock structure” in the throes of raising £20 million-plus to finalise the mining and processing equipment it needs and to provide working capital. One of the significant changes to be made to currently employed plant is the addition of an optical ore sorter which uses automated optical identification and pneumatic pulse sorting of processed ore.

“One of the main concerns we had,” says Malaza, “was whether we could work the mine safely. The rock above us is honeycombed with tunnels and it was necessary to prove there was sufficient stability within the rock structure to cut further openings with impunity.”

While the operational challenges are no more than would be expected on bringing a project such as this to fruition, behind the scenes Malaza and the other directors have been facing a completely unexpected commercial challenge. The government, in its desire to broaden economic participation of historically disadvantaged South Africans and improve cascading of benefits to surrounding communities, lays special BEE (black

economic empowerment) conditions into the granting of mining permits and licences. As such, when applying for new order rights to mine the site, CRG was obliged to take on a BEE partner—in this case Puno Gold Investments, which has a 26 per cent holding in the mining operation.

However, relations between CRG and Puno are far from harmonious and a wrangle over shareholder contractual obligations has been ongoing since 2008.

“The outcome will soon be determined by arbitration,” says Malaza. “So far, legal actions have gone in our favour and are having no impact on the progress of the project.”

In relative terms, the new generation gold mine in Johannesburg won’t employ anything like the number gold mining once did but the venture is nevertheless important for the region. “The jobs we’re generating,” says Malaza, “are largely skilled positions but the spin off to other local businesses via the procurements we make are far more economically important to the area.” www.centralrandgold.com

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Th

go h

Eritrea’s economic looking up with th opening of Bisha M General manager Ruari McCallion th

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he

olden horn

c prospects are he approaching Mining’s operation.

Stan Rogers gives he lowdown

E

ritrea, located in the north-east of the continent on the northern shore of the ‘Horn of Africa’, has had a troubled post-colonial history. Initially subsumed into Ethiopia, it finally achieved self-determination after decades of struggle in 1993. European powers and neighbouring states coveted its mineral deposits and deep-water access to the sea; ironically, the deposits remained essentially undisturbed for 70 years during the decades-long upheavals of the Second World War and the post-colonial period, so the object of exploitation was not achieved.

And every cloud has a silver lining, as the saying goes. Eritrea has had a stable government since independence and its attractiveness as a source of minerals is once more gathering attention. The new wave of exploration has a different aspect to it, however; it is a long way from the colonial era and from other models of foreign direct investment. The government, both directly and through the Eritrean National Mining

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Bisha Mining

SENET The Bisha Project in Eritrea has been a momentous opportunity for SENET, furthering the company’s reach throughout the African continent. SENET commenced work in 2007 on the initial design and engineering for Nevsun Resources Limited through its Eritrean subsidiary Bisha Mining Share Company (BMSC).

Currently,

Bisha

is

in

the

advanced

construction stage of the oxide (gold) phase which is poised for completion late 2010. This will be closely followed by the supergene (copper) phase.

SENET is privileged to be part of BMSC’s Bisha Project as it sets the benchmark as the first modern day mine in this NE African country.

Corporation (ENAMCO), is able to take a share in all mining exploitation, as Stan Rogers, general manager of Bisha Mining, explains.

“In the case of Bisha Mining Share Company [BMSC], ten per cent of the company is owned by the state under ‘free carry’ interest and a further 30 per cent of Bisha is being purchased at fair value by ENAMCO from Nevsun Resources Ltd, which retains the other 60 per cent,” he says. “We will go through an international assessment for the value of the property at first pour, when the balance will be paid. During the construction process, costs have been split two to one, between Nevsun and ENAMCO.” Rogers has been impressed with the way the partnership has worked thus far. “Trust has been the essential element. It was vital that both sides trusted

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each other, especially as this was a new experience for both sides,” he says. “All the way through, BMSC has found the government to have been very cooperative. They have stuck to every agreement. This is the most honest nation in Africa I have ever worked in. There are low levels of observable crime, the lowest levels of financial corruption I have ever come across and deals stick. It’s very straightforward—there are no hidden agendas and we have developed this very high degree of trust.”

The project has proceeded pretty rapidly since the exploration company (and Bisha Mining’s privatesector parent) Nevsun Resources completed its feasibility study in October 2006. The social and environmental impact assessment was completed the following December and the mining licence was granted a year later, after the state’s participation agreement was concluded in October 2007.

The Bisha mine is located about four hours’ drive (220 kilometres) west from Asmara, Eritrea’s capital, which is at an elevation of 7,000 feet—so the area enjoys a climate that isn’t beset by extremes of heat and cold.

The project is in a large precious and base metal-rich volcanogenic massive sulphide (VMS) deposit, with a gold and silver oxide zone underlain by a copper supergene and then copper and zinc sulphide zones.

It is planned to be a producer of gold for the first two years, by the end of which time it will have generated enough value to repay the initial costs, including construction, which commenced in 2008.

“The mine is being developed on the basis of a 10 year life, which is pretty standard,” says Rogers. “The reality is that there is more to find and things change.

We know there are additional minerals at depth, which haven’t been taken into account—the deposits we will be exploiting are at relatively shallow depths and will

be extracted with open-cast methods.” And there are satellite deposits, as well. “The mine has no course gold—it is very fine grained, which makes it secure and unobservable until it reaches the gold room, after which it has to be refined. In the ore, the gold is within a matrix of other materials and yields about eight grams per tonne—which is actually very high; most people would love to have that concentration from open cast mining. We expect to produce around 500,000 ounces a year for two years, so over one million ounces in 24 months.” Which adds up to a lot of value. At the end of the initial gold extraction period, the emphasis will shift to copper extraction.

The price of copper has fallen dramatically since its high in September 2008. “Viability has never been an issue—metal prices change all the time,” Rogers explains. “We looked at the total package: we have gold at the top, then copper and zinc, plus silver to exploit.

It ultimately depends on the market but the costs are relatively low and we anticipate making money throughout the project.”

Making money is important, for all parties. The Bisha mine will be a valuable earner of foreign currency for Eritrea—indeed, the only foreign exchange earner of any significance. It also acts as a catalyst for change in the country, for the raising of skills levels and the development of its rich mineral deposits, which have lain undisturbed for so long. But there are challenges, and skills are at the heart of them.

“We have, in effect, a clean sheet but that means we are trying to develop an entire system,” says Rogers. “We have to bring everything in to a relatively isolated area.

There are skills in Eritrea but a degree of conversion is required, for engineering and administration. However, there are no mining people here so we have had to bring in expatriates for geology, control of basic functions and operation of specialist big machinery, which we have purchased from Caterpillar and Atlas Copco, for example.” Eritreans will eventually have to be sent for specialist training in mining to institutions in South Africa and other countries; and will return with higher skills and knowledge. BMSC currently employs around 1,000 people, of whom around 54 are expats. “When we have finished all phases of construction in about another five years, we expect there will be around 10 expats going forward,” says Rogers.

“This is a great project,” he concludes. “Our eyes are firmly set on starting production later this year and it will be fascinating to see how it, and Eritrea, develops in the years ahead.” www.bishamining.com

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The

Midas

Mineral exploration and development company focusing all its resources on its Amulsar gold p CEO Dr Tim Coughlin explains why to Jayne Fl

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y Lydian International is project in Southern Armenia. lannery

Ly d i a n I n t e r n a t i o n a l

L

ike its flagship gold project at Amulsar in Armenia, where gold was first discovered in 2006, Lydian International is a relatively new entrant into the international mining scene. The company was formed in 2005, but while Lydian may be a youthful player in corporate terms, the management team brings together many years of combined expertise in the exploration industry. Dr Tim Coughlin, CEO, is an international expert in frontier mineral exploration and the development of mining investment opportunities in emerging and transitional environments.

By international mining standards Lydian is small and autonomous, with just 40 employees and a geographical presence centered on Eastern Europe. Coughlin sees the agility this gives as a tremendous advantage in pursuing the company’s first mover strategy in emerging markets. “As an exploration company, we need to be able to move very quickly and that means rapid decisions without the need to convene endless committee meetings,” he states.

Up until a year ago, the Amulsar project in Armenia was a 50/50 joint venture with a subsidiary of Newmont Mining Corporation, the world’s second largest gold producer. The venture was focused principally on developing the Amulsar project.

