September 2010 EMEA

Businessexcellence ACHIEVING

SEPTEMBER 2010

O N L I N E

Beyond the

www.bus-ex.com

storm Potential supply chain threats are often closer and more preventable than many people think

Editor’s letter

EDITORIAL

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

DESIGN

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

BUSINESS

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

Infinity Business Media Ltd Suite 22, St Francis House Queens Road Norwich, NR1 3PN UK Tel: +44 (0) 203 137 7100 Fax: +44 (0) 1603 666466

Working

together With downward revisions to economic growth forecasts still muddying optimism for recovery, governments worldwide will no doubt be seeking to boost trade, stimulate business and drive productivity. This issue of Achieving Business Excellence Online demonstrates what can happen when governments and businesses work together to do so—with inspiring results.

Riversdale Mining has been working with Mozambique’s authorities and the mining giant Vale to improve the Port of Beira, ready for the export of coal. The resultant trade will be a huge boost for Mozambique’s economy; and as the country’s mining industry continues to gather pace, the inflow of mining expertise from Australia, South Africa and Brazil will undoubtedly be of great benefit. Furthermore, Mozambique’s legislative system is modelled on that of South Africa—so it is expected that world best practices in all aspects of operations, health and safety, and environmental responsibility are applied. It is an exciting period in Mozambique’s mining history, with the country having the potential to become

a major exporter of hard coking coal— second only, perhaps, to Australia.

Telecom Namibia is working closely with the government as it embarks upon an ambitious update of the country’s telecommunications infrastructure.

Namibia’s Ministry of Information and Communication Technology is following a five-year strategic plan aimed at driving ICT development growth in the country, and hopes that technology can also be brought to rural areas—in turn stimulating better communications and education.

Meanwhile, the Namibia Diamond Trading Company (NDTC) is working towards establishing the country as a global diamond centre. A joint venture between De Beers and the Namibian government, NDTC is helping to develop a sustainable local downstream diamond industry, driving job creation and creating value from the country’s substantial diamond resources.

Governments and businesses may not always see eye-to-eye; but when they do and work together, the results can be impressive.

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STRATEGY: Architecture for change Business leaders must take steps to ensure that today’s innovation doesn’t become tomorrow’s legacy.

OPERATIONS: What the World Cup taught us…

South Africa’s World Cup can offer surprisingly valuable lessons for CIOs and network managers.

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SUPPLY CHAIN: Beyond the storm Potential supply chain threats are often closer and more preventable than many people think.

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SUSTAINABILITY: Lean, but green, supply chain machine Organisations can take tangible steps to reduce their environmental impact and build a green supply chain.

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Telecom Namibia Building the infrastructure The award-winning national telecommunications operator is committed to the country’s economic growth and development.

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Eskom: Ingula Hybrid hydro South Africa is increasing its electricity supply—but not all of it is coming from coal generation plants.

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Umeme Electrical outlaws Uganda’s main retail power distributor is taking positive steps towards providing reliable electricity for all.

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Lesedi Nuclear Services (Pty) Ltd A powerful case for expansion This company is cementing its reputation as a reliable player in all sectors of the energy market.

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Boskalis Offshore Digging deep With a cradle to cradle approach to projects, this company has become a world leader in subsea soil intervention.

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Wagenborg Offshore Prospecting below ice The expertise of this specialist oilfield services provider is in demand to support oilfield operations in Kazakhstan.

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Contents

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McNally Bharat Engineering Company Ltd Going for growth One of India’s leading diversified engineering companies is going through a period of meteoric growth.

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Fairbrother Geotechnical Engineering Proactivity in piling Underneath a number of South African bridges and buildings is work undertaken by this geotechnical contractor.

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Port of Durban In deep in Durban The Durban Harbour Entrance Widening & Deepening project is taking the port into the era of big ships.

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Riversdale Mining Putting Mozambique on the map This company is bringing some much needed expertise and capital to the transformation of Mozambique.

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MMTC Trading places For India’s largest non-oil importer and largest exporter of minerals, success has not come easily.

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Namibia Diamond Trading Company From rough diamonds...

Moves by Namibia to capitalise on its extensive and valuable diamond resources are stepping up a gear.

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Technip Oceania At the epicentre Thanks to a boom in Australian oil and gas exploration and development, this company is positively thriving.

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Afripack Pty Ltd From sack to pack This company has grown from being a maker of paper sacks to a leading manufacturer of flexible packaging.

Great North Transport Driving the bus industry This company has driven home a competitive advantage based on its reputation for safety and reliability.

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Tullow Oil Ghana A well-oiled operation Ghana has emerged as a potential major new oil player in West Africa’s resource-rich region.

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AMEC Minproc Solid as a rock The global economic downturn has meant opportunity for AMEC Minproc to expand its activities in Africa.

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Gold Fields Comprehensive engagement Environmental and social commitment is a way of life for this South African gold mining giant.

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Procter & Gamble Egypt FMCGs, Egyptian-style Retail in Egypt has barely changed in decades; but Procter & Gamble is trying to modernise from within.

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Gold One International A promising strategy South Africa’s shallow gold resources look promising for the country’s most dynamic recent market entrant.

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Gateway A theatre of shopping Offering its visitors the full spectrum of all-round entertainment, this shopping centre continues to thrive.

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Sekunjalo Investments Ltd Investing for fairness Sekunjalo Investments has a broad portfolio covering most of South Africa’s key industrial growth sectors.

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Territory Resources Limited In new territory This iron ore producer is delighted to be mirroring the growth of Asia’s resurgent economies.

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KEC International Ltd. A growing superpower As governments around the world invest in power infrastructure, competition has become rife within this specialist construction sector.

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Secure Meters Very smart meters This Indian company is making its mark on energy conservation, having spotted a smart business opportunity.

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Architecture

for change

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Strategy

Chris Moyer, EMEA chief technologist with HP Enterprise Services, outlines ways of ensuring that today’s innovation doesn’t become tomorrow’s legacy

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anaging an information technology budget is often like managing a professional sports team. In the sports world, team owners look to managers to acquire the brightest talent and maintain a winning team while keeping a watchful eye on the bottom line. In the technology world it’s the same concept: chief executive officers (CEOs) look to chief information officers (CIOs) to acquire and maintain the latest technology to drive innovation with a set budget.

Whether on the football field or in the data centre, it can be challenging to do more with less. One winning solution for CIOs is to architect for change, enabling functionality to be quickly and easily added as the business requires it. A services-minded technology strategy, from cloud computing to outsourcing, will help the business stay one step ahead of the competition. In developing a technology playbook, ensuring that today’s innovation does not become tomorrow’s legacy is critical to a successful outcome.

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Strategy

“A services-minded technology strategy, from cloud computing to outsourcing, will help the business stay one step ahead of the competition” Step one: Redirect investment dollars from operations to innovation A global survey of more than 500 business and technology executives commissioned by HP and conducted by Coleman Parkes Research in April 2010 reveals that one out of every two business executives feel their companies suffer from innovation gridlock. Innovation gridlock is a situation where IT organisations are blocked from driving new business innovation because the majority of their funding is consumed by operating the current environment. More than 50 per cent of business and technology executives feel this gridlock prevents their organisations from keeping up with the competition.

By adopting technologies like cloud computing, CIOs are able to lower costs and redirect funds to fuel innovation and help drive business growth. New utility-like services can speed time to market for new offerings, improve efficiency and free up resources while lowering the risks associated with the adoption and management of cloud computing initiatives. These types of offerings help technology departments get certain applications in hours or days, compared to the weeks or months it takes for current manual processes to deploy applications.

Other solutions take into account the full lifecycle of services by helping CIOs plan and design, automate and manage, and most importantly, assure that cloud services will meet the performance as well as cost objectives required to drive business outcomes. In cases, these projects can be ‘self-funding’, meaning that CIOs are not asking CEOs for more money— rather, working with what is already in place.

Step two: Obtain essential knowledge and knowhow to make the most of technology solutions Excellence in business is dependent upon excellence across an organisation’s technology environment. That, in turn, demands expert staff and an efficient technology infrastructure that is highly available, consistently reliable, readily scalable and totally secure. Enterprise infrastructures are inherently complex and rely heavily upon skilled staff. However, many technology departments do not have all the in-

house expertise to prevent and rapidly resolve issues associated with these complexities.

Outsourcing services can help CIOs simplify and streamline their organisation’s infrastructure environment to achieve business goals while reducing costs, as well as maintaining a competitive edge. Outsourcing services should work to support businesses, helping clients drive measurable value from technology investments.

This can dramatically reduce the time, cost, complexity, disruption and risks associated with creating and managing dynamic data centres as well as updating existing applications.

Step three: Transform the approach to facilities and IT resourcing to reduce ongoing energy and operations outlays Organisations need ever increasing computing capabilities to stay competitive, yet many data centres are reaching their capacity limits. As the workload requirements for data centres increase, so the need for power and cooling increases, too. At the same time, technology executives are tasked with reducing overall energy costs as well as lowering carbon footprint.

Engaging in a services approach can help overcome these challenges. Services organisations are able to devise and implement a sustainable energy efficiency strategy to: • Eliminate over-provisioning of power and cooling resources • Improve power usage effectiveness • Analyse the impact of prospective changes in layout, equipment or cooling capacity • Identify the return on investment of moving to industry benchmark best practices • Place workloads into optimised environments, inside or outside the organisation.

Whether it’s a sports team seeking out the next great sports star, or an enterprise business developing a data centre that is architected for change, the best move is often to utilise partners and experts that can ensure success.

A services-minded strategy, along with the right funding options, can provide a winning outcome for even the most challenged CIO. http://h10134.www1.hp.com/

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Wh

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Operations

World Cup

hat the

taught us...

The World Cup didn’t teach us anything we didn’t already know about the England team; but it will provide valuable lessons for CIOs and network managers, says Adrian Thirkill, global customer operations director, Easynet Global Services

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hile this summer’s World Cup may not live long in the memory for those in England, it may nonetheless be recognised as a turning point in the consumption of online video content.

Before it began, much was made of how the tournament would stretch business networks to the limit as workers across the world streamed games live to their desktops. Indeed, traffic on our own global network increased sharply during games. For example, England’s game against Slovenia, held on the afternoon of 23 June, prompted a 226 per cent spike in traffic during the match— proof that in many offices, the desktop PC is rivalling the TV as people’s preferred means for watching video.

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This did not, however, have disastrous effects for business networks. Such was the anticipation of the game that most employers made alternative arrangements for their staff, and as a network provider, we took steps to protect the resilience of our network and the services we provide to our customers.

However, there is no denying the growing popularity of streamed video: the 2014 tournament may well have a bigger audience online than conventional TV. From the corporate IT perspective, a potential crisis was averted this year. But this year’s sports events have thrown the importance people attach to online video into sharp focus, and not just for fun. The rapid growth of video-conferencing over IP, online learning, and the millions of business-oriented videos on YouTube demonstrate the potential of video within business as well. The challenge facing CIOs is to ensure business applications and video communications can co-exist on the company network.

networking as far as possible.

Increasing or cutting back on bandwidth requirements or fine-tuning service-level agreements on IP networks is quite simple, and the right managed network provider can advise on how best to balance speed and performance. In the process, CIOs can not only achieve real economies of scale, they can also secure faster, better connectivity with minimal disruption to their business.

Ringfence your critical players Simplifying the network in this way enables CIOs to precision-manage the bandwidth each application needs—so the performance of email, databases and other business systems need never be threatened by unforeseen spikes elsewhere on the network.

Such capabilities are especially valuable for unified communications, video conferencing, and at the very high end, telepresence. These technologies rely on low-latency, high-speed bandwidth in order

“This year’s sports events have thrown the importance people attach to online video into sharp focus” A single high-quality video stream can demand up to 800kbps of bandwidth. Multiply this by dozens, if not hundreds of users, and the total impact on a company’s network could be severe. CIOs must do two things if they wish to reap the broadest benefits of the online video explosion. First, they must consolidate their connections to the outside world so they have greater bandwidth, from fewer service providers. Second, they should take steps to segment network traffic so business-critical systems, such as email or databases, are protected.

Focus on your top performers Business spending on telecoms and networking is coming under the spotlight, amid wider scrutiny of corporate budgets. However, rather than focusing purely on cost reduction in their negotiation with service providers, it is important that CIOs focus on building a solid long-term communications capability for the future. With the Olympics in 2012 being held in London, the recent World Cup video ‘spike’ could be the normal daytime level as company employees stream events throughout the day. This means ripping out older, more expensive communications technologies, and using IP (internet protocol) based

to function, and end users simply won’t use them if the service doesn’t live up to their expectations.

For CIOs then, the message is clear: factor video into your network planning now. While it may have taken longer than expected to take off, video streaming and online viewing are now a vital part of many workers’ everyday media consumption, and at the same time, have become increasingly vital to their collaboration with colleagues, customers and business partners.

This shift in habits could see bandwidth usage increase exponentially, making reliable, wellmanaged networks more important than ever.

Network managers and CIOs must therefore ensure not only that network capacity is improved to meet increased demand, but also that their service provider has the management capabilities to ensure business-critical systems are protected at times of high demand.

Video has been accused of ‘killing’ any number of things in the past. With its usage on the increase, taking the correct steps now should ensure that businesses can not only cater for their employees’ demands for video—they can thrive on it. www.easynet.com

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Beyond

storm the

It is tempting to think of supply chain risk in terms of a catastrophic and unpredictable event; but potential threats are often closer and more preventable than many people think, as Andrew Kinder explains

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Supply chain

E

ven without the recent turbulence in the capital markets, executive minds were already spinning with the relentless onslaught of events in the past year that have threatened to disrupt their continuity of supply.

An expanding list of globally scarce resources, rising energy and fuel costs, volatile and unpredictable demand and increased international regulation are each taking their toll on profitability.

And this is without consideration of geopolitical events, terrorism and natural disasters that drive chaos into the best strategic supply chain plans overnight. For executives in manufacturing and distribution, tomorrow’s source of disruption will be another lesson in the management of uncertainty.

To effectively manage this uncertainty, executives must analyse and find actionable answers to the following key questions: • Have the key sources of risk been identified and their impact assessed?

• Has the organisation built chaos-tolerant supply chains that can absorb the knocks?

• Is risk management seen as a one-off exercise, initiated in response to an unexpected event, or are employees actively building risk mitigation into their everyday activities?

This article examines some of the key sources of risk and practical steps that organisations can take to mitigate supply chain disruption.

Identifying the real sources of risk A common response when executives are asked about the risks in their supply chain is to think in terms of headline-grabbing disasters: factory explosions, earthquakes, freak weather conditions, the loss of the container ship carrying three months’ supply of your product, etc. Such events are, by their nature, infrequent and unpredictable, leading many to bypass risk management as being too difficult to address meaningfully beforehand. “We’ll deal with it when it happens,” would be a common reaction.

But the reality is that the real risks in your supply chain are closer to home than you think and are altogether more predictable and in your control than imagined.

As a case in point, one Infor customer based in New Orleans faced the ultimate disaster in the form of Hurricane Katrina. The event was indeed a disaster for the region, for the company call centre

and distribution facilities, and for the impact on its associates. But in supply chain terms, it proved to be minimal. The company experienced no system downtime, lost less than three per cent of network capacity for a few weeks, and, because of the nature of the cleaning products it distributes, actually recorded some of its highest sales in the weeks that followed.

There are several lessons from this example.

The first is that even natural disasters can be anticipated and planned for. Given the locality of the business, the potential impact of hurricane damage was not unimagined, and the organisation had prepared plans that included actions such as rapid rerouting of supply from other US distribution centres, switching from owned transport to common carriage and anticipating spikes in demand for certain product lines with the ability to switch supply sources quickly to meet requirements.

But the bigger discovery is that if something on the scale of Katrina did not constitute a major supply chain risk to the organisation, then what did?

Risks are more predictable than you think In a recent Infor Executive Summit, executives were asked about the sources of risk. The number one risk was reported as supplier failure.

Manufacturing disruption, logistics failure, IT failure and rising fuel and energy costs completed the top five. Natural disasters polled last.

The findings are in keeping with the results of a much wider study from AMR Research, which reported supplier failure as the number one risk factor for 28 per cent of firms polled [source: Managing Risk in the Supply Chain, January 2007].

Returning to the New Orleans-based company, events having a much greater long-term impact on their supply chain were reported as the following: • Rapid growth, year over year for more than eight years • Expanding and opening new facilities • Massive increase and churn in product range • Adding new, large customers • Substantial changes in the supplier base • Changing or implementing IT systems.

The interesting thing about these risks is that they are all entirely predictable and largely within the control of an organisation when compared with other external factors such as natural disaster

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assessment of risk is a different function or a separate department, then it will fail to address the everyday sources of risk, where the evidence suggests their impact is highest.

An example taken from another Infor customer involves strategic sourcing. The organisation mapped out its supply chain right through the multiple levels of suppliers to identify the critical raw materials for which there are few global sources. They recognised that availability of these resources is scarce and that global demand has the potential to outstrip supply, with the potential to catastrophically disrupt their own ability to satisfy customer demand. Once identified, they were able to address the risk in multiple ways including duel sourcing, reserving capacity with the suppliers in advance and working with product development to find alternative ways of designing their products without dependence on those critical resources.

Use supply chain modelling and scenario analysis to quantify alternative plans:

“Supply chain leaders know that the sooner an unplanned event can be detected, the greater the opportunity to minimise its impact—or to maximise its benefit” and geopolitical or macroeconomic factors.

Building a chaos-tolerant supply chain There is much at stake in terms of the millions of dollars that flow through the supply chain, the impact on long-term competitiveness through failure to deliver, or the damage to brand reputation from a failed product launch, or worse, a product recall through material defect.

What can organisations do to mitigate risk? And how can a well-prepared risk migration strategy be usefully turned into a competitive weapon that enables companies to take an opportunity from an unexpected event? Here are some strategies and examples.

Build risk identification into everyday operations: Managers need to visualise and understand what potential sources of risk affect their part of the business and formalise the identification of these into daily practices. Risk management is like quality management or the sustainability strategy—it needs to be pervasive. If the

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With the risks identified, it becomes possible to assess alternate strategies and their impact and cost to the business. Supply chain modelling and network design are tools that can provide valuable assistance in this area. For example, an organisation with an extended supply chain could easily model the impact of fuel increases on transportation costs and test out different sourcing strategies to adopt in the event of a further doubling in oil prices. In the face of rapid expansion, they can quantify how much extra capacity they need and where to locate new manufacturing and distribution capacities or how to absorb capacity among remaining plants in a consolidation process. One US-based food company tells how they regularly switch capacity between their various facilities in response to differential energy prices across several states, maintaining margins in the face of rising energy costs and seeking competitive advantage over more static supply chain organisations.

Supply chain

New product developments can identify and avoid globally scarce materials, or those which have different legislative requirements placed upon them between different countries, thus lowering compliance risk. As companies increase use of outsourced manufacturing sources and suppliers are developing more value products, supplier compliance capabilities, levels and countries in the supplier’s supply chain can expose hidden risk. Product lifecycle modelling can speed time to market, reduce compliance risks and reduce the risk inherent in being late into a developing market.

There are technology solutions available that make it easier to assess the impact of risk on a business’s supply chain and evaluate alternate strategies to enable managers to make the final assessment of whether any pre-emptive strike is, on balance, a risk worth taking to the organisation.

Value supply chain agility over efficiency: A number of organisations have built their risk mitigation strategies on the principle of supply chain flexibility. They accept that events move quickly, whereas turning supply on and off can often seem like turning the proverbial tanker.

Efficiency in supply chains is frequently built on predictability, repeatability and a solid supply chain network. When the unexpected occurs, such supply chains can be slow to react. The fashion industry is one of the first to recognise the benefits of agility and has coined the term ‘fast fashion’ to describe supply chains that can deliver from design to shelf in weeks, responding to consumer trends multiple times in a season. This provides a massive competitive advantage and significantly reduces supply chain risk to those practicing fast fashion in meeting demand driven by an unusually wet summer, or reacting rapidly to a design that is suddenly made the ‘must-have accessory’ from a TV personality or news item.

Improve responsiveness through smart alerting: Supply chain leaders know that the sooner an unplanned event can be detected, the greater the opportunity to minimise its impact—or to maximise its benefit. For example, early notification of the promotional success of a product on a retail shelf can pass right through the tiers of the supply chain to profit from the peak. Equally, early detection of a poorly performing product launch can save millions in the avoidance of obsolete inventory or poorly used capacity. There are infinite numbers of opportunities

for real-time detection capabilities that can be the eyes and ears of the supply chain, continuously and silently monitoring for unusual events: missed shipments, late orders, data discrepancies and stock write-offs. It does not represent a preventative measure, but early identification and action are a valid risk mitigation strategy.

Create a framework for continuous and formal assessment of supply chain risk: There is no one single approach or technology in dealing with risk. It varies from industry to industry and across strata of supply chain maturity. What is needed is to make risk identification, with a qualitative and quantitative assessment of alternatives, a formal part of the supply chain process. Some organisations report that this framework has become part of their overall executive sales and operations planning process—increasingly known as ‘integrated business planning’. Since such a process is frequently driven by supply chain functions, it is a suitable starting point for introducing risk identification into the overall business plan that the executives are signing up to.

Conclusion Supply chain risk management is an increasingly important initiative for business as a proactive response to turbulence in today’s fast-paced business environment. While it is tempting to perceive risks as unplanned, unexpected events that companies can do nothing about until they happen—the reality is that sources of strategic supply chain risk are much closer to home and easier to identify and predict than at first apparent.

Managers must formalise their approach to risk identification in their everyday activities and catch potential problems before those events become catastrophes. Technologies are available to help identify, quantify and build scenarios to test alternative action plans as preparation if an event occurs, as well as improve the ability to sense and respond quickly to events and minimise their impact.

Forcing oneself to think in terms of potential sources of risk, their likelihood and what to do about it in its eventuality is not easy—but doing so is the only way to allow risk to be mitigated, rather than just responded to. A crystal ball would help, but until these are market tested and readily available, other strategies must prevail.

Andrew Kinder is director of product marketing for supply chain management at Infor. For more information, visit www.infor.com.

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Lean,

butgreen, supplychain

machin Building a green supply chain might be an easier process than at first it appears. Paul Tatam, sales and marketing director EMEA at Inovis, a GXS company, looks at some tangible steps organisations can take to reduce their impact on the environment

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Sustainability

F

ollowing the worst economic climate for many years, it’s understandable that many organisations don’t place greening the supply chain at the top of their priority lists. After all, the whole concept of green is often assigned to notions of complexity, tokenism and perhaps most importantly, financial cost. However, despite all the accusations of greenwash and the unwillingness to challenge existing processes because of the disruption to current business models, it’s now easier than ever to build a green supply chain without going into the red, while actually adding to the bottom line along the way.

As a starting point, ask any chief technology officer (CTO) what they are most interested in from their supply chain solution, and the answer will often be just a blank look. This is because the supply chain is invariably a small part of a CTO’s remit, and if the current system is working to an acceptable standard, it is likely that in their mind, no problem exists.

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To take things to the next level, organisations need to understand the importance of operational excellence, and how they can work smarter and be better informed to drive the efficiency of everyday business processes. This new level of visibility is built on B2B collaboration, specifically through a set of capabilities which allow organisations to communicate more effectively. At a basic level, businesses can look to processes such as reducing or removing paper invoicing from their business.

By taking advantage of next-generation automated electronic data interchange (EDI) solutions, organisations can have a real-time platform displaying invoicing information, removing the cost of traditional paper invoicing and dramatically reducing the environmental impact of their operations. Further, by implementing intelligent

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Sustainability

systems which can spot discrepancies in supply chain data, it is possible to enable businesses to maximise resources and deliver optimum efficiency.

Logistics is an area where many organisations are now looking to optimise efficiencies. For example, why would a retailer send two halfempty trucks from London to Newcastle to

to be aware that consumers today are much more focused on how and where products are sourced, and with ‘local’ appeal becoming increasingly attractive to the consumer market, this can have a significant overall impact on the reputation and success of the company. If the procurement manager has access to a user-friendly system that

“With best-of-breed supply chain solutions, organisations can have confidence in the delivery of the data they need” collect one load worth of stock returns, when an empty truck returning from Glasgow could easily have collected it? Two less journeys doesn’t sound like an awful lot, but if we multiply this occurrence on a weekly, monthly and yearly basis, then the potential savings, both financial and environmental, are suddenly very significant.

In addition, the emergence of e-commerce and the internet has meant many organisations are now moving away from traditional ‘order indelivery out’ style models to cross-docking or drop-shipping solutions processes. With little or no storage involved, the benefits are plentiful, including quicker distribution, reduced handling and operational costs and increased warehouse space, not to mention the decreased number of trips to transport the goods to holding stores. Such direct methods can work well; however, without adequate visibility this system can easily fall down.

When a garden shed from Frankfurt ends up in Middlesbrough instead of Macclesfield, retailers need to know about it; and so do customers. The key to success here is being able to track and trace an item throughout the whole lifecycle, and have an automated system in place that can flag up non-delivery of stock or other problems during transit. With best-of-breed supply chain solutions, organisations can have confidence in the delivery of the data they need, allowing them to embrace smarter ways of working—and smarter can mean leaner, which in turn leads to greener.

Visibility of the entire supply chain can also enable businesses to better source products and raw materials, again with positive environmental effects. The horror stories of organisations shipping processed vegetables from the UK to Asia before returning the product to the UK to be sold with a ‘Made in England’ stamp are simply unacceptable in today’s economic and environmental climate. Grocers and retailers need

quickly and efficiently details available suppliers on his company’s network, he can clearly see that he doesn’t need to import from China as he has a supplier in the Netherlands. The benefits are again considerable, and essentially very easy to obtain.

It is not only the end consumer who appreciates efforts that are made to ‘green’ business operations.

From a corporate social responsibility perspective, many organisations also have environmental policies in place which encourage low-carbon, high-efficiency business practices. In light of this, businesses are increasingly making a considered effort to partner with ‘environmentally-friendly’ organisations that also have proven green policies.

A business that can clearly demonstrate its logistical efficiency to partners is therefore well placed to benefit, and from a supply chain communications perspective, sustainable IT can not only work to help automate and optimise the transport and delivery of goods, but can in fact also have wider benefits to the supplier/retailer relationship, including improved order-to-payment processes and transaction speed.

Ultimately, now there is major pressure on retailers of all sizes to be seen as green by their customers. Gartner Research suggests that as this pressure mounts, by 2011 suppliers to large global enterprises will need to prove their green credentials via an audited process to retain preferred supplier status—which means the time for apathy is clearly gone. If ever IT managers were looking for an opportunity to sell in that next generation supply chain system to senior business decision makers, then that time is now.

B2B integration and effective supply chain communication can drive down risk and also reduce the impact that business operations have on the environment—all while improving the visibility of transporting goods for more effective logistics management and even cost savings. www.gxs.co.uk/inovis

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Buildi

infrastruc

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Te l e c o m N a m i b i a

Namibia’s telecommunications infrastructure is currently undergoing amazing transformation. Andrew Pelis learns exactly why Telecom Namibia has been recognised for the impact its work has had on the creation of a vibrant national business environment

T

ing the

cture

he telecommunications industry has been through seemingly endless changes for a decade or more now. As technological advances have been introduced to the market, these have improved not only our everyday lifestyles but also the way business is conducted.

With that in mind, it is little wonder that in March the announcement was made that Telecom Namibia’s well-established role and continuing investment in Namibia’s economic growth and development had been emphatically recognised once again at the annual PMR.africa Awards in Windhoek.

The national telecommunications operator (which was commercialised in August 1992 having been previously wholly owned by the government of Namibia), was awarded the Golden Arrow Award in the Telecommunications sector. Single companies and institutions in different business sectors were rated on their contribution to the economic growth and development of the country.

“The commitment of Telecom Namibia to economic growth and development has been strengthened and a strong common platform is being set up to invest in a new generation of ICT products and services required by a knowledge-based economy,” commented senior manager for Corporate Communications and Public Relations Oiva Angula.

Today, Windhoek-based Telecom Namibia runs the largest digital telecommunications network in Namibia and is a leading supplier of voice, text, data and video solutions. The company serves more than 145,360 customers, with a workforce of 1,134 employees and annual revenues in excess of N$1 billion.

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Te l e c o m N a m i b i a

Detecon International GmbH Detecon International GmbH has supported Telecom Namibia during the past years in the transition to a next generation telecommunications operator.

Although initially Detecon’s work focused on support with specific topics such as roll out for CDMA, Metro Ethernet, IP/MPLS and ADSL, emphasis was soon placed on more strategic topics including the question, how the steady decline in voice revenues could be compensated for by other revenue streams.

Detecon supported Telecom Namibia in drafting a strategy to address these challenges and actively supported Telecom Namibia with its implementation.

Internet and broadband services, modern network infrastructure for corporate and wholesale customers were some elements where efficiency gains have been

realized

technologies

by

and

the the

exploitation introduction

of of

modern improved

collaboration concepts.

During the execution of the projects a strong partnership between the two companies could be established and Detecon would like to thank Telecom Namibia for the trust shown in us.

Namibia and present regional business opportunities.

Telecom Namibia’s strategic plans fall nicely in line with those of Namibia’s government, which has a policy to accelerate the growth of information and communication technology in the country. In February, the Ministry of Information and Communication Technology (MICT) launched a five-year strategic plan founded on four key pillars, or strategic themes: ICT development growth in the country; the provision of information and media access to government; ICT service delivery by the ministry; and the aim for sound administration and good governance. It is hoped that the plans will bring technology to poorer rural areas of Namibia, which in turn will stimulate better communications and education.

The company is now in a position to provide both fixed and mobile services to its customers, thanks to investments in ADSL, CDMA, WiMAX and IP/MPLS infrastructure. This is in line with the company’s strategy of convergence.

Telecom Namibia’s current programme very much reflects its activities over the past five years—a period that has seen the company invest around N$1.04 billion in a network expansion

“The next generation broadband networks being created today are the key to keeping Namibia competitive in SADC and the global economy” Telecom Namibia is currently embarking on an ambitious programme to update Africa’s telecommunications infrastructure. Part of the process involves installing fibre optic lines into Namibia which will enable faster data transfer and clearer telecoms connections. “This will have a positive impact on bandwidth speed and capacity,” states Frans Ndoroma, managing director of Telecom Namibia. “The direct benefits are affordable bandwidth costs, and access to the rest of the world (connectivity). The indirect benefits are foreign direct investment, business opportunities for online offerings, hosting services and access to the global labour market,” he adds.

All of this will result in the company being less dependent on transit countries and allow better service levels. Of equal importance, the initiative will drive down the cost of international bandwidth in

and modernisation programme. The spending has created an advanced IP-based networking infrastructure for the country which has itself generated significant opportunity to drive IP networking for both local and foreign network operators to some of the most exciting and dynamic but so far under-served markets inside and outside Namibia. This, of course, is one of the key reasons why Telecom Namibia won its award.

“The next generation broadband networks being created today are the key to keeping Namibia competitive in SADC and the global economy,” comments Angula. “This would make it even easier for foreign companies seeking to establish or expand their operations in Africa to obtain IP-based and mobility services and applications from Telecom Namibia. These include emerging technologies such as tele-presence, cloud

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Te l e c o m N a m i b i a

Dimension Data A leading African-born global ICT company with an extensive footprint in Africa, Dimension Data is also a corporate citizen. In April 2010, Telecom Namibia and Dimension Data jointly announced the adoption within their respective organisations of the e-Thena HIV Aids Programme – a unique software providing comprehensive HIV Aids and Anti Retroviral education. Says Jacques De Witt, MD of Dimension Data Namibia: “HIV Aids affects everyone in Africa.

We believe that by using IT solutions we can support businesses and the community. This e-learning tool will certainly contribute to the much needed education of individuals, improving their lives through exposure to essential learning.” www.dimensiondata.com

computing and hosted services.”

Angula adds that the role of Telecom Namibia in the broader economic development of the country is receiving increased priority. Preferential procurement is one area where the company is making serious efforts to drive the social and economic transformation of Namibian society— and this ties in well with its Black Economic Empowerment progress. “It is the company’s objective to increase spending on BEE initiatives in the years ahead, in order to create jobs for Namibians in the SME sector,” Angula explains.

The awarding of contracts to local BEE companies is very much designed to increase the number of sustainable black-owned companies—Telecom Namibia has invested significantly (to the tune of N$2.13 billion) in BEE over the last five years.

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Te l e c o m N a m i b i a

OmniTel Namibia OmniTