NOVEMBER10 emea magazine by Business Excellence Magazine

Businessexcellence ACHIEVING

NOVEMBER 2010

O N L I N E

best business

The

Look at what your competitors are doingâ&#x20AC;&#x201D; then set out to do it better

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Editor’s letter

EDITORIAL

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

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better job It has long been acknowledged that to be successful, a business doesn’t have to be doing something groundbreaking or brand new. To take some examples from the virtual world, Google wasn’t the first search engine; Amazon wasn’t the first online bookshop; and Facebook wasn’t the first social networking site. And most of the companies we are showcasing this month didn’t have first mover advantage either—they just set out to be the best in the business. With a goal to become the city’s largest internet protocol (IP) provider by 2016, Hong Kong’s City Telecom has taken the opposite view of its competitors by setting out to commoditise bandwidth. As CFO and head of Talent Engagement NiQ Lai points out: “A commodity business is a great place to be if you are the lowest cost provider. We want to collapse bandwidth pricing and commoditise it to unbelievably low prices whereby 1,000

Mbps becomes the industry norm for the mass residential market. We did this with callback in the 1990s and made lot of money doing it; we want to do it again with fibre. The rest of the industry can’t understand how we run this company.” Electrical contractor Cegelec is working towards securing a niche in its home market of Morocco, thanks to its highly specialised team and valuable expertise. The only Moroccan company capable of designing and installing new overhead 400 kV power lines and pylons, Cegelec knows what it takes to stand out. “We want to differentiate ourselves in the market by being a onestop shop,” asserts CFO and business development director Michel Bouskila. In a crowded marketplace there is often only one way to make an impact; and that is to look at what your competitors are doing—then set out to do it better.

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STRATEGY: How to win! Does the UK’s deal-making with other countries suffer because of an inherent negotiating skills gap?

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OPERATIONS: Refreshingly simple Encouraging your current and prospective clients to mingle can be a remarkably effective marketing tool.

SUPPLY CHAIN: Time to be decisive There is plenty that manufacturers can do now to take advantage of the early signs of recovery.

SUSTAINABILITY: A green legacy ‘Going green’ is no longer an optional consideration for business owners—it is fast becoming an imperative.

INNOVATION: The power of reinvention Once regarded as a manufacturer of office equipment, this company has been undergoing something of a transformation.

Gladstone Ports Corporation Ltd Australia’s Pacific gateway Australia’s fourth largest port had a record financial year in 2009, handling over 83 million tonnes of coal, grain and other goods.

Advent Energy Well oiled preparations Drilling is about to start on what may become one of the largest natural gas discoveries of the decade.

Avocet Mining Plc Gone West A major shift in strategy is now seeing this company adjusting its focus from South East Asia to West Africa.

Rockwell Diamonds Inc. A glittering prize This company’s size and agility have enabled a more nimble response to the downturn than some of its competitors.

Chelopech Mining Hidden obstacles The challenging task of bringing mining projects to fruition isn’t always a question of solving engineering problems.

Chalice Gold Mines Limited Good as gold Strongly positioned and with a solid track record, this company is seeking to maximise development potential in Eritrea.

Rathdowney Resources Galvanised into action Advanced projects in Poland and a potential major discovery in Ireland makes an attractive offering for investors.

Antrak Air Ghana Africa’s gateway to the world Expansion and rising revenues mean that Antrak Air Ghana is becoming West Africa’s most important regional airline.

Copperbelt Energy Corporation The power of expansion This company is helping to improve Zambia’s infrastructure and ensure power supply will meet demand.

Cegelec Morocco Lighting up Morocco This electrical contractor is finding itself well positioned to capture some very promising new markets.

Contents

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City Telecom (Hong Kong) Networking Hong Kong This company has not been shy to take risks in order to achieve its goal of dominating the local broadband market.

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Webb Construction Going for growth This construction specialist is playing an increasingly major role in support of West Africa’s mining boom.

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Biocon Pharmerging The new buzz in the pharmaceutical industry is how best to capitalise on demand from newly affluent emerging markets.

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Acoustex Quietly making progress Reduced order volumes leading to a re-think on inventory strategy helped this company to ride out the storm.

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Arabian Bemco Converting oil to electricity Saudi Arabia has an insatiable appetite for electricity, turning one local business into an international giant.

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Dawn Ltd A new day Recovery from the downturn has seen this firm shift to infrastructure and building from trading and manufacturing.

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Tsb Sugar The sweet taste of success South Africa is an agricultural utopia for food production—and among the many crops to prosper has been sugar.

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United Basalt Products All about diversity Extending along the construction value chain has been key to the success of this Mauritius-based industrial group.

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DoRego’s Fast track improvement Under new ownership, South African fast food franchise DoRego’s has achieved a significant turnaround.

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McColl’s Transport Being systematically better The secret to success at this transport company has been to lock operational activities into standardised systems.

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Rezidor Hotel Group The unorthodox approach Amid the doom and gloom of the global financial crisis, the hotel sector is continuing to enjoy something of a boom.

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Zamil Steel D-I-Y, Saudi style Business is all about accepting risks but if you have the ‘do it yourself’ attitude, nothing remains out of reach.

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Green Cross Manufacturing Walking on air Consumers are continuing to choose shoes that offer comfort, quality and durability over cheap prices.

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Anvil Mining Development matters About to become one of the DRC’s leading copper producers, this company has a well crafted CSR strategy. Tüprag Metal Mining Industry & Trade Inc The gold standard Extensive gold reserves in Turkey are providing plenty of opportunity for this low-cost gold producer. Nautilus Minerals Niugini Ltd Ocean pioneers This company is undertaking pioneering work to explore and develop seafloor mineral deposits in the South Pacific. SEMS Exploration Through thick and thin Providing a reliable, consistent consultancy service depends upon retaining staff through good times and bad.

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AFS Group Fuelling ideas Fuel costs are a headache in the current climate; but this company is making a real difference to corporate fuel costs.

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Ashok Leyland A moving story from India A return of confidence to the automotive market both nationally and regionally is driving success at this Indian manufacturer.

CEO of Rich Futures Clive Rich asks how well we are prepared to negotiate on the international stage; and whether our deal-making with other countries suffers because of an inherent skills gap

e live in a new ‘deal economy’ where everybody needs to make deals in order to succeed. Yet negotiation skills are seldom taught or practised. This can mean people either lack confidence when they negotiate, or they negotiate from gut instinct, not really knowing why it has worked when a deal goes well, or what went wrong when a negotiation doesn’t work out. Maybe that’s you? Sometimes people assume that negotiation is very easy and there is nothing they need to learn about it. These attitudes leave UK Plc at risk of being left behind as the global ‘deal economy’ gathers pace and it becomes ever more important to have international trading partners. Technology is partly responsible for the increasing importance of international deal-making skills. Technology has made the world a much smaller and more inter-connected place, so we all need deal partners to help us reach a potentially much wider, global audience. Technology also enables everybody to compete in everyone else’s space, so we all need deal partners to help us compete effectively. Technology also means that we have to respond quicker than ever before to market opportunities before they disappear, so we all need deal partners to help us execute at pace. The most successful people at creating these deal partnerships will be those who are the most effective negotiators. Yet, do UK negotiators have the key attributes of these individuals? If not, the UK potentially faces a ‘negotiating deficit’ which is just as significant as its current trade deficit. Indeed, the two are directly related. This negotiation deficit, if not addressed, will grow as China and India increase their negotiation strength, as emerging economies like Brazil become more powerful, as the demands of technology place an ever greater premium on effective deal partnerships, and as the lingering effects of

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Strategy

How win! to

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Strategy

recession and the credit crunch continue to squeeze the availability of working capital. So, what is it that effective negotiators do differently from normal people? Firstly, smart negotiators tend to bring an effective attitude to the negotiating table. Research shows that good negotiators feel positive about themselves, and believe that they can win. Is that an attitude that is prevalent among UK negotiators, or are we generally a bit more fragile than that?

as to what is going on at any particular stage. The first stage is ‘preparation’. We all lead such busy lives that time spent on preparation can seem like something of a nuisance. In fact, however, it is an investment of time—fail to prepare and you prepare to fail. Good negotiators take the time at this stage to map out their approach in advance. They also consider what their ‘megawin’ position is (their ideal position, which will comprise their opening bid), together with their ‘bottom line’ position (the point

“Top negotiators believe that a win for the other side is as important. In any long term partnership, both parties to the deal need to feel like winners” Top negotiators also believe that a win for the other side is as important. In any long term partnership, both parties to the deal need to feel like winners. So win/win is the most effective negotiating attitude. Variations to that approach tend to create negative outcomes. For example, if you play lose/win (where a win for the other side is more important than taking care of your own needs), then you are very unlikely to end up with what you want. If you play win/lose (where you don’t care what happens to the other side), you will just create problems later on— nobody likes to feel like a loser. Sometimes people end up playing lose/lose (where it’s more important to punish the other side than to worry about a win for either party). You can guess what kind of outcome that destructive attitude creates. Bringing a win/win attitude to the table is often a function of properly understanding the bargaining power on either side. Who holds the aces? People often underestimate the bargaining power they have on their side by focusing exclusively on the ‘market power’ of the other side. Yet there are many other sources of bargaining power, including expertise, information, the power of numbers and access to influential networks. Marshal your bargaining power and you can feel positive about any negotiation. The UK’s deal makers will increasingly need to do that in order to compete with both larger and emerging powerful economies. Secondly, effective negotiators know how to manage the negotiation process. Most negotiations follow a set pattern, with a number of recognisable and distinct stages. If you know what stage you are at and how to handle that stage, then that automatically gives you an advantage over the side, who will generally be completely confused

at which they will walk away from the deal). The distance between these two positions gives them the space in which they can negotiate. The next stage of the negotiation will be ‘climate setting’. What’s going to be the atmosphere in which the negotiation takes place? Effective negotiators consider whether they want the negotiation to be ‘warm’ (with a friendly atmosphere), ‘hostile’ (very pressurised and fast-moving), ‘cool’ (very objective and data-driven) or ‘wacky’ (fun and off-the-wall). Different climates suit different kinds of negotiation, and different nationalities. The third and fourth stages of a negotiation are exploring ‘wants’ and ‘needs’. Good negotiators know that you can’t expect to engineer a win/ win outcome if this stage is skipped in the rush to get to the ‘haggle’. It’s important that each party understands what the other side ‘wants’. ‘Wants’ are organisational requirements like price, quantity and delivery dates. It’s even more important to understand what the other side ‘needs’. ‘Needs’ are the underlying emotional requirements that each side has from the deal. These are critical to understand, because they underpin the whole negotiation, and yet they are often unspoken. These needs will always exist and will need to be identified regardless of the nationality of the negotiators. Does the other side have a security or reassurance need? Are they desperate? Do they need to achieve something unique as a result of the deal? Do they need respect or esteem? Great negotiators are adept at working this out and using it positively. Now the parties are ready to move on to the ‘bidding’ stage of the negotiation. This is where the offers come on to the table. Good negotiators know the importance of bidding high. Generally speaking,

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as a negotiator, the more you ask for, the more you get. They also know the importance of being convincing when you bid. Traditional UK reticence and politeness is not always what is required— “I want”, “I need” and “I require” are all far more effective than “Would it be ok if...?” or “Could I possibly have...?” Different nationalities will come from different cultures where they may be either more or less comfortable about being upfront in expressing their requirements, but good negotiators everywhere will be convincing when they bid. The bids will reveal a gap in the parties’ positions. This is when the ‘bargaining’ phase of the negotiation starts. What can the parties offer to each other in order to close this gap? Are there lowvalue concessions which one party can give which have a high value to the other side because they meet a personal need? These concessions —called coinage—are like gold dust in any negotiation. Are there incentives and pressures that either side can deploy? The effective negotiator remains superobservant and flexible in this stage, and never gives something away for nothing. How effective are UK negotiators in the heat of the haggle? Do they tend to sink or swim when the bargaining pressure is on?

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Strategy

“During the negotiation process, different behaviours will suit different stages and different opponents” If the parties can bargain successfully they will arrive at the final stage of any negotiation, ‘closure’. Skilled negotiators know how fluid this moment is. It must be bottled immediately before either party changes their mind, goes through a re-structure, or is impacted by new economic factors, or before a deal champion on either side leaves. During the negotiation process, different

behaviours will suit different stages and different opponents. The effective negotiator understands this and has the full repertoire of behaviours available—choosing the right behaviour for the right occasion, regardless of any cultural behavioural norms from their own country. Sometimes ‘push’ behaviour is called for—focusing on your own agenda. This is when it’s important to state your

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â&#x20AC;&#x153;Good negotiators know the importance of bidding high. Generally speaking, as a negotiator, the more you ask for, the more you getâ&#x20AC;?

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Strategy

“Skilled negotiators go out of their way to avoid negative behaviours, whether these are aggressive or passive” expectations, use incentives and pressures and make proposals backed up by sound reasons. Push behaviour is especially useful at the ‘bidding’ or ‘bargaining’ phase of a negotiation. It’s also very useful if you are dealing with ‘tough guys’. These are people who pile on the negotiation pressure—for example using threats, aggression, deadline tactics, or playing good cop/bad cop. These people need to be ‘pushed’ back by making it clear you know what they are up to. Sometimes ‘pull’ behaviour is required—focusing on the needs of the other side. This is when it’s important to listen, explore and focus on common ground—all very useful in the early climate-setting and exploring stages. Other behaviour options include ‘joining’— inspiring others to work with you on the deal; and ‘parting’—taking your energy out of the deal by calling for a break. Parting behaviour can be especially useful in the bargaining phase when the atmosphere can be pressurised and fast moving, and breaks enable the parties to re-group and re-energise. The good negotiator knows that effective behaviour is not just a question of selecting the right behaviour for the right occasion, but also a question of modelling that behaviour effectively. Research shows that 93 per cent of the effect of what we say consists not of the words we use but of the ‘music’ and the ‘dance’. The music includes the way we use our voice—its pitch, rhythm, pace, tone. The dance is the way we use our body—our facial expressions, eye contact, gestures, the way we fidget. If UK negotiators find that their chosen behaviour doesn’t work it may be that they are either out of tune with the required music or out of step with the required dance, so the impact of their behaviour is reduced. Skilled negotiators also go out of their way to avoid negative behaviours, whether these are aggressive or passive. You will rarely see an effective negotiator use threats, or be sarcastic, patronising, presumptuous or dismissive. Nor will you see them model weak behaviours such as imploring, begging or avoiding. So, effective international negotiators know the importance of managing the three angles of

successful negotiation—attitude, process and behaviour. They will be more equipped than anyone else to prosper in today’s new internationalised deal economy. Much is made of the need to understand cultural differences when negotiating with the Chinese or Middle Eastern countries; and it is true that any intelligent negotiator would take these cultural differences into account. However, these three essential ingredients of effective negotiation underpin any deal, regardless of the nationality of the participants. Still feel there is nothing more for UK deal makers to learn about negotiation? See Clive Rich talk about negotiation and deal making on YouTube: http://www.youtube.com/ watch?v=7grkULA22eg. He can be contacted at www.cliverich.com

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Refreshi

simple

Positively encouraging your current clients to mingle with your prospective clients would sound risky to even the most successful of businessesâ&#x20AC;&#x201D;but not if you base your operations on an honest and straightforward approach, as Becky Done finds out from Derek Buchanan, CEO of Episys 16

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Operations

ingly

hen was the last time you visited your local tourist office for leaflets on the best restaurants in your area? Never? Most of us, whether we realise it or not, rely on word-of-mouth and personal recommendations when deciding who gets to benefit from our hard-earned cash. And the same is true in business—or at least, according to Derek Buchanan, CEO of Episys, it should be. Episys is a UK-based global information technology company providing products, services and support for signage, labelling and mobile systems across a range of industries. Clients—to name a few—include Marks & Spencer, Sainsbury’s, Waitrose, Procter & Gamble, Reckitt & Benckiser and the NHS. Last time we spoke with Buchanan, he was actively seeking to enter new markets; but he has always recognised and shied away from the hefty initial outlay that’s often associated with doing so. “Companies going overseas often have this great idea that they want to conquer a certain market,” he says. “They raise some money and go to that market, hire sales and marketing people, get a nice office and attend lots of trade shows. But quite often they come back

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with their tail between their legs, no customers and no revenue, having spent all the investment. My approach is that I don’t make that investment but I enter the country or the market through a referenceable, satisfied and iconic customer.” The power of this approach means that Episys doesn’t need to spend vast sums of money on advertising. “I know advertising has a benefit in certain industries—I certainly know the power of it in the retail market and many others,” he acknowledges. “But if somebody you trust refers you to a restaurant—somebody who has the same values and interests as you—you feel much more compelled to go there than if you had flicked through a brochure and trusted your instinct, don’t you? “So if I go to a home improvement retailer and tell them that we were able to introduce operational efficiencies at Home Depot [the US home improvement giant], then that’s much more powerful than me just telling them I’ve got this cool product.” Buchanan likens his tried-and-tested method to that crucial element in the planning of a new shopping mall—to attract new tenants by securing a prestigious and iconic anchor tenant. “Our first customer in the US was the Sears Corporation— an iconic US retail brand that everyone is familiar with. By having Sears as a client, I was then able to secure other clients.” Since we last spoke, Buchanan has applied this approach to Episys’s entry into the Middle East—a market which can be complex, with its fair share of bureaucratic hurdles to negotiate. “We appointed a partner there to represent us; and that partner then had access to a reputable customer—because here in the UK we had the retailer Lakeland,” Buchanan explains. Lakeland had just moved out to the Middle East and wanted to make sure its branding was consistent with its UK stores, which opened doors for Episys and its partner. “Our partner then had a reference in the Middle East—and they’ve now subsequently won a number of contracts with us in the region.” If there is a certain client or industry that Episys wishes in particular to target, then it may offer the prospective client a special price in return for a certain amount of pre-agreed PR once they are satisfied with the solution. “It might be the use of their name, a press release, a case study video or a presentation at an event—because at our events, it is our customers who present, not us,” says Buchanan. “Sometimes you have to invest in

those early customers—but it’s actually a form of marketing. Once they are satisfied, they’re happy to do press and case studies and network at your events,” he explains. Episys events are certainly unique, with current customers presenting real-life case studies, and hard selling conspicuous by its absence. “I don’t allow people to sell at events,” asserts Buchanan. “What we do is allow prospective clients to freely network with existing customers. I’m much more comfortable doing business that way—through references, PR, through events where people don’t feel threatened and that sort of thing. Of course we’re trying to ultimately welcome them as a customer; but we’re just not trying to do it that day,” he says of the events. There are other routes to attracting new business, of course, and cold hard numbers are always going to play their part. But here too, Episys is able to leverage valuable experience gained from work with its existing client base. “If I see a retailer that’s clearly got some challenges because I can see it as I walk around the store— there might be spelling mistakes on signs, for example—we’ll offer to do a retail efficiency survey where we’ll look at visual merchandising, store operations and IT,” explains Buchanan. “And because we’ve implemented the systems in so many places now with all different types of retailer, we can then present where we think there will be tangible benefits. That’s often an approach that we take, because the retailer is getting informed approaches to where the challenges are and what the benefits are.” With clients at the heart of its ethos, Episys has a refreshingly straightforward approach to customer care. “If you do what you say you’re going to do when you say you’re going to do it, and you tell the truth and people can trust you, it doesn’t matter where you are in the world, people are going to want to do business with you.” Looking forward, Buchanan is positive about new business. “There’s other territories we might want to expand into over the next 12 to 18 months or two years,” he says, without mention of ‘recession’ or ‘turbulence’ or ‘troubled times’. Which just goes to show, if you have a prestigious client list thanks to a straightforward, honest approach to doing business, you’re ideally positioned to continue doing what you do best—which in the case of Episys, is providing outstanding customer care, and then watching the word spread. www.episys.com

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Time to be

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As tempting as it might be to sit back and breathe a sigh of relief as the global economic situation begins at least to stabilise, there is plenty that manufacturers can do now to take advantage of the early signs of recovery

iven the difficult conditions that have prevailed in manufacturing over the past year you may think that the only course of action is to stay hunkered down and wait for it all to blow over for good. But there are signs a plenty that recovery is underway across Europe and there are plenty of actions that manufacturers can take to accelerate their own recovery. “Pain is a forceful driver of change,” claims Andrew Kinder, EMEA director of Solution Marketing at global ERP software provider Infor. “People and organisations find it easier to accept meaningful change when the pain of it is less than the pain of staying the same. The last 12 months have been incredibly difficult for manufacturers and this has created the best possible opportunities to make the tough decisions, innovate at speed and re-engineer business processes in ways which might have been unthinkable at other times.”

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Supply chain

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Inforâ&#x20AC;&#x2122;s largest customer base is represented by the manufacturing sector; and Infor has been quick to respond to the difficulties manufacturers are facing, with technology solutions that address the current climate and future expectations. They offer five strategic actions that organisations can undertake today, putting them in a better position to take advantage of the recovery when it comes. Smart move #1: Protect cash. Businesses recognise the critical importance of cash management, particularly at times when capital and credit are difficult to come by. One way in which manufacturers

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Supply chain

can release cash is through reducing inventory and work-in-process levels. Infor has observed an uptake in technology solutions around demand and inventory optimisation in the past year and resurgence in interest in sales and operations planning (S&OP). “S&OP leaders report 15 per cent lower inventories on average and up to 30 per cent shortening of cash-to-cash cycle time,” comments Kinder. Smart move #2: Pursuit of productivity. One measure that is consistent among manufacturing leaders is their relentless focus on productivity— whether this be their production assets, people, warehousing or transport. It makes sense to make the optimum use of existing resources before investing in new products, especially in current times. Technology solutions that help you achieve this are in vogue. An example is production scheduling which, through intelligent sequencing through a plant, can reduce lost time due to changeovers by 30 per cent and reduce costs through the reduction of overtime or other shift premiums. Warehouse management is another area where productivity gains flow through to cost savings, often leading to a deferment or elimination of the need to invest capital in expensive new warehouse space. Smart move #3: Go green. Whatever your beliefs on the causes of climate change, what is certain to impact manufacturers over the next decade is their need to adapt to operating in an increasingly carbon constrained economy: government legislation will demand it. Your largest customers will select their suppliers based on it. And having a sustainability strategy for manufacturers is not just good environmental stewardship, it makes good business sense too. Reducing energy use, reducing waste and recycling materials saves money. One way in which

manufacturers can profit from this is by tracking energy use from high energy consuming assets in the manufacturing plant. “Since 80 per cent of the total cost of operating an asset can be in the energy it consumes over its lifecycle, it makes sense to monitor this intently. By maintaining equipment at its peak performance, energy bills can be cut by eight to 20 per cent,” says Kinder. Smart move #4: Rent instead of buying. You may want to adopt new technology to help you to a stronger, faster recovery but huge upfront costs are a tough sell in a tight-money environment, no matter how big the future payoff might be. An alternative might be to subscribe to business software rather than buy it outright. This preserves cash and without the upfront payment associated with purchased software, has the financial effect of shortening the time to benefit. Software as a service (SaaS) or application managed services (AMS) are both alternative deployment options to help companies address cost or resource concerns. Smart move #5: Upgrade your business software. Almost all manufacturers have some form of enterprise resource planning (ERP) system and the normal agreement includes an annual maintenance and support fee entitling customers to the latest versions. And yet research across the industry shows that the majority of organisations are not on the latest release of their software, with many on versions several years old and facing an uphill effort and high cost to update to the latest version. In effect, this means companies are not getting the full value of their software investment and are missing out on newer capabilities that could help improve efficiencies and innovate processes. Despite the difficult conditions, Kinder remains optimistic about the future of manufacturing. “Whilst many European countries are just emerging out of recession, it is noticeable that manufacturing is changing too, with the manufacturing economy comprising of a larger number of smaller manufacturers compared to the larger enterprises of the past. Smaller manufacturers have the benefit of agility and rapid innovation. They also have different technology needs to support their businesses and manage their supply chains. “Now is the time to be decisive and make cost effective actions that can position your company for growth in the long term.” www.infor.com

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‘Going green’ can no longer be viewed simply as an optional consideration for business owners—it is fast becoming an operational imperative, as Abbey Petkar, managing director of Magenta Security Services, explains

t was only a few years ago that ‘going green’ was seen as a rather twee idea that being environmentally friendly would somehow save the planet. Big business viewed the green movement as the preserve of the ‘beardies and weirdies’, part of the rather radical Greenpeace fraternity and nothing to do with serious matters like economic growth and the maximisation of profitability—regardless of the environmental consequences. How things have changed! Today, and increasingly, it is those businesses not taking environmental issues seriously that are becoming the social outcasts. Today being ‘green’ is about demonstrating corporate social responsibility and being part of the solution rather than the problem. At first it was the big polluters who were targeted as the main offenders. Oil companies and chemical companies in particular were accused of environmental pollution and unsustainable practices. It was one of the reasons that BP changed their slogan to Beyond Petroleum, with a new greener logo to match! Now though it is not just the big polluters that are undertaking massive and unprecedented changes to become greener entities but organisations across the whole spectrum of business, both large and small. The security industry is one of the business sectors that is now having to face up to the green agenda and in the process of critically examining the implications. It’s fair to say that some security firms woke up to the green movement a long time ago, whilst others still lag far behind. A lot of the decisions about whether to ‘go green’ are formulated in the boardroom or by an influential CEO: commitment from the top is still one of the most critical factors that will determine an organisation’s stance on green issues.

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Sustainability

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Some security firms are predictably raising the question of whether ‘going green’ might somehow compromise their fundamental operations or increase security risk. In other words there is a fear that by changing processes or tools it could risk the integrity of secure systems. It raises the question of whether it is actually possible to be both green and secure, and if so, might there be increased risk during the changeover period when errors and chinks in the armour could appear? At Magenta Security Services, we have faced this dilemma ourselves but have made the decision to embrace the green agenda for what we hope are all the right reasons. In my opinion it would be wrong to stand aloof and believe that green issues are less important than our business model. As an industry we must move with the times whilst still maintaining the trust of our clients. In many cases it is our clients that want greener security suppliers with a firm CSR strategy; and if that forces us to make changes we should not only provide those changes but embrace them. It would not be right to walk away from the issue and bury our heads in the sand. Instead we need to meet the challenges head on—and where possible, stay ahead of the game. So what exactly does ‘going green’ actually mean? Why is it important to make sure that corporate social responsibility in the widest sense is central to business strategy? What can businesses do to improve their own green credentials? It is useful to look at some of the key elements of the green movement as a whole; but by way of example, we have looked in more detail below at the concepts we have embraced at Magenta. Firstly, we are proud to be a carbon neutral company. We have a fully operational fleet of LPG vehicles and we try to live by the mantra ‘recycle, reuse and reduce’. These elements combine and sit firmly within the company’s corporate social responsibility (CSR) policy. In 2007 and again in 2009, the company won the contract to provide security services to the Royal Parks—a contract awarded by the UK’s Secretary of State for Culture, Media and Sport, which praised our environmental campaigning and initiatives undertaken. Secondly we continue to plant trees as part of our commitment to carbon offsetting and make donations to

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Sustainability

biodiversity and alternative energy projects. We also encourage staff car sharing schemes and wherever possible the use of public transport. We also believe in playing an active part within the local community, sponsoring the local cricket and football teams. We have worked with the Metropolitan Police on an educational project, educating a group of 250 local school children on safety issuesâ&#x20AC;&#x201D;from knife crime and drugs to road and fire safety. In the future, we have plans to take full advantage of solar technology to reduce our energy costs. In terms of our â&#x20AC;&#x2DC;reduce, reuse, recycleâ&#x20AC;&#x2122; policies we try to utilise practical methods to not only reduce the amount of waste we generate but to also reuse the waste. In addition to converting our entire fleet of vehicles to LPG, we converted equipment used across sites to low voltage and low energy systems. In a bid to reuse waste, old uniforms have been distributed to third world clothing schemes. Old office equipment such as mobile phones and computers have been given a new lease of life by

being donated to charities. All waste is sent away to take on a new form: from paper to plastic and printer toner to packaging. The recycling efforts of the company are then measured, enabling us to state with confidence that we have saved hundreds of trees. Some measures, such as the recycling of toner cartridges, can also have charitable benefits. Be warned though: as security specialists we are well aware that even the simple task of recycling has inherent security risks. There have been many news stories about banks throwing out client statements and sensitive information. The simple solution is to use a specialist firm offering a secure recycling service, where you can actually see sensitive materials destroyed on-site. Finally, we have sought employee feedback and suggestions, resulting in simple process changes to achieve a paperless office: using both sides of every piece of paper, invoicing clients online and asking the bank for online statements. My advice to any organisation serious about

November 10 www.bus-ex.com

“To initiate company-wide understanding, commitment and support, a top down approach to the objectives is of paramount importance” becoming greener is to try, wherever possible, to use alternative and renewable energy suppliers and change lights to low voltage. On the operational side make sure CCTV systems, barrier controls and alarm systems all use the latest low energy technologies. Make sure that staff switch off monitors and computers when they are not in use (as the standby mode on most appliances still uses 90 per cent power) and undertake as many carbon offsetting activities as possible. Within environmental circles, carbon offsetting is sometimes perceived as giving organisations a licence to pollute. Instead, we use carbon offsetting to complement our growing list of green and sustainable initiatives. We also like to work alongside the local community to promote social inclusion and green initiatives within the area, engaging with families and children and providing practical training to overcome adversity and encourage positive attitudes to learning and development. Let’s be completely honest about this. Instigating and driving any company’s green policies/ procedures and environmental activities is not something that can be achieved overnight. To initiate company-wide understanding, commitment and support, a top down approach to the objectives is of paramount importance. Staff must be involved at all levels of the organisation and given the opportunity to ask questions and provide

www.bus-ex.com November 10

thoughts and feedback to the managing director or board of directors. Critics of green policies often make the claim that going green is bad for business in the commercial sense, because green solutions cost more money. To an extent this is true but is an argument that, in global and temporal terms, is very short sighted. More efficient use of paper, electricity and fuel should all lead to lower expenditure but needs to be weighed up against the elements that will be more expensive for reasons that include resource availability, increased research and development costs. Careful balancing, however, should still see an overall saving particularly if there is a top down strategic approach to CSR rather than a haphazard approach. Sustainability though, is not just a ‘green message’; better business practice comes first and foremost. Measuring a company’s performance and managing its impact undoubtedly drives benefits

Sustainability

“Doing what you do in the knowledge that your actions generate a positive response is a winning strategy—economically, socially and environmentally” to the business because doing what you do in the knowledge that your actions generate a positive response is a winning strategy—economically, socially and environmentally. Significant savings and results can be achieved through smarter working practices; and adopting such policies therefore secures market advantages.

In the final analysis, ‘going green’ should no longer be considered a necessary evil foisted upon business by the environmentalists. Instead, it should move to centre stage of the business strategy. The legacy of our actions today will determine the sort of world our children will inherit tomorrow. www.magentasecurity.co.uk

November 10 www.bus-ex.com

The power reinvent

www.bus-ex.com November 10

Innovation

If necessity is the mother of invention, then the same must be true for reinvention, too. It’s certainly true for Ricoh—once regarded as a manufacturer of office equipment, the company has been undergoing something of a transformation. Becky Done talks to Carsten Bruhn, VP of Ricoh Global Services Europe, to find out more

rof tion

nsightful manufacturers have long been conscious that these days, potential and existing customers have got their eye on the value-add. In order to stay ahead of the competition, companies have to be offering as much bang as possible for that hard-earned buck. Ricoh is one company that quickly recognised the requirement for a shift in focus from product to services, in order to meet the expectations and fast-changing needs of its client base. “Ricoh has transformed from a manufacturing company with that associated culture, into a services company—which also means we’ve changed our way of working,” explains Carsten Bruhn, VP of Ricoh Global Services Europe. “It’s created a change of culture which I find very exciting. We have had to attract a lot of new talent and also train some of our existing people to ensure they made the transition from a manufacturing culture into what we call ‘services and solutions’, with a high emphasis on IT services with outsourcing and production printing. It’s been a fascinating transition.” The company recognised that its clients were rapidly requiring more from Ricoh as a supplier than simply its products. “We take a much more strategic approach with our clients now—we’re on the front line, supporting them in their core business,” explains Bruhn. “We have totally moved away from what I call transactional selling, where in the old days we would be selling a product, to much more consultative selling. That’s really the space we are in. “We go in and work very closely with our clients to understand how they store and distribute information within their company, and then we re-engineer all those processes by utilising our solutions. That drives down costs; but it also makes them much more efficient as a company.”

November 10 www.bus-ex.com

www.bus-ex.com November 10

Innovation

The transformation and subsequent explosive success of Apple in the late 1990s and early 2000s is testament to the power of reinvention and innovation within a business: it’s about recognising the changing needs and trends within an existing or potential client base and acting upon them. Coincidentally, it was what some saw as a design flaw in Apple’s hotly anticipated iPad that prompted one of Ricoh’s latest innovations: “It seems to me that the consumer has responded extremely well to the iPad—so one of the things that some users were a bit disappointed with was that the iPad couldn’t print [directly],” explains Bruhn. “So by clearly understanding that the requirement was coming, we developed something called HotSpot printing.” HotSpot allows users of internet-enabled laptops, smart phones or PDAs in an office environment to use an application that will search for a HotSpot printer, which once identified, enables them to print from the device there and then. The breathtaking speed of technological advance has begun to generate an entirely new way of thinking—and manufacturing, says Bruhn. “It’s been fascinating to see how we have changed our traditional way of manufacturing—where you investigate the market for months, develop something and then enjoy your return on investment for those new products for a few years. But today, with the speed of change in the market, certain innovations have already run out of their lifetime after six months, for example. For me, that’s where you see the ability of Ricoh to spot that change and react to it very quickly, so we are in tune with the market and can be at the forefront when we speak to our clients. I think that’s key for us.” And when Generation Y is your future customer base, being at the forefront of the market is critical. “If you look at future customers of ours, but also our future employees, they have high demands— when they need information, they need it there and then,” asserts Bruhn. “And that’s where we see an opportunity to ensure that when we install workflow processes, any information is very easy to access. It’s all about, how do you store information and then ensure you can distribute that information?” As technology has evolved, working methods have evolved along with it—heralding the arrival of a true business-without-boundaries culture. But that growing demographic of mobile workers

also brings a big risk—security. “When you talk about mobile working, that means that wherever I am, I can access the network and then bring down and print out my information,” says Bruhn. “And that’s very exciting; but we also need to make sure we clearly understand what that means. Mobile or home working is a key trend and a key area for Ricoh as a company—we see it as an opportunity—but we still see some uncertainty out there. People are not 100 per cent certain what it will bring.” According to IDC, says Bruhn, the average organisation can spend up to six per cent of its annual revenues on managing document information processes. “And what’s really scary is, we found out that nearly 85 per cent of that is not really being managed. So today there is a huge amount of information within a company that is there in a very unstructured manner— you only have about 15 to 20 per cent that is structured. So we can go in with solutions to manage those requirements—we take all the information that comes in, and the moment we scan it into the network we have it in what we call a secured environment: that’s become very high on the agenda. By doing very simple process re-engineering, you can now manage information in a structured way in a secured environment, ensuring confidentiality and integrity.” This can address both the security issue and the demands of today’s need-it-now culture. “The key is, it’s much easier for the employees to search for information—it will be available there and then, when they need it,” asserts Bruhn. “And because mobile workers or home workers are really not attached to an office any longer, they need somehow to secure or capture this information in the cloud. This can be done the moment you have it in this structured way, which we can do with our solutions.” The transformation of Ricoh will certainly define its future in today’s fast-paced environment. “Ricoh is an information management company— the space we will be in going forward is all about how to manage information,” says Bruhn. And with mobile working set only to increase and the pace of technological innovation seemingly boundless, information management looks set to become one of the most challenging and lucrative spheres in which Ricoh can continue to make its mark. www.ricoh.com

November 10 www.bus-ex.com

Australia’s

Pacific gateway to

Australia’s fourth largest port achieved a record financial year in 2009, handling more than 83,000,000 tonnes of coal, grain and other goods. The company managing this impressive growth is Gladstone Ports Corporation Limited

ladstone Ports Corporation (GPC) is a governmentowned corporation that manages and operates three port precincts: the Port of Gladstone, Port Alma Shipping Terminal and the Port of Bundaberg. Gladstone is Queensland’s largest multi-commodity port, housing the world’s fourth largest coal export terminal.

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Gladstone Ports Corporation Ltd

c November 10 www.bus-ex.com

Gladstone Ports Corporation Ltd

Xtreme Engineering Pty Ltd Xtreme Engineering Pty Ltd has been associated with

Gladstone

commencement

Ports

Corporation

of operation

since

the

2008. Xtreme

Engineering’s services include the fabrication and site installation of structural steel, tanks, piping, bins, mechanical equipment and conveyors. We also offer on and off site maintenance and support services, including shutdowns to the mining, coal, marine, aluminium, oil, chemical, gas and power industries. This service is supported by 24-hour around the clock back up. The team at Xtreme Engineering Pty Ltd are committed

providing

quality

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and

services with attention to the highest standards always. This is achieved through commitment to occupational health, safety, environment and quality assurance.

Port Alma Shipping Terminal facilitates the import and export of niche market products including ammonium nitrate, explosives, general cargo, salt, frozen beef, tallow and scrap metal. Gladstone, and Port Alma in the Fitzroy River delta near Rockhampton, are both sheltered from the heave of the Pacific behind opposite ends of Curtis Island, while Bundaberg lies some 100 kilometres to the south. The Port of Gladstone traces its history back to 1914, while the other two are even older, having been founded in 1896. However, the governmentowned corporation (GOC) that now unites them didn’t come into existence until 2008. Between them the three sites employ 684 people carrying out operations that include ship loading and unloading, harbour works, quarry operations, reclamation works, general maintenance and administration. The Port of Gladstone’s major cargo today is coal. To give some idea of how the scale of operations has developed, coal was first handled in 1925 at Auckland Point at a ship loading rate of 100 tonnes per hour (tph). Today at GPC’s RG Tanna Coal Terminal (RGTCT), coal is loaded at an amazing 6,000 tph, with Barney Point Coal Terminal (BPCT) loading at 3,000 tph. But this did not happen at random.

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Gladstone Ports Corporation Ltd

Corporate Protection Australia Corporate Protection Australia (CPA) is a specialist, dynamic and highly professional security organisation whose credentials in the provision of practical, effective security solutions ensure our standing at the forefront of industry. CPA supplies professional security services exclusively to the maritime, mining and critical infrastructure industries. Corporate Protection Australia is pleased to be affiliated with the Gladstone Ports Corporation (GPC) for the past three years and currently is GPC’s site security provider.

has won approval from the Queensland State Government. This has diverted GPC from coal as its central focus, and given it another completely new industry to consider. While the corporation does not intend to miss any opportunity to fulfil the needs of its powerful coal mining customers, keeping a close eye on the mining companies’ proposal for a new coal terminal at Wiggins Island, it is now working closely with the LNG sector. LNG, highly compressed methane which can be piped in from coal mines, landfill and other sources, is seen by many as the automotive fuel of the future, encouraged by many cities as a pollution-free way of keeping traffic on the roads. As the host port for this new industry, it is now developing protocols for the safe movement of

“Gladstone is Queensland’s largest multi-commodity port, housing the world’s fourth largest coal export terminal” During the early 1950s the port transformed from a declining primary industry export base (handling cattle, etc) to the multimillion-tonne export centre it is today. GPC assumed a unique role in 1954 when it pioneered bulk coal handling in Queensland— not only did it develop the facilities, but it opted to operate them, a role it continues today on a vastly expanded scale. The three ports handle the export of resources from Central Queensland and of finished products from local industries, notwithstanding the global trade downturn, which knocked 4.3 per cent off expected coal export volumes for example. Coal exports in 2009/10 were up 7.5 per cent on the previous year’s figures, reaching a record 60.4 million tonnes. As the effects of the downturn start to diminish, business is expected to become even brisker in the current financial year, when the Port of Gladstone is forecast to handle a total of 89.8 million tonnes of cargo, an impressive 7.8 per cent increase on last year. Trade growth in 2010/11 is expected to come primarily from the coal industry, with coal exports forecast to reach 67.0 million tonnes. The ever-increasing demand for coal from India and China should see sustained growth in this important part of GPC’s trade. A multibillion-dollar liquefied natural gas (LNG) project on Curtis Island

LNG ships in Gladstone harbour. The Wiggins Island Coal Terminal (WICT) and the imminent major LNG export hub on Curtis Island stimulated GPC to prepare to develop the Western Basin in the Port of Gladstone into the most significant industrial port precinct in Australia. Under the GPC 50-year Strategic Plan, the Western Basin is highlighted as the major future growth area for port infrastructure. Proposals for the LNG export hub on Curtis Island have triggered an environmental impact study (EIS) process for the Western Basin Dredging and Disposal Project—perhaps the largest dredging approval ever sought in the nation. This EIS submission is being processed through both Queensland government and Australian government regulatory agencies for approval. During the year, work commenced on the logistics facilities that will service the movement of people and materials between the mainland and Curtis Island during the construction of LNG compression and storage infrastructure there. Work also commenced on constructing storage areas for pipes which will be used in the construction of the coal seam gas (CSG) pipeline between the gas fields and Curtis Island. The WICT Project design process was completed during 2009/10. The terminal, with an ultimate

November 10 www.bus-ex.com

Gladstone Ports Corporation Ltd

GAGAL To accommodate for industry growth throughout the region and better service the community, GAGAL has three regional offices servicing Central Queensland. GAGAL

also

operates

range

commercial

workshops in Gladstone and Biloela which provide manufacturing and construction services and college training in metal fabrication, diesel fitting, fitting and turning, carpentry cabinetmaking, painting and decorating, plumbing and electrical, as well as a number of services focusing on school-towork transition and employability skills training. With 25 years experience servicing the Central Queensland region, GAGAL believes ‘facilitating skills development through the employment and training of apprentices and trainees will better service the needs of our community’ is the key to its success.

capacity of approximately 80 million tonnes a year, has been designed for construction in three stages. Construction is expected to take three years and will create approximately 800 jobs. Safety is always one of the most important concerns in the hazardous environment of a port, where every ship movement or loading operation is a hazard. As GPC’s CEO Leo Zussino says: “A robust management system provides the cornerstone of a strong safety culture.” The workforce has doubled since 1995, and Zussino expects it to increase to over 1,000 by 2015, so the port’s Site Safety Committee has worked closely with management on a daily basis to

“Gladstone looks like becoming in its own right one of the fastestgrowing industrial hubs in Australia”

November 10 www.bus-ex.com

www.bus-ex.com November 10

Gladstone Ports Corporation Ltd

Dredging International (Australia) Dredging International (Australia), a fully owned subsidiary of the D.E.M.E. Group, has provided dredging services to Gladstone Ports Corporation for the last three years. The Rio Tinto Berth 1 Fisherman’s Landing Dredging Works was completed in 2009, while the Early Works Dredging project is currently being undertaken for QGC (BG Group), one of the LNG proponents.

remind workers to act safely for their interest and that of fellow employees. “In the coming year, we plan to transition to the internationally accredited AS4801 Safety Management System and this, along with enhanced data capture and analysis

capabilities, will provide the prerequisites for improved performance,” says Zussino. Far from being a minor provincial harbour, remote from any large population centres, Gladstone looks like becoming in its own right one of the fastest-growing industrial hubs in Australia. Since consolidating under the GPC ‘brand’, it has adopted world class environmental, safety and materials handling practices, a Continuous Improvement Programme (CIP) and excellent corporate social responsibility policies. One of the community engagement highlights during the year was the release of the first edition of a five-part port history. The publication documented the role of the indigenous community in the preEuropean settlement of Gladstone and the early history of the port’s development up until 1934, and this has been presented to schoolchildren throughout the region. www.gpcl.com.au

November 10 www.bus-ex.com

Welloiled

preparatio T

he global energy marketplace is undergoing unprecedented change as nations seek to migrate to cleaner and less environmentally damaging forms of power generation. Combined cycle gas-fired power plants produce some 60 to 70 per cent less CO2 than coal-fired power plants for the same power output; and unlike wind and solar power, they are not dependent on an intermittent supply of fuel. This makes natural gas an attractive choice for the generation of a constant base load power output with greatly reduced carbon footprint. For Australia, which is sitting on a substantial resource of unexploited natural gas, this is very good news. Where previously, with a consumer population of just 22 million, it had been uneconomical to invest in exploration and development of natural gas prospects, this search for cleaner power generation has led to a renaissance in natural gas exploration and production, including LNG production and export. Large exploration, development and production projects are underway off the coasts of Western Australia and the Northern Territory, and of coal seam gas from within Queensland. An increasingly significant proportion of that gas is being exported as LNG to meet the rapidly increasing demand from countries such as India, China, Korea and Japan. As a result, Australia is rapidly climbing the world rankings in terms of gas export, and commentators are predicting that there is a probability it may eventually overtake Qatar to become world leader.

www.bus-ex.com November 10

d ons

Advent Energy

Advent Energy is about to begin drilling the first ever exploration well off the coast of New South Wales, in what may become one of the largest natural gas discoveries of the decade. Ben Sansom talks to managing director David Breeze about the exploration and why the prospects look so good

November 10 www.bus-ex.com

www.bus-ex.com November 10

Advent Energy

Recent exploration work done by Advent Energy in the hydrocarbon-rich Sydney Basin has revealed a prospective gas resource that could turn out be one of Australia’s most exciting gas discoveries of this decade, and could certainly put New South Wales on the map as a gas producer. Current estimates are that it may yield over 13 trillion cubic feet of natural gas. However, the data also suggests that with further exploration that estimate could well increase to somewhere in the region of 35 trillion cubic feet.

$38 million. Therefore, if the Advent project does realise the value that the press reports suggest, that would give BPH a share of just over $2 billion—quite an improvement on its current value. Exploration projects are notoriously capital intensive—the cost of drilling this first well is likely to be in the region of $18 million. They are also inherently risky. However in this case, according to Breeze, several factors have significantly reduced the risks. The gas has been discovered in the vast 8,200 square kilometre PEP11 permit

“Successful development of this field could yield an export programme in the region of 4.4 billion cubic feet of gas over the next 40 years” “We are now in the final stages of preparation, and expect to commence drilling our first exploration well before the end of the year,” says Advent Energy’s managing director David Breeze. “It’s a very exciting time for us. Based on the independent estimations of yet to be discovered resources, successful development of this field could yield an export programme in the region of 4.4 billion cubic feet of gas over the next 40 years, and this will bring us into a significant phase change as both developer and exporter.” An unlisted public company, Advent has two major publically listed shareholders. Former biotechnology focused company BPH Corporate Ltd owns a 20 per cent share and MEC Resources, an investment company specialising in energy and mineral exploration, owns 51 per cent. For both of these companies, success with this first exploration well will have a significant financial impact. “To put that into perspective, MEC is currently worth around $100 million on the Australian Stock Exchange, and BPH is worth around $27 million. Between them they have around 70 per cent total interest in the project,” says Breeze. “If the project is worth $12 billion, as has been suggested in recent press commentary, then there is substantial capacity for value appreciation in these two companies.” From the investment perspective there is an added twist to the story. BPH is currently believed to be considerably undervalued, and estimates indicate its value should be somewhere in the region of

area, located in a 200 kilometre corridor off the coast of New South Wales between Wollongong and Newcastle. Advent bought into the project in 2006 by acquiring a 25 per cent stake in the area which, on successful completion of the first exploration well, will be increased to 85 per cent. Since 2006, the company has undertaken numerous studies and worked extensively on the exploration data to define the likely extent of the gas reserves and de-risk the exploration process. “Two separate companies had previously done work on PEP11, and had independently estimated a prospective gas-in-place of 1.75 trillion cubic feet,” explains Breeze. “However, by reprocessing these earlier results with a further seismic survey that we funded in 2004, we have been able to boost those estimates substantially, to 13.2 trillion cubic feet at 50 per cent certainty.” The certainty could, however be significantly higher than this. The area has revealed many interesting geological features commonly associated with giant natural gas discoveries. “We have discovered seabed pockmarks of the sort you would find in the Gulf of Mexico and offshore Norway, and these are usually caused by gas fluid flow events,” Breeze explains. “One of these is one kilometre wide and 60 metres deep.” In addition, a 2006 survey reveals columns of gas seeping from some of the pockmarks, some of them up to five kilometres wide. “This provided support for quite a range of prospective areas for drilling, which is terrific for a large project like this.”

November 10 www.bus-ex.com

Features such as these taken with geochemical indicators, according to international hydrocarbon migration expert and author Dietmar Schumacher, tend to increase the probability of discovering gas on a commercial scale to a reassuring 82 per cent. PEP11 is also an attractive position because of its proximity to Sydney. It’s not only close to Australia’s largest and most rapidly expanding energy market with its associated power generation capacity, but it will also have close proximity to the national gas pipeline and export infrastructure. Drilling is scheduled to commence before the end of the year and a semi submersible drilling rig, the Ocean Patriot, has been hired to carry out the work. Meanwhile, the four possible locations identified by the pre-drilling site survey have now been honed down to just one off the coast of Newcastle. A well at this location is expected to intersect to gas sources: the Great White prospect at 390 metres below sea level and the Marlin prospect at a depth of 530 metres. Considerable interest has been generated among the international oil and gas community, and Advent has already been approached by a range of companies keen to participate in the project. Looking to the future, Advent is putting together plans for further exploration wells in the development of what could turn out to be one of the most significant discoveries of the decade. “And the good news,” Breeze concludes, “is that you don’t have to be a major investor to become involved in this. Anyone can have access to it through our two shareholders, BPH and MEC Resources.” www.adventenergy.com.au

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Advent Energy

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Gon F

or the past 16 years, Avocet Mining Plc has had its focus on South East Asia, firstly mining tungsten and latterly, gold. However, a major refocus is now underway that has indeed seen the company go west—specifically, to West Africa. The man overseeing this huge shift in strategy is CEO Brett Richards. “The company began in 1994 with gold and tungsten assets and that year it discovered Penjom in Malaysia,” he explains. “From that point the business was focused on South East Asia. We operate two mines in the region (the second site is called North Lanut and is located on the Indonesian island of North Sulawesi) and have a series of pipeline projects in Indonesia.

www.bus-ex.com November 10

The saying “Go West, young m of our language for over 150 y origins may have referred to A empire, the idea has been follo one gold mining company, as A

Avocet Mining Plc

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manâ&#x20AC;? has been a part years; and while its Americaâ&#x20AC;&#x2122;s growing owed to the letter by Andrew Pelis discovers

November 10 www.bus-ex.com

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Avocet Mining Plc

“However, these existing assets are coming towards the end of their mine lives, with higher than desired costs and we have found it is becoming increasingly hard to manage operations in two distinct geographic locations, seven time zones apart. We now have an opportunity to focus on developing early stage exploration projects in a highly prospective district of Burkina Faso, with our fully commissioned first mining operation in West Africa—as there is simply lower hanging fruit in this part of the world. By being able to simplify our story and uncomplicate our lives, it will give us the chance to focus on understanding the quantum of the ore bodies we have under licence in Burkina Faso and Guinea, so as we can expedite building a bigger business in West Africa,” he says. The opportunity has manifested at Inata, in the southern Sahara region of emerging gold producer Burkina Faso. The chance to enter the new market arrived with perfect timing—the old management team at Avocet were beginning to look at alternative regions as South East Asia began to frustrate. “The West African assets were originally controlled by Wega Mining,” states Richards, “however, through a combination of factors primarily driven by being in a financial crisis during a time when the world was going through a financial crisis lead them to immediately look for a strategic partner to acquire the business. Wega Mining had no experience building or developing a mine, and had limited experience in West Africa. They went through a feasibility study and believed the project cost would be under US$100MM, and that construction would take less than 12 months. However, as they experienced financial problems they quickly looked for strategic alternatives.” At that point, 18 months ago, Avocet came in as a strategic partner and Richards became involved in the project to turn Inata into a fully functioning gold mine, and Avocet into an emerging producer in West Africa. However, this was no easy task— the construction project was poorly advanced, the contractors were poorly managed and there was significant re-engineering and re-work required in many areas. The site is located very close to the Sahara desert and the project started with no power, no water source, no road system and no capable infrastructure. Everything had to be built

November 10 www.bus-ex.com

Avocet Mining Plc

HGS Ltd

Rana Motors

HGS Ltd is a supply and service company focusing

Rana Motors are tyre distribution network leaders in

on the industrial and mining sectors in West

Ghana, with a history of 35 years. “West Africa Tire

Africa. We have a hands-on approach, and we

Services Ltd”, (Rana Motors subsidiary) is the regional

provide customers with remote location solutions

distributor for Goodyear Earthmoving tyres in West

for all hydraulic hose and fitting needs, as well

Africa, and is associated with Avocet Mining in Burkina

as asset protection management (APM) for your

Faso by way of supplying Goodyear Earthmoving tyres

equipment. Our APM range covers lubrication & fast

and related services for their operations.

fill systems, fire suppression, filtration, hose reels

WATS Ltd., the first company in Burkina Faso supplying

& meters, as well as spill kits for environmental

the whole range of Mining tyres to the mining

protection. As the leader in our field of business,

community, also provides on-site tyre services and tyre

we incorporate years of experience and embrace a

repairs (REMA Tip Top).

team of professionals that strive for perfection in all

WATS Ltd. is the retail partner of Goodyear and operates

areas of their respective disciplines.

its premium retail stores—“VULCO” in Ouagodougou.

“We now have an opportunity to focus on developing early stage exploration projects in a highly prospective district of Burkina Faso” from scratch. “When Avocet took control of the assets from Wega Mining, it was clear that serious changes were required to get the project back on track, and to mitigate any delays in start-up and commissioning. When we took over, we quickly set about a re-engineering and reconstruction plan that ended up extending the construction period by four months and adding $30 million of costs to the project. The guys at site did a tremendous job getting the operation to first gold on December 20, 2009,” says Richards. However, the turnaround since then has been extraordinary. Avocet poured its first gold in December 2009 and is now up to full production capacity. “This year has been all about commissioning and ramping up production, and the extra time and cost spent to ‘do it right’ last year has paid significant dividends in allowing for minimal start-up delays and extremely well positioned costs in such a short time frame; and is really testament to the skills and expertise of our guys getting it right.” The acquisition saw a number of existing Norwegian shareholders become part of Avocet Mining and the company, which was already listed on the London Alternative Investment Market (AIM), has now listed on the Oslo Børs as well.

The requirement of raising equity capital is not currently a consideration as the company is now producing 150,000 ounces of gold (annualised) per year with good cash flow. It has already started re-paying project debt and is delivering into the project hedge that came with the project facility as a result of the Wega Mining acquisition. “Now we are in a position to quickly understand the quantum and quality of the ore body at Inata, and in Belahouro—in an effort to support expansion plans of the construction of a new mine in Belahouro,” says Richards. “We have an area covering 1,660 square kilometres, and although our mining licence fits into around 10 per cent of that, we are quickly exploring a series of priority drill targets by commencing a large drill programme over the next 10 months, costing approximately US$25MM in 2011. Wega Mining simply drilled Inata out enough to justify an economic feasibility study to procure project financing, and did not completely drill the ore body’s extension out enough to understand the magnitude of the deposit—simply because of their financial distress,” explains Richards. “We need to gain a better understanding of Inata, and we need to do it quickly and efficiently,” he continues. “What we do know is we have recently

November 10 www.bus-ex.com

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Avocet Mining Plc

increased the resources by 25 per cent, taking the deposit back to over one million ounces in reserves, which gives us a revised mine life of eight years. It is our goal to double the reserves and resources at Inata from feasibility study figures, and we are hoping to accomplish that by the third quarter 2011.” Inata is an open pit mine and has a relatively soft ore—it is fairly user-friendly and has simple metallurgy and provides for good recoveries. “We have been mining for over 18 months, and we only began drilling and blasting in the second quarter of this past year,” says Richards. “But more importantly to the upside is that the deposit is not fully understood yet, as it is open to the north; open at depth; and to the south. To understand the area better, we have embarked on an extensive 200,000 metre drilling programme that will cost approximately $10 million this quarter and a further $25 million during 2011.” In addition to investment in Burkina Faso, Richards says that Avocet will be investing $5 million to $10 million next year in Guinea, where the company acquired two exciting packages of land in the Wega Mining transaction. At the same time, he is busy working on a plan to completely move the company out of South East Asia and expects to make an announcement by the end of the year. “I’d like to make a clean break—our new mission will be to be a leading West African gold mining and exploration company,” he indicates. “Investment in West Africa is very much in vogue at present. Burkina Faso only brought out a Mining Code in 2003—and three years ago there was only one operational mine here. It is today becoming one of the world’s hottest fastest rising countries for gold projects.” With 400 people employed in Burkina Faso and an increasing shift towards local workers as training pays off, Avocet is clearly keen to help

the local community. The company invested $10 million and took eight months to build a barrage on a dry river that has provided a yearround water supply not just for the business, but for 10,000 local people who have moved settlements to the site. It is a project that has even drawn praise from the country’s prime minister, who hailed it the biggest corporate social programme in Burkina Faso’s history. The business has also built a school and birthing clinic and contributed housing for 250 people, ensuring its workforce has good living conditions. Today, Avocet Mining is a thriving business with a comfortable cash flow; and Richards has an organic growth plan to increase production to 500,000+ ounces per year in the next four years, and with inorganic growth, could very easily be a million ounce mid-tier producer in that same time frame. “Firstly we want to devise a plan to grow to the half a million ounce mark organically and that should be achievable in the next four years,” he says. “We are in a good position and do not need to rely on raising equity to procure the exploration, as Inata’s free cash flow is more than ample to finance all of the needs of the business in the foreseeable future. Investing in these projects will be the foundation of Avocet’s future, and by expediting new ounces of production into the group, it has a profound effect on diluting the hedge and increasing the cash resources,” says Richards. Richards goes on: “Our corporate philosophy is to be an unhedged gold mining company, and I would like to give our shareholders full exposure to the gold prices, but the hedge acquired in the Wega transaction limits this exposure—so introducing new, sustainable organic or inorganic ounces significantly dilutes the effect of the hedge, and the sooner we are able to do that, the greater the positive impact will be for the business.” www.avocet.co.uk

November 10 www.bus-ex.com

glitterin pri

2010 has been a stellar year to date for Inc. CEO John Bristow talks to Jayne trends and factors moving in th 60

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ng ize

Rockwell Diamonds e Flannery about the he company’s favour

Rockwell Diamonds Inc.

009 was an awful year for the diamond industry, with markets recording an unprecedented plummet in prices of around 50 per cent. As the global recession hit, it seemed that diamonds were no one’s best friend. Girls the world over were finding themselves compelled to downgrade and weigh up cheaper options. However, Rockwell Diamonds Inc. succeeded in weathering the storm better than most. As a junior player in South Africa’s mining industry, the company’s size and agility meant it could respond to the global downturn much more nimbly than some of its large and cumbersome competitors. “We were able to react very quickly, particularly in cutting costs by placing our least viable mine at Wouterspan on a care and maintenance regime. At the same time, we made some tough but necessary business decisions and a range of operational enhancements to reduce our cost base. The processes

November 10 www.bus-ex.com

Rockwell Diamonds Inc.

Thorburn Security Solutions Thorburn Security Solutions is a black-owned South African company established in 2002. It is SABS ISO 9001/2008 accredited and a Security Association of SA Gold Class Member. A contributor to Broad Based Black Economic Empowerment, the company’s fundamental principles are: a zero tolerance approach to risk, especially crime; effective sourcing of security specialists and specialized products; integration of advanced technology with manned security and procedures; and a flat management structure with direct management and directors’ intervention. “Safety is not found in numbers, but in an integrated risk reduction program that is transparent and solutions driven designed to meet the specific needs of our clients.”

time, with no new viable discoveries made for a number of years,” Bristow says. In all its operations, Rockwell uses open-cast or horizontal strip mining operations. This method of mining offers the lowest recovery costs of all— the key technical challenge is devising efficient processes to sift and process countless tonnes of rock and earth in order to extract a few precious gems. It is essentially a large earth moving and processing operation, which Rockwell has carefully refined and perfected. Through a combination of innovation, a low cost structure and a focus on the world’s biggest, finest diamonds, supported by what Bristow believes is the industry’s sharpest team of diamond valuation and marketing experts, geologists, and a dedicated engineering and operating team, Rockwell has found its own special niche.

“We have now achieved a very large footprint in low grade alluvial deposits of exceptional diamonds” we use are not unique, but we have a very large scale processing capability which enables us to achieve unprecedented economies of scale within the industry,” says John Bristow, CEO. Like many junior players in South Africa’s mining industry, the company is listed on the Toronto Stock Exchange but its activities are wholly focused on South Africa’s alluvial deposits. Rockwell has diamond operations in the Northern Cape Province—the Holpan and Klipdam mines are located north of Kimberley, while the Saxendrift mine is on the Middle Orange River to the south-west of Kimberley. The company is currently engaged in a bulk sampling project at a hitherto unused extension of the Klipdam mine in the Northern Cape. Most importantly Rockwell is also in the process of acquiring the Tirisano (or Blue Gum) operation of Etruscan Diamonds, located in the well-known Ventersdorp alluvial diamond district in South Africa’s North West Province. “We have now achieved a very large footprint in low grade alluvial deposits of exceptional diamonds. Our assets are particularly valuable because diamonds are becoming scarcer all the

The company is strategically positioned at the high end of the value chain. “We don’t mine many diamonds but the ones we do recover are of exceptional value and quickly find buyers. Typically our diamonds sell to private individuals of very high net worth,” reveals Bristow. The nature of demand is swinging steadily towards the largest, purest gems that are the focus of Rockwell’s operations. In August, Rockwell reported the recovery of five large gemstones from its Holpan, Klipdam and Saxendrift operations. The jewel in the crown was found at Holpan, a massive 136-carat clean white diamond. This brought the total number of stones weighing in excess of 50 carats recovered this year to 11, whereas in the whole of 2009, only a total of 12 gems of this size were found. The West may be making a slow economic recovery, but China and India are holding up much better. Meteoric growth in some sectors has produced a swathe of new billionaires and millionaires eager to possess the ultimate status symbol. “Even in the West, we see that the highest end of the luxury market has fared better than the sector overall. It is another factor that works in

November 10 www.bus-ex.com

Rockwell Diamonds Inc.

Sizemech Vibrations Sizemech Vibrations advises on and installs all types of vibratory equipment. We supply grizzly and vibrating feeders starting at 300mm and up to 3,000mm wide with lengths to suit the application; inclined or horizontal screens, either single, double, triple or four deck from 600mm and up to 3,000mm wide; banana screens from 1,500mm and up to 4,000mm wide; and probability sizing screens from 500mm and up to 2,500mm wide, either three or five deck. Selection and sizing is our specialty. We can supply you with a comprehensive General Assignment Drawing, indicating all the dynamic loads and sizes. Our crew can install or assist with any of the vibratory equipment.

our favour,â&#x20AC;? Bristow adds. A successful private placement and rights issue at the beginning of the year raised C$16.9 million, and enabled Rockwell to recapitalise its balance sheet and proceed with the important acquisition and re-development and commissioning of the Tirisano project. The company is also committed to modernise and re-commission the important Wouterspan operation which is adjacent to Saxendrift in the Middle Orange River area of the Northern Cape Province. Wouterspan was closed due to the negative economic environment in January 2009. The engineering redesign of Wouterspan is almost complete; and project implementation and recommissioning is scheduled for 2011. The funds raised early in the year also provided a capital base to support the company in adding

November 10 www.bus-ex.com

Rockwell Diamonds Inc.

Flow Sort Flow Sort’s patented, state of the art sorter design has set the benchmark for efficiency and reliability in the recovery of diamonds. Our sorters’ superior performance backed by Flow’s uncompromising after sales service has made us the number one supplier of x-ray diamond recovery equipment. Testimony to this is Rockwell, with use of over forty of our sorters.

to its asset portfolio. “We are not interested in growth for the sake of it,” Bristow asserts. “Rather, we need to be able to create critical mass in terms of production profile and to fully leverage our technical and processing capabilities. It is also important that if maintenance and repair cycles at one mine cause a temporary shut-down, we can continue recovery elsewhere, which acts to smooth revenue flows. We are only interested in acquiring assets with the potential to economically deliver a high grade product and we expect to see a consistent improvement in our recovery rates.” One acquisition this year has been a 20 per cent stake in Flawless Diamond Trading House, a professional marketing and sales facility which was already used to sell Rockwell’s diamond production. However, Bristow is quick to point out that the company has no intention of switching to a vertical integration model. A further key benefit that Rockwell has in place to leverage off its diamond product is its unique

joint venture arrangement with the Steinmetz Diamond Group (SDG), a world leader in terms of the manufacture and marketing of unique and rare large and special diamonds. This partnership ensures that Rockwell attains additional upside in a profit share arrangement that ensures extra margin from the company’s most special diamonds. Typically these diamonds include exceptional coloured stones and product larger than 10 carats which are manufactured, certified and marketed via SDG’s specialised and highly successful diamond business. “We are deeply committed to focus on our core competence which is alluvial diamond mining. However, in addition to a small revenue stream, what is really important about this acquisition is that it gives us a critical insight into the market, particularly in terms of further penetrating Chinese and Indian markets. We will gain an immediate sense of new trends and changing demands,” he explains. Looking to the future, Bristow believes that Rockwell will further consolidate its position as a mid-tier supplier over the next five years. “We have resources for at least the next 15 to 20 years and we are adding to these all the time. Then we benefit from a number of committed long-term investors and an improving market environment. “The basic market fundamentals are excellent,” he continues. “High quality diamonds are becoming scarcer all the time. That fact, combined with the new purchasing power emanating from emerging economies, means that our very high grade output can only become more sought after,” he concludes. www.rockwelldiamonds.com

November 10 www.bus-ex.com

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The challenging task of bringing mining projects to fruition isnâ&#x20AC;&#x2122; a question of solving engineering projects, as Alan Swaby le

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Chelopech Mining

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hey say that what doesn’t kill us makes us stronger. On that basis, the guys at the Chelopech Mine in Bulgaria must be feeling on top of the world. It’s taken since 2004 and the job won’t be completed until the end of next year, but a mine they acquired due to the bankruptcy of its previous Irish owners has gone from unprofitable to extremely profitable—and when the upgrading is complete, it should be among the lowest cost underground mines of its kind anywhere in the world. Bulgaria doesn’t immediately spring to mind when thinking about mining in general and gold in particular; but geological exploration began in the region over 150 years ago. However, nobody was in any rush and it wasn’t until the Soviets took an interest in the 1950s that production at Chelopech began—albeit on a small scale of just a few thousand tons a year until the early 1970s, when the mine was expanded and a new concentrator built.

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After the fall of the Soviet Union, the mine was privatised but the Irish interests who took over always struggled, partly because of the then low mineral prices but also because they spread themselves too thinly, with properties elsewhere, and were unable to make any meaningful improvements to the mine. Now that the minefield of Bulgarian bureaucracy has been negotiated, Dundee Precious Metals— the Canadian owner of Chelopech Mining—will invest $150 million in upgrading production. “It probably could have been done quicker,” admits general manager Rick Howes, “but we insisted on transparency all down the line and at that time, Bulgaria worked quicker if a little greasing of the wheels took place.” In the end, Dundee had to call on the joint help of the Canadian, United States and EU diplomatic forces to put pressure on those causing unjustified obstructions; however, the company hasn’t won all its battles. The high arsenic content of the ore makes it difficult to find smelters capable of refining the copper concentrate, and so plans were drawn up to build an on-site gold and copper processing facility. But these had to be shelved as the original permission was overturned last year by the Bulgarian Supreme Administrative Court. Along with the mine itself, Dundee acquired some of the key mine managers, so it had a pretty good idea of where its attention should be focused. The Chelopech deposit is situated at the

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Chelopech Mining

November 10 www.bus-ex.com

“By doubling throughput and stabilising the ground by backfilling using a method known as blasthole open stoping, the whole economics of the project have been changed” foot of the Balkan Mountains, in the western half of the country, 700 metres above Black Sea level. The gold inclusive copper ore is located in several steeply dipping orebodies that average 40 metres thick and several 100 metres in strike length, ranging in depth from 300 to 700 metres below ground. Not only were previous production levels too low to be economically viable, the wrong mining methodology had been employed. “As the ore was being extracted,” explains Howes, “the seams were allowed to cave back in, in a method known as sub-level caving. This had the effect of diluting the quality of material being mined. But by doubling throughput and stabilising the ground by backfilling using a method known as blasthole open stoping, the whole economics of the project have been changed.” And plenty more changes are in the pipeline. Presently, ore is trucked to the bottom of a vertical shaft to be taken to the surface. But this method is

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limited to a maximum of one million tons a year. In order to improve on this, the vertical shaft is being replaced by a 4.5 kilometre inclined conveyor. Ore will still be trucked from the face but then dropped into a crusher which will feed the conveyor. On surface the three stage crushing will be replaced with a semi-autogenous grinding mill which will then feed the new flotation plant. The final gold and copper concentrate will then be shipped to the company’s newly purchased Tsumeb Smelter in Namibia where it will be smelted into blister copper and shipped for further refining. Chelopech has already been able to double production at the mine since acquiring it in 2003. When all the upgrades come on stream next year, it will double yet again, to two million tons per annum producing about 140,000 tons of concentrate, from which 22,000 tons of copper and 140,000 ounces of gold are refined. Proven reserves exist for at least 10 years of production; but Dundee is hoping

Chelopech Mining

to find viable deposits nearby which will extend the life of the mine much longer. “There is no doubt,” says Howes, “that this mine is head and shoulders above others to be found in central and eastern Europe—so much so that many other mining companies have visited us here to examine how we go about things and learn from our experience.” Dundee is determined to treat the local community and its inhabitants fairly and with respect. “When we do eventually move on,” says Howes, “we will leave it in a much better condition than the way we found it. Each year we are spending large amounts of money undoing the damage to the environment caused in previous years. The caving mine process has resulted in considerable subsidence on the surface which we are gradually filling in before reforesting the land. In addition we support many events in the local community and donate around

$1 million annually to infrastructure projects in the local communities.” Chelopech is also continuing to finance an English language high school established by the previous mine operators but open to local inhabitants who pass the entrance exam. The school has around 100 students and invariably shines compared to other educational institutions in the country, as measured by annual results and periodical competitions. Since this is the first mining venture for Dundee Precious Metals, it could have had a very different outcome. Instead, it is proving to be a significant success story. “Our experiences here,” says Howes, “have given us the experience and confidence to take on new challenges in other parts of Bulgaria and on development projects in other challenging areas of the world.” www.dpm-group.com/internal/chelopechAbout.html

November 10 www.bus-ex.com

Good gold

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Chalice Gold Mines Limited

Dr Doug Jones, managing director and CEO of Chalice Gold Mines Limited, speaks to Jane Bordenave about the company’s work in Eritrea, and the shining opportunities it presents

halice Gold Mines is an Australian listed but East Africa-focused exploration and development company, working in Eritrea on the Arabian-Nubian Shield. The firm recently merged with Sub-Saharan Resources, a business that has been working in Eritrea since 2000, enabling it to further strengthen its position in the area. Chalice Gold Mines’ current focus is the development of the Koka gold mine, which is part of the 615 square kilometre Zara Project, located 160 kilometres north-west of Asmara, the capital of Eritrea. The company’s managing director and CEO Dr Doug Jones, an exploration geologist with 20 years experience exploring for metals in Africa, explains the importance and uniqueness of the ArabianNubian Shield and the Zara Project: “The area we are working in is very rich in deposits and has been home to small mines since ancient times. However, due to historical instability in the region, it’s almost completely undeveloped in modern terms. Now that the political situation has stabilised, the area presents great opportunities for exploration.” The company has secured six contiguous licences, consisting currently of four exploration licences and two prospecting licences, covering just over 600 square kilometres. Currently there is one pit planned for development—Koka—which is located in the centre of the area. “We have recently completed a feasibility study at the Koka Gold Deposit and plan to begin work on the construction of the mine in mid 2011. It should take approximately 18 months to complete and production will commence in early to mid 2013,” explains Jones.

November 10 www.bus-ex.com

The mine’s deposit of 760,000 ounces of gold in 4.6 million tonnes of ore is expected to last for seven years, with an extraction rate of 104,000 ounces per annum at a grade of 5.1 grams of gold produced per tonne. The deposit is easily accessible, as most of the ore is located within 150 metres of the surface, meaning there is low technical risk when it comes to extracting the metal. The firm also expects to explore for deposits of base metals such as copper, lead, zinc and possibly tin and nickel that may also be found in the region. As well as the abundance of undeveloped deposits in the area, low operating costs are another attraction of mining in Eritrea. “Our operating costs are only projected to be US$338 per ounce of gold produced, which is quite low by global standards,” says Jones. But all these benefits combined with the new-found stability in the region bring with it increased competition. “Things are hotting up in the area and there’s a lot of competition for ground; there are a number of junior prospectors now present in the country, as well as larger, more established mines such as the Bisha Project,” he explains. “However, we have a very strong position through the long presence that Sub-Saharan has had in the region.” The relative underdevelopment of the area brings its own challenges. “Because the history of exploration in Eritrea only goes back around 10 years, there’s an almost complete lack of supporting infrastructure and suppliers,” says Jones. “We are limited when it comes to companies we can use for drilling, assaying, where we buy our equipment such as bulldozers and so on. However, this is not unusual in terms of the early days of mining in Africa—the situation in Tanzania and Mali in the 1990s, for example, was very similar; but now in both countries there is a strong industry supported by strong peripheral networks.” Chalice Gold Mines is also making its own major investments in the area. “We are very remote—the nearest settlement is a village of 2,000 people eight kilometres away. We have taken some initial steps, but there is more to do—we will be working to develop the area, including improving the access road, installing an airstrip, putting in place electrical generating capacity (there is no grid electricity in the region), establishing a water supply and building an accommodation village for our workers.” Thus the mine will not only supply jobs and boost the local economy, but it will also improve the infrastructure of the local area, benefitting the local community.

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Chalice Gold Mines Limited

November 10 www.bus-ex.com

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Chalice Gold Mines Limited

Capital Drilling Capital Drilling is an emerging and developing markets focused drilling services company that provides exploration, development, grade control and blast hole drilling services to mineral exploration and mining companies. Since inception in 2004, the company has developed an enviable reputation for its ability to deliver safe, professional and reliable drilling services in remote locations.

Investment in people is an important aspect of the company’s work on the Zara project and the Koka mine in particular. “Providing skills training for the workforce is a core part of what we will be doing, because it is one of the first such projects to begin development in Eritrea—so it is essential to develop workers who are familiar with world best practice,” says Jones. “Once again, due to the lack of a history of mining in the area we will be providing our workers with the full gamut of training: health and safety on site, essential skills and knowledge for the

job, and continued training. It’s necessary for us to provide all of these ourselves, as few of the required skills are present in the working population.” While the development of the Koka mine is in its initial stages and will present the main focus for the next seven years, the scope for expansion along the same strike is significant. The company is applying to transform its two prospecting licences for the Zara Project into exploration licences, and has also approached the government for further licences in the far south-east of the country and to the south-west of the Koka development. Despite the increased competition in Eritrea from other mining companies, Chalice Gold Mines is in a strong position and, through its merger with Sub-Saharan Resources, has a solid track record in the country. It is these assets and the potential for development of the Arabian-Nubian Shield that ensure an exciting and prosperous future for Chalice Gold Mines. http://chalicegold.com

November 10 www.bus-ex.com

he story of zinc in the international press right now is all about surpluses in the global market. Prices have been holding up and production sustained, though they are expected to fall in the short term. But look a little further ahead, says John Barry, CEO of Rathdowney Resources, and it is apparent that zinc is worth investing in. As China and India start to produce and consume more cars and white goods, it will be in ever increasing demand over the next decade, he firmly believes. And that opinion is shared by the backers of Rathdowney, which started life as Mayfly Resources, a company founded by Irish geologists to look for lead and zinc potential in Ireland. It very soon attracted the interest of Hunter Dickinson Inc. (HDI), a diversified, global mining company with a 25-year history of mineral development success, which invested in the company in 2007. By then Rathdowney had accumulated a portfolio of properties in Ireland covering more than 1,600 square kilometres. Ireland is an important source of zinc, ranking as the world’s fifth largest producer of concentrates from its mines at Navan (the largest zinc mine in Europe), Galmoy and Lisheen. John Barry is an Irish geologist who knows this area like the back of his hand, having been closely involved in early resource delineation at Lisheen. When getting his team together, however, he was delighted to secure Mike Mlynarczyk as chief geologist, who is Polish by origin though educated in Canada. It was always going to be a challenge to discover the next generation of zinc deposits, Barry explains, because the near-surface deposits ‘low-hanging fruit’ have already been discovered and new discoveries are likely to be concealed deeper beneath the surface.

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By fo Polan Rath CEO

Rathdowney Resources

Galvanised

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ocusing on the potential to develop near-future zinc resources in nd combined with the potential for new discoveries in Ireland, hdowney Resources has created an attractive package for investors. John Barry explained the strategy to John Oâ&#x20AC;&#x2122;Hanlon November 10 www.bus-ex.com

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Rathdowney Resources

With the 2008 global banking crisis the investment markets grew much more nervous— suddenly it was not such a good idea to be an early stage exploration company trading on the expectation of making significant discoveries. It was a time for quick thinking, says Barry: “We realised we needed some more advanced projects.” He and his co-directors and advisors

needs to be done before you can even make an application,” says Barry. “It took about seven months to prepare the applications for the Ministry of Environment in Warsaw. But in May 2010 we were granted our first concession in Rokitno and in June the Zawiercie concession, and that has given us the green light to move forward with an intensive resource confirmation drilling programme in Poland.”

“For each job in the mine we probably create three or four local jobs; additionally we will plan to provide a sustainable and inexpensive supply of water to Zawiercie” quickly started looking for assets that could be brought to market in a shorter timeframe. “We assembled a group of highly respected international technical advisors, one of whom was Duncan Large, based in Germany, who had considerable experience in Poland. But Mike Mlynarczyk was our secret weapon!” In October 2008, Mlynarczyk moved to the industrial Krakow. To the north-west lies the world class zinc and lead of Upper Silesia, and it was here that Rathdowney focused its attention, Barry says. “It is an historic mining district. Lead/zinc sulphide Mississippi Valley-Type deposits, commonly referred as MVT ores, have been mined there since just after the war; but the extraction of zinc/lead oxide ores— or ‘calamine ores’ locally referred to as ‘galmei’— actually goes back to the 12th century.” The Polish state mining corporation has exploited lead and zinc historically in the area, starting with its Bolesław mine, then nearby Olkusz and then the Pomorzany lead and zinc mine also near Olkusz. Pomorzany was created in 1974 and is still in operation under the successor organisation ZGHB. It has produced 90 million tonnes of ore in what Barry describes as a large room-and-pillar operation, but the exciting thing about the existing set-up is that ZGHB also has a zinc smelter nearby, with a current throughput of 70,000 tonnes running at significant under-capacity. This means that, if the price is right, Rathdowney will be able to avoid transporting the concentrate it produces to smelters in other European countries. The early stages toward obtaining the necessary licences were slow but sure. The mechanisms for granting exploration licences in Poland may be speeded up soon, but for the time being the system is demanding. “A lot of compilation and research

The Polish State Survey carried out drilling in the area until 1988, providing valuable geological and historical drilling information, but the fact that no core samples were retained means that the resources will have to be verified by further drilling on the part of Rathdowney. The good news is that the original surveys are thought to have considerably underestimated the amount of zinc to be found up to 200 metres below the forests and pastures of Upper Silesia. Rathdowney applies environmental best practices in its project activities and the company has retained Schlumberger Water Systems, one of the best hydrogeological water consultancies in the world. “People forget that though mines are involved in pumping out water from the ground they also discharge mostly clean water,” says Barry. “For each job in the mine we probably create three or four local jobs; additionally we will plan to provide a sustainable and inexpensive supply of water to Zawiercie.”

November 10 www.bus-ex.com

www.bus-ex.com November 10

Rathdowney Resources

Pelican GeoGraphics With a mineral exploration background and 10 years in business as a GIS consultancy, Pelican GeoGraphics is ideally placed to provide software, support and training to exploration companies. We have been working with geologists at Rathdowney Resources to enable effective use of MapInfo Professional™ and Discover3D™ to visualise and interpret their surface and sub-surface exploration data in both 2D and 3D.

So Ireland and Poland are at quite different stages. In Ireland there are good chances of making a major new discovery. Rathdowney will drill-test some 40 exploration targets spread across six project areas in Ireland and any ‘hit’ could lead to a major discovery. “In Poland we have the opportunity to get to production quicker because we are starting off with a very substantial historical resource base,”

says Barry. “We are doing resource confirmation rather than exploration there. Combining advanced projects in Poland with the ‘sizzle’ of a potential major discovery in Ireland gives a nice balanced offering for an investor.” The market should also be encouraged by the fact that Rathdowney has grown entirely organically as an agile private company with the backing of HDI. The estimated budget for the 2011 drilling programme in Ireland and Poland is about C$13 million. Rathdowney plans to lists on the Toronto Stock Exchange Venture Exchange later this year, so investors will have 100 per cent exposure, he points out. Barry would love nothing more than to confirm a new discovery in Ireland. The country has slumped from Celtic Tiger to debt-fuelled desperation in a short time, he says, and its minerals could help kick-start an economic revival. www.rathdowneyresources.com

November 10 www.bus-ex.com

Antrak Air Ghana is emerging as West Africa’s most important regional airline. William Asare, quality assurance manager and acting head of flight operations, talks to Jayne Flannery about the factors behind the success story

he global aviation market has undergone a testing time in recent years; however, Antrak Air Ghana has taken analysts by surprise. To date it has been a tale of ongoing expansion with steadily soaring revenues and profitability. The company began operations in September 2003 with the stated ambition to become West Africa’s gateway to the world, and quickly established a position as Ghana’s only significant provider of domestic airline services. Last year, over 70,000 passengers took to the skies with Antrak Air. William Asare, quality assurance manager and acting head of flight operations, believes that the most critical factor behind the company’s success is the wealth of experience its management team has to offer. Antrak Air is led by one of Ghana’s most experienced businessmen, Dr Alhaji Asoma Abu Banda, who holds the position of CEO and executive chairman. Alhaji Banda—a member of the Council of State and recently judged the fifth most respected CEO in Ghana by global accounting firm PricewaterhouseCoopers—has been the driving force behind the establishment of a number of successful companies, both within Ghana and internationally, including Antrak Group of Companies; OTAL Holding Group; Cross Marine Services, Nigeria; and the Tema Container Terminal. The Kwame Nkrumah University of Science and Technology and the University of Cape Coast have since conferred on him a doctorate in recognition of his outstanding contribution to the maritime and air transport industry. “Dr Banda’s experience was vital in drawing up the specifications for Antrak Air’s fleet, which has been a key factor behind its success,” explains Asare. Dr Banda is also a member of the British Institute of Directors. Asare believes that the management team benefits from the European outlook he shares with his son, Fadel Banda, who was educated in Europe and

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Af ga

Antrak Air Ghana

fricaâ&#x20AC;&#x2122;s atewayto

the world

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Antrak Air Ghana

ATR Toulouse, Southern France-based regional aircraft manufacturer ATR is the world reference in the 50 to 74-seat turboprop market. Its ATR 42 and ATR 72 are the perfect solution on short-haul routes around the world. ATR has sold more than 1,000 aircraft since the beginning of its programme in 1981, and benefits from the experience and know-how of two of the major leading European aerospace industries EADS and Alenia Aeronautica (Finmeccanica Group). ATR counts today some 160 operators on 90 countries. ATR has become the leader in its category by providing environment-friendly, low operating costs, easy-to-maintain and comfortable aircraft. ATR ‘-600 series’, its newest version, will enter into service in 2011.

have now been supplemented by daily flights from Accra to Takoradi, which gives coverage of the most important city of the Western Region. The service has immediately established its popularity due to growing economic activity in the area as a result of increasing offshore oil activities. Then there is the new Accra to Sunyani route, previously without regular scheduled flights, where there is now a daily passenger service from Monday through to Friday. This area also boasts a number of large scale projects, from the issue of new mining rights to the high profile Bui Dam power project. “We are working to link all of Ghana’s major cities and to satisfy the demand of a new generation of

“Satisfying domestic demand is our first priority and having the right equipment is absolutely fundamental” also has a place on Antrak Air’s management board as general manager / head of corporate affairs. The fleet was founded with the purchase of two DC-9 aircraft from Boeing International Corporation in 2003. Antrak Air then acquired a further two 46-seater ATR 42-300 aircraft for domestic services in 2008. The fleet was added to again this year by the recent addition of a stateof-the-art 19-seater Beechcraft 1900D in May 2010 through a lease arrangement with Allegiance Air in South Africa. Antrak Air has initiated the process of acquiring its own two Beechcrafts, one of which is expected to touch the soils of Ghana in January next year. The Beechcraft has established a niche as one of the most popular 19-passenger planes ever made. This twin-engine turboprop plane, manufactured by Raytheon, was designed primarily as a regional airliner with the flexibility to be adapted to freight and corporate requirements. It is designed to operate in all weathers from airports with relatively short runways and has a range of almost 1,000 kilometres. “Satisfying domestic demand is our first priority and having the right equipment is absolutely fundamental,” says Asare. “We have excellent aircraft for our routes and knew from the outset they would provide a good return on the investment.” Daily flights from the national capital Accra to Kumasi and Tamale using the 46-seat ATR 42-300s

enlightened air travellers,” explains Asare. “People are quickly recognising the ease and comfort that our shuttle services offer and realising that air travel is a reliable, affordable and enjoyable experience. The Ghanaian business community is seeing new commuting opportunities as a better way to make use of its time and a new way to enhance working efficiency,” says Asare. Above all else, Antrak Air has consolidated its success by establishing outstanding safety credentials. Asare explains that at present, apart from minor repairs, a French maintenance company, based in Toulouse but with international operations, takes full responsibility for repairs. Meanwhile Blue Sky, based at Exeter in the UK, is responsible for pilot training and safety. “We are absolutely committed to the safety of our passengers and we have an excellent safety record with zero accidents since we began operating,” continues Asare, who is licensed by the Federal Aviation Authority and Ghana Civil Aviation Authority as a flight operations officer. He was trained in Quality and Safety Management in South Africa and also holds the IATA Operational and Safety Audit (IOSA) accreditation. “We recognise that our strength lies in management and marketing,” he says. “At present we undertake only minor routine maintenance and work in partnership with French and British providers

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for all of our major maintenance requirements and safety and pilot training. This means we are able to satisfy the very demanding audit requirements of oil and mining operations who want the maximum guarantee possible that their staff are being transported safely,â&#x20AC;? he adds. As a result, these companies are increasingly specifying Antrak Air as the transport provider of choice. As both the mining and energy sectors in West Africa are noting a strong recovery, there is an immediate prospect of strong organic growth in demand for air services. Antrak Air also intends to expand its tourism-based business over the next few years. Tourism in Ghana is a fast growing sector and can only be enhanced by the availability of an easy transport option to the countryâ&#x20AC;&#x2122;s many notable sights, which at present are often difficult and time consuming to access. Looking beyond domestic opportunities to the future, Antrak Air holds rights to operate flights to all the major cities in the West African-sub region. Then it intends to project itself onto the global stage. The company has been designated to operate flights to the UK, Germany, South Africa, Saudi Arabia, UAE and Lebanon. www.antrakair.com

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Antrak Air Ghana

November 10 www.bus-ex.com

powerof exp The

Owen Silavwe and Aaron Botha talk to Gay Sutton about a transmission line project that will make Copperbelt Energy Corporation the export route for DRCâ&#x20AC;&#x2122;s power for another generation; and the construction of a new hydro power plant in an area of historic significance for Zambia

he face of Zambia is changing fast. The mining boom is not only generating revenue and attracting investment into the region, it is also imposing increasing demands on the national power infrastructureâ&#x20AC;&#x201D;and Copperbelt Energy Corporation (CEC) is playing its part in improving that infrastructure and ensuring the power supply will meet demand. Formed in 1997 following the privatisation of Zambia Consolidated Copper Mines, CEC has established three major capabilities in the mining-intensive Copperbelt region. Firstly, it has 80MW of emergency gas turbine generation and supplies power to the mines of the region. Secondly, it owns and maintains the Copperbelt regional power transmission network for supplying the mines, which not only forms an integral part of the national transmission network and carries power to the urban population on behalf of the national power utility ZESCO, but also links with SNEL, the national utility for the Democratic Republic of Congo (DRC). And this interconnector forms the only export route for power from that nation. Finally, CEC has installed and maintains the Copperbelt regional element of the national fibre optic communications network.

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Copperbelt Energy Corporation

pansion

November 10 www.bus-ex.com

Copperbelt Energy Corporation

Alba Power Alba Power was founded in 1997 to offer a reliable, cost-effective

alternative

traditional

aero-

derivative gas turbine support services (especially for Avon Olympus gas turbines) conventionally delivered by OEMs. By minimising overheads and optimising the recycling of overhauled components, Alba Power has quickly established a strong track record as a truly innovative gas turbine specialist—an international company capable of delivering quality service and increased maintenance life within the budgetary constraints of modern turbine operations. Alba Power draws on its unrivalled independent, ISO 9001 approval as a completely specialised operation to deliver maximum service flexibility, including a 24-hour service. www.albapower.com

to begin work early next year on the construction of two additional transmission lines and supporting infrastructure. This will not only increase the capacity of the interconnector from its current 260MW to a maximum of 750MW, but it will also safeguard the security of supply. “Although the new interconnector could theoretically handle 750MW, the aim is to limit the entire corridor to a capacity of 500MW,” Silavwe says. “This will ensure good firm trade on the line and safeguard. Then, if a fault develops on one of the lines, for example, the remaining two will still be able to handle the load without tripping.” The Zambian element of the project, which is valued at US$18 million, includes the construction of some 51 kilometres of dual transmission lines along with significant upgrades to the Michelo and Luano substations. The Michelo substation supplies power to the mines around the town

“The DRC has a surplus in terms of power generation, and the only route through which it can export power to the SAPP at the moment is through this interconnection” Ongoing investment in infrastructure is a major theme of corporate strategy, and the company currently has two major projects under development. The first project is one that will have a significant impact on power security, not only within Zambia, but also throughout southern Africa. The neighbouring DRC is a nation rich in possible future power generation capacity while the majority of those in the Southern Africa Power Pool (SAPP) are facing power shortages. Since 1951, DRC and Zambia have been linked by a single 220kV interconnector, the Zambian section of which is owned by CEC. “This line is important for the region,” explains Owen Silavwe, commercial director also overseeing the development phase of the DRC transmission line project. “The DRC has a surplus in terms of power generation, and the only route through which it can export power to the SAPP at the moment is through this interconnection. However, there has been no expansion in terms of capacity on this line since it was installed.” Working together, CEC and SNEL are scheduled

of Chililabombwe, while the Luano substation supplies power to the mines in Chingola and the surrounding areas, and both will link the new interconnector lines to the transmission network. With work scheduled to start early next year, two main contractors have been appointed—KEC International of India and ABB OY of Finland. However, when work reaches completion in April 2012 the project will not only benefit DRC and the SAPP group of countries, but Zambia as well. “Almost 99.5 per cent of our power generation comes from hydropower, so during drought years we are always challenged. Although that happens quite rarely, when it does happen it’s quite a serious situation and we rely on this transmission line to import power from DRC.” The second major project will boost the country’s power generation capacity by a further 40MW. The work includes the construction of a hydroelectric power station and dam at the Kabompo Gorge, a site located in the north-western province of the country, between Solwezi and Mwinilunga. Not as far advanced as the interconnector

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project, the environmental impact assessment for the dam and power station is still in progress, while the feasibility study was completed in July this year—and the outcomes look positive. “The feasibility report shows there are no obvious fatal flaws,” says project director Aaron Botha. “So we are now gearing up to proceed with the project.” The preliminary plan for the project is in two parts: a dam is to be constructed at the entrance to the Kabompo Gorge, while an underground power station is to be built on the western side of the gorge and connected to the dam and the river outflow by a system of tunnels. By early 2011 CEC hopes to be ready to go out to tender for the various elements of engineering and construction, consultancy and advisory work. In parallel with this, work is now in progress to present the scope of the project and the results of the feasibility study to the financial institutions and investment banks for project financing. “This is a fairly long process,” Botha says, “and might continue until this time next year, when we should reach financial closure. Then if all goes to

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Copperbelt Energy Corporation

DH Engineering Consultants DH Engineering Consultants is a wholly Zambian owned

engineering

services

consultancy

firm

providing design and project management services. The firm also provides environmental consultancy services.

are

currently

undertaking

the

Environmental Impact Assessment Study for the Kabompo Hydro Electric Scheme and Transmission Lines. The company has also had several associations with both local and international firms.

schedule, we hope to begin construction work early in 2012 and complete it by the end of 2015, ready to begin operational testing of the first of two 20MW generation machines.” Quite early on in the project, as part of the

ongoing Environmental Impact Assessment, the National Heritage Conservation Commission of Zambia carried out a heritage impact study to determine how the project will affect the area. “The gorge is very narrow and deep,” Botha explains, “and although the study did not locate any cave paintings, it established that because we are going to be building the dam at the entrance to the gorge, the gorge itself will not be inundated with water, so the sensitive area will not be negatively affected.” Both of these projects will have a significant impact on power security for Zambia, and will also bring the added benefit of job creation, both in the short term during the construction phase and in the long term, running and maintaining the new facilities. http://www.cecinvestor.com/

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Lightin

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Cegelec Morocco

Electrical contractor Cegelec Morocco has found itself poised to capture some very promising new markets, as CFO and business development director Michel Bouskila explained to John O’Hanlon

Morocco S

ince its creation in 1946, Cegelec Morocco has been an important partner to the large state electricity, mining and water enterprises, as well as the country’s oil company SAMIR in providing electrical engineering services. It employs over 2,000 people, many of them highly specialised engineers. Cegelec has a long history of supporting the country’s power infrastructure, and is the only Moroccan company capable of designing and installing new overhead 400 kV power lines and pylons. “We did face international competition when we tendered for two contracts for ONE (the national electricity corporation), totalling 370 kilometres of 400 kV line in the southern part of Morocco earlier this year,” says CFO and business development director Michel Bouskila. “But nothing from local companies. We have an excellent fabrication plant in Casablanca to produce the pylons, and fantastic installation teams too.” Line work is hard, and these guys have to be tough, he explains, so they tend to be from the mountains where they are used to Morocco’s desertic seasonal extremes of temperature. Morocco has no oil of its own, so it has to live on its wits to a greater extent than many African countries. However it has always been a great tourist magnet. The tourist industry has been hit by the recession, Bouskila admits, and this has put the brake on new hotel building; however, he hopes this will just be a temporary blip. Hotels have complicated energy requirements, and Cegelec has been working towards securing this niche market. When it was presented with a tight schedule to install the HVAC systems at the newly-refurbished Mamounia Hotel in Marrakech, frequented in its heyday by Winston Churchill, the work was done jointly with Cegelec France. “We treated Mamounia as a training exercise and learned a lot in the process,”

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Bouskila says. “But when we moved on to the much larger Four Seasons resort we were able to do the job entirely with Moroccan skills and resources.” This time the job included not only HVAC but all the electrical installation, including fire systems and even CCTV. “We want to differentiate ourselves in the market by being a one-stop shop.” This approach is paying off in other expanding sectors. The company has just won the contract to wire up three very large office blocks being erected at Casashore, a 53 hectare zone in Casablanca dedicated to offshoring businesses that has already attracted large French banking and industrial customers. “We are hoping this will lead to more offshoring contracts in other parts of the country,” he says. Offshoring and automotive plants are new departures for a company still more associated with power transmission. However, electric rail systems present similar problems, relying on overhead catenaries mounted on pylons. In 2009 Cegelec was awarded the job of electrifying the first tramway network in Morocco. The 18 kilometre-long line, with 32 stations, will link the two cities of Rabat and Sale and Cegelec is responsible for the engineering, procurement, installation and commissioning of 17 sub-stations as well as the overhead lines. The first trams will run in January 2011, but Cegelec has already landed the country’s next tramway project at Casablanca. “Rabat is 18 kilometres, whereas Casablanca will be 30 kilometres, and the work will be harder because there is more traffic: in both projects we are working with Cegelec Transport, which has built tram systems all over the world, but all the time we are gaining local expertise.” All of this is encouraging, and in addition it should be pointed out that Cegelec has ongoing partnership agreements to maintain SAMIR’s oil refinery at Mohammedia and is one of a handful of approved contractors to the world’s largest phosphate producer, OCP Group. However, what really excites Bouskila are some truly massive opportunities in alternative power he says he never would have encountered in France, where he had been working as regional director of Sogetrel before joining Cegelec in January 2010. He is keen to see Cegelec take a key role in the emerging solar market. “Morocco is investing $9 billion in solar capacity. They have chosen

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Cegelec Morocco

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Cegelec Morocco

Alstom Grid Alstom

Grid

(previously

called

AREVA-TD)

and

Cegelec are celebrating their long-term partnership, strengthened day by day with significant successes such as, in Morocco, the completion of the 4 x 400 kV substations: Bourdim (interconnection with Algeria), Oualili, Mediouna and Meloussa (interconnection with Spain). “These projects are the spine of the high voltage network of the kingdom” said François Hussenot, Area Sales Director.

the concentrated solar power [CSP] technology and there are about 18 consortia applying for concessions here.” He expects contracts to be coming along in the next few months and is determined to secure the power transmission and substation work for the first array, which is to be built at Ouarzazate. Morocco hopes to be able to produce 40 per cent of its electricity from five different locations in the country, substantially reducing its reliance on imported oil. Massive though the Moroccan solar project is, it would be dwarfed by the largest

green initiative ever planned, the German Desertec project which aims to supply solar power from the Sahara to Europe. The $400 billion scheme, if it gets off the ground, would have to transmit power through Morocco, he believes In another recent development, ONE announced that Nareva, the energy arm of the country’s biggest conglomerate ONA, would lead construction of a 300 MW wind farm at Tarfaya. In addition to its solar ambitions, Morocco wants to build five wind farms and increase its wind generation capacity tenfold to 2,000 MW by 2020. Cegelec is particularly well placed to design and implement the civil works and electrical installations. Solar and wind projects are a reality, and on a scale that would satisfy most business development directors, but Bouskila has his eye on another market that is still at the feasibility stage—desalination. He expects the first Moroccan projects to be announced quite soon, and sees this as another great opportunity. www.cegelec.com/our-locations/world/morocco.html

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We b b C o n s t r u c t i o n

Going for

growth Webb Construction is playing an increasingly major role in support of West Africaâ&#x20AC;&#x2122;s mining boom, as Ben Sansom reports

he mining industry in West Africa is going through a period of intense international interest and rapid growth, and as a consequence, associated service providers in the region are enjoying something of a renaissance. Webb Construction, as its name implies, specialises in the provision of a full range of construction services for the mining and resources industry. With 15 years experience of operating in the region, Webb Construction has accumulated a sound knowledge and understanding of the local operating environment. In addition, the in-depth grounding it has acquired in business issues such as sovereign risk and foreign exchange fluctuations, as well as operational practicalities such as understanding cultural nuances and how to interact with government bodies, means the company has become the contractor of choice on many large projects where specialist local knowledge is required.

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We b b C o n s t r u c t i o n

Having developed a strong reputation for being able to perform well in remote and difficult environments, Webb has expanded to offer a wide range of services throughout West Africa, including feasibility studies, design and detailed engineering, project management, equipment refurbishment, commissioning and EPC contractor services. Its major specialisations include structural, mechanical and pipe installation as well as tank fabrication and erection, earthworks, civil and concrete, electrical and instrumentation and commercial building. Based at Takoradi in Ghana, the company is a wholly owned subsidiary of the Australian engineering and construction company, the Forge Group. Although operating purely in Africa, Webb currently accounts for between 10 and 20 per cent of group revenue. It has two sister companies: Cimeco Pty is a construction company operating in Western Australia and West Africa where it frequently works in close collaboration with Webb; and Abesque Engineering, based in Nedlands, Western Australia, is a multi-disciplined engineering organisation providing mining and mine development services in Australia and Africa. The close working relationship that Webb has developed with both sister companies enables it to offer a comprehensive range of services including engineering, procurement and construction management. It is also able to offer its services to complement theirsâ&#x20AC;&#x201D;in recent years, for example, Webb has worked with Cimeco on the expansion of the Tarkwa Gold Mine which is owned by Gold Fields Ghana, and it has also provided the structural, mechanical and pipe services for Newmontâ&#x20AC;&#x2122;s Ahafo Gold Mine. Although operating across the region, Webb is a major local employer in Ghana, where there is particularly high unemployment. For many years the company has been operating a policy of employing, training and motivating Ghanaian people to fill all the major roles in the company. As a result, some 85 per cent of the companyâ&#x20AC;&#x2122;s 400 employees are Ghanaian, and they can be found across all disciplines: in skilled craft and supervisory roles; as tradesmen and machinery operators; and in logistics and materials control. At the administrative level, they can be found filling HSE, purchasing, accountancy and general office duties. One great advantage of having a skilled

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Ghanaian workforce is that it can quickly and easily be mobilised to work on a construction job anywhere in West Africa, giving the company added flexibility to fulfil urgent construction work. The last two years have been particularly successful for Webb. The company has enjoyed a period of considerable expansion, particularly into the fast growing mining regions of Burkino Faso and Mali. In Burkina Faso, work on the Inata Gold Mine, which is owned and run by Londonbased Avocet Mining, has been underway for some 16 months and is expected to continue into next year. In Mali, the company has been involved in construction work at the Syama mine site, and this will continue through the year. Meanwhile, in Ghana the company successfully completed a considerable plant expansion for Chirano Gold Mines, work that included structural, mechanical and piping work as well as installing tankage. The company has also been working on a contract to construct CIL tankage and process tanks for Adamus Resources. As a result of continuing growth in its West African operations, the company has invested significantly in expanding and relocating its headquarters and engineering facilities to a new location in Takoradi. During 2009 it acquired the

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We b b C o n s t r u c t i o n

lease on a 9,000 square metre plot of land, and began the construction of a modern and efficient office block to accommodate the increasing number of administrative personnel, along with a new fabrication workshop, stores building, a heavy duty vehicle maintenance workshop, fuel storage and services bays. The relocation was completed in July this year. In addition, the company has made significant investments in new plant and equipment to support the ongoing expansion. Looking to the future, Webb believes there will continue to be significant opportunities for expansion of the business in West Africa, particularly in countries such as Burkina Faso, Mali, Guinea, Senegal and Sierra Leone which are attracting increasing interest from international mining houses. Meanwhile, the company believes that with rapidly expanding oil and gas exploration and

development in the region there are likely to be further opportunities for growth. Following the announcement of initial oil and gas discoveries in 2009, major exploration groups such as Kosmos Energy and Tullow Oil have ramped up their exploration efforts in the region. In Ghana alone, massive investments have been made in offshore drilling programmes, along with extensive onshore support bases and facilities, and Webb has been closely involved with some of those projects. Finally, the Ghanaian government and private investors are also considering a number of infrastructure prospects, including a proposed oil refinery, a gas processing facility, onshore storage terminals and a new deepwater port along with an upgrade of the existing port at Takoradi. With so many prospects on the horizon, the future for Webb Construction looks rosy. www.forgegroup.com.au/webb/index.html

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Quietly making

progres

The automotive industry certainly suffered during the global financial cris the knock-on effect for many lower tier affiliates was devastating. Jackie managing director at Acoustex, tells Andrew Pelis how reduced order volu lead to a re-think on inventory strategy that saw the company ride out th 110

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Acoustex

ess

sis and Barclay, umes he storm

he effect of Black Economic Empowerment can be felt across South Africa, with its reach now starting to have an impact on the Rainbow Nationâ&#x20AC;&#x2122;s automotive industryâ&#x20AC;&#x201D; and nowhere more so than at Acoustex. Established back in 1969, the Port Elizabeth-based business has long supplied the OEM market with sound deadening and insulation components; but it came to a watershed in 2005. Managing director Jackie Barclay, who had joined the company a year earlier, takes up the story.

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Acoustex

Rigifoam & Resichem Rigifoam and Resichem were established 10 years ago with the head office based in Johannesburg and branches in Durban, Port Elizabeth and Cape Town. With more than 85 man years of experience in urethane formulating and application technology, Resichem formulate and supply an extensive range of rigid and flexible polyurethane foam systems to major

manufacturers in industries such as

automotive, appliance, refrigeration, construction and agriculture. Resichem’s reputation has been built on supplying systems that perform efficiently.

“Acoustex was originally owned by a group of companies culminating in Formex Industries; but they had a focus on bottling soft drinks in South Africa and adjoining countries for one of the world’s major soft drinks and decided to leave automotive component manufacturing,” he explains. “At that time, Black Economic Empowerment programmes were coming to the fore across the country and Ukuvula decided this was an opportunity to gain entry into this market.” Ukuvula Investment Holdings is a black-owned investment holding company also based in Port Elizabeth, which has a diversified investment portfolio ranging from automotive components, textile technology, hospitality & leisure and construction, to medical and healthcare products and services. By purchasing Acoustex for R20 million, Ukuvula became the first BEE company to enter the automotive fray on a first tier basis and according to Barclay, they have since acquired several other automotive component manufacturing companies to strengthen their hold. One of Acoustex’s most attractive assets was its involvement in the development history on Melt-on pads and PU insulators since 1969, not to mention an impressive list of customers including Mercedes-Benz, BMW, Toyota, Nissan, General Motors and Volkswagen. “We are 99 per cent focused on automotive,” affirms Barclay, “although there are also markets outside of automotive for our products, including possibly the manufacturing of bitumen roofing sheets.” Barclay joined the company in 2004 to help prepare the business for a buyer. “We had the

customer base in place already and our involvement with Black Economic Empowerment is now helping us to compete for new business. Without a doubt, given the incentives within South Africa for BEE, we have gained a commercial edge on our rivals and at the same time, we are encouraging our suppliers to become BEE certified.” Acoustex has thus far achieved a BEE Rating of 3; and Barclay and his team are now acting as mentors for the company’s next generation of leaders, many of whom will come from previously disadvantaged backgrounds. “The idea is for people like me to find and mentor people and to nurture them so that eventually they can manage operations. We have a few ladies that we put through university, and we have already promoted people through our business,” Barclay explains. Training also aims to improve everyone’s performance and Barclay says that the average employee has been with the company for over 10 years—experience that allows the training to focus on new skills, like technology and statistics. “Through our goal alignment training each employee can learn what to do and how important quality is; and we see the results of our efforts from the customers,” he asserts. The last two years have been anything but straightforward for Acoustex, however. As 2008 unfolded, it became apparent that the automotive industry was taking a large hit from the global economic crisis and as a Tier One supplier that had a damaging effect on the business. “Today we operate with around 120 employees but that figure was much nearer to 200 before the automotive market crashed,” says Barclay. “While we did not lose our customers, we did lose volume of orders and turnover reduced by somewhere in the region of 35 per cent during this period—although we are now slowly starting to see an increase in business again, helped by Volkswagen’s launch of a new Polo model.” Aside from the inevitable job casualties, shifts reduced from three to one. This was a time for reflection—for Acoustex to look closely at all aspects of its operations. “Before the problems, it was common for us to operate our factory with R6 million to R8 million of inventory, but we now operate a system that means we only hold around R1 million at any time,” Barclay says. “It is a constant challenge to reduce our product cost while maintaining margins; and we have

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â&#x20AC;&#x153;We are 99 per cent focused on automotive, although there are also markets ou

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utside of automotive for our products”

Acoustex

looked to buy materials direct from the suppliers rather than using middleman agents, which has reduced our costs on materials like EPDM rubber, bitumen and ferrite.” The move was part of an ongoing lean manufacturing effort at the 9,500 square metre facility, which still sees regular training for the workforce. “We have adopted both lean and six sigma, and we run mission directed work teams that educate all of our employees in goal alignments and targets. We now carry little stock and operate single flow processes with a pull system focused on order and delivery date and an emphasis on 5S for our staff.” It is efficiency that relies on suppliers delivering on a just-in-time basis—and the quality of each vendor is equally important to Barclay, who says that Acoustex expects the same of its suppliers as the OEMs expect of them. “Our customers expect us to be rated on quality and the same applies to the supplier,” he says. “To that end, the company is TS16949 accredited, meets the most stringent customer requirements and has been certified to ISO14001 standard.” Barclay feels that the automotive sector is on the road to recovery—an assessment that is reflected by his current market valuation for Acoustex. “We are now back to roughly the value we were bought at in 2005, but we are aiming to get to quote on additional new business of around R35 million shortly. We have confidence that the final quarter of 2010 will see increased revenue and that this will also continue into 2011.” Barclay says that the future could open doors to new opportunities like seat foam and felttype insulators, which he concedes will be more technically challenging to manufacture, although he is confident that the facility is more than capable of achieving this. “We are determined to be acknowledged as a world class supplier of sound deadeners and insulators, PVC and rubber extrusions, and extruded sealants, by focusing on the tenets of quality, speed, cost, safety and morale. “We have been in this type of business for 40 years and focus on producing parts at the right price, the right time and of the highest quality, which is our main focus and our greatest advantage,” he summarises. www.acoustex.co.za

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Networking

HongK

On 18 March 2010, NiQ Lai and his colleagues celebrated 10 y on NASDAQ by ringing the opening bell: he tells John Oâ&#x20AC;&#x2122;Ha how after 10 years of investing, City Telecom is now in harves mode, being profitable, with positive free cash flow and achie its goal to dominate the Hong Kong broadband ma 116

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C i t y Te l e c o m ( H o n g K o n g )

Kong

years anlon sting eving arket

business that sets out to crush its competitors and which annually terminates the lowestperforming five per cent of its workforce could look ruthless. Single minded would be a better description, though. In the 1990s founder Ricky Wong chucked a stone into a local telecoms market dominated by former monopoly incumbent Hong Kong Telecom (now known as PCCW) by leveraging callback opportunities to undercut the competition on international calling. With the cost of outward calls from Hong Kong being higher than inbound calls, reversing the direction of the call created value for the subscriber and made City Telecom a lot of money over the next decade and a half.

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Taking a 10-year view and investing in its people are two things that distinguish this company, says NiQ Lai, City Telecom’s CFO and head of Talent Engagement. “We have a very distinct way of doing business and we stick to our guns: through good and bad times we don’t falter.” The callback opportunity drove deregulation in Hong Kong and long-distance calling quickly became a commodity, but the battle moved on as data became more important than chat, and bandwidth the Holy Grail. Downloading high definition video or large data files requires fibre optic, so City Telecom started laying down its own network in Hong Kong in the early 2000s, a seriously capitalintensive venture. Lai had joined the company in 2004 at a fraction of the salary he was earning as director and head of Asia Telecom Research at Credit Suisse First Boston. However, after over a decade of researching telecom companies, he knew the business well enough to believe it was worth selling his home to give him the capital to buy a share of the equity. Two years later he stepped into his present role as CFO and head of Talent Engagement. The same year City Telecom set its 10-year BHAG, or big hairy audacious goal, to become the city’s largest internet protocol (IP) provider by 2016. In 2007, after seven years in the red, the company became cashflow positive. Today, it is now free of debt, profitable, with positive free cash flow, over US$50 million in the bank, and positioned to take advantage of the exponential growth of internet traffic driven by online video, gaming, learning, cloud computing and the like. “We are proud to be the provider of the fattest, dumbest pipes in town to the households and then charge a monopoly rent on them,” says Lai. “We are not a sexy technology or content business. We roll up our sleeves, dig up the roads, lay fibre down, and we have been doing this for 10 years now.” None of this was as obvious in 2000 as it is today. “We started 10 years ago, just after the technology bubble burst when the industry was not ready and people did not believe in fibre. In fact, as we started just after the technology crash, our competitors were looking to cut capital expenditure rather than invest. But we continued to chug away for the first seven years losing money!” Lai admits, “Most companies would have sacked their CEO long before that! But our founders own the majority of our company, which helps them to keep their jobs during the investment period and allows them to invest according to their vision rather than short term market pressures.” City Telecom built the biggest network in town by stealth, putting it in an unassailable position because what it was doing was counter intuitive. The technology is very routine and ‘off-the-shelf’, but deployed differently, Lai explains. Standard enterprise routers from Cisco Systems created a LAN (local area network) like that found in any large office, but City Telecom deployed this on a much more massive scale to 1.75 million homes.

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C i t y Te l e c o m ( H o n g K o n g )

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C i t y Te l e c o m ( H o n g K o n g )

Cisco Cisco (NASDAQ: CSCO) is the worldwide leader in networking, with a mission to shape the future of the Internet by creating unprecedented value and opportunity for its customers, employees, investors and ecosystem partners, transforming how people connect, communicate and collaborate. Since 2000, Hong Kong Broadband Network Ltd (HKBN), the wholly-owned subsidiary of City Telecom (H.K.) Limited has been deploying Cisco’s robust networking solutions to build its high-speed, stable and scalable network infrastructure to deliver diversified fixed telecom network services. Cisco have had a long and successful relationship with HKBN and our stateof-the-art solutions enable forward-thinking service providers such as HKBN to anticipate and respond to customer needs in a timely and cost-effective manner. http://www.cisco.com/

Telecoms incumbents instinctively avoid commoditisation of bandwidth, he says, preferring to add value by developing sexy content and other applications. City Telecom takes the diametrically opposite view. “A commodity business is a great place to be if you are the lowest cost provider. We want to collapse bandwidth pricing and commoditise it to unbelievably low prices whereby 1,000 Mbps becomes the industry norm for the mass residential market. We did this with callback in the 1990s and made lot of money doing it; we want to do it again with fibre. The rest of the industry can’t understand how we run this company. We are paranoid about change, which is why we are constantly changing.” It would be very difficult to start this fibre upgrade process again today for another new entrant, so there’s not much the competition can do to catch up with City Telecom now. “We are the only fixed line new entrant in the world that we know of, with a specific timeframe to overtake the incumbent network,” he says. “Our competitors are responding with short term measures, so they copy our prices but they can’t match our bandwidth. Even if our competitors start to build a similar fibre network now by copying our model, it would still take them a few years to match our coverage, by which time our position will be firmly established.” It’s unusual for a CFO to double as HR director but for Lai, it is a role that comes naturally from the company’s approach to ‘Talent’—a word that

is used in preference to ‘employee’. So firing the bottom five per cent is less a Draconian measure as an admission that no company can expect to get its hiring 100 per cent right. And no company takes more trouble to get it right. “We are taking the McDonald’s Happy Meal approach to Talent acquisition. Get them when they are young!” Hong Kong university student Ray Chau, a 2010 intern, was amazed to be taken by Lai to meetings with high powered equity analysts. “Talk flat,” Lai told him, “and think about ways that you can add value to them.” Chau says he will never forget the experience. If he joins City Telecom after graduating Chau may find himself on the aggressive ‘CXO’ management trainee programme. The X can be substituted by any letter, e.g. CEO, CFO, CTO (Chief Talent Officer) etc as participants are expected to aim for the board. “There are two ways I can find my own replacement—when the time comes in 15 to 20 years time, I could hire a head hunter to search for my replacement; or I can try to groom someone today. I much prefer the latter option.” People who have survived the CXO 18 month programme are Talents indeed. They are stretched intellectually and physically, expected to read a management book a month, run a half marathon and crucially pass Level 1 of the Chartered Financial Analyst exams. “CFA is extremely tough to get through but it gives them the ability to talk the common language of business, and I think that is vital for a future CXO.” While other operators outsource everything they can, he says, “we are very parental to the extent of being paranoid about owning our customer contact points. Our management structure is set up to be customer-friendly. We have broken Hong Kong up into five manageable regions each run by a mini-CEO.” Unlike a traditional corporation with its operational departmental structure, the buck stops with that miniCEO if anything goes right or wrong in her region. To reach its 10-year big hairy audacious goal of becoming the largest IP service provider in Hong Kong by 2016, City Telecom will need to woo 75,000 customers a year for 10 years from competing networks; in FY2010 it added 132,000! It’s a stretch goal, but City Telecom’s investment in Talent will see it through that and its next goal to provide ‘Free TV via Fibre’, Lai believes. “Disrupting the landscape is something that’s in our corporate DNA.” http://www.ctigroup.com.hk/ ctigroup/eng/global/home.htm

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Pharmerg T

here’s nothing very conventional about the way the Indian biopharmaceutical company Biocon has developed. Even its original structure—a joint venture in 1978 between the Indian entrepreneur, Ms Kiran MazumdarShaw, barely out of university at the time—and the Irish Biocon Biochemicals company is hardly textbook. But it did mark the start of a bio-revolution in India with Biocon evolving over the years from an enzyme-manufacturing company into a fully integrated biopharmaceutical enterprise.

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The new buzz in the pharma industry is how best to capi rapid demand from newly a markets. As Jeff Daniels lea already well ensconced

Biocon

ging

aceutical italise on the affluent emerging arns, Biocon is

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Biocon

The full impact that Biocon was to have on India had to wait for some time. In the meantime, ownership of Biocon Biochemicals in Ireland, first passed to Unilever, where for a while it was incorporated into Quest International. Later still, in 1998, when Unilever sold a package of businesses in its specialty chemicals division— including Quest—to ICI, an agreement was made for Unilever to sell its shareholding in Biocon to Indian promoters, thus bringing Biocon home as an independent entity. After six years of private ownership, Biocon created a storm in the stock market when it floated a third of the stock in March 2004. On day one of its hugely oversubscribed launch, markets closed valuing Biocon at $1.11 billion—only the second time in history that an Indian company crossed the $1 billion mark on the first day of trading. Today, Biocon is a fully integrated healthcare company that delivers innovative biopharmaceutical solutions. Through separate subsidiary businesses that have been created to specialise on specific roles, Biocon’s business structure enables it to span the entire drug value chain, from pre-clinical discovery to clinical development and then on to commercialisation. Together, these interests provide multiple revenue streams which balance risk, encourage innovation and deliver products with accelerated growth. Biocon capitalises on India’s globally competitive cost base coupled with its own exceptional scientific people resources, pushing through its own in-house R&D programmes, while also providing custom and clinical research services to international pharmaceutical and biotechnology majors. Biocon has rapidly developed a robust drug pipeline, led by monoclonal antibodies and several other molecules at exciting stages in the biopharmaceutical value chain. With the successful commercial launch of its first anti-cancer drug and several other promising discovery partnerships in progress, Biocon strongly advocates the development of affordable medicines. Syngene is Biocon’s custom research organisation, responsible for pre-clinical discoveries of new pharmaceutical products. It aims to provide high value development services, from target identification and validation to small molecule and library synthesis. With its reputation for meticulous

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Agilent Technologies Inc. Agilent Technologies Inc. (NYSE: A) is the world’s premier measurement company and a technology leader in life sciences and chemical analysis. Agilent has developed innovative analytical solutions for laboratory-dependent organizations in the form of UHPLCs, HPLCs, GCs, columns and chemistry products, dissolution

baths,

UV-VIS

spectrophotometers,

mass spectrometry systems (LCMS, GCMS, GCQQQ, ICPMS), FTIR, NMR, MRI, lab automation solutions, qPCR, microarrays, lab informatics & data systems, and comprehensive service programs to enable scientists, manufacturers, researchers and regulatory agencies working in pharmaceutical, chemical, food testing, environmental, forensics, genomics, clinical and contract research & life science research/ academia to work more effectively. Agilent solutions provide measurement capabilities making our world a safer, healthy, productive and more enjoyable place. www.agilent.com/chem

development and manufacturing expertise. In recent years, Biocon has spread its wings internationally, starting in 2007 with a joint venture with Abu Dhabi-based pharmaceutical company Neopharma to manufacture and market a range of biopharmaceuticals specifically for countries in the Gulf Cooperation Council. In 2008, Biocon acquired a 78 per cent stake in German pharmaceutical company AxiCorp at a cost of €30 million. AxiCorp markets paralleldistributed EU pharmaceuticals as well as its own generic brand ‘Axcount’ in a unique business approach which has brought significant cost savings to German health providers and patients in the under-patent pharmaceuticals market, as well as in the off-patent market. Through the AxiCorp acquisition, Biocon has access to a wide range of pharmaceuticals including generics, biosimilars, biologics and innovative pharmaceutical products in Germany and Europe. At other times, Biocon has elected to enter strategic partnerships, both with high tech ‘startup’ companies or long established names in order

“Biocon is a fully integrated healthcare company that delivers innovative biopharmaceutical solutions” protection of intellectual property, it provides customised solutions in the areas of synthetic chemistry and molecular biology to pharmaceutical and biotechnology majors worldwide. Clinigene covers the middle ground, specialising in phase I-IV clinical trials and studies, using well-characterised clinical databases in diabetes, oncology, lipidemia and cardiovascular diseases at Biocon’s state-of-the-art Bioavailability and Bioequivalence Centre—accredited by both the College of American Pathologists and NABL (National Accreditation Board for Testing and Calibration Laboratories). Biocon handles the commercialisation of products, for which it has gained a solid reputation with a formidable portfolio of biopharmaceuticals, led by Biocon’s cholesterol lowering star Statins. The ability to commercialise insulin, immunosuppressants and a range of biogenerics demonstrates highly advanced process

to exploit potentially rewarding new products. The list is far too long to itemise here but the following selection will provide a flavour of the variety of interests Biocon is developing. Biocon’s relationship with Amylin Pharmaceuticals, for example, is to jointly develop, commercialize and manufacture a novel peptide therapeutic for the treatment of diabetes. Sapient Discovery is an established leader in structure-guided drug discovery with a number of proprietary algorithms and capabilities for efficient protein structure based drug discovery. Sapient is working with Biocon and using its proprietary Genes-to-Leads, Fragments-to-Leads and X-ray crystallography technologies which are claimed to provide dramatic reductions in the time and costs associated with compound synthesis and screening. Sometimes these partnerships are created to better exploit generic drugs while at others, as is the case with US start-up company Iatrica,

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Biocon

the collaboration is to co-develop an exclusive new class of immune-conjugates for targeted immunotherapy of cancers and infectious diseases. Iatrica is based in Baltimore and uses technology developed at Johns Hopkins University. Alternatively, Biocon has chosen to use licensed technology to further its product portfolio as was the case when Biocon acquired the rights to manufacture Abraxis BioScience’s Abraxane approach to the treatment of breast cancer. Under the terms of the agreement, Biocon will have the right to market the drug throughout the Gulf States and the Indian sub-continent. To demonstrate its versatility and flexibility, you need look no further than the partnership it has with DuPont, which is working with Syngene on the development of new crop protection products. Biocon also works closely with a number of universities. For example, in conjunction with the Indian School of Business (ISB) the Biocon Cell for Innovation Management has been launched to promote innovation in business. The Cell, set up at the cost of 10 million rupees, operates under the aegis of the Centre for Leadership, Innovation and Change at the ISB, and helps organisations find answers to questions such as the gaps in a company’s ability to innovate, assessing the required understanding to manage and mitigate risks associated with innovation and how to produce high value, high quality, strategic innovation at low cost. To capitalise on the interest in biotechnology and biosciences research at the Deakin University of Australia, Biocon has helped establish the Deakin Research Institute in Bangalore and a joint development of a mammalian cell bio-processing facility at Geelong in the Australian state of Victoria. In an industry dominated by American and European giants, Biocon has nevertheless carved out a significant role for itself, ranking among the top 20 global biotechnology companies—making it, at one stage, the seventh largest biotech employer in the world. Biocon’s workforce presently totals around 4,750—expected to rise to 5,000 in the next quarter—of which, at the last analysis, 84 per cent were university graduates and more than half of these held postgraduate degrees or PhDs. With the average age of employees at just 29, the company is alive with energy and youthful enthusiasm.

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Biocon

Millipore Millipore is a Life Science leader providing cuttingedge technologies, tools and services for bioscience research and biopharmaceutical manufacturing. As a strategic partner, we collaborate with customers to confront the world’s challenging human health issues. From research to development to production, our scientific expertise and innovative solutions help customers tackle their most complex problems and achieve their goals. Millipore Corporation is an S&P 500 company with more than 6,000 employees worldwide. For more information, visit www.millipore.com.

four years after the start of her business career, she won Gold for Best Woman Entrepreneur, awarded by the Institute of Marketing Management. Since then she has been showered with honorary degrees from universities, leadership awards from business publications and numerous recognitions from various august business institutions. Despite the enormous workload of her role as chairman and managing director, the open door policy of Mazumdar-Shaw still remains—whether for the key management team that surrounds her or for the most recent campus recruit—a highly refreshing attitude. A commitment to continuous training programmes for internees and permanent staff alike brings out the best in her people from

“Collaboration is proving to be the most prudent and effective way to boost productivity, cut time to market and sustain growth” We started this profile of Biocon by remarking on its unconventionality. Perhaps the most striking example of this is the founder of the business herself. Born and educated in Bangalore—still the home of Biocon—Kiran Mazumdar-Shaw graduated in 1973 and studied beer brewing at the Ballarat Institute of Advanced Education in Australia before joining Carlton & United Beverages, originators of the famous Fosters brand. In 1978, Mazumdar-Shaw moved to Ireland and joined Biocon Biochemicals as a trainee manager. Within a year she had persuaded the Irish management to help her establish Biocon in India with the initial goal of extracting an enzyme from papaya. At that time, biotechnology was a completely unheard of science in India and not surprisingly, her first application for finance was turned down by banks. Nevertheless, over the years, the company grew under her stewardship and is today the biggest biopharmaceutical firm in India. When the business was floated in 2004, the issue was oversubscribed by over 30 times! Mazumdar-Shaw held onto 40 per cent of the stock, making her one of India’s richest women with an estimated worth of $480 million. Over the years, her inspirational leadership has won her countless awards and accolades. Barely

the very beginning of their employment at Biocon. And headaches aplenty there certainly have been in recent years for the chairman. As MazumdarShaw reported at the most recent annual general meeting, 2010 has been a very challenging year for the global pharmaceutical industry. Sales have declined, research productivity has fallen off while development costs have spiralled at the same time that pricing pressures from national healthcare systems have squeezed margins. Growth has been hampered and the dynamics of the industry changed. But when markets experience churn, new opportunities often emerge. To take advantage of unfolding possibilities, companies need to have in place business strategies that are open to change. In this regard, Biocon has demonstrated it has developed a business model that is both flexible and risk balanced. Mazumdar-Shaw believes that the dependence on blockbuster drugs in niche developed markets is “suboptimal, expensive and economically unsustainable.” Instead she considers that the industry’s next growth story will come from emerging markets, through synergistic alliances and a diversified portfolio weighted towards generics and biosimilars. Nevertheless, innovation is expected to

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Biocon

Chemetall Chemetall

global

company

committed

specialty chemistry and the world’s leading supplier of a broad range of Lithium compounds. Following to our expertise in this field of chemistry we also supply other

organometallic

compounds

Grignard

reagents, Amides and Alkoxides. Besides our high quality products we offer technical and chemical solutions for lab, pilot and commercial applications.

Thermo Fisher Scientific Thermo Fisher Scientific is a Biocon partner for providing various products and services for research applications,

manufacturing

cell

culture

based

products, laboratory consumables and analytical equipments that help Biocon in new drug discovery. Thermo Fisher Scientific works closely with Biocon from R&D, bench top to large-scale cGMP operations and remains a world leader in serving science.

costs and the long path to new medicine, Biocon considers that many companies will be forced to view outsourcing or contract services as a means of achieving the advances they need. As the complexity and scope of Bicon’s own R&D increases, this will be the perfect foil for the other divisions, delivering meaningful synergies. Finally, Mazumdar-Shaw predicts rewards from a strong market development focus on India and emerging markets. And there is no shortage of emerging markets. As well as India itself, countries such as China, Brazil, Mexico, South Korea, Turkey and Russia are all home to a growing middle class with rising disposable income and with that, the seemingly irresistible onset of ‘affluent’ diseases. These markets are increasingly investing in healthcare and health insurance. Together, these nations will generate exponential growth for biopharmaceutical sales in years to come. Whether wanting to revive the research base, bolster the product pipeline or make inroads into new markets, biopharmaceutical companies such as Biocon are increasingly recognising the strength of, and need for, partnerships. Through

“Biocon capitalises on India’s globally competitive cost base coupled with its own exceptional scientific people resources” continue delivering exciting, new opportunities. She advocates risk sharing models based on co-development of novel drugs. She argues that research services capable of spanning discovery, preclinical and clinical development will win out thanks to their ability to contain R&D costs. If this is the case, Biocon is uniquely positioned to capitalise on its superior technology base, proven research teams and highly productive manufacturing. Biocon has identified four strong and differentiated growth drivers. Firstly, it expects demand for its portfolio of biosimilar insulin and insulin analogs and the basket of biosimilar monoclonal antibodies to continue strongly, thanks to the prevailing health of the Western world and the way it is being copied in the East. It also sees considerable opportunities for customised research services as delivered by Syngene and the high productivity clinical research delivered by Clinigene. With escalating R&D

licensing of advanced discovery programmes, marketing alliances and strategic research collaborations, it is possible to share the risks and costs associated with drug development by leveraging complementary skills and combining capabilities along the drug value chain. In Biocon’s opinion, collaboration is proving to be the most prudent and effective way to boost productivity, cut time to market and sustain growth. Biocon is among those farsighted biopharmaceutical companies that have been mindful of change, agile to adapt and intuitive about opportunities for growth. Its strategic location in the heart of a ‘pharmerging’ market (industry jargon for an emerging pharmaceutical market) has enabled it to fully capitalise on its low cost base. Long before it became a widely held strategic need, Biocon has advocated affordable innovation. It invested in world class research outsourcing

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Biocon

â&#x20AC;&#x153;In an industry dominated by American and European giants, Biocon has nevertheless carved out a significant role for itself, ranking among the top 20 global biotechnology companiesâ&#x20AC;? capabilities, US FDA compliant bio-manufacturing facilities and a self-financed R&D pipeline while the global industry was still grappling with strategies to mitigate escalating drug development costs. A forward looking biosimilar strategy was already in place prior to the industry realising its potential to sustain expensive discovery and become a powerful source of revenue. So today, as the industry restructures to seize opportunities, Biocon could perhaps lead the way as a model, risk balanced company well positioned to harness the biopharmaceutical emergence. Patents for first generation biological products will begin to expire from 2014 onwards, opening the door for biosimiliars which have been estimated to be worth $19 billion. With products such as Insugen Basalog and BioMAb, Biocon has already

demonstrated it has the technical and operational expertise necessary to take innovative and affordable insulin and MAb products to the market. The proof of the pudding is in the eating and in July this year the company reported 52 per cent higher net profit year-on-year at 723 million rupees for the first quarter ended June 2010 against 475 million rupees during the corresponding period last year. Among insulins, immunosuppressants, statins and branded formulations, representing the core of the business, net sales increased by 37 per cent. Biocon has also taken a number of steps closer to its ambitious global aspirations. In Europe, the EU regulator has cleared the phase III clinical trials of its biosimilar insulin and the company will soon begin patient recruitment. In the US, another important milestone has been reached with the

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Biocon

Waters One purification solution provides endless possibilities for your lab. Whether you want a greener purification laboratory or more choices in instrumentation and capabilities, Waters now has the most comprehensive purification solutions on the market. No matter your challenges, Waters has the purification system you need. Waters is the laboratory technology leader that first brought mass directed auto purification system to the commercial market and is first to bring a single-vendor solution that encompasses the entire purification range. Watersâ&#x20AC;&#x2122; robust solutions are flexible and scalable, from high-throughput fraction collection of hundreds of

samples

simple

systems

for

purification

of just a handful of samples. From HPLC to the newest Supercritical Fluid Chromatography (SFC) innovations, Waters systems are designed to adapt to your needs.

revolutionary oral insulin pill programme, IN105, entering phase I trials for Type-1 diabetes. The company plans to commercialise this molecule through a global partner and will begin licensing discussions towards the end of this year when it has more detailed data from the trials. To demonstrate the balanced structure within Biocon, despite its emphasis on generics and biosimilars, in the latest reported quarter, its branded drugs for diabetes, cancer, renal disorders and cardiology also did well, notching up a 28 per cent sales growth year-on-year. Finally, in September, two new divisions were launched, to market a range of dermacare, immunotherapy, pain relief, anti-infectives and comprehensive care products aimed at hospital intensive care units; yet more evidence of Bioconâ&#x20AC;&#x2122;s unconventional ability to adapt to new opportunities. www.biocon.com

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Converting

oil toÂ electricity Saudi Arabia has an insatiable appetite for electricity, which has turned one local business into an international giant, as Jeff Daniels learns

lthough it has to be said that not all projects have yet received their financial green light, Saudi Arabia has an impressive programme of converting its oil dollars into other forms of essential infrastructure. Billions are being spent on water desalination plants and even more on ever increasing electricity capacity.

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Arabian Bemco

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Arabian Bemco

Econosto Mideast B.V. Econosto Mideast B.V. is a subsidiary of Econosto Group,

established

1892

Rotterdam,

Netherlands. Econosto is one of the world’s leading manufacturers and suppliers of valves (manual/ motor actuated) and equipments; and a stockist and supplier for related pipeline products. We are pleased to be associated with Ms. Arabian Bemco; and are especially delighted to have been the major supplier for valves for PP-10 at Riyadh.

Across the country as a whole, it’s reported that investments in an additional 20,000 MW will have been made by 2020 at a cost of well over $100 billion, taking total electricity production to 70,000 MW—much of the increase said to be driven by air-conditioning! The greatest single centre of activity is at the Saudi Electricity Company (SEC)’s giant Riyadh site, which by itself contributes 10,000 MW to SEC’s Central Operating Area of the national grid. So far the complex is up to Power Plant 9 and with PP10—currently under construction—output will be increased by a further 20 per cent when it is completed next year. But progress never stops

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Arabian Bemco

“Bemco has a number of key specialised affiliates and subsidiaries, which enables us to maintain supply of vital equipments, materials and components, as well as subcontracts under our control” and PP11 is already on the drawing board. Construction of PP10, a large power plant complex with infrastructure for 5,000 MW, is in the hands of one of Saudi’s largest construction companies. Arabian Bemco Contracting was awarded the $3 billion engineering, procurement and construction (EPC) contract in June 2008; and by summer 2010, half the plant was already on line. PP10 is a greenfield project initially based on the installation of 36 simple cycle, base loaded gas turbine generators operating—as are a large number of the generators at Riyadh—on treated

crude oil. In addition to preparations for combined cycle conversion, there will also be provision for a further power generation increase during peak demands through turbine inlet air cooling of the combined cycle power blocks. Initially, however, the simple cycle gas turbines will run without turbine inlet air cooling for an unspecified period of time, to satisfy regional power demands. Conditions are harsh at the PP10 site, with temperatures that can exceed 50 degrees Celsius or nudge zero. Dust storms can appear out of nowhere, reducing visibility to just a few metres. Desert spec

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Arabian Bemco

“We put considerable effort into continual in-house staff training in order to remain an industry leader”

GEA Westfalia Separator GEA Westfalia Separator is a leading supplier of system solutions for liquid fuel treatment for power generation. The remarkable success in the Gulf region is especially thanks to the comprehensive support of its subsidiary, GEA Middle East FZE Dubai. This combination of technical and cultural experience

forms

the

backbone

fruitful

cooperation with partners like Arabian Bemco. For the PP10 project, Arabian Bemco recently contracted GEA Westfalia to build a comprehensive crude oil treatment system capable of processing 1200m“ per hour. Having successfully executed this project on time PP10 is proof of the capabilities and dedication of GEA Westfalia towards its partners and the Middle East region.

ducting and silencers as well as air intake systems— with self-cleaning filter systems on the air intake systems—are in constant battle with the elements. Bemco was established in 1965 and is certainly an international giant now. A combination of engineering skills and business acumen—the ability to juggle the many balls involved with complex projects—soon enabled the business to grow and from an early day, SEC was singled out as a client of choice. Bemco is no stranger to mega-projects such as PP10. It has built a reputation as an EPC contractor capable of competing with the best in the world, particularly on power generation projects using various technologies including co-generation, combined cycle and steam power plants. Throughout this period of energy expansion, Bemco has been linked with some of the largest and most challenging turnkey projects in Saudi Arabia and has often taken its expertise into neighbouring countries.

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Arabian Bemco

Bemco has a current workforce of 18,000 people, with 90 per cent of them located in Saudi and the rest spread around neighbouring areas. Bemco has something of a reputation for relatively short construction schedules and beating deadlines, as well as bidding attractively low. Henry Cabrera, executive director of Bemco, believes the company’s record of delivering fast track power projects on or before due is a key ingredient for its success as well as the control it has over the supply chain. “Bemco has a number of key specialised affiliates and subsidiaries,” explains Cabrera, “which enables us to maintain supply of vital equipments, materials and components, as well as subcontracts under our control.” “Nor is there anything better,” says Emad Ghandourah, project development director, “than an over-skilled workforce. We put considerable effort into continual in-house staff training in order to remain an industry leader.”

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Arabian Bemco

GEDAC ELECTRIC Since 1978 GEDAC ELECTRIC has manufactured and supplied low and medium voltage switchgear and power distribution solutions from manufacturing facilities in Jeddah. Arabian Bemco has been a key customer to GEDAC ELECTRIC

for

than

decade.

Through

the commitment and leadership of the Bemco management and project teams plus the dedication of

the

GEDAC

engineers,

together

have

commissioned switchgear solutions throughout Saudi Arabia, typically on the largest power plant and numerous other complex and/or challenging projects. We salute Bemco and look forward to a long and mutually successful association with Bemco in the future.

Behind the scenes, Bemco has also invested heavily in software and IT systems, especially in enterprise resource planning (ERP) which Bemco finds indispensable for best scheduling and controlling its many capital assets. Unlike some organisations, which believe in hiring absolutely everything that is needed on a project, Bemco has gone the other way and put huge amounts of capital into human resources, fleets of construction equipment, and fabrication workshops which are crucial for carrying out operations. But with additional power generation projects showing no sign of slowing up, this expensive capital investment is likely to be put to good use for some time to come. http://www.arabianbemco.com

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new A

day

Recovery from the downturn has seen a shift of Dawn Ltd’s core business focus to infrastructure and building from trading and manufacturing—quite an agile move for a large organisation

hen Wholesale Housing Supplies (WHS), the company that was to become Dawn Ltd, first saw the light of day in 1997, its name described its business and focus pretty well. However, the market has changed, as customers got bigger and used their size to leverage their relationships. WHS mirrored the change, as it was acquired by City Investment Holdings in 1998 and set its sights on transforming itself into a vertically-integrated distribution and trading specialist. It became Distribution and Warehouse Network—Dawn—in 1999.

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Dawn Ltd

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Dawn Ltd

Henkel With the vision of being a global leader in brands and technologies, Henkel has for 134 years been setting the pace. Active in over 125 countries, people around the world trust Henkel brands like Pattex, Tangit, Pritt, Loctite and many more. Dedication to sustainability and corporate social responsibility is a key factor in its commercial endeavors as is evident in its inclusion in the Dow Jones Sustainability World Index 2010. Its South African subsidiary closely aligns itself to key partners like Dawn Ltd and for the last seven years enjoyed exponential growth through its Hardware (WHD),

Plumbing

(Saffer)

and

Infrastructure

(Incledon) divisions.

The company achieved R1 billion turnover for the first time in 2004, made possible by a strategic focus on growth, served by acquisition. It now owns major brands including Cobra and Iska in brassware; Saffer and WHD in wholesale; Vaal, Libra and Plexicor in sanitaryware; and AFF and Roco in kitchen equipment. On the infrastructure side, Dawn owns DPI and Incledon and has significant holdings in Sangio and Fibrex. Dawn describes itself as “centred on the manufacturing and wholesale distribution of quality branded hardware, sanitaryware, plumbing, kitchen, engineering and civil products”. Its growth has been quite remarkable—revenues in 2010 are in the region of R3.6 billion. The payroll is over 3,700 and it has operations across South Africa, in other African countries and in Mauritius. However, size is no protection against the harsh winds of economic reality. The downturn had an impact, with revenues and activities down pretty much across the board. But the mark of resilience is not whether or not a company was affected by the situation—it is how it deals with it and emerges on the other side. In that respect, Dawn has done pretty well. Its year-end results presentation, dated September 2010, throws the challenges it has faced into stark relief—and illustrates what it has been doing to turn things round. Total revenues in the year were down nine per cent over the same period in 2009, which may seem curious but the full effect of the recession had

not revealed its impact. That came through in the second half of 2009, when the company recorded a loss of R54.9 million. The good news comes under various headings—while margin fell, it was by only 0.5 per cent, to 5.7 per cent. Earnings per share also fell, by 16 per cent—but that is uncomfortable, rather than catastrophic. In the same period, total debt was reduced by approaching two-thirds, to 21 per cent (R285 million). Dawn has clearly moved swiftly in order to ensure its continued progress. It has said that evolving market dynamics make it important to manage its businesses according to the markets they serve. Accordingly, it has restructured its business into ‘Building and Infrastructure’, rather than ‘Trading and Manufacturing’. In doing so, it has highlighted where the current resilience resides. The Building operations, which include wholesale, brassware, sanitaryware and kitchen segments, never fell into loss, even at the depths of the recession; the company puts this down to early decisions to ‘rightsize’ for current levels of activity. That included headcount reduction of over 700 and cancellation or postponement of capital projects while, at the same time, ensuring it retained the capacity to take advantage of the upturn. Profits have recovered strongly, although not yet to the high levels seen in the boom that busted in mid-2009. On the other hand, Infrastructure (which includes DPI, Incledon and the holdings in Sangio and Fibrex) continues to experience shrinkage—but this is not expected to continue indefinitely. Dawn says that current performance is due to a lack of infrastructure projects and extremely low water and sanitation spend in its markets. However, people need water and sanitation services—and so does the country. It was because of South Africa’s investment in infrastructure improvements, beginning in 2003/2004, that Dawn bought DPI and Incledon in the mid-2000s, which took it further into infrastructure work. Despite the current reduced level of activity in the sector, the company sees a future of sustainable, long-term growth—in water and sanitation particularly. In 2008, the South African government pledged state investment of R800 billion to improve the infrastructure, so the company’s strategy remains in place. Activity in Dawn’s Building segment reflects shifts in market demand. Residential and ‘additions and alterations’ (to existing buildings) have increased

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Dawn Ltd

Maksal Maksal is the dominant force in the non-ferrous tube and extrusion industry in Africa. Its main business is the manufacture of copper tubing. In addition to its huge manufacturing plant Maksal has a branch network countrywide with distribution centres in Cape Town, Durban and Port Elizabeth. Maksal supplies copper tubing to market segments for air-conditioning and refrigeration, the plumbing industry as well as the industrial market and medical grade market. Since 1970 Saffer, a division of Dawn, has been Maksal’s biggest customer. Maksal is proud of its association with the Dawn Group

and

congratulates

the

Group

their

phenomenal achievements to date.

their share of its overall sales; the commercial and non-residential sector has seen a significant decline, from 16 per cent market share to just 11 per cent. Overall, the company’s share of these markets has actually increased, a performance it ascribes to competitive advantages achieved by its investment in efficient business processes, including JIT (justin-time) deliveries. As the ‘D’ in Dawn’s name stands for ‘Distribution’, it is to be expected that it will have its own transport facilities—and that is indeed the case. It has its own fleet of trucks, for long-haul and more local deliveries. But transport is a cost that can run away with itself if it isn’t monitored. Dawn has invested in factories producing piping, for example, in other markets in Africa. It sees no value in ‘transporting air’, and one cannot take issue with that kind of logic. Green issues are moving up the agenda in general; Dawn recently assigned a board member specific responsibility for improving environmental and energy performance. Looking to the future, Dawn has announced its intention to gain further market share through capitalising on the leaner mindset of merchants. While they are expected to continue cautious restocking, they don’t want to be caught with loads of inventory that suddenly takes months to shift. Dawn’s JIT strategy fits in with those ideas and the drive to optimise working capital. It believes it has the structure in place to drive modest growth and increase profitability in a market that will continue on a gentle upward curve, rather than return to boom. www.dawnltd.co.za

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The

sweet taste of

success

South Africa’s rich and fertile lands have long been an agricultural utopia for food production—and among the wide variety of crops that have prospered has been sugar

s food science has progressed, the uses of sugar have diversified significantly. Today, it is not only used to add flavour to food but also as a bio-fuel. And at Tsb Sugar, a wholly owned subsidiary of Remgro—a diversified company, listed on the Johannesburg Securities Exchange—the changes have become a regular occurrence, all part of a developing culture. Tsb Sugar is situated in the picturesque Nkomazi region of the south-eastern Lowveld of Mpumalanga, South Africa, approximately 60 kilometres east of Nelspruit. Its story dates back to 1964, when the Minister of Economic Affairs granted permission to construct the Malelane Sugar Mill, which produced

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Sappi in Mpumalanga Sappi is one of Mpumalanga’s largest economic contributors and corporate citizens. We operate four business units in the region—Sappi Kraft Ngodwana Mill, Sappi Forests, Sappi Lomati Sawmill and Sappi ReFibre (previously Sappi Waste Paper). We are one of the largest employers and tax payers in the province— our economic contribution to the province GDP is over R2 billion per annum, with more than 33,500 people depending on the company for their livelihood. We support health care, education, environmental, job creation and enterprise development projects and recreation events in the province.

its first sugar crystals 20 months later. Today, the business has spread into a vast empire, with the production of refined and raw sugar remaining at the heart of everything. The raw and processed product is marketed locally by Quality Sugars under the Selati brand name, while the South African Sugar Association (SASA) aids the export process. The overseas focus was further enhanced in 2004 when the company acquired UK business Booker Tate, an organisation responsible for the management of sugar producing companies around the world. The acquisition became just the latest subsidiary of a business that now includes Molatek, an animal feeds company, and Golden Frontiers Citrus and Komati Fruits, which cultivate and export quality citrus fruit. Tsb Sugar is striving to become a world leader in the sugar industry, with a strategy that concentrates on its production, distribution and marketing. However, the ultimate aim stretches much further and includes an active involvement in the renewable energy sector that includes the integration of a number of international biofuel and bio-energy assets. With a vast array of technical knowledge in areas such as agriculture, the company also hopes to provide technical services including help on support contracts, project management contracts and corporate management contracts. Such global reach must seem a million miles away from the aspirations when Tsb Sugar was founded in 1965 as a new venture in competition with the

two then existing market leaders in South Africa. The introduction of the Komati Mill in 1994 served to increase production; and within the space of four short years, the new site was doubled in size to take on extra capacity. Today Komati Mill is acknowledged to be the most modern sugar factory in the entire southern hemisphere. The two mills combined produce nearly half a million tons of sugar every year, contributing approximately 18 per cent to South Africa’s annual sugar production. The mills operate along very clear guidelines—when cultivated sugar cane arrives by road, it is firstly weighed before being moved through the cane preparation area where it is ultimately shredded into a finely chopped fibre, exposing the sweet sucrose-bearing cells. A series of chemical processes extracts the juice from the fibres and a further number of processes evaporate and then crystallise the product to create raw sugar. The raw sugar molasses are used by Tsb Sugar’s animal feed plant (Molatek) at the Malelane Mill and the remainder is sent to the refinery for further processing before it is packed and finally distributed. The company is the single most important driver of the economy in the Nkomazi region and unsurprisingly, takes a keen role within the local community. At a time when South Africa is starting to realise the benefits of Black Economic Empowerment initiatives, Tsb Sugar has adopted a people-centred, needs-driven and sustainable approach to the development of communities and individuals. This focus includes empowering those in need by providing them with knowledge, skills and other key resources to assist them in growing out of poverty. Much of the company’s education centres around its core competencies in science and technology and reaches out to employees’ children and all Tsb Sugar farm schools, as well as linking to the Department of Education and other training institutions. One example of where the company’s education initiatives have really struck a chord has been its Tsb Maths and Science Star Schools project, which attracted the attention of the provincial Department of Public Transport, Roads and Works. Most beneficiary learners had to travel great distances in order to get to the Star School venue where they receive extra lessons; and this resulted in a high level of absenteeism. They are

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Sutherland Transport Sutherland

Transport,

Proudly

South

African

company, provides fast, friendly and efficient bulk freight transport and logistical solutions to TSB Sugar. Its immaculate fleet of Volvo Trucks, with its broad selection of interlink trailers, is supported by a dedicated team providing uncompromising levels of service 24/7, with satellite tracking and on board vehicle and driver video monitoring.

now able to make use of transport sponsored by the Department, ensuring that they receive the full benefit of the programme; and as a consequence, the Department hopes to be able to recruit employees from the pool of new talent that is being developed. Aside from technical education, the company also provides education on HIV and supports welfare and charity organisations that provide care for sufferers. Sport is another area where the local community has benefited from Tsbâ&#x20AC;&#x2122;s benevolence: given the areaâ&#x20AC;&#x2122;s love of soccer, the company set up the Selati Super Cup tournament. Today Tsb Sugar employs approximately 2,400 people. Increasingly, its implementation of Black Economic Empowerment has become intrinsically woven into the company culture through a variety of projects that embrace ownership, management, employment equity, skills development, preferential procurement, enterprise development and social investment. The business has helped to establish a black-owned sugar distribution enterprise; the settlement of seven medium-scale cane growers on property acquired by Tsb Sugar for land reform purposes; and the settlement of 420 beneficiaries on a 1,000 hectare sugar cane farm in partnership with the Department of Land Affairs. At the same time, Tsb makes approximately 32 per cent of its purchases from BEE suppliers and is committed to increasing its annual BEE procurement spend to at least 50 per cent of purchases by the end of this year. Tsb Sugar has also focused training and skills development specifically on employees from designated groups, some of whom have been identified for middle and senior management positions; while a sale of 49 per cent of the equity in Golden Frontiers Citrus to the Industrial Development Corporation of South Africa will create further opportunities for Black Economic Empowerment. Tsb Sugar has remained innovative, responsible and committed to its future and the future of its communities. It embodies the Rainbow Nation. http://www.tsb.co.za/

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Allabout

diversity Extending its reach along the construction value chain has been central to the success of Mauritius-based industrial group United Basalt Products. Julia Smith traces the group’s evolution

he Republic of Mauritius is located about 1,000 kilometres east of Madagascar, deep in the Indian Ocean. The name has become iconic—redolent of spices and sunsets, palm-clad beaches and coral gardens, Mauritius has become one of the planet’s ultimate destinations for those in search of off-beat exoticism and the high end of alternative lifestyles.

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Before the crisis led to an inevitable slowdown, Mauritius was a favourite media hotspot. The New York Times cited it as one of the “53 Places to Go in 2008”; Time magazine praised the republic’s economic strength; and the Daily Telegraph asked of its readers, “Who needs the Caribbean when you can buy in Mauritius?” Not surprisingly, the islands that constitute Mauritius witnessed a spectacular construction boom in the first decade of this century. Not only were they a sought-after tourist destination and a retreat for the super-rich, but they also offered an extremely stable economy. Mauritius became independent in the 1960s and a combination of excellent tax breaks, no exchange controls and a convertible currency quickly attracted a stream of wealthy investors seeking upmarket residential accommodation. United Basalt Products (UBP) was an early entrant to the boom that the construction sector witnessed.

and capitalise on long-held local connections, the group moved into direct retailing in 2002. Espace Maison & Jardin started with the opening of its first shop in the Trianon shopping park. Since then, the company has opened three more showrooms under the same name and demonstrated an adept grasp of marketing and branding—a skill entirely different from crushing stones. The stores now offer more than 25,000 distinct product lines, divided between cladding, sanitary, construction, hardware, wood, tools, electrics, garden or decoration. “Our stores have become more and more popular. They have become a must with those who love DIY and gardening and to meet demand we are currently building a fourth store at Flacq which is scheduled to open in October,” said Giraud to journalists earlier in the year. And for those who are not so keen on DIY, a contracting arm of the company will take care of all the bothersome

“United Basalt Products was an early entrant to the boom that the construction sector witnessed” The company was established in 1953 and its principal activity from the outset was the manufacture and sale of building materials. The company went on to become became listed on the Mauritius stock exchange in 1989 and is today controlled by a shareholder-nominated board of directors led by managing director Jean-Michel Giraud. The mineral industry of Mauritius is small; but the island’s geology has left generous deposits of basalt, a fundamental building block for the construction industry. UBP Group has 10 aggregate production units and distribution centres located all over Mauritius, including two associated companies under the same management. The four key operational subsidiaries are Ste Marie Crushing Plant Ltd; Welcome Industries Ltd in Rodrigues; UBP Tana SARL in Madagascar; and United Granite Products Ltd in Sri Lanka. The main products the company manufactures are building commodities and include hollow concrete bricks, aggregates, rock sand, prestressed concrete slabs, paving blocks, rustic paving, roof tiles and concrete pipes. In a logical move to progress up the value chain

installation details. To supplement local production, the group began importing ceramic tiles, marble and sanitary building materials to complement its core offering in 2005. These are distributed by a separate subsidiary, Marbella Espace Maison Ltée. Most recently, the group has moved into cement—a commodity, but a particularly valuable one, as local production is limited. UBP shares gained five per cent earlier in the year after the group said it would increase its stake and buy additional shares in an associate group, Pre-Mixed Concrete. The move, which was welcomed by analysts, saw UBP increase its shareholding in Pre-Mixed Concrete from 30 per cent to 49 per cent. The prefect complement, one could say, for another subsidiary—Dry Mixed products, which is a specialist in dry mortar, primer fix, plaster fix and screed fix. Despite the inevitable slowdown in the sector, UBP Group still managed to increase profits in the operating year 2008 to 2009, from MUR162 million to MUR231 million. Giraud is optimistic that the group is ready to take advantage of recovery when it comes and the Mauritian government has introduced

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Scomat Ltée Scomat Ltée is, since the creation of United Basalt Products, a core business partner through the supply of the latest Caterpillar products and related services. Its large specialised workshop with its continually trained

personnel

ensures

components

and

machines repairs with professionalism. Scomat also has a fleet of service trucks which provides maintenance services on site and after hours to increase the productivity of UBP. Parts availability is the cornerstone of Scomat product support through its large stock and rapid availability of emergency parts which reduces downtime. Scomat is a key supplier of Caterpillar machines, generators and IVECO trucks in Mauritius.

a number of measures to make sure this happens. Critically, the government has launched a MUR10.4 billion fiscal stimulus package which includes measures such as removing the requirement that land should have been purchased five years in advance before being used for development and subjecting many new villas to the minimum duty of US$70,000 until December 31, 2010. New purchasers can also now have payments of land transfer tax deducted from their income tax. Meanwhile, Giraud is particularly proud to be associated with the project Maurice Ile Durable. This is a long term sustainability plan aimed at making Mauritius less dependent on imported fossil fuels, which offers a long term vision for sustainability and a focus on renewable energy sources. Two hotels—le Trou aux Biches et le Coco Beach—have already been constructed from recycled materials as well as a number of residential dwellings built by the group. In another initiative—the group has also become a property developer in its own right—the objective has been to provide quality homes for local people, ensuring that the Mauritian people are not priced out of the housing market. All in all, it adds up to a diverse and complex offering, but UBP Group’s financial results last year show that it is a strategy that makes sense. http://www.ubpgroup.com

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track

Fast I

t’s been five years since brothers Gerald and Cedric Brown took over the South African fast food chain Captain DoRego’s. In that time they have transformed the business, revamping its tired image, creating a well-oiled management process to support the franchisees, and increasing store numbers from 29 to 67, with five more due to open before the end of the year. The Brown brothers acquired the business in 2005, and came into it from a position of strength, having run their own Captain DoRego’s franchise since 1996. Knowing the business inside out, they approached brand ownership with a clear vision. “Our initial aim was to upgrade the existing stores and increase their turnover, because when we took over they were just hanging in there,” explains joint owner Gerald Brown. “Then, the plan was to grow the brand and make it stronger throughout the country.”

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Under new ownership, franchise DoRego’s ha turnaround. Gerald Br revamping the brand management improve

DoRegoâ&#x20AC;&#x2122;s

improvement

p, the South African fast food as achieved a significant rown talks to Gay Sutton about and introducing operational ements

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DoRego’s

MoodsSportklere Our business is 15 years old and still growing each year. We started out making school uniforms. Our business has grown so much that we are now doing gholf shirts, corporate wear and all kind of sportswear, as well as jackets, jerseys and more. We have 26 workers who are full-time busy making clothes from old to young. We are further proud to supply DoRego’s with their uniforms from top to toe. We supply them with gholf shirts, polar fleece tops and warm winter jackets, as well as managers’ shirts. DoRego’s is a fast growing business with great potential and we are proud to be part of their success.

The beauty of the brand is the unique feature that makes it so successful. Unlike many of its competitors in the fast food marketplace, who specialise in one particular product—chicken, fish or burgers, etc—DoRego’s offers a wide variety of options. “Therefore, people can walk into the store and there is something for everyone in the family. It can be a nightmare to manage,” Brown admits, “but it’s a big strength in our business. “However, when we first came to the business, it was just hanging in there,” he continues. “So our initial task was to get the existing stores up and running better.” The initial improvements tackled three key operational areas, and laid a solid foundation upon which the company could grow. “We began by looking at the store design and making a basic upgrade—things that were simple for our franchisees to achieve; that were not hugely costly. We also looked at procurement and found we could source many of the products a lot more cheaply, which gave the guys a better bottom line,” he says. “We then started enforcing the general rules of the franchise to raise the standards across the stores and ensure the food being prepared for customers complied with our brand regulations.” Tackling procurement meant examining and completely changing the purchasing ethos of the business. Although procurement was managed centrally, contracts generally went to those who could supply most cheaply. “We began by negotiating with the suppliers who we felt were the best in the business rather than the cheapest,

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Central Signs The owner of Central Signs, Robert Wilke, would like to congratulate Cedric Brown and his team at DoRego’s for all their success. For the last six years, Central Signs have worked closely with DoRego’s as an integral part in ensuring that all branding is up to their high standard and of the best quality. We also want to thank DoRego’s for entrusting us to set the standard of branding in South Africa through their national brand. Our best wishes for the future and we look forward to being with you every step of the way.

believing that the more you buy from a specific supplier, the better price you will get. We now have well established long-term relationships with those key suppliers. By establishing six to 12 month contracts we have ensured a consistent supply of stock, even when products are scarce, and we get it at the right price,” Brown says. “I believe it’s one of the better things that we’ve done.” The next area of focus has been developing and rolling out an array of business tools that will help franchisees to run their businesses successfully at store level—a campaign that has been particularly important and valued through the recession. The franchises are overseen and supervised through a

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DoRegoâ&#x20AC;&#x2122;s

Lufil Packaging Lufil Packaging is wholly-owned by Bidpaper Plus (BPP) and therefore shares in BPPâ&#x20AC;&#x2122;s empowerment initiatives. Bidpaper Plus currently holds a Level Three Contributor rating and has attained an A rating for BEE Ownership, Operational Capacity, Enterprise Development and Socio Economic Development. We strive to recycle and use recycled products wherever possible, and go to great lengths to avoid using hazardous substances during production. We dispose of all chemical and paper waste responsibly, and our paper is obtained from reputable mills with responsible environmental management and monitoring policies. Our factory is located in Isithebe, KwaZulu-Natal, with additional sales and distribution offices in Johannesburg, Cape Town and Port Elizabeth.

national network of five field staff, each responsible for the welfare of the stores in their region. Tasked with visiting each store at least once a month, the field staff have been introducing a range of new analytical processes. Working together with the franchisee, they begin by analysing the business performance year-onyear. This enables the business owners to identify areas where performance has perhaps fallen and could be improved. Following on from this, further tools enable them to assess whether the problems are with pricing, products or marketing and so on, and this progresses to mapping out a plan to win that business back. The field staff continue to work with the franchisees, monitoring their progress and supporting them in their efforts. Finally, the stores have just been taken through a second and much more significant makeover under the direction of a marketing and branding company from Johannesburg. The aim was

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DoRego’s

to bring the brand identity right up to date, to enhance the prospect for expansion, and to create the opportunity for some brand stretch. Among many changes, the brand name has been shortened to the very stylish DoRego’s, while the stores have been completely revamped to create a fresh, modern, energising and clean environment for eating out. And the brand stretch is now going ahead successfully, with stores opened in the more affluent areas of Bloemfontein and Kimberley. Today, DoRego’s has more than doubled in size, now encompassing 67 stores and employing over 800 staff across the business. However, in spite of the size of the organisation, the Browns continue to maintain a very close working relationship with the store owners, who number around 40. “All our franchisees understand that if they have a problem they can just pick up a phone and call either myself, my brother or one of the field guys. So we all know each other pretty well.” And this understanding and close contact with the grass roots of business is one of the keys to its success. The Browns’ vision for the business is ultimately to expand strongly in all regions of the country, and to develop the range of franchise offerings. As part of this, the first DoRego’s Express has been opened at a petrol station in Bloemfontein. A cut-down version of the normal store, it’s suitable for incorporating into an existing supermarket as a takeaway or small eating facility, and the plan is to roll them out quickly during 2011. The second new franchise, the DoRego’s Direct, is akin to a small supermarket and evolved from the older practice of selling fresh fish at the DoRego’s counter. The idea is to open the DoRego’s Direct alongside a DoRego’s takeaway, giving customers the opportunity to buy either a takeaway or all the fresh ingredients required to make a DoRego’s meal in their own homes. The offering includes a wide range of products such as oil, flour, cold drinks, fresh fish and meat and so on. The first Direct was opened in Bloemfontein two months ago and is doing very well. Moving forward, the strategy is clear. In the short term, the focus is on expanding in areas where DoRego’s is already well established, such as the Free State, Northern Cape, Eastern Cape, the North West and the southern regions of Natal. “Then we will be in a position to attack those areas where the brand is not so strong,” Brown concludes. www.doregos.co.za

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Being

systematic bet

Company turnarounds require tou leadership. But for McCollâ&#x20AC;&#x2122;s T been to lock operational ac systems, as CEO Simon Thornto 178

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cally tter

ugh decisions and strong Transport, the secret has ctivities into standardised on explains to Gay Sutton

M c C o l l ’ s Tr a n s p o r t

n just 18 months the new management team at McColl’s Transport has achieved a significant business turnaround, returning what had once been a well respected family-run Australian transport company to profitability, and re-establishing its reputation for delivering quality services reliably and consistently. Brought in by the company’s new owner, 333 Management found staff morale at rock bottom with remedial action needed quickly. “The transportation industry tends to be very price competitive, and for many it’s a race to the bottom, with competitors vying to offer the lowest prices,” CEO Simon Thornton explains. And since 2005, when bought out by a private equity firm, McColl’s had lost its way and become one of those tumbling towards the bottom with decreasing service levels and increasing debts. The challenge was to reverse that decline. “We recognised that there were blue-chip brand name companies that could not afford their logistics to operate like that, and would be prepared to pay a modest premium for a company prepared to

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invest in systems to deliver a consistent and high quality service. Our strategy, therefore, was to divest areas of the business that made no sense for us and invest in those areas of the business where we could do well. We then began to lockdown everything we did into systems so that we could achieve repeatable and consistent results for our customers.”

is now being configured to manage the business administration faultlessly from end-to-end, from initial order entry, through truck scheduling and materials ordering to customer invoicing. Beyond this, great improvements have been achieved at the driver level. A $1.6 million investment in a GPS truck management system named McColl’s Co-Pilot is significantly improving

“Our strategy was to divest areas of the business that made no sense for us and invest in those areas of the business where we could do well” Of an original customer base of around 300, the cull was impressive. “We were really brutal. We got rid of all those who didn’t fit with our way of operating, and today we have just 15 customers that really matter to us.” The choices must have been difficult. But they were based on a thorough analysis of the company’s capabilities and resources, and by defining the way the company wished to operate. With a large fleet of 500 specialised tankers equipped to provide a high quality service for farm milk collection, the company already had a dominant position in the milk marketplace, and the facilities to deliver a value added service. At the other end of the spectrum, its large fleet of tautliners—large dry freight lorries—operated in a highly competitive and low value arena. “It was a $50 million division of our business but we made the decision to close it. And it has worked very well. We reinvested the money in technology and training to provide better services for our core customers.” Today, McColl’s operates in three principal markets: the farm milk collection service, transporting milk between factories, and transporting chemicals—and it has seen business increase significantly in each area. Alongside this rationalisation, the company has implemented a business improvement programme based on locking all operational activities and events into defined business systems—a concept it calls being ‘systematically better’. At the heart of the newly tuned internal administration lies a specialist transportation ERP system that had been in the company for 12 years but only used for its invoicing capability. This has been cleansed and populated with accurate data and

operational efficiency as well as driver safety. Installed in every truck, the system monitors and measures all aspects of the equipment’s activity in real time. The control centre therefore records and monitors where the vehicles are, how they’re being driven, whether speeding or driving in a fuel efficient way and so on. “We can then reward drivers who are driving efficiently, and improve the driving skills of those who are not,” Thornton says. With a fleet of 200 prime movers and 500 tankers and trailers travelling around Australia and an annual fuel bill of between $14 million and $20 million, even a small percentage improvement in fuel efficiency significantly impacts the bottom line. “One of the big issues in Australia is managing driver fatigue and we have strict fatigue laws that govern this,” Thornton continues. “However they’re difficult to manage unless you put in some systematic way of doing it.” Most companies operate a paper management system using driver diaries that are filled out and checked retrospectively, but McColl’s is going to be the first in Australia to manage this also in real-time electronically. When the driver gets in the truck he punches in his pin number and it keeps track of him, reminding him when he should take a break, and alerting the control room if he fails to do so, making it easier for drivers to manage their safe driving hours. “We have found this is a great differentiator with our clients. We have legislation called the Chain of Responsibility, which extends the liability for road transport offences to our clients and their respective clients. We are therefore managing the Chain of Responsibility for everyone and ensuring the rules cannot be broken.”

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â&#x20AC;&#x153;As weâ&#x20AC;&#x2122;ve differentiated ourse our three business areas, more and business has been coming towar

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elves in d more rds us”

M c C o l l ’ s Tr a n s p o r t

The Co-Pilot is currently being integrated into the ERP system, and once completed, each driver will receive their job instructions in the cab, including sat-nav directions to the pick-up and drop-off points, instructions about the plant layout and the loading and unloading operations. “Everything is documented, even down to which hose to use, so there is a systematically reduced likelihood of a mistake.” The second major investment is in a driving simulator costing around $1/4 million, which is due to be delivered shortly. The aim is to improve safety by simulating normal driving conditions and then presenting the drivers with almost everything that could go wrong, whether that’s losing the steering and brakes or a pedestrian stepping out in front of the vehicle. Simulator training can then be provided to improve any skills deficiencies. Early on in the change process, the company brought in a safety specialist to analyse the accident rate prior to the takeover; and one of the key findings was that many drivers continued for excessively long hours, and this rang some warning bells. Although a drugs and alcohol testing regime had been in place it had not been effective, so

the team implemented a strict regime, testing 20 per cent of its 600+ drivers every month. “Early on we lost a lot of drivers because they knew the game was up,” Thornton comments, “and we fired everyone who tested positive. Then after a few months there were no more problems.” Putting all these programmes in place has resulted in significantly increased consistency of service, which is appreciated by customers who are prepared to avoid the ‘discount transport trap’ in return for the safety and reliability. 333 Management took over halfway through 2009; and the figures speak for themselves. “Our net debt has been reduced from $71.8 million to $36.6 million over the past 18 months,” Thornton says. “And we see plenty of opportunities to expand. As we’ve differentiated ourselves in our three business areas, more and more business has been coming towards us.” But the company is remaining true to its principles: it will not accept every contract on offer. “We will not be all things to all people,” Thornton concludes. “We are very specific about what we offer, and we’re very disciplined in how we deliver it.” www.mccolls.com.au

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unor The

Amid the doom and gloom of the global financial crisis hotel sector has continued to enjoy something of a bo Central to the ongoing success and growth within this has been travel and tourismâ&#x20AC;&#x201D;and capitalising on the m opportunities therein is the Rezidor Hotel G 184

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Rezidor Hotel Group

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, the oom. area many Group

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ravel and tourism has showed no signs of abating in recent times, remaining the worldâ&#x20AC;&#x2122;s largest revenue-generating industry. Of course, travel and tourism relies on the hotel trade for clients; and the hotel industry has consequently continued to grow over the past three years. One of the big winners in this continuing boom has been the Rezidor Hotel Group, now one of the worldâ&#x20AC;&#x2122;s fastest-growing hotel businesses. A series of expansions has seen the group increase its numbers year-on-year and today, Rezidor is present in some 62 countries around the world, with over 400 hotels operational and further prospects in the pipeline.

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So what has been the secret to Brusselsbased Rezidor’s success, and what sets it apart from its competition? The company says that it has a different approach to other companies in the hospitality sector and takes pride in being non-conformist, actively participating in driving change within the industry. One area of expansion has been the lifestyle hotel, an area Rezidor has explored through its worldwide licence agreement with Italian fashion house Missoni, culminating in the creation of Hotel Missoni—a hotel brand set to branch out strategically across the EMEA landscape. Of course know-how is also critical and a deep understanding of its operating environment, combined with the ability to adapt to new situations, has played an important role in growing the business. Rezidor has focused its efforts on the upmarket and midmarket hotel sector, concentrating on four geographic areas: the Nordic Region, Western and Eastern Europe, the Middle East, and Africa. Brand is an important aspect of Rezidor, with two major brands most people would be familiar with: Radisson Blu and Park Inn by Radisson, while the group is also developing the Missoni brand and two others: Regent and Country Inn. Asset management initiatives have seen the refurbishment and expansion of existing hotels to ensure they match the group’s changing brand perceptions. Having decided over 10 years ago to divest itself of real estate, Rezidor is asset-light and has been able to concentrate more on managing its people, brands and relationships. A big part of that focus has been to deliver a “Yes I Can!” service culture that has resulted in a large number of awards and recognitions. In 2008 Rezidor scored highest on HVS’s European Corporate Governance Report, which takes into account the size, makeup and independence of the board, committee structure and effectiveness, the presence of interlocks and related transactions and a commitment to reward that reflects pay for performance in the executive and director arena. Furthermore, in 2009 no less than 20 Rezidor hotels across Europe and Africa were included on Expedia’s Insiders’ Select 2009 list of the world’s very best hotels, with Germany’s Park Inn Bochum ranked highest at 55. The award is given to the top one per cent of more than 80,000 hotels and

resorts that have been reviewed by hundreds of thousands of Expedia customers. Another key factor in Rezidor’s success is its ability to build new hotels according to the hotel owner’s brief. This flexibility has allowed bespoke projects to succeed and brings in roughly half of the group’s revenue. Other income sources for the group include room sales, while meetings and events continue to attract customers. High quality food and beverages also contribute significantly to the whole Rezidor experience. So how did such a vast empire begin? It took its first tentative steps back in 1960, when the first SAS hotel opened its doors in Copenhagen, Denmark. At the time it held the distinction of being one of the world’s pioneer designer hotels courtesy of its designer Arne Jacobsen and the hotel’s first general manager, Alberto Kappenberger. The legacy that these visionaries set down remains today, and has been renamed the Radisson Blu Royal Hotel. Reorganisation in the mid-1980s saw the group renamed SAS International Hotels (SIH), a fully owned subsidiary of the SAS Group; and the company then focused on expansion of the hotel network, with acquisitions a prime strategy. That culminated in the 1989 purchase of 40 per cent of Intercontinental Hotels. During 1994, SIH of Brussels concluded a marketing agreement with Radisson Hotels, which strengthened SIH’s marketing and distribution networks as a part of Carlson Companies, owners of Radisson. SIH became Rezidor SAS Hotels in October 2001, opening up opportunities for expansion and the creation of new brands for the chain. A year later a strategic agreement with Carlson Hotels Worldwide saw Rezidor SAS become a strong partner for the Park Inn, Country Inn and Regent brands; and this was completed in 2005 with the enhancement of the franchise partnership, resulting in a shareholder agreement. Four years ago, the company went public, listing on the Stockholm Stock Exchange, with 42 per cent of the business owned by Carlson Companies. It also changed its name to the Rezidor Hotel Group at that point. February 2009 saw the creation of Radisson Blu, formerly known as Radisson SAS, now recognised as the largest upscale brand in the European Union. And the boom period looks set to continue for

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Rezidor Hotel Group

OTRUM OTRUM is a leading provider of interactive TV solutions and content to the hospitality industry. The company develops and supplies total solutions, consisting of hardware, software, TV channels, films and guest broadband solutions. OTRUM has partnerships with leading LCD vendors, to ensure full integration of inroom services, and powerful deployments of digital signage applications. OTRUM operates through wholly-owned sales offices and an established network of alliance partners for worldwide coverage. OTRUM is committed to delivering innovative and creative solutions.

Rezidor—in October 2010 the group announced its newest venture, the Radisson Blu Hotel, Dubai Downtown. The property, which includes 220 rooms, is scheduled to open in early 2011 and will become Rezidor’s fourth Radisson Blu Hotel in the Emirate. “Despite the slowdown, Dubai continues to have the highest RevPAR [revenue per available room]

worldwide and is an interesting market for Rezidor— and one of our focus areas in the Middle East,” Kurt Ritter, president and CEO of Rezidor commented. “We see a promising potential especially for business travellers and the new hotel benefits from an excellent location near the main commercial areas,” he concluded. www.rezidor.com

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Business is all about accepting risks but if yo have the â&#x20AC;&#x2DC;do it yourselfâ&#x20AC;&#x2122; attitude, nothing remain out of reach, as Alan Swaby learn

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he mark of a true entrepreneurial spirit is when challenges turn into opportunities. In the 1970s, the Zamil family business in Saudi Arabia reconginsed that pioneering steel buildings to a predominantly concrete market was no easy task, as it involved educating and converting end-users to the benefits and advantages of locally manufactured steel buildings. For an entrepreneur, the answer is obvious. Stop being a customer and become a supplier. Of course the execution is not quite so simple. On the pro side, demand existedâ&#x20AC;&#x201D;on top of Zamilâ&#x20AC;&#x2122;s limited but guaranteed demand, the country as a whole was just gearing up to transform its infrastructure and economic base. On the con side, Zamil had no experience or expertise in this line of work. The solution was a 50/50 joint venture with a United States partner who supplied the initial knowhow. The choice of partner was, in part, influenced by the technology it used. The European approach to designing steel buildings was to use proprietary hot rolled steel sections. The US approach, on the other hand, was to build up custom designed sections by cutting sheets of steel and welding them together in a process known as pre-engineered.

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Zamil Steel

Ideal Fiberglass Ideal Fiberglass is reinforcing its status as the Middle East’s premier fiberglass reinforced plastic (FRP) manufacturer, having the production capacity to cater for rising demand in the region for all preengineered building systems (PEB). As one of the leading

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skylights,

it is responsible for supplying the quality skylight demands of Zamil Steel.

more complex areas. Factories wanted overhead cranes and supermarkets wanted a greater degree of aesthetic input into their facades. But the fundamental proposition hasn’t changed. The lightweight buildings are designed to put only sufficient metal into the frame as the loads require. High tensile steel is usually used to allow the thinnest sections possible. The frames tend to be I-shaped members constructed by welding together individual steel strips. If the loads allow it, sections can be tapered to reduce weight,

“We are firm believers in the most advanced management techniques” “In a sense,” says Khalid Al Zamil, managing director of Zamil Steel, “the choice of technology was a gamble. But the gamble has paid off and we now see that the majority of buildings here are made this way.” The project was designed to give Zamil Steel sufficient capacity to satisfy an estimated 20 per cent of the country’s needs. The joint venture, though, was never designed to last forever and within five years of setting up shop, Zamil was (amicably) in sole charge of its destination. With successive expansions in engineering and manufacturing capabilities Zamil Steel now commands substantial market share. In keeping with the tremendous growth of industry within Saudi Arabia, Zamil Steel has diversified into more traditional steel fabrication with separate divisions for structural steel, pressure vessels and electrical and communication transmission towers. Each division is a separate company, with its own factory and management team. But the largest division by far remains pre-engineered steel buildings with over 50,000 buildings delivered around the globe to its credit. Zamil Steel has developed proprietary design software; and worldwide operations are networked for operational efficiency and customer care. Such buildings are invariably low rise, clear span structures—usually without internal columns— used in applications such as supermarkets, warehouses, factories or aircraft hangers. Over the years a greater degree of sophistication has taken what was once simply a metal box into

restricting larger plate dimensions to those areas of highest load. Purlins to carry the roof are made from coils formed into Z or C shapes. “Cutting and welding sheets in this way,” says Zamil, “looks more involved than simply cutting up hot rolled sections but we estimate that it gives us an in-built price advantage of at least 10 per cent.” Roofs and side cladding are produced from rollforming pre-painted coils. The unprecedented growth within Saudi has meant that there is no shortage of competition from both local and overseas suppliers. Although Zamil manages to retain its market leader position, the over supply of fabricators often leads to times of squeezed margins. Consequently, 15 years ago, Zamil decided to diversify geographically. In 1996 manufacturing subsidiaries were opened in Egypt and Vietnam—moves that have proved highly successful in both instances. In fact, Zamil Steel now has two factories in Vietnam with a second in Ho Chi Minh City to complement the original Hanoi plant. More recently, Zamil Steel has entered the Emirates and Indian markets. Saudi Arabia still accounts for half of the $500 million sales. Each year the group consumes 350,000 tons of steel—sufficient to build approximately eight to 10 million square metres of floor space. Although Zamil has some impressive projects in its portfolio, bread and butter work is much smaller— often needing just 20 or 30 tons of steel. If called for, the highly automated machinery, linked to the equally sophisticated design tools the engineers employ, means these projects can

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Buildex Buildex is one of the world’s leading manufacturers, innovators and suppliers of self-drilling screws and

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Buildex

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Australian (AS3566) and International Standards, often exceeding expectations. Buildex provides an ‘unmatched’ industry warranty, supported by ‘real world’ testing exposing not only Buildex but our competitors’ screws over a wide range of climatic and environmental conditions. Buildex fasteners are available in a variety of head painted colours.

be designed, detailed and fabricated in just days. However the more normal throughput of eight to 10 weeks fits in perfectly with the time required for civil work. “It is this totally integrated, in-house ability,” says Zamil, “that continues to give us an advantage. We also are firm believers in the most advanced management techniques—all of which help us control overheads and remain competitive.” Zamil has the option of buying steel on the local market or from the Far East. With such large

tonnages being consumed, tight inventory control is a must. “As managers,” says Zamil, “we’ve tried to get stock holding down to just four weeks supply but the production team feel this is just too tight, so we settle on holding around six weeks of raw materials.” In an active economy such as Saudi Arabia, staffing is always an issue. Around two thirds of the 4,000 strong workforce are non-Saudis—either ex-pat professionals or shop floor workers from the Philippines or India. In all cases, English and technical on-the-job training is part of the training curriculum. The Zamil family took an unprecedented lead in the formation of the first industrial IPO in the country when it merged its air conditioning, steel and glass businesses; and the Zamil experience has been a remarkable success. The company, part of Zamil Industrial Investment Company, is now listed on the Saudi stock exchange. www.zamilsteel.com

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Walking on

Hatti Zeppel, CEO of Green Cross Manufacturing, South Africa’s leading comfort footwear manufacturer, has been caught off guard by the company’s success over the past year. Jayne Flannery reports

reen Cross is dedicated to the manufacture and retail of high quality comfort footwear dedicated to the maintenance of healthy feet. All shoes are orthopaedically designed with anatomically correct arch and foot supports. A fashion element has been added in recent years, but never at the expense of comfort— Green Cross wants its wearers to feel as if they are walking on air.

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Whilst some manufacturing sectors remain mired in recession, Green Cross Manufacturing has a different tale to tell. The South African public have voted with their feet: following a poll of 3,500 consumers, the 2010 Times and Sowetan Retail Awards moved Green Cross up to take the place of the country’s second most popular footwear brand. “It was a great accolade to receive in this particular year, as we are also celebrating our 35th anniversary,” states CEO Hatti Zeppel, who is the third generation of his family to lead the business. “Our continuing success shows that people do not want inferior, poor quality products which are the inevitable result when prices are cut back beyond a certain point. Why buy two pairs of cheap shoes when you can have a pair of Green Cross shoes that will last three times as long?” The company he leads has grown by 33 per cent in the past year, while retail sales have increased by 21 per cent to take group turnover to over R300 million. R8 million has been re-invested in new machinery to enable the company to meet the demand it anticipates from the forthcoming summer season, with the investment focusing on state-of-the-art CAD and laser pattern cutting equipment which will ensure the design process is in line with international standards. “Our success has caught us off guard,” Zeppel declares. “We were not anticipating such a fantastic year—in fact, demand has been so great we have had to take on another 100 staff in order to cope, taking our workforce to 665 people.” Green Cross footwear is sold through pharmacies, independent shoe stores and directly to corporate customers within South Africa and neighbouring countries. However, the most important distribution channel is the company’s network of own-brand stores. These absorb 45 per cent of manufacturing output and sales are growing rapidly. Green Cross is now gearing up to increase its retail footprint to 30 stores in the next year, with three new stores already in the pipeline for 2011 and a further three stores undergoing refurbishment. “To date we have focused on having a presence in large shopping malls in major urban centres, but now we are profiling our customers much more carefully and looking at opportunities in smaller malls with a more targeted offering that meets local needs,” Zeppel explains. “South Africa has a very diverse population and each population group has

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different requirements, so rather than offering our full range, in future we will be looking much more closely at the make-up of the local population to decide on the range we will offer,” he explains. The range is enormous, catering from baby’s first shoes through to a fine fitting shoe for the grandparents. Zeppel feels that retailing has offered the company much greater insight into what customers want and has enabled new trends to be identified and acted on much more quickly. Several key niches in the market have emerged where Green Cross has a clear market advantage. “For example, the school shoe market is a niche in the market that is ideal for us. Children spend a lot of time on their feet and do a lot of rough activities. It means that their school shoes have to have a high quality specification if they are not going to be worn out after a few weeks,” he says. Sales of the school shoe range have increased by 45 per cent in the past year, which Zeppel attributes to a larger range and updated styles. In a similar vein, the children’s casual range has also seen excellent growth with a doubling of sales over the past year. “We are also increasingly sought after in black population areas,” Zeppel continues. “Our shoes are not the cheapest, but they are of excellent

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quality and durability. We know that our black customers want to spend their money wisely and that they value high quality, so there is a natural synergy with the Green Cross brand.” For a number of years, the company has been meeting corporate requirements and this market segment is also expanding exponentially. “Our shoes are made of genuine leather and flex to allow ease of movement in walking. They are lightweight and conform to the shape of the wearer’s foot, which means they are perfect for people whose jobs require them to spend a lot of time walking or standing,” he explains. Looking to the future, Zeppel sees product development as having a fundamental role to play in the brand’s future growth. “The product mix we offer has to be absolutely right. This has design implications and so we have increased the size of our design team, but it also means that we have

to forecast and plan very accurately.” His biggest challenge is managing the supply chain. Local leather, for example, all ends up as upholstery within the country’s automotive industry and so must be imported. “We have seen lead times double for many of our components, raw materials and even finished goods. Identifying reliable suppliers has become much more difficult. Forward planning is now a very long process and is more important than it has ever been,” he adds. Zeppel is convinced that the management team he has put in place can get it right. “We are sure that we can continue to grow our market share and that our brand will grow from strength to strength. There is still plenty of room in the market for a premium product like ours and we will continue to take Green Cross to new towns and areas throughout next year and beyond.” www.green-cross.com

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Anvil Mining is about to become one of the Democratic Republic of Congo (DRC)’s leading copper producers. A defining characteristic of the company’s presence in the DRC is the degree to which it is taking a leading role with a carefully crafted corporate social responsibility strategy. President and CEO Bill Turner talks to Jayne Flannery

hen considering a good place to do business, the Democratic Republic of Congo (DRC) is not a country that springs instantly to mind. Wracked by civil war, ethnic conflict and political instability, the country witnessed its annual output of high grade copper plummet from half a million tonnes in the early 1990s to less than 50,000 tonnes by the turn of the millennium. Anvil Mining was one of the first mining companies to establish an operating presence in the DRC in 2002, just as South Africa was brokering the formation of a transitional government as a prelude to the country’s first democratic election in 2006. The company has since proved the potential to establish successful mining operations in the DRC’s Katanga Province and will soon commission its largest mine development yet, when the Kinsevere Stage II project becomes operational early next year. Along the way, Anvil has also pioneered a new and progressive approach to combining economic and social development within the industry, which has resulted in a blueprint for maximising local employment and local sustainable benefits from mineral production. “As a foreign mining company, we have always felt strongly that we should work to create a legacy of lasting significance. We are conscious that we are essentially a visitor in someone else’s country and if we are to operate effectively and safely and have a social impact of lasting significance, we need to understand the issues faced by local people,” states Bill Turner, Anvil Mining’s president and CEO.

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Xstrata Technology Xstrata Technology Tankhouse Group has been supplying proven engineering designs and equipment to copper electrowinning and refining projects for over 20 years. The ISA / KIDD stainless steel cathode plates and electrode handling equipment are proven critical elements to the production of quality copper cathode product and benchmark performance for all our licensed users. Ongoing innovation has lead to the successful development

Xstrata

Technology’s

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duplex cathodes and ISA stripping systems. These have been introduced into several projects within the African copper belt in recent years, including the Kinsevere Stage2 project.

Multilateral Investment Guarantee Agency (MIGA), which is part of the World Bank, with political risk insurance cover for the Dikulushi Mine. A condition of MIGA’s involvement included a requirement that Anvil partner with a credible international NGO to assist with the design and implementation of the company’s social programmes. As a result, Anvil partnered with the Washington-based NGO, PACT Inc. “PACT helped us to understand how to connect much more effectively with local people and see development more holistically. The core competence of most company employees was initially of a technical nature; so building roads and bridges and schools was relatively easy. What we did not understand so well in the beginning was how to engage effectively with the local community and appreciate social needs. Above all, the partnership with PACT showed us how to reach out to local people and enabled us to

“If we are to operate effectively and safely and have a social impact of lasting significance, we need to understand the issues faced by local people” Turner also points out that in terms of managing political risk, striving to be a good and responsible neighbour has an underlying value in safeguarding the company’s assets and employees, should unrest occur from time to time. In addition, a local community with clear channels for expressing their views to company management—regardless as to whether they are positive or negative— is an excellent early warning system, allowing corrective action to be taken when needed. Turner believes the company learned its most valuable lessons in the DRC during its early years. Anvil’s first operations were centered on the Dikulushi Mine, a remote outpost to the west of Lake Mweru, which began production late in 2002. “From the outset, we returned ten per cent of the economic benefit directly to the local community, investing in projects and areas that the local people themselves told us mattered most to them. We went on to build nine schools, refurbish two hospitals, install more than 70 water wells and build several markets, along with a lot of other infrastructure improvements.” In 2005, Anvil secured the support of the

adopt a much more proactive and engaging role in community development.” For example, Turner feels that supporting local women to develop literacy skills was one of the most valuable softer initiatives that Anvil became involved in. “It was not just about learning to read, but about creating a conduit for greatly improved self-esteem. I found it a very moving experience to witness a group of Swahili speaking adult women at one of the schools we had built, actually reading from a book in Swahili for the first time in their lives.” Because of dramatically falling copper prices in late 2008, and the onset of the global financial crisis, Dikulushi was de-commissioned in late 2008; and Turner is now applying the lessons learned there to the company’s next, much larger project. The Kinsevere Stage II project is expected to be commissioned in the second quarter of 2011. The deposit has known reserves of 20.8 million tonnes of ore and a future operational life of at least 14 years. The project will feature a state-ofthe-art $400 million solvent extraction and electrowinning (SXEW) processing plant, which will

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produce 60,000 tonnes per year of cathode copper. The project represents Anvil’s most ambitious investment in the DRC to date and will massively boost current processing capability, which stands at approximately 15,000 tonnes per annum of copper in concentrate form from a relatively small heavy media separation (HMS) plant. During the present construction phase for Kinsevere Stage II, over 1,100 construction personnel are employed. This will drop to approximately 350 once the mine is commissioned and the nature of expertise that is required changes from construction to operating personnel. At steady state, approximately 90 per cent of Anvil’s employees will be DRC nationals, but research shows that there is a strong multiplier effect on employment

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generally within the local economy as other sectors are indirectly stimulated. Moreover, locally based engineering, construction and service companies including MCK, Safricas and CCC have played an important role in developing new projects alongside Anvil. These relationships are likely to strengthen as local service sector capabilities improve. “We recognise the impact that sheer lack of opportunity has had on people’s lives in the DRC and we see a clear role for our company in engaging with and helping people to realise their full potential,” says Turner. “A fascinating element of our training work is seeing how quickly it is possible to build a skill base with people with very limited previous exposure to mining technology.” Key technical roles are generally filled by

Anvil Mining

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“A fascinating element of our training work is seeing how quickly it is possible to build a skill base with people with very limited previous exposure to mining technology” expatriate workers, but Turner stresses that all expatriates are given a clear training role. “Many people have been with us for a number of years now and we have many examples of Congolese nationals who have had excellent career progression. The complex and demanding level of technical proficiency we require in employees to manage the hard disciplines (engineering, metallurgy, geology) is a longer-term challenge, but we are making significant progress. There is a lot of scope in what I term the softer disciplines, such as administration, human resources, finance, government relations and social development. The top positions in these disciplines are almost always filled by Congolese nationals.”

The mining sector in Katanga is widely recognised as being crucial to the future economic development of the country, and Turner is happy that Anvil has created a clear and coherent role within this process. “We believe the DRC still has a huge distance to travel to realise the full potential of its tremendous resource endowment, but a terrific start has been made. “It is a privilege to be a participant in the redevelopment of the country’s copper mining industry and I believe our approach of respect for local customs, our focus on social development issues and willingness to learn as well as share our knowledge will continue to create a durable legacy for the Congolese people.” www.anvilmining.com

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gold The

standard

Jane Bordenave talks to David Bickford and Ah Uslu of TĂźprag Metal Mining Industry and Trade a the largest open pit gold mine in Turkey and companyâ&#x20AC;&#x2122;s subterranean plans for the fu 210

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hmet about d the uture

ounded in 1986, Tüprag Metal Mining Industry and Trade has been operating as a subsidiary of Eldorado Gold since 1995. Although it belongs to a Canadian parent company with a global footprint, Tüprag itself is an entirely Turkish business. The firm has two major projects— Kisladag and Efemçukuru, both located in the west of the country. The organisation is overseen by geologist and managing director David Bickford, who has been working for the company since its founding, and, on the ground, engineering manager Ahmet Uslu.

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The Kisladag mine site, located in Usak Province, hosts the largest open pit gold mine in Turkey, producing low-grade gold ore with a throughput of 10 million tonnes per year. It was developed from an exploration into a fully operational site over a period of 10 years, with construction taking place in 2004 and commercial production commencing in 2006. “Right from the very start, this site has been overseen very carefully, because it was only the second gold mine to be developed in Turkey,” says Uslu. “This careful management has meant that we have kept it as one of the lowest cost producers not just in the country, but in the world.” This coming year, Tüprag will be investing $40 million to increase production to 12 million tonnes per annum.

“We consult with the local community and explain to them what will be happening; and we also assess how we can minimise our impact on the area” Although it will still be a gold mine, Efemçukuru, on the Aegean coast, is a very different operation. This deposit is high-grade epithermal ore that will be accessed through an underground mine and processed through a milling and flotation circuit on site. From there, the concentrate will be transferred to Kisladag for recovery. This new mine represents a $152 million investment for the company, with production expected to begin in late 2011. “From a footprint point of view, Efemçukuru is smaller than Kisladag because much of the work will be taking place beneath the surface,” explains Uslu. “It’s also a very different mine in terms of specification—there’s a lot of preparatory groundwork to be done before we can even think about production.” As would be expected, Tüprag uses a lot of static heavy machinery on site, as well as vehicles such as trucks and loaders. In order to maintain a high level of production, choosing the right supplier is important. “For the most part, we source our equipment from big-name companies: we use Caterpillar for the mining machinery such as trucks, dozers, graders and loaders, and we use Hitachi for items such as excavators,” says Bickford. What is most important for him is that any company Tüprag does business with can provide the organisation with a full-spectrum service. “Part of the reason we use brands such as Caterpillar and Hitachi is that they are well established, with a good reputation. We know that by sourcing our machinery and equipment from them, items are less likely to break down and we will have a reliable supply of replacement parts. We will also sign maintenance agreements with them whereby a member of their staff is seconded to instruct

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Metso Minerals MM Turkey Service Organization supports Tuprag on service, spares & wears for the equipment supplied by Metso. The key account manager Serkan Hosgit has his special attention visiting the site frequently. Working together, with Tuprag having the first mining crushers of Metso in Turkey, the Service Organization of MM Turkey has also gained experienced on these equipments. With the global experts of mining crushers visiting the site for repair and inspection jobs, meanwhile, Tuprag maintenance team has had ‘hands on training’ opportunities.

some of our employees in how to carry out general maintenance on any new purchases.” However, there are some occasions when it makes sense to use local suppliers, rather than those with a global presence. “When it comes to commodities such as lime, explosives, oil or petrol, we use local Turkish companies, as this is both the most economic and reliable way of sourcing them,” Bickford explains. Environmental issues and consideration for the local community are very important aspects of Tüprag’s activities in the area. At a very basic level, oil and petrol suppliers must be able to remove used oil from the mine site and recycle it. “Carrying out an environmental impact assessment and then submitting it to the government is one of the preliminary stages when applying for a mining permit,” explains Bickford. “We consult with the local community and explain to them what will be happening; and we also assess how we can minimise our impact on the area.” There are many ways in which Tüprag does this, including eliminating chemical pollution and reducing noise pollution as much as possible. “We use heap leach technology at Kisladag to extract the gold from the ore, which requires the use of cyanide,” explains Uslu. “Obviously, this is a hazardous chemical so it is of the utmost importance to us that neither it nor any other harmful residues can be discharged into the environment.” The business is committed to working with the local communities, not just to protect the towns and countryside, but also to create employment opportunities. According to Bickford, “currently, 80

per cent of our manual workforce is from the local population—a figure that we are hoping to raise to 90 per cent within the next few years. We have been fortunate really in that before our arrival this was a largely agricultural community, which already had an ethic of hard work. All we had to do was take that enthusiasm and apply it to our industry.” All new recruits are put through a comprehensive orientation and training programme, with all employees being given annual training updates and skills reviews. To ensure the success of the continuous professional development, each employee is given training targets for the year, which can be used to measure his or her progress within the company. Having been part of the industry for nearly 25 years, Tüprag has extensive knowledge of the gold mining sector in Turkey—experience that enables it to move forward successfully. Within five years, Bickford expects both Kisladag and Efemçukuru to be working at full capacity and for another project to be in development. Given its history and the prestige of its parent company, there is no doubt that Tüprag Metal Mining Industry and Trade has a shining future in Turkey. www.tuprag.com

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Oceanpion

Mel Togolo, country man Niugini Ltd (Nautilus) talks the companyâ&#x20AC;&#x2122;s pioneering wor seafloor mineral dep 216

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neers

nager of Nautilus Minerals s to Jayne Flannery about rk to explore and develop posits in the South Pacific

Nautilus Minerals Niugini Ltd

he deep ocean has been slow to give up its resources. Volcanogenic massive sulphides (VMS)—the source of a lot of the world’s copper, gold, zinc and silver to date—are now largely mined and there are few new quality finds on land. Deposits within their undersea geological equivalent, on the other hand, known as seafloor massive sulphides (SMS), have yet to be completely mapped and the rate of discovery is high (and the grades are high too). Nautilus is a leading force and pioneer within the industry of exploration and development of SMS systems. The company, which is listed on the Toronto (TSX) and London (AIM) Stock Exchanges, draws on the expertise of at least two of the world’s largest resource companies—Anglo American and Teck Resources, both key shareholders of the company. Nautilus has been exploring in the territorial waters of Papua New Guinea (PNG) since 2005 and has now identified 19 mineralised seafloor systems in PNG. Exploration in Tonga began in 2008 and to date, 16 SMS discoveries have been made.

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Nautilus Minerals Niugini Ltd

Technip Oceania Technip has been awarded by Nautilus Minerals Singapore two EPCM contracts for the Solwara 1 Project in Papua New Guinea. This project will involve

extracting

Seafloor

Massive

Sulphide

deposits in approximately 1,700m water depth. The contracts include: Risers And Lifting System (RALS) – EPCM contract for the design and supply of the riser system; and conversion and integration of the Production Support Vessel – EPCM contract initially covering Definition phase and encompassing the management of the conversion and interfaces with Seafloor Production Tools, RALS, Dewatering Plant and ore handling facility.

Solwara 1 is the flagship exploration project which is currently at the engineering and permitting phase of its lifecycle. It is a small area of highgrade deposits (~seven per cent copper) located on the floor of the Bismarck Sea in New Ireland Province, PNG. The mineralised zone is just 1.3 kilometres long and up to 200 metres wide; and has been drilled to depths of up to 19 metres below the seafloor. It occurs as a mound on the seafloor in water depths of approximately 1,600 metres. “Rising copper prices is a factor that is driving exploration, but the deposits we have identified are also of an extremely high grade,” explains Mel Togolo, the PNG country manger of Nautilus. “What makes our approach viable is that we will be adapting technologies already in existence through other offshore industries. The biggest technical challenge is that we are working in the deep sea. To overcome this barrier, we have partnered with the world’s most advanced engineering companies specialising in deep sea exploration and mineral extraction.” The UK company Soil Machine Dynamics, a leading subsea engineering company specialising in the design and manufacture of remotely operated vehicles (ROVs) and seabed trenching systems, has been awarded the contract to build three remotely operated seafloor production tools. Technip is another key partner. It is one of the world’s largest full-service, integrated groups to provide engineering, technology and construction services to the oil/gas and petrochemical industries and has been awarded the contract for engineering, procurement and construction management of the

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riser and lifting system which will bring the minerals from the seabed to the surface vessel. Togolo explains that although water depth represents a technical challenge, the overall cost of subsea development is comparable, or cheaper, than land-based operations. “If you have to sink a pipe to a depth of 1,600 metres on land, that means a complex drilling operation. Passing a pipe through water is much easier. Moreover, the deposits we have identified at Solwara 1 actually sit directly on the surface of the seafloor so there is minimal requirement for preliminary stripping, which is normally a major issue associated with land-based deposits,” he explains. An Environmental Permit for the development of the Solwara 1 Project was granted in December 2009 by the Department of Environment and Conservation in PNG. Togolo points out that the environmental impact will be minimal compared to land-based operations—the footprint of the extraction area of Solwara 1 comprises only 0.11 square kilometres and there will be no land clearance, tree removal or construction of permanent site infrastructure. In addition to this, independent experts have estimated that within a few years, sea animals are expected to re-establish on the areas which have been excavated. Nautilus, which benefits from good relations with PNG’s government, anticipates that it will receive its mining licence for Solwara 1 later in the year. “For more than a decade, PNG has offered one of the most stable and business-friendly operating environments in the South Pacific. The government

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has created a very positive investment climate and is actively encouraging and supporting both foreign and local investors,” adds Togolo. A study released in June 2010 defined capital costs for the construction of an offshore production system. The total cost is set at US$383 million, including a 17.5 per cent contingency. Meanwhile, average operating costs up to the Port of Rabaul are estimated to be US$70 per tonne based on a 1.35 million tonnes per year production, although there will be the opportunity to ramp up production to 1.8 million tonnes per year. When the study was released, Stephen Rogers, CEO of Nautilus, commented: “This work contains the results of over five years of engineering, testing and mine planning. Our estimated operating costs are competitive with the operating costs for existing deep underground mines. However, one of our great advantages over land-based mining is that the equipment used in our offshore production system is mobile, allowing production at successive sites without needing significant additional capital investment.” Togolo estimates that Solwara 1 will start producing within 30 months of project sanction. Meanwhile, there are a number of other sites in the exploration pipeline. “We can’t be exact about when we will start to develop our other projects, but within the next 30 months or so, we expect to see a cash flow that will allow the development of other tenements. One thing is certain though: we anticipate, and are excited about, being in the South Pacific for a very long time to come.” www.nautilusminerals.com

Nautilus Minerals Niugini Ltd

â&#x20AC;&#x153;Rising copper prices is a factor that is driving exploration, but the deposits we have identified are also of an extremely high gradeâ&#x20AC;? November 10 www.bus-ex.com

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SEMS Exploration h on a unique busine Gay Sutton about t

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SEMS Exploration

hrough thick thin and

has built its reputation as a mineral exploration service consultancy ess model. Managing director Simon Meadows Smith talks to the secrets of retaining staff through good times and bad

n the nine years since Simon Meadows Smith established SEMS Exploration as a geological consultancy for the gold mining industry in Ghana, the company has grown to lead the field in West Africa, providing a full range of geological, mining and engineering services that span from grassroots early stage reconnaissance exploration through to the completion of feasibility studies and mine designâ&#x20AC;&#x201D;and all the steps between.

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“We started in gold,” explains Meadows Smith, SEMS’s managing director. “But as our business and reputation grew, we were asked to get involved with other minerals, so lateral growth has been very much a logical progression.” Today, the company works with a wide range of minerals including manganese, iron ore, bauxite, kaolin and even water. And it provides everything from full turnkey exploration operations to specialised technical services. The company’s headquarters are still in Accra, Ghana, but offices have also been opened in Abidjan, Ivory Coast and Ouagadougou, Burkina Faso. Now boasting almost 100 employees, SEMS has field crews and teams working in all corners of West Africa, from Mauritania and Senegal to Cameroon. “All our staff are permanent employees,” Meadows Smith says—and this is one of the true secrets of the company’s success. “In the mining industry staff tend to be quite transient. But we believe you can’t provide a reliable and consistent consultancy service if you’re constantly hiring new people for each job. Our business model is therefore different from many other consultancy groups who tend to employ staff on short term contracts.” Continuity has played an important role in many of the long-term contracts the company has worked on. Between 2002 and 2008, for example, SEMS provided a complete turnkey service for Adamus Resources, an Australian diamond exploration company based in Perth that acquired a gold exploration licence in Ghana. “We managed Adamus Resources from the first acquisition of the licence through to granting of the mining lease. We built up their landholding, performed all the technical ground work, established a large resource, completed the feasibility study and went through the application for a mining lease. Then we handed over everything to them. Right now they’re building the mine and should pour their first gold next year.” In a similar way, the company has been working with Gryphon Minerals in Burkina Faso, and recently enabled Gryphon to announce a 1.5 million ounce resource on their Banfor Gold Project. Another unique feature of the SEMS business model is that the majority of its staff are West African, supplemented by a small number of expats who supply specialist skills the company has been unable to source locally. Countries such as

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SEMS Exploration

Midlands Minerals Midlands is a growth oriented and value based gold exploration company operating in Ghana and Tanzania, two stable countries with a history of gold mining. Midlands’ top priority project is the fully permitted Sian gold project in Ghana, which contains Esaase and Ampeha, two previously producing open pit mines with a resource with significant growth potential. Midlands’ second priority project is the highly prospective Kaniago gold project, contiguous to two past open pit gold producers. Midlands also holds highly prospective licences for gold and diamonds in the Lake Victoria Goldfields in Tanzania, including its advanced Itilima Gold Project. The company has a highly qualified management and technical team with extensive experience in the countries in which it operates. www.midlandsminerals.com.

Ghana have a well established mining culture, and are endowed with mining schools and universities providing high quality training in subjects such as geology and mining engineering. The region therefore produces well qualified people with all the necessary knowledge and experience. There are many benefits to employing staff in the long term, and West African staff in particular. Not only do they not require the investment in international travel, visas and accommodation that expats do, but they also bring an in-depth knowledge of community relations and cultural customs, which tends to vary from country to country. “This is almost as important as technical knowledge, especially in the exploration industry where you’re at the forefront of meeting the communities and introducing them to the idea of what we’re trying to achieve,” says Meadows Smith. “And that is much better coming from someone who can speak the local language and understands the cultural effects of our actions.” Over the past nine years, SEMS has also accumulated an in-depth knowledge of the political landscape and industry marketplace in each of the countries in which it operates, and this is put to good use for many clients, helping and advising them as they enter the exploration field in West Africa. With such a strong focus on continuity and long-term service, staff retention is of paramount importance to SEMS, which can be very difficult in an industry as inherently volatile as mining. “The mining industry is very cyclical, so when we’re in a boom period as we are at the moment, some companies will offer high salaries. We can’t compete with that. What we can do is offer security and stability,” Meadows Smith says. Interestingly, Meadows Smith has been able to retain all his staff, even through the downturns. This is largely due to the wide range of clients and projects on the company’s books; but it’s also due to the fact that during boom times—as now—mining companies flow into the region from around the world, setting up offices and deploying large workforces. “Then during the downturns in the cycle, they’ll let go of their offices and staff. However the last thing they want to let go of are their mineral assets. We have picked up a considerable amount of work during the lean periods doing a range of care and maintenance work, completing

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reports and doing basic field expansion work.” Training forms an integral part of SEMS’s company culture, and it offers both internal and external training programmes, along with on-thejob monitoring and mentoring. In recent years, many of the West African staff have been sent to Pitney Bowes in the UK for GIS (geographic information systems) training, leading to formal accreditation. Having formed a strong relationship with Pitney Bowes, SEMS has become the first accredited training centre for MapInfo and Discover software in Africa, and operates training centres in both Burkina Faso and Ghana. Looking to the future, Meadows Smith sees two areas for expansion. Firstly, he is keen to extend the company’s geographical spread. Having achieved considerable success in the Ivory Coast after setting up an office there just 18 months ago, he sees significant opportunities in mineral-

rich Guinea. His other area of focus is to attract some top-end technical staff in areas such as GIS, database management and mineral resource estimation. “It’s not always easy to attract people at the top end of the market because of the conditions they expect. But we’ve just about attained a size where we can offer the volume of work and remuneration they’re looking for.” It must have been very tempting, over the last few years, to migrate from consultancy into exploration and mining, but the lure has not attracted Meadows Smith. “The rewards can be very great,” he concedes, “but it’s not the life for me. We pride ourselves on being an independent group of consultants and we don’t involve ourselves in licence ownership. If we are able to build good relationships within the mining industry and help other companies achieve a good exploration result, then that will provide security for us.” www.sems-exploration.com

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Fuellin ideas

Fuel costs are a constant headache in the c climate for any company. Colin McKenzie, the founders of AFS Group in South Africa, t Andrew Pelis about how his company is making difference to corporate fue 230

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AFS Group

ng s

current one of alks to g a real el costs

he cost of fuel is a regular topic of consternation for all of us. At a time when most of us are financially stretched, the need to save on costs has never been greater. Imagine, then, the impact of soaring fuel prices for major organisations with large fleets of vehicles. Fortunately through its network of OEM technologies, AFS Group is changing the way companies complete fuel transactions. AFS Group, with its headquarters in Johannesburg, has for the past 11 years built up its range of products and spread its reach across South Africa and into new territories. Throughout that time, one of its founders Colin McKenzie, now head of New Business Development, has overseen the changes in attitude that have enabled the company to grow, typically between 30 and 40 per cent year-on-year. “AFS Group looks after systems technologies and procedures to ensure effective fuel management solutions in a broad range of applications and environments,” McKenzie explains. “Using our technologies, the client is better able to manage the flow and movement and accounting of their fuel products and make considerable savings.”

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AFS Group

Gilbarco Veeder-Root Gilbarco Veeder-Root represents the leading brands of solutions and technologies providing convenience, control and environmental integrity for retail fuelling and adjacent markets. Providing to convenience stores, hypermarkets and service stations, our products and services include petrol dispensers, tank gauges, submersible pumps, forecourt control, point of sale solutions, back office & service monitoring and service & installation. Gilbarco Veeder-Root is delighted to be represented and supported by AFS in the South African market. Gilbarco Veeder-Root’s install base in South Africa, comprising of Veeder Root Automatic Tank Gauging, Red Jacket Submersible Pumps and Gilbarco Encore &

Endeavour

significantly,

series

dispensers,

demonstrating

has

industry

increased leading

technology and products, coupled with local service & support infrastructure is a winning combination.

support infrastructure throughout South Africa, Namibia, Botswana and Mozambique, and through alliance partners is able to supply fuel management solutions to anywhere in the world AFS Namibia is one of 13 brands that the group now operates; and McKenzie says he is particularly proud of eFuel, a card-free, cashless system using technology to pre-authorise and conclude refuelling transactions. “Our eFuel eAsy is a system to facilitate refuelling with manual input of vehicle odometer reading. The vehicle, not the driver, authorises the transaction,” says McKenzie. The system has been selected by a consortium of leading oil companies in South Africa and has provided a common platform that enables vehicles to refuel at any eFuel-equipped site. The system works by recognising the moment the nozzle is inserted into the tank inlet, at which point an ‘electronic handshake’ takes place through RF communication. If the authorisation process is successful, the dispenser commences the refill. “The biggest benefit is 100 per cent accountability

“We do lots of efficiency optimisation benchmarking for clients to help them get the best benefit from AFS Group” The company formed in 1995 when technology was brought into South Africa from Israel that would in time revolutionise the way the country approaches fuel purchase. “In 1999 I and a partner were running a vehicle management business that looked at fleet performance and efficiency but did not take into account the impact of fuel,” McKenzie continues. “We were approached with this technology and started a pilot programme on 550 vehicles, based around automatic refuelling and automated banking systems, which quickly proved a success. We merged the two businesses and shortly afterwards received a government tender to provide services across five provinces, covering some 15,000 vehicles.” Today, AFS Group enjoys annual turnover in the region of R400 million and has offices in Johannesburg, Durban, Cape Town and Middelburg. It is also represented in Namibia through a 50 per cent Namibian owned company, AFS Namibia (Pty) Ltd. AFS also has operational

in terms of the flow and procurement,” McKenzie states. “Our track record is excellent and our worst case scenario projects cost savings of five to six per cent for the customer, with typical savings of 30 to 40 per cent on bills not uncommon.” He adds that the client will only ever pay for what was authorised; and of course the data collected provides accurate information without human intervention, while security is beefed up through site control solutions that incorporate bank cards, keys, smart cards, keypad entries and barcodes. McKenzie says that the system is tamper-proof and will not work if removed. “It also allows a client to identify specific issues, so for example, if one vehicle is using more fuel than the rest of the fleet, this can be easily identified—we do lots of efficiency optimisation benchmarking for clients to help them get the best benefit from AFS Group.” The company has now grown to over 200 employees and McKenzie says that for every one employee, there are probably five external personnel

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involved in each project. Continuous training plays an important role, with the company using a dedicated training room equipped with all the technologies it utilises from its OEM partners around the world. Overseas operations frequently involve strategic alliances with existing organisations; and McKenzie says that key personnel are brought to South Africa and provided with on-the-job training for up to six weeks. The internal training set-up has also played its part in elevating AFS Group to Level Three accreditation for its Black Economic Empowerment efforts. “We are 100 per cent compliant and are bordering on attaining Level Two status,” says McKenzie. “This has been our strategy from many years ago; and one of our existing directors has worked his way through our company from a grass roots starting point as a driver. Every day, our expansion looks to empower people from disadvantaged backgrounds and that is also reflected in our supply chain.” As the global economy continues to readjust, McKenzie has seen initial start-up costs as the biggest block to AFS Group’s further growth; but he feels that the company’s excellent track record and ability to save money for businesses is often an overriding factor. Currently, the company has over 45,000 vehicles running on its systems in South Africa and manages over one billion litres of fuel. It has made significant progress in sectors such as heavy transport, rail transport, light passenger vehicle fleets, ports, local authorities, state government departments and private sector fleets. Mining is another area in which AFS Group has proved highly successful; and as international mining companies have entered South Africa, the company has been able to further extend its global footprint. “Expansion across Africa continues apace for us and there are lots of opportunities, especially in the mining sector—hydrocarbon management is an area we dominate,” says McKenzie. “We also provide consultancy services; and overseas business now accounts for roughly a quarter of our turnover, although there is still lots of growth potential for us in South Africa.” McKenzie says that while its phenomenal growth rate is fantastic news, he also has a word of caution. “We must remain consistent year-on-year and expand into areas of the world that will be beneficial. Forty per cent annual growth is not easy to manage and we do have a very dynamic operation; but we have to concentrate on achievable growth rates without failing.” www.afsgroup.co.za

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AFS Group

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A moving

story from

India

Ashok Leyland, the Hinduja Groupâ&#x20AC;&#x2122;s flagship company in India, is a leading manufacturer of 7.5 to 50 tonne trucks; and buses to carry from 18 to 80 passengers. It traces its roots back to the dawn of Indian independence in 1948, when Ashok Motors was set up in Madras (now Chennai) to assemble Austin cars for the Indian market

t was seven years after its inception, in 1955, when British Leyland purchased a share in Ashok Leyland which thereafter focused on commercial vehicle manufacture rather than passenger cars. Since that date the company has set standards in the Indian automotive industry, leading with the introduction of new technology in the commercial sector and gaining a reputation for robustness and durability. It was the first in its sector to gain international accreditations including ISO 9002, and in 2006 became the first Indian automotive company to receive the latest ISO/TS 16949 Corporate

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Ashok Leyland

Certification. It has delivered more than five million vehicles and today sells around 7,000 engines as well as 60,000 vehicles annually. With its own comprehensive R&D base, strengthened by collaborations with global technology leaders, Ashok Leyland has established a tradition of technological leadership and a strong reputation for product reliability. The

history of the company has been punctuated by a number of technological innovations, which have since become industry norms. It was the first to introduce three-axle trucks, full-air brakes and a host of innovations like the rear-engine and articulated buses in India. In 1997, the company launched the countryâ&#x20AC;&#x2122;s first CNG bus and in 2002, the first hybrid electric vehicle.

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Ashok Leyland

Anand Anand is among the leading manufacturers of automotive components and systems in India. With the widest range of products, the group is the country’s leading OEM supplier. With 14 joint ventures and 8 technical collaborations, Anand is a conglomerate of 19 companies spread across 44 locations. All of Anand’s strategic partnerships are with global automotive leaders. The group also has interests in industrial filtration, waste water technology and hospitality.

In 1987, Hinduja Group jointly with IVECO (the commercial vehicle arm of Italy’s Fiat) gained a controlling interest in Ashok Leyland and its associate companies when it acquired the UK-based Land Rover Leyland International Holdings Ltd (LRLIH). Ashok Leyland has seven manufacturing plants—the mother plant at Ennore near Chennai, three plants at Hosur (called Hosur I and Hosur

II, along with a Press shop), the assembly plants at Alwar, Bhandara and a state-of-the-art facility at Pantnagar. The total covered space at these seven plants exceeds 650,000 metres square and together they employ over 11,500 people. The commissioning of the modern, fully integrated plant at Pantnagar in March 2010 will eventually augment Ashok Leyland’s installed capacity of 100,000 vehicles by another 75,000, and with the tax concessions available in the north India state of Uttarakhand, the company will gain a cost advantage of Rs. 40,000—Rs. 50,000 per vehicle. The plant is the company’s largest, and

combines the latest manufacturing technologies with best-in-class industrial architecture bound together in an ecologically sensitive environment. The commercial vehicle industry in India as elsewhere was severely impacted during 2008 and 2009 as a result of the economic slowdown, and continued to be sluggish in the first half of the financial year to March 2010. However, thanks to the stimuli provided by the government, primarily

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Ashok Leyland

Meritor HVS (India) Ltd Meritor HVS (India) Ltd, Mysore have a very strong association with Ashok Leyland accounting for over 75 per cent of their requirements with seven different axle models and over 150 variants and six different variants of foundation brakes. Meritor has partnered with Ashok Leyland for their Future Vehicle Program with customized drive axle solutions. Meritor will have a 100 per cent share in the models launched in this program, aimed at addressing the emerging needs in the domestic market. Meritor received Golden Award from Ashok Leyland for outstanding QCLDM Performance in 2010 and continues to be a committed partner in all their future endeavours.

range of city buses. Optare has been a pioneer of the low-floor double-decker in the UK; and their new electric bus product has already secured several orders as more countries in Europe promote cleaner, greener mobility. Ashok Leyland has been advancing its bus business with purpose-built bus plants in Alwar in India and Ras Al Khaimah in the United Arab Emirates, and a new range of both city buses and inter-city coaches. The strategy behind this has been to address the growing need for modern urban mobility in India, as well as in international markets. The new agreement with Optare will benefit both companies—Optare gains access

“Ashok Leyland has delivered more than five million vehicles and today sells around 7,000 engines as well as 60,000 vehicles annually” in the form of excise duty reduction and improved availability of bank finance, the market saw a strong revival of demand during the second half of the year. According to the most recent annual report: “A number of supply constraints came in the way of fully exploiting the new available opportunities. Overall, during the year, with a focus on marketing efforts, cost control, and effective working capital management, Ashok Leyland considerably improved profitability.” In the event profits more than doubled over the previous year’s figure to R54,804.63 lakh. However, the domestic market is far from Ashok Leyland’s only potential growth market and it has been steadily extending its overseas interests. In July this year it announced that it had reached agreement with Optare plc, a leading bus manufacturer in the UK (and incidentally another company that traces its origins back to Leyland), to subscribe for a 26 per cent stake as a part of long-term strategic cooperation. The investment is estimated at about US$7.5 million, and the deal is expected to further benefit Ashok Leyland in its endeavour to accelerate technology, new product development and to address new markets. Optare, founded in 1985, has a turnover of about US$125 million, and has been recognised for its innovative, weight-optimised ‘Low Carbon’ range of low-floor, mid-size buses, as well as a modern

to Ashok Leyland’s lower cost supply chain, increasing its competitiveness in its home UK market, and Ashok Leyland will have access to Optare’s technology including a modern range of mid-size and full-size city buses which will appeal to a number of global markets. The agreement brings together two quality busmaking companies who can trace their lineage to common roots—the Leyland brand, with links to the long history of that company, when it was the largest bus maker in the world. Commenting on the move, Mr. R. Seshasayee, managing director of Ashok Leyland and executive vice chairman of Hinduja Automotive, said: “This strategic alliance is a critical part of our Global Bus programme, which is under development. In Optare, we have found a European manufacturing partner who shares our vision for state-of-art buses at affordable prices. Together, we will be able to offer future-ready products of high quality and design that are competitively priced to customers in almost all regions.” Recent orders show returning confidence to the bus market both nationally and regionally. In August the company was successful in gaining a $26 million order for 1,000 buses from the People’s Leasing Company in Sri Lanka. With the cessation of hostilities, the north and east of Sri Lanka have once again opened up for trade, commerce and people movement.This is the

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Ashok Leyland

largest single order Ashok Leyland has ever delivered to Sri Lanka. And in September it bagged an order for 2,850 buses from the Institute for Road Transport (IRT), the nodal agency for procurement of vehicles for the state of Tamil Nadu. â&#x20AC;&#x153;The key aspect of this order is that it reflects the trust reposed in us by such an esteemed customer and represents almost 95 per cent of the entire requirement of buses for the state,â&#x20AC;? said marketing director Rajiv Saharia. Though only a small part of this order, the inclusion of 150 vehicles conforming to BS IV emission norms is a significant step, since it is the first such order to be received from a State Transport Undertaking. www.ashokleyland.com

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