Diversification was the original name of the game. But last year’s boom in commodities has come to an abrupt end. A new economic downturn means retrenchment as a wave of investors turn to gold as a long term safe haven. “Over the last six months many of our shares have changed hands and there is a renewed interest in gold generally. Now we want to put most of our resources into Amulsar and we are looking for partners to help us with our other exploration projects.”

In March 2010, Lydian became the sole owner of Amulsar when it bought out the Newmont interest as part of Newmont’s strategic decision to refocus on other areas. Meanwhile, estimates on the size of the deposit are getting bigger all the time. “We are now optimistic that Amulsar holds at least two million ounces, but we still have no accurate feeling for its eventual size, although we know it is currently 1.4 million inferred ounces. So far, drilling has shown that the deposit is open in all directions, which means there is gold beneath our feet wherever we tread.”

Moreover, Amulsar does not pose any particular technical challenges and the site benefits from a great existing infrastructure in the sense that it is adjacent to the main highway and with all necessary utilities

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on hand. “There are three factors that can complicate gold mining. Problems can arise from deep, technically demanding deposits, a lack of infrastructure such as roads and utilities and poor extraction levels from the ore. None of these issues apply at Amulsar—it is economically robust and overall, by comparison to other global projects, a very simple one. The ore is close to the surface and tests show that 94 per cent to 97 per cent of the gold can be extracted easily,” he comments.

Coughlin explains that Armenia is also highly attractive for other reasons. The mining sector in Armenia was liberalised in 2005 as part of a far reaching programme of economic reform to encourage Western investment, and despite its emerging status, the country is very stable. “Armenia also has a huge and very successful diaspora. People who have done well in Western style democracies return as investors and are naturally inclined towards Western business practices. It all goes towards making Armenia a modernizing and excellent country to do business in.

“There are many emerging or emergent environments that are possibilities from a geological perspective, but we would not wish to operate there,” he continues. “Of course, geological prospectivity is very important, but I believe our political judgment is something that gives us an edge in the exploration industry. It is vital that any deposit we explore is in an environment in which we can safely and reliably operate. Is there suitable infrastructure, political stability and a positive attitude towards working with foreign enterprises? We tend to look for a significant strategic or economic international interest that is likely to guarantee a level of political stability that goes beyond the immediate governance capability of any elected government,” he says.

Lydian is also helped by its excellent shareholder

credentials. “Our shareholder demographics are very important to us,” he continues. “Our largest shareholder is the International Finance Corporation, which is the equity investment arm of the World Bank and a very active multi-lateral investor. We are part of their broader investment portfolio in the region and that gives us a strong position.” A further five per cent of Lydian is owned by the European Bank for Reconstruction and Development, which is also a powerful economic supporter in this region.

Locally, the company has impressed the remote rural community where the project is based by its commitment to supporting sustainable community development in the area. “Social responsibility is now thankfully part of the corporate strategy of most mining companies,” he says. “At Amulsar, we do a lot of work around education and healthcare provision but we are also involved in several very innovative community programmes. One of our best projects is centered on an integrated environmental and social programme to modify cattle farming practices, allowing people to make maximum use of all available resources, including cow dung which is recycled as fertilizer and used to generate methane and high calorific value briquettes for heating homes.”

Coughlin envisages a long and prosperous future for the project, but wants Lydian to do all it can to create a sustainable local economy that is not ultimately dependent on mining. “In this industry we move in cycles of expansion and contraction and right now we want to focus all our energies on releasing the enormous potential of Amulsar. Of course, we still have other projects in our sights, but they are definitely not our priority at the moment,” he concludes. www.lydianinternational.co.uk

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E.ON UK has successfully seen farm through design and c operation. Senior project ma talks to Andrew Pelis about challenges and rewards invo

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E.ON Climate & Renewables UK: Robin Rigg

native power

donto

its Robin Rigg wind construction to final anager Ian Johnson t some of the many olved in the project

T

he wind farm revolution is well and truly gathering pace in the UK, but for E.ON Climate & Renewables UK, the Robin Rigg project has been anything but a breeze.

Plans were in place and the design phase for Robin Rigg was complete in 2005, when a paradigm shift in the contracting of wind farms meant that the main contractor in place at the time decided to pull out of the project at the eleventh hour.

“The plan had been to construct the site on a turnkey basis, using the EPC [engineering, procurement and construction] method,” explains Ian Johnson, senior project manager for Robin Rigg. “By the summer of 2005, we were ready to sign contracts when a market change saw the contractors decide that EPC was no longer the right route for them. This left us with a big problem, as no-one in the market wanted to do a project that way any more.”

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E.ON Climate & Renewables UK: Robin Rigg

The solution required a radical re-think in strategy and for E.ON it was a difficult induction into the offshore renewable energy market. “We had invested a lot of time, money and resources into this for an EPC contract and then had to start again from scratch. We decided to create a multi-lot package and offer contracts on an individual process basis, which required us to take on much more risk. By early 2006, we began to place the first new contracts,� Johnson explains.

Robin Rigg is the third wind farm project for E.ON in the UK, following a pilot project at Blyth, Northumberland and Scroby Sands, near Great Yarmouth in Norfolk. The farm is located on the Solway Firth, on the border between England and Scotland, and lies 11 kilometres off the Scottish coastline and 13 kilometres off the Cumbrian shore.

The plan to build two wind farms was originally

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E.ON Climate & Renewables UK: Robin Rigg

Stockton Drilling Limited The Robin Rigg HDD outfall further extends the company’s experience in the industry. Stockton used its 250 tonne rig and an offshore jack-up barge to complete an 800m drill to install a cable duct under a railway line and environmentally sensitive beach.

The cable duct housed one of two export cables for the 180MW wind farm in the Solway Firth.

proposed in the early 2000s; and consent was given to a joint venture partnership between TXU and Babcock and Brown. However, plans were compromised when TXU went into administration and Babcock and Brown, landed with the prospect of financing the project, decided to sell it to E.ON in 2003.

“They had received consent but there were lots of engineering and procurement designs to complete when we took over in 2004,” Johnson admits. “Under the terms of the consent we were limited to building a maximum 30 turbines on each farm which gave us no scope to increase the capacity. There were further limitations on the height of the turbine blades but there was a clear strategic fit with E.ON’s development and construction of offshore wind farms as part of our renewable energy plan.”

The consent gives E.ON the capacity to erect 60 three megawatt turbines (30 per wind farm) totalling 180 megawatts, which can service up to 117,000 homes and offset 220,000 tonnes of carbon per year.

Given E.ON’s lack of experience in offshore activities, the engineering process provided a real challenge and Johnson says that this led to work being split, with E.ON involving external suppliers like KBR for non-core capabilities such as design philosophy for offshore structures.

“We started in mid-2006 with construction of the onshore substation, as it was critical to be connected to the grid system before the turbines went up,” states Johnson. “By the end of the year we had placed contracts for the offshore foundations and turbines and after a delay (due to the need for a transportation vessel) work on the foundation began around Christmas of 2007.”

The logistics proved a challenge, not least given the inclement weather—of course, wind is a necessary feature of any wind farm, but bad weather caused considerable delays, on one occasion an unbroken run of 34 days’ inactivity.

Initially items were delivered on a just-in-time basis but

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E.ON Climate & Renewables UK: Robin Rigg

“Our offshore wind farm projects are centralised in Dusseldorf but here in the UK we are in the construction phase of the London Array project” practicalities altered this format, with turbine manufacturer Vestas able to use the Harland and Wolff facility in Belfast for storage of equipment and the turbines.

“Aside from the weather, our primary challenge has been getting the right vessels at the right time. When we were contracting for Robin Rigg, there were very few suitable vessels available in the market, although that is not necessarily the case today, given the drive for more wind farms. We actually ended up hiring our own vessel to help mitigate potential delays,” Johnson comments.

Although wind farms produce clean energy, there are still environmental considerations that have to be

met in the construction phase and Johnson says that the building of Robin Rigg was overseen by the Robin Rigg Monitoring Group, which comprised a number of stakeholders including the Scottish Executive, Scottish National Heritage and the RSPB. At its peak, E.ON’s first multi contract offshore project employed in excess of 200 people, with a dozen or so from the owners and the majority made up of various contractors and wind farm experts from Vestas and other key contractors. Local companies benefited from the project, supplying equipment, materials and boats.

To this day, a boat from the locality is used to transport

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E.ON Climate & Renewables UK: Robin Rigg

“We talk to contractors about the changes in the industry and we recognise that we have to understand the tone in the market and what people are comfortable with” the remaining 40 technicians to the site, as well as to monitor environmental impact.

Upon reflection, Johnson says that Robin Rigg has been a huge learning curve, which he hopes will prove invaluable experience for future projects. “We are a Europe-wide energy company and have a focus now on offshore projects. Our offshore wind farm projects are centralised in Dusseldorf but here in the UK we are in the construction phase of the London Array project.”

The London Array wind farm is a joint venture being developed by three international companies with renewable energy interests. The location for the wind farm is the outer Thames Estuary, one of the three strategic areas the UK’s government identified for their Round 2 offshore wind farm developments.

Unquestionably, the Robin Rigg project has given Johnson and his team a helping hand for future work.

“We have the processes in place for knowledge transfer and our project set-up is now carried out using a different approach,” he explains. “We talk to contractors about the changes in the industry and we recognise that we have to understand the tone in the market and what people are comfortable with.”

Robin Rigg was officially taken over and became operational this April. It has been built on sea bed with a 22-year lease from the Crown Estate but Johnson says that the farm itself is built to allow a much longer life span. “Robin Rigg gives E.ON the ability to combat climate change with cheaper, clean energy while offering a diverse supply,” he summarises. www.eon-uk.com

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Tap h

Jaypee’s Karcham Wangtoo Hy in north-west India is all set and beginning to genera McCallion learns 160

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Jaypee Karcham Hydro Corporation Limited

pping hydro potential

ydroelectric Project t for commissioning ate power, as Ruari s from Mr D P Goyal

H

ydroelectric power has a dualistic reputation. On the one hand, it generates electricity without emitting tonnes of carbon dioxide (CO2) or other greenhouse gases into the atmosphere. The other side of the coin is that hydroelectric power dams have a history of drowning hundreds or thousands of square kilometres of land under millions of tonnes of water, which is then used to turn the generator turbines. But the recent emergence of ‘run-of-the-river’ hydropower projects presents a different story.

They don’t require huge dams—essentially enough to store sufficient water to ensure peak demand coverage—and so they don’t drown the landscape. Run-of-the-river hydropower projects tend to be associated with smaller-scale storage requirements, perhaps supplying the needs of a local community, but that does not always have to be the case.

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Jaypee Karcham Hydro Corporation Limited

ANDRITZ HYDRO ANDRITZ HYDRO is a global supplier of electromechanical systems and services (“from water to wire”) for hydro power plants. The company is a leader in the world market for hydraulic power generation. ANDRITZ HYDRO promotes hydro power as the most economic form of renewable energy. In close cooperation with its customers, it supports long-lived, environmentally friendly concepts that maintain nature, mankind and technology in perfect harmony, as part of its own corporate culture.

ANDRITZ HYDRO represents: * over 160 years of experience in turbine design and manufacturing * more than 26,000 turbines installed, totalling approx.

245,000 MW output * over 110 years of experience in electrical equipment for power stations * complete supply range up to 700 MW * leading in service and rehabilitation for upgrades.

True to its motto: “focus on performance.”

The Indian state of Himachal Pradesh is located in the north-west of the country in the south-west Himalayas.

It is a mountainous region, with steep valleys and gorges cutting into the Himalaya ranges. The landscape is ideal for run-of-the-river hydropower—and it doesn’t have to be small-scale. The Karcham Wangtoo Hydroelectric Power Project is being constructed on the Satluj river in the Kinnaur district in the west of the state, between the villages of Karcham and Wangtoo. The river is fed mostly by the snow melt in the upper areas and by the monsoon in the lower areas, and is a vital supply to the region’s population—a consideration that received high priority in the design of the project.

“We have to divert just under half of the flow into a tunnel, which is discharged back into the river about 17 kilometres downstream,” says Mr D P Goyal, managing director of Jaypee Karcham Hydro Corporation Limited.

“Outside the monsoon season, the water is held behind the Karcham Dam on a daily basis in order to enable us to meet peak demand, which generally occurs between 6am and 9am, and from 6pm to 10pm. The total area of land that will be submerged behind the dam amounts to only 62.61 hectares.”

The first generating unit is scheduled to be commissioned in August 2011 and all four units by midNovember 2011. With the acceleration measures adopted under the inspiration and guidance of Mr. Jai Prakash Gaur, the founder chairman of the Jaypee Group, the project proponent is making all efforts to bring forward the commissioning by three to four months. When completed, the Karcham Wangtoo hydroelectric power

station will produce 1,000 MW of electricity—so this is larger than a community-level run-of-the-river project. In fact, when it received the go-ahead, it was the largest such project in the private sector in India. The dam itself rises 88 metres from its deepest foundation level and is 182 metres long at the top, with four sluice spillway bays. The project has a head race tunnel 10.48 metres in diameter and 16.92 kilometres in length; four pressure shafts; an underground powerhouse with four 250 MW Francis turbines; a transformer hall; and a tail race tunnel 1.3 kilometres long and 10.48 metres in diameter.

“The project was approved considering the power shortages in the power grid in north-west India,” Goyal explains. “Cuts and power outages occur often. The state of Himachal Pradesh has surplus power for most of the year and sells it to neighbouring states, including Punjab, Uttar Pradesh and Rajastan.” However, it is worth bearing in mind that Karcham Wangtoo is well into the Himalaya ranges—it is located at over 1,800 metres (6,000 feet) elevation and surrounded by mountains. Besides the hydropower station, the means to transmit the power has to be constructed. “We are investing in transmission infrastructure and building 217 kilometres of 400 Kv double-circuit lines from the power station to the grid point through Jaypee Powergrid Company Limited.”

Besides the location being remote, the main challenges have been geological. “We encountered very high temperatures in the rocks—up to 98 degrees Celsius— when we were excavating the tunnel,” Goyal says. “We had to deal with highly fractured rocks, water ingress and soft strata also.” Jaypee used Atlas Copco tunnel drilling equipment, equipped with a special forepoling boom attachment, to help it complete the task before time.

Apart from the physical challenges, environmental issues required extensive consultation and planning before clearances were issued by the government agencies. “Commencement of construction got delayed by about 23 months, from January 2004 to November 2005, while we waited for environmental and forestry approval,” says Goyal. Jaypee is optimising the construction period by deploying additional equipment and by recruiting additional staff—as at April 2010, the project involved 14,369 people, including contractor personnel. “When the project is running, around 750 people will be employed, including security staff.” And the challenges will not end once the ‘on’ buttons are pressed in 2011.

“We get lots of silt in the river during the monsoon,” Goyal continues. “Clearly, that has to be kept out of the turbines and pretty much all of the hydromechanical parts,

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Jaypee Karcham Hydro Corporation Limited

Südkabel Südkabel,

Mannheim/Germany,

experienced

in

delivering cable systems for hydro power plants, delivered six circuits 400 kV XLPE-insulated power cables for the Karcham-Wangtoo Hydroelectric Project. Due to its special design, the 2,500 sq mm conductor cross section cables connecting the power station to the transmission system have a transmission capacity of 2,500 A each. Via these cables the entire produced electrical power will be fed into the Indian 400 kV power grid.

which would be damaged by it. We have constructed the largest underground de-silting basin to exclude silt particles down to a size of 0.2 mm and we also decided to invest in full tungsten-carbide coatings for the runners. If one runner gets damaged, which is quite possible, it will take about 18 days to replace it, so we have built in 100 per cent redundancy—we have a full set of spare runners.”

The entry of the private sector into power generation in India is relatively recent. Jaypee Karcham Hydro Corporation was set up seven years ago as the special

purpose build-own-operate vehicle for the construction and operation of the Karcham Wangtoo Hydroelectric Project. The total cost of the project will be about US$1.5 billion by the time it is completed. It is unlikely to be the last such project in Himachal Pradesh as untapped potential for hydroelectric power in the state, especially run-of-theriver schemes, remains very large. Jaypee Group already owns two other hydropower plants under operation; namely the 300 MW Baspa-II hydroelectric project, also in the district of Kinnaur in Himachal Pradesh, and the 400 MW Vishnu Prayag hydroelectric project in Uttaranchal State. It undoubtedly has the experience and expertise to bring such opportunities to fruition.

The Jaypee Group also plans to take up execution of the 2,700 MW Lower Siang hydroelectric project and the 500 MW Hirong hydroelectric project in Arunachal Pradesh State; as well as the 450 MW Kynshi Stage II hydroelectric project and 270 MW Umngot hydroelectric project in Meghalaya State in north-east India. www.jhpl.com

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Refini business the

The Bahrain Petroleum Company ( business for the rapidly changing Deputy CE Eion Turnbull tells Gay Sutto has a reputation for being a p 166

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BAPCO

ing

(BAPCO) is honing its g global marketplace. on why the company powerhouse of talent

I

mages of Bahrain are televised around the world each year as the Formula 1 Grand Prix season kicks off at the spectacular Bahrain International Circuit at Sakhir, located among verdant greenery in the otherwise dusty arid interior of the island. Although Bahrain has only hosted the race for seven years, it seems very much at home in this Kingdom as it too, races to further make its mark on the rapidly evolving global stage.

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BAPCO

This land of date palms and fresh water springs, with a rich cultural heritage that can be traced back many thousands of years, is the cradle of the Arabian Gulf oil industry. A small island lying between Saudi Arabia and Qatar, Bahrain was the first country in the Gulf region to discover and harness the rich oil reserves that lie beneath the earth’s surface.

In 1929, SOCAL (now known as Chevron), set up the Bahrain Petroleum Company (BAPCO), and made the first discovery of oil in 1932. That event then paved the way for exploration in countries such as Saudi Arabia, Kuwait and the United Arab Emirates, leading to the industry we know today.

With operations across a wide spectrum of disciplines, from exploration, drilling and refining through to storage and wharfing facilities, and with 16 retail outlets on the island, BAPCO today is 100 per cent owned by the government of Bahrain. “So we are essentially a national oil company,” explains the DCE, Eion Turnbull.

Output from the Bahrain oil fields is around 32,000 barrels a day, while the refinery processes about 267,000

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Grace Davison Grace Davison is very proud to have been the sole FCC catalyst supplier to BAPCO for the last 25 years.

The FCC unit at BAPCO was started up in 1945 and is the oldest design in the world, which provides unique operating challenges. However, BAPCO has successfully operated its FCC unit by applying top-class technical competence. Grace Davison has an excellent working relationship with BAPCO and offers extensive technical support, which has been instrumental in achieving outstanding operational excellence and unit performance. In addition, our tailor-made catalyst formulations

have

allowed

BAPCO

to

maximise

distillate production and resid intake.

$4 billion is likely to be invested to upgrade the refinery, to improve its energy efficiency, and reengineer the product mix to reduce production of lower value or loss making products such as fuel oil and increase the production of higher value growth products such diesel and kerosene.

In parallel with this, the company also aims to diversify into other areas of the oil market and is engaged in researching and analysing the marketplace to identify trends and establish further opportunities. Its strategy for achieving this is to utilise its core strengths, which include project execution and operational excellence, and to find joint venture partners with expertise in complementary areas such as marketing.

“We are currently building a lube base oil plant,” Turnbull says. “And we are doing this in partnership with Neste, whereby we will operate the facility and produce

“All forecasters are predicting that demand for diesel and jet fuel will grow strongly, whereas the same is not true for gasoline. That we are in this position is testimony to the wisdom of investment decisions made during the past decade” barrels a day of crude. From this, 35 per cent is converted into diesel, manufactured to the highest global standards of quality, 20 per cent is kerosene—jet fuel, 20 per cent is black products (fuel oil or asphalt) and 15 per cent naphtha, with a small amount of gasoline also produced, predominantly for the local market. “As you can see, the refinery product slate is skewed towards middle distillates, being diesel and jet,” Turnbull says. “And we see this as a real strength because all forecasters are predicting that demand for them will grow strongly whereas the same is not true for gasoline. That we are in this position is testimony to the wisdom of investment decisions made during the past decade.”

Having invested $1.1 million increasing the refinery’s processing capability over this period, BAPCO is now looking to the future to secure its growth and enhance performance in what is a rapidly changing world. “This is being done under the banner of what we call our refinery master plan, which will define how the refinery will need to look post-2015.”

Elements of this plan include analysing the economic market, projecting what the quality requirements are likely to be after 2015, as well as environmental standards and community expectations. Based on these projections, something in the region of $2 billion to

the lube oil, and Neste will market it on behalf of the joint venture.” Once up and running, the plant should produce 400,000 tonnes of high grade, group III lube oil a year.

Environmental issues are a major concern to the oil industry in general, and BAPCO has always striven to position itself ahead of the game. Last year it commissioned a new refinery gas desulphurisation plant costing some $160 million. “And this was all about environmental improvement. It has minimal payback in terms of profits, and goes way beyond the government’s environmental requirements.”

In early 2012 a new wastewater treatment plant incorporating the latest technology is due to come online, and this has presented quite a challenge. “In this case, getting the technology right was very important for us,” he explains. The conditions in Bahrain are very demanding.

There are high salt levels in the effluent, the quality regulations are stringent and the climate is very hot.

“Which is why we built a pilot plant and tested it rigorously over a 12 month period, to ensure that we got it right.”

Looking to the future, the government of Bahrain is at the start of a major exploration programme to more than triple oil production from the Bahrain oil fields, and to identify further natural gas reserves. “I would think that over the next 10 years or so, this investment would

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BAPCO

come to something in the region of $20 billion.”

BAPCO’s role will be to oversee the technical aspect of the work on the Government’s behalf, to ensure that it achieves value for money, that the right balance of longand short-term goals is struck and that the work is done to high technical specifications. Already, a joint venture called Tatweer is actively developing the onshore oil reserves. Offshore reserves are to be developed by joint ventures with PTT of Thailand and Oxy of the USA. And finally, joint venture partners are being sought to search deeper into the earth’s crust for further reserves of gas.

Having operated in Bahrain for some 82 years, BAPCO has developed a reputation for business best practice, always seeking win-win outcomes and social integrity. It was, for example, the first company outside of North America to win the prestigious Robert Campbell Award from the National Safety Council of America. It

undertakes all the usual charity and public outreach activities, and also plays a key role in developing the island’s future leaders.

Each year the company selects 15 or 16 talented students and sponsors them through university at home and abroad, taking an interest in disciplines ranging from chemical and mechanical engineering through to accountancy, geology and physics. Some of the graduates continue with BAPCO, and others step into fast track careers in other organisations on the island. “As a result, BAPCO is seen as a powerhouse of talent,” Turnbull says.

“I think, if you had to sum up BAPCO, it’s an organisation that people like to deal with. We tend to be mindful of people’s needs, whether it’s a customer, a supplier, or a stakeholder. As a result, we’ll take a firm but fair approach. And people like that,” he concludes. www.bapco.com.bh

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on

techn

Technip KT India is enjoying a period of phenom growth. CEO Ram Kishore Iruvanti talks to Gay Sutton about his strategy for innovation and remaining ahead of the competition

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Te c h n i p K T I n d i a L i m i t e d

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Te c h n i p K T I n d i a L i m i t e d

S

ome marriages are a matter of convenience while others are made in heaven; and some are destined to produce a long-lasting union of harmony. Just such a marriage took place in 1999 when Technip, a global provider of project management, engineering and construction services for the oil and gas industry, acquired KTI—the chemical process division of Mannesmann. With offices in Delhi, Rome, The Hague, and Claremont, USA, KTI had a worldwide reputation for high temperature reaction process engineering for the refinery and petrochemical industries, and the fit seemed perfect.

“We had been working on projects with Technip for many years and knew them very well. In ethylene plants, for example, we would work on the front or hot end of the plant, and they would manage the cold or back end of the plant,” explains Ram Kishore Iruvanti, CEO of Technip KT India. “The acquisition therefore provided vertical integration for Technip. Meanwhile, we transitioned into a project management company and have been able to participate in much larger projects worldwide.”

This decade has been one of phenomenal growth for the company, so much so that the cold winds of recession which have depressed businesses around the world have hardly been felt. “When I returned from the Netherlands and took over as CEO here about five years ago, we were a €20 million company in terms of revenue,” Iruvanti says. “Today we are a €100 million company. And we have been playing a part in India’s drive to produce gasoline and diesel fuels to meet the Euro IV emissions standards. There has been, and continues to be, considerable investment in new refinery and petrochemical plants in India.”

Today, Technip KT India is recognised as a market leader in a range of technologies for the hydrocarbon industry—for example, it has built 16 hydrogen plants in India to date. “Each project is unique,” Iruvanti asserts.

“But the core chemistry and engineering remain the same, so you could almost call this a product line.”

The company is also market leader in the construction of fired heaters and furnaces for oil refineries, and has built around 100 in India alone since its inception. It has developed a considerable reputation for sulphur recovery units; and has developed skills in designing and building modular plants in the hydrocarbon industry.

“In these areas, which form around 50 per cent of the business, we are well known in the market. In another 30 per cent, we use other people’s technologies and share the market with other EPC contractors. For the remainder of the business, we provide engineering services to Technip

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worldwide, whenever they require our areas of expertise.”

Being part of a large global group has also brought a series of benefits. Not only can the Indian division participate in much larger contracts with its parent company, but it is able to share technology and knowledge with other members of the group. Technip also continuously improves its engineering and business processes, systems and procedures, and standardises them across the group, only adapting them when necessary to the country in which they are being implemented.

As a result, engineers moving from office to office within the group will find project planning and project management systems they are familiar with. “This then gives them confidence to exchange information, and increases mobility between the units. And this is happening more and more as we share knowledge and skills. And for our clients, these standardised procedures mean they can expect the same products and services in India as they have received from us in, say, Aberdeen, Paris or Italy.”

To date, the majority of work in India has been for onshore refineries, petrochemicals and gas processing

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plants. However, Technip KT India’s strategy going forward is to consolidate and grow the home market, first of all bidding for projects as an independent unit, and secondly bidding on larger projects in collaboration with the group. Iruvanti would also like to see the company expand beyond onshore work and to develop its expertise in offshore work.

The vibrancy of the Indian economy has not only presented opportunities, but also challenges.

Consolidation in the EPC field has resulted in many small contractors folding and larger contractors growing to become more competitive. In addition, many of the international players have been entering the Indian marketplace. Attracted by the strengthening economy, they not only compete for contracts, but also for skilled personnel. “So we’re increasingly finding it important to create a working environment that both interests and challenges our engineers, and meets the growing aspirations of our people.”

The company is rising to this challenge in two ways.

Firstly, Iruvanti believes that working on large projects such as the Indian Oil Corporation’s isomerisation plant

Te c h n i p K T I n d i a L i m i t e d

Dresser-Rand Dresser-Rand

is

a

global

supplier

of

custom-

engineered rotating equipment solutions. During the last 12 years, Dresser-Rand has supplied process compressors for Technip KT India’s IOCL Guwahati,

IOCL

Mathura

NHTU

Revamp,

IOCL

Gujarat and HPCL Vizag-HGU projects. DresserRand is proud of this relationship and continues to provide Technip with superior value reflective of our technological leadership, service support and engineered solutions.

enables the company to manage a project through from concept to commissioning. “And this keeps the interest of our engineers alive,” he says. Secondly, he is personally driving the activities of an innovation unit in India. “I want to keep the fires burning so that we come

out with some interesting future product lines.”

The unit is currently looking at a variety of technologies including carbon capture and wind energy. Carbon capture could, he believes, be of great value to the carbon dioxide recovery projects that will be going out to tender in the future. “These technologies will also be valuable from the sustainability point of view.”

Looking at the immediate future, the company has ambitions to expand into industries upstream and downstream of its traditional area of focus, and thereby create a bigger footprint in the marketplace. “We already have the technology, although there are still a few technical challenges,” Iruvanti concludes. “But we believe that unless we continue to innovate and develop these new technologies, the competitors will catch up with us.”

By personally driving the innovation process, Iruvanti intends to maintain that forward momentum and stay one step ahead of the competition. www.technip.com/en/entities/india

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Power

to

peop

the

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NamPower

Jane Bordenave talks to Paulinus Shilamba, managing director of Namibian power utility NamPower, about how the company is securing the country’s energy supply and the challenges this presents

N

amPower, as Namibia’s national power utility, was established in 1964, with the ambitious vision of powering Namibia to new commercial heights. The utility’s major investment projects are among some of the largest ever carried out in Namibia and serve as the backbone of dynamic growth and diversification.

NamPower is a parastatal company registered under the Companies Act, with the Government of the Republic of Namibia as the sole shareholder. It reports directly to the Ministry of Mines and Energy through the board of directors. The core business focus of the company is the generation, transmission and trading of energy, and to a lesser extent the distribution of electricity in Namibia.

Currently, the company operates three power stations, namely: Ruacana Hydro Power Station situated in Ruacana on the Cunene river in the north of Namibia, providing up to 240 MW of clean and renewable energy to the National Grid at very low costs; the Van Eck coal-fired Thermal Power Station situated in the capital city of Windhoek, with a capacity of 120 MW; and Paratus (‘Always Ready’) Diesel Power Station situated in Walvis Bay, with a capacity of 26.4 MW. Generation is supported by an extensive 10,000 kilometres of transmission lines throughout Namibia, ranging from 66 kV to 400 kV. NamPower trades energy with neighbouring countries, such as South Africa, Zambia, Zimbabwe, the Democratic Republic of Congo and Mozambique, and is a member of the Southern African Power Pool (SAPP).

The company faces particular challenges in providing power to the country. With a population of little over two million, spread over an area of 825,418 square kilometres, Namibia is resource-poor in terms of fuel for power stations. One of the tasks of Paulinus Shilamba, who joined the company as managing director in 2006, was to put in place short-term, medium-term and long-term measures to ensure a secure supply of electricity.

One of the short-term strategies has been the control of customer electricity demand.

Some of the demand side management (DSM) programmes initiated included educating the customer base about how to conserve electricity; and distributing one million energy-saving light bulbs to energy consumers, encouraging them to replace their existing tungsten light bulbs with compact fluorescent ones. Additionally, NamPower has introduced time-of-use tariffs, making electricity more expensive during peak hours and cheaper during off-peak times. The company is also working with its large consumers of energy in Namibia, such as the mining companies, who have agreed to shift their operations from peak to off-peak times when NamPower experiences an energy shortage. In total, these measurements have reduced electricity usage in peak times by approximately 20 per cent.

In addition to promoting energy conservation and reducing power surges, one of the company’s main objectives is to introduce supplier diversification and electrical selfsufficiency in Namibia. “In the past, we relied heavily on Eskom, the South African energy provider and approximately 60 per cent of the power in the country was supplied by that utility,” explains Shilamba, “but Eskom is now experiencing brown-outs and power cuts in

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NamPower

South Africa and is not able to provide us with the level of energy we need.”

One of the ways in which NamPower plans to overcome this problem is through the construction of the Caprivi Link interconnector. This pioneering N$3.2 billion project, which stretches for nearly 1,000 kilometres, will connect Namibia with its northern neighbours and allow them to trade directly, rather than through South Africa. “What we are doing with this line is at the cutting edge of technology,” says Shilamba.

“ABB, the company that built the substations on this transmission line, installed an HVDC Lite system, which has never been used before on long distance overhead lines. It’s an exciting time—this project will be the blueprint for other countries to follow when building transmission systems on this scale.”

The other area of large-scale capital investment is at the Ruacana Hydro Power Station, where a fourth unit is to be installed at a cost of N$750 million. This is the largest and also the most economical power generating facility owned and operated by NamPower. As diesel

and coal have to be imported from South Africa, the Van Eck and Paratus Power Stations are expensive to run, only being used to generate power during peak hours and in emergencies.

“The Ruacana Hydro Power Station was commissioned during the 1970s and was designed to accommodate four generators, each with a capacity of 80 megawatts.

However due to low demand at the time, only three generators were installed,” says Shilamba. “When I took up my position at NamPower, I realised that this presented us with an opportunity to upgrade our power supply potential. We started a feasibility investigation straight away and in 2008, made the final decision to go ahead with installation.” Work has already begun on this project and by early 2012 the facility is expected to provide 320 MW of energy, rather than the current 240 MW. An additional project in the implementation stage is the Anixas Diesel Power Station to be constructed next to the existing Paratus Power Station in the coastal town of Walvis Bay in Namibia. Work on this project has commenced and every aspect of the 22.5 MW diesel

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NamPower

Consolidated Power Projects (Pty) Ltd Consolidated Power Projects (CONCO), one of Africa’s leading suppliers of turnkey solutions for the high voltage industry, successfully designed and supplied the latest protection and automation technology for Namibia’s national electricity utility, NamPower.

CONCO’s flexible and open design has allowed NamPower to easily extend the infrastructure making use of the latest technology, such as IEC61850 and other advanced technological features.

power project is on track for commissioning in early 2011, at a cost of N$375 million.

In addition to the Caprivi Link Interconnector Project, the Ruacana 4th Unit and the Anixas Diesel Power Station— all well into the implementation phase—NamPower has various projects in the feasibility study phase.

Namibia is rich in its potential for renewable energy as well. Investigations are currently ongoing into onshore wind farms and a concentrated solar photovoltaic system (CSP). While the investigation to establish a wind farm is in its preliminary stage, plans for a 50

MW CSP facility are already on the cards. The other renewable energy project option being investigated is the use of invader bush to generate electricity. Invader bush is an alien species of vegetation that threatens the local environment, due to its virulence. With an invader bush power station, NamPower can generate sustainable energy while at the same time getting rid of potentially damaging flora in the region.

Clearly, there are challenges that NamPower has to overcome in order to meet its mandate fully, and in so doing, meet the increasing demand for electricity in a self-sufficient and sustainable manner.

However, the numerous projects in the various stages of conceptualisation, feasibility and implementation are testimony to a power utility company that takes its vision ‘To be a leading energy company in Africa, which excels in customer service, people development and technological innovation,’ seriously. www.nampower.com.na

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Afric

An

If ever a case were neede offers the perfect illustrat

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can

Autopax

journey

ed for the FIFA World Cup coming to South Africa, then Autopax tion of the many benefits, as Andrew Pelis discovers

P

retoria-based Autopax runs coach transportation services across South Africa. It is owned by the state agency PRASA—the South Africa rail authority—and primarily runs long distance coach journeys within the country and across its borders into neighbouring states.

The company has witnessed many improvements over the past couple of years, as CEO Saki Zamxaka explains. “The transport system in South Africa has undoubtedly improved and that has helped us in many ways,” he acknowledges. “The better road surfaces have reduced our need for maintenance on vehicles, which has reduced our costs but importantly, has also lessened the risk of roadside breakdowns and the implications these have on driver hours.”

The company operates two established brands: Translux, which offers the customer luxury travel; and City to City, which provides a more basic service within the country.

Zamxaka says that although the Autopax name only came into being as recently as April 2009, the company has operated under various guises since 1912, becoming incorporated in April 2001.

Competition in this sector is rife; but Zamxaka says Autopax holds its own well on the grounds of its reputation for value, safety and reliability. The arrival of the FIFA World Cup was the catalyst for an ambitious R1.4 billion investment that has seen the company increase its fleet of coaches in anticipation of the demand for transport during the tournament.

“It is a pretty competitive and open market and affordability is certainly an issue,” states Zamxaka. “We have started to target the leisure travel sector recently and with the FIFA World Cup imminent, we have introduced

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Autopax

DigiCore The

key

differentiator

of

an

effective

fleet

management solution is its potential to maximise visibility, thus enabling fleet managers to identify problems as they occur, and respond to them instantly. DigiCore’s advanced technology provides our customers with “an edge” in managing their fleets

cost-effectively

and

assisting

them

to

remotely control their mobile assets.

Marcopolo The relationship between Marcopolo and Autopax has been in existence for almost 10 years, since the beginning of the company’s operation in South Africa. To participate in a project so important, significant and challenging proves the company’s ability to provide, in record time, 460 buses with a higher standard of quality, comfort and security, which no doubt will be successful during the World Cup football tournament.

a charter business that will include providing transport from some of the railway stations.

“This included an injection of cash that paid for the addition of a new fleet of vehicles and we are now starting to see a turnaround in the business as a result of this. The fleet for the World Cup will be entirely new and will take our total number of buses to over 500, making us the largest fleet owners in South Africa.

We expect these vehicles will then operate for up to a further six years.”

The company has also recruited additional drivers over the past few months, ahead of the surge in business that this June’s fiesta promises. “We have higher staff numbers than normal to cope with the demand and recently brought in a number of contract drivers,” Zamxaka explains. “We have in place a number of client commitments and needed the extra workforce in order to deliver on these promises. We will therefore have 1,200 drivers during this winter’s tournament and 2,000 staff overall but numbers will of course reduce to normal afterwards.”

The recruitment drive has been exhaustive and detailed, with candidates having to meet strict requirements following medical and criminal checks and psychological evaluation to determine suitability.

Zamxaka says that each driver then has to undertake in-house road and customer service training, as the role entails extensive interaction with customers.

“We have a national call centre and three major operations centres in Pretoria, Johannesburg and Cape Town, plus a smaller depot in Durban and sales offices around the country,” he comments. “All of our frontline call centre staff have undergone training on how to better handle complaints and how to successfully engage in marketing.

“Further training has taken place with MercedesBenz, who supplied our new fleet of vehicles and this will help us to better manage our maintenance going forwards,” he adds.

Maintenance is a key issue for operations, as any maintenance problems to vehicles can cause big headaches in terms of downtime. In addition, recent health and safety regulations impact greatly on the time a driver must take to recover. Zamxaka says that much of the company’s training brings Autopax in line with the raft of recent legislation. “There are strict rules on the licensing of each driver who must have achieved a minimum 100 hours driving a public transport vehicle and who is not allowed to work more than eight hours at a time.

“The new traffic management laws have introduced a

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points system for the transport companies to adhere to, while the environmental laws actually criminalise some practices,” he states.

He cites the challenge of meeting customer expectations as a primary focus for Autopax. “We particularly aim to ensure our coaches depart on time and that the safety and reliability of our services is never compromised.”

Increasingly, part of that solution has come from investment in technology. The new fleet of coaches comes with sophisticated tracking systems that will monitor fuel consumption, driver behaviour and will ensure the correct routes are taken at all times. Zamxaka believes that this will change the company culture for the better and will ultimately help to drive down costs, particularly given the fluctuations in fuel prices.

He says that technology, and in particular the internet, has also begun to offer customers a new dimension when it comes to booking tickets. “This has definitely given us an advantage and those outlets that are not office-bound

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Autopax

Toughbrakes Toughbrakes was established in 2004 by the current managing member, Mike Letang. Toughbrakes is solely black-owned with a Level 1 BEE rating and has established itself as an important role player in the brake and clutch industry. Autopax has been one of our most valued clients since 2004 and we are honoured to be associated with them.

are doing much better—convenience is a major bonus for customers who can book from home rather than having to queue. Our existing system works very well and in the next week or so we will be going live with our latest development that ties in our payment systems.”

One of the areas that received greater attention when it was announced that South Africa would be host to the World Cup was the transportation network

system. Much maligned, there has been enormous work undertaken to improve road systems and this has had both a positive and negative effect for Autopax.

“This has been an interesting one for us,” Zamxaka affirms. “On the one hand, the improved roads now make for much more comfortable travel and also reduce the need for maintenance; however, we have also seen an increase in road tolls, so it has become much more expensive.”

With the economy having improved in recent months and a spike in business anticipated over the next couple of months, Zamxaka has good grounds for future optimism.

“I think the key is to maintain our modern fleet of vehicles so passengers can travel in comfort; but we also want to increase our footprint throughout Southern Africa. We already operate services to Mozambique and want to get into Botswana, Malawi, Zambia and Zimbabwe.”

With such ambitions, it seems there is a lot of mileage left in the Autopax journey yet. www.translux.co.za

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growin A

group

Lewis Group

ng Lewis Group is very much a part of the retail scene in southern Africa, having been around for all of 76 years; but its new and dynamic CEO Johan Enslin is determined that the group will make an even bigger impact over the next three years, as John O’Hanlon reports June 10 www.bus-ex.com

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Lewis Group

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ewis Group first hit the South African retail scene back in 1934 when it opened its original store at Woodstock, Cape Town. Since then it has expanded to become one of the country’s most successful retailers, with a network of 548 stores; and in 2004 the group was floated on the Johannesburg Stock Exchange. South Africans can buy their household furniture, electrical appliances and home electronics products in every metropolitan centre in the country as well as many rural areas.

On top of this commanding presence in the home market, Lewis Group has 49 stores in the neighbouring countries of Botswana, Lesotho, Namibia and Swaziland. Lewis is southern Africa’s single largest retail furniture brand and the group has a customer base of close to 700,000.

The mainstay of Lewis Group’s business is furniture, which accounts for 82 per cent of its revenues. Lewis, the largest furniture brand with 427 stores, sells a wide range of household furniture, electrical appliances and home electronics to customers in the LSM (living standards measure) 4 to 7 categories. Lifestyle Living, which was acquired by the group in 2003 to focus on higher income customers, accounts for just six per cent of merchandise sales.

Perhaps the greatest opportunity for organic growth

lies in the fast developing consumer electronics markets, catered for by the Best Home and Electric stores, which in 2009 still only accounted for 12 per cent of group sales. Best Electric, as it’s known for short, has 88 branches and targets the same demographic as Lewis with specialist electrical and audiovisual products.

The group business model relies on high value sales, which are typically supported by terms. Credit sales are supported by the group’s financial services arm, Monarch Insurance, which provides short-term insurance to the group’s credit customers.

Despite the downturn, Lewis Group’s sales actually increased by eight per cent in the year to March 2010.

Merchandise sales grew by 6.5 per cent to R2.1 billion, to the satisfaction of chief executive Johan Enslin. “Sales of the higher margin furniture and appliance category increased by 8.5 per cent as our merchandise strategy of sourcing exclusive and differentiated furniture ranges continued to benefit the group,” he said.

During the last financial year the group opened 10 new furniture outlets under the Lewis banner and six Best Home and Electric branches, a confident move in a difficult retail market. Enslin’s confidence is tempered with realism: “We are seeing the signs of improved trading conditions and more optimism on the part of our

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Lewis Group

“Sales of the higher margin furniture and appliance category increased by 8.5 per cent as our merchandise strategy of sourcing exclusive and differentiated furniture ranges continued to benefit the group” customers; all the same, our trading environment will remain challenging as long as the country is emerging from this recession.” Naturally enough, he is hoping unemployment can be kept in check. Job creation is still the key to stimulating economic growth among the Lewis target market, he believes.

With so much uncertainty around, you might not think this a good time to enter a really aggressive expansion programme, but that is just what the Lewis Group board is planning. The company announced in May that it would open up to 45 new stores in the current financial year and continue to expand at the same rate over the next three years. This will see 150 new outlets by 2013, bringing the total number to around 700, some of them in Lesotho, Swaziland and Namibia, where the group has stores.

This is not as risky a strategy as it may seem at

first sight: Enslin, who was appointed to the top job in October last year, knows Lewis’s customers better than anyone, having started as a salesman back in 1993. The Lewis and Best Home and Electric business model has been proven over many years, he says, and if the right locations are selected, the investment involved will be secure.

The Lifestyle Living stores, which are described as a niche furnishing business aimed at the highest earners in the LSM 8 to 10 bracket, are the only part of the business that has been underperforming, showing a decline in turnover last year. “We have been rethinking this business, and are going to launch a completely new trading brand called My Home, which will focus on consumers in the LSM 7 to 8 bracket. We are going to convert 13 of the 20 existing Lifestyle Living stores to

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Ellies Ellies pledges its dedication and commitment to maintaining and improving both service and sales within the Lewis Group. Ellies has built up a premium brand over the last 30 years; and the SA consumer recognises and asks for ‘The Name You Can Trust’.

Customer is king, and we thank the Lewis Group for its support over the years. Our focus now is to strengthen our relationship and strive towards organic growth within the Lewis Group. Ellies is entering a new era as a listed company and will be investing in new product ranges and ventures which can only enhance our current business relationship.

My Home, bring the business model a lot closer to the tried and tested Lewis approach, and in particular make fuller use of our group credit infrastructure.”

The plan, he adds, is to differentiate the merchandise in these stores by continuing to offer exclusive ranges and attracting the type of customer who would use instore credit facilities. It is worth pointing out that 70 per cent of the furniture that the Lewis Group sells can’t be bought anywhere else.

South Africa has been to some extent cushioned from the worst impact of the recession, despite what Enslin says about employment. It is certainly no Greece, and confidence in the South African economy survived longer and revived faster than in the majority of the world’s other large industrial nations.

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“We are seeing the signs of improved trading conditions and more optimism on the part of our customers” MasterGuard Fabric Protection MasterGuard Fabric Protection is in wide use in southern Africa and is a proud supplier to Lewis stores, with whom it has developed a marketing and distribution supply chain for the product. MasterGuard Fabric Protection bonds to each fibre of a fabric, creating an invisible defence against liquid, dirt, dust and damage by UV rays. It is non-toxic, odourless, non-flammable and biodegradable.

The morale of the entire nation has been boosted by the excitement generated by the World Cup and the associated investment in infrastructure. The roads are better and telecommunications have improved with the addition of international internet pipes. None of this

may be said to have a direct impact on the upmarket retail sector represented by Lewis, but its indirect and long-term effect on national prosperity has certainly helped to keep the sector buoyant and should be seen as a backdrop to the store expansion programme.

To give an idea of the innovative approach that Lewis Group is adopting, it is looking afresh at each retail outlet. In one exciting recent development, Lewis has opened a number of experimental stores which are half the size of the normal outlets. Driven mainly through automated servicing, these have achieved sales virtually to the same level as the larger sized stores, says Enslin. “We are planning to roll this format out as part of our ongoing growth programme—it’s not unique in the world but it is a new and efficient way of doing furniture business in South Africa.” www.lewisgroup.co.za

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Coal might not be enviro electricity in South Africa as well as those involve power station,

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onmentally popular but a is dependant upon it, ed with getting it to the as Alan Swaby reports

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hen the world’s financial troubles erupted in 2008, the economies of many countries went into decline. But by and large, South Africa managed to avoid the worst of the impact. “It did have an effect on certain sectors,” says Jim Harrison, managing director of Taggart JHDA, “but mining in general and coal in particular continued largely unscathed. It’s only now that we are noticing a slowdown in major projects.”

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In fact, during a period where most businesses have been content merely to survive, Taggart JHDA has positively thrived. Prior to 2008, the company’s best results ever achieved saw sales of R120 million. Last year, however, turnover was R357 million.

The quantum shift has coincided with the acquisition of JHDA by Taggart Global—an international US specialist in materials handling and coal preparation plants—whose fortunes have risen even more meteorically than JHDA’s.

Taggart’s roots go back to just 1993 when a joint venture was established with Sedgman Australia, aimed at upgrading and modernising US coal preparation plants. By 2000, it had interests in China followed over the years by expansion into Brazil, Russia, Canada and finally South Africa. Since 2000, Taggart has completed more than 200 major coal preparation and materials handling projects in seven countries across five continents and has been ranked 28th out of the top 50 US-based contractors with international operations

by McGraw-Hill’s Engineering News Record.

On a personal level, the interest from Taggart couldn’t have come at a better time for Harrison. Having spent

almost 50 years in mining, Harrison was looking to grow and expand his business. He had met Larry Watters of Taggart several times, so when Taggart started looking at expanding into South Africa, the link was obvious and the timing perfect.

As individuals, both Harrison and Watters have similar backgrounds—a long history with one specific industry, working up through the ranks to managerial positions.

“The fact that my business had to start small, picking up whatever work it could find,” explains Harrison, “has proved very beneficial. It means we have enormously wide contacts with people who at one time might have been fairly junior within an organisation but who are now running things. We’ve grown together. My customers know we might not always be the cheapest but they know that the work we do will be free of future problems.”

On the back of its successful investment into JHDA, Taggart also bought a major holding in another South African company—LSL/Tekpro, which specialises in materials handling plants. LSL Consulting is well known in the South African market, with particular expertise in iron ore, coal and mineral sand projects, and with major

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clients such as the Sishen Mine (Kumba Iron Ore) and Exxaro, as well as Namakwa Sands. Specialising in the design of long overland conveyors as well as dual carry conveyors, in 2001 LSL successfully designed and installed a 6.6 kilometre long dual carry conveyor. When it eventually reaches its final length of 7.5 kilometres, it will be the longest dual carry conveyor in the world. LSL is also currently one of the main consulting engineering companies on the Exxaro Grootegeluk Coal Mine expansion project, which will supply coal to the new Medupi Power Station. The scope included the materials handling from in-pit crushing through to the Eskom silo.

Together with JHDA and LSL, Taggart is now able to offer a complete project solution from materials handling to processing, all in-house, and foresees this as being of significant benefit to clients in the future. Taggart’s aim in South Africa is to become a major engineering company in all mining projects.

Taggart and JHDA is a two-way street. JHDA provides a broader spread of interests, while Taggart is renowned for the innovative solutions it has developed to the question of cleaner coal. Over the years it has developed systems that need 40 per cent less equipment to achieve a plant’s specifications. It uses a package of proprietary modular plant which reduces a facility’s overall dimensions and consequently, the amount of energy needed to run the plant and its equipment. The domino effect of a smaller footprint streamlines the whole construction and operation process, saving on construction materials and accelerating construction schedules.

Of course, coal is a controversial topic among environmentalists who consider it among the most polluting of fuels. Harrison reports that not only is South African coal low in sulphur—one of the worst contaminants—but the whole raison d’être for the coal preparation plant his company designs is to remove the

“My customers know we might not always be the cheapest but they know that the work we do will be free of future problems” The emphasis at JHDA, meanwhile, is very much on engineering. Nothing is made in-house. Instead, head office, in a series of truly elegant buildings in one of the smartest parts of northern Johannesburg, is home to around 70 engineers and draughtsmen. Site work is supervised by a core team of 30 pulling in agency workers as required. With no manufacturing facilities whatsoever, it requires the engineering to be carefully thought out, well planned and accurately detailed.

Longstanding relationships with top notch fabricators adds to hassle-free project execution.

South Africa’s dependence on coal for its energy is extremely high—it provides 80 per cent and more of the total. Eskom, the parastatal electricity company, is currently building two massive new power stations, one with its own integrated coal mine alongside.

Unfortunately, for all contractors such as Taggart JHDA, Eskom’s capital commitment of several hundred billions of rand is proving problematic and much of the development work has been on hold for some months while it manages to solve these enormous debt financing requirements.

Fortunately, over the years, Taggart JHDA has taken the opportunity to spread its expertise into other mineral areas and has tackled projects ranging from chrome to diamonds. As such, the transfer of benefits between

inorganic, so that the coal burns with maximum calorific value and minimum particulates.

Taggart has patented a process design for fine coal recovery that employs spiral technology to recover ultra fine coal fractions as small as 0.15mm and less.

It’s possible to achieve similar results with flotation technology but the Taggart process delivers the same efficiency but at significantly lower operating costs.

Promising research is also being conducted on preboiler technology that will offer burning efficiencies that dramatically decrease the emissions of carbon, sulphur, mercury and other incombustible materials associated with coal.

With a presence in most of the major coal producing countries, the one remaining growth area not yet tackled is India. “The coal there is similar to South Africa’s,” says Harrison, “so we have a head start. It’s likely that we’ll soon be bidding for work in India.” Closer to home, there are enormous coal reserves in neighbouring African countries. There, though, development is being held back by a lack of infrastructure between the remote coal deposits and ports capable of handling it. However, whichever way you look at it, there are sufficient projects on the go to keep Taggart JHDA very busy for the foreseeable future. www.taggartglobal.com

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The coal mining sector in Z hit hard by the economic dow transport infrastructure. to Fred Moyo, managing Colliery Company Limited, ab efforts to meet the c

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Zimbabwe has been wnturn and an ailing . Andrew Pelis talks director of Hwange bout the company’s challenges head-on

Hwange Colliery Company Limited

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he effects of global economic instability have been far-reaching, yet few places have suffered more in recent times than Zimbabwe. As the country struggles to get back onto a firm fiscal footing, the need for investment in its rich mineral resources has perhaps never been greater.

One company that is very much waiting for the financial corner to turn is Hwange Colliery Company Limited, a coal mining business with a rich history of tradition. Today, the company is big business, headquartered in Harare and with a listing on the Zimbabwe Stock Exchange. It is a component of its stock index, the Zimbabwe Mining Index, and is also listed on the London Stock Exchange and Johannesburg Stock Exchange.

“The first point to note is that we are the biggest coal mining company not only in Zimbabwe, but in the whole Sub-Sahara region,” states managing director Fred Moyo.

“We operate as an energy mining company and supply electric products, industrial coal and thermal coal.”

The colliery sits in the western corner of the country and was founded at the end of the 19th century. Mining operations are located near Hwange in the province of Matabeleland North, exactly 100 kilometres south of Victoria Falls. “It is a big area and covers roughly 20,000 hectares,” Moyo says. “The mines date back to the turn of the 19th century and are open cast. We are currently building underground pillars to help renovate some of the mines from the 1920s, to give us more opportunity to mine.”

The company’s history dates back to 1896, with the first coal coming out around 1901.

Company production expanded during the 1920s and 1930s, when it was producing up to four million tonnes of coal each year. Following independence, a 750 megawatt power station was installed, which increased production to nearly six million tonnes annually.

There has been a decline since about 2003; and due to the dip the company is now producing around two million tonnes each year.

“The big issue is having the right technology and equipment in place to mine,”

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explains Moyo. “Our main challenge is to bring the growth capacity back to the company but we have to match that with the recovery of our ailing transport infrastructure and economy.”

In recent years, as Zimbabwe entered economically uncertain times, the challenges began to mount for Hwange as the need for reinvestment in modern equipment became apparent. The domestic market has been starved of adequate coal supplies, as the company struggled to tie up operational costs and revenue available to buttress increased productivity.

“There are a number of challenges holding us back and foremost is the need to improve and repair the transport infrastructure and our machinery,” says Moyo.

and have also provided a lot of funding for schooling, including our current initiative to provide e-learning. We are trying to link up with broadband service providers at the moment and hope to go live in June.”

The focus on IT extends beyond social responsibility, with the company having recently invested $2 million in new software. “For a company of our size having a reliable resource planner is a must,” Moyo acknowledges. “It will enable us to audit and monitor all of our automated processes and will integrate our systems remotely. Our financial controls are critical, particularly our inventory, over half of which is electronically-driven. As a listed company, it is important that our financial reporting is transparent.” The company’s maintenance contract

“We are the biggest coal mining company not only in Zimbabwe, but in the whole Sub-Sahara region” Crossing those particular barriers is currently proving tough for Hwange but the benefits of success will be there for all to see. “We are ideally located on the rail and road networks that link Johannesburg to the Copper Belt,” Moyo explains. “We have excellent rail links for international trade with nearby countries but the systems are now in disrepair and need to be refurbished.

“The rail and steel companies are all quasigovernment operations and attempts are now being made to commercialise them,” he continues. “We are also in the market at the moment for financing and will do what we can to help improve the transport system and re-trench parts of the rail track where we can.”

The transport system is far from Hwange’s only commitment. The company is home to the country’s largest training centre of its kind. “We train all allied technical staff as well as providing management training. We have the biggest engineering training centre in Zimbabwe, as well as the biggest graduate training programme,” Moyo affirms.

The company has also invested enormous capital into developing the town (of the same name) to support a good standard of living for its 100,000 residents, many of whom also work for the company. “We are effectively the local authority,” comments Moyo. “Hwange is located very far from other commercial centres and we have to make our employees happy. We have focused on three areas of social responsibility: education, health and sport. By not doing these things, we may not be able to attract good people to work for us.

“We have invested a lot to bring doctors to the area

with suppliers is also electronically linked, meaning that they can look at machines and equipment remotely and give instructions to the company’s maintenance teams from anywhere in the world.

Moyo agrees that lack of finance compromises environmental initiatives but says the industry is now waiting to see the results of the current government review of the Mining and Minerals Act. “We are sure that there will be environmental issues that will come out of this and we recognise the importance of mining rehabilitation; but we need the capital to undertake all the required work.”

News broke in August 2009 of a meeting in Hwange between the company and a high-powered delegation of officials from the Development Bank of Southern Africa and Industrial Development Corporation of South Africa, with discussions concentrated around a $75 million deal to recapitalise Hwange Colliery Company.

Opportunities for financing will enable the company to open and establish new coal fields, whilst repairing and re-equipping existing processes.

Moyo feels that the government’s encouragement of mining competition in Zimbabwe is a good thing for the client and the economy but warns of a potential downside. “The problem is that the market is depressed right now and the introduction of small operators may put a strain on the standards of the coal mining sector.

It is important that we preserve the twin disciplines of mine rehabilitation and social responsibility,” he concludes. www.hwangecolliery.co.zw

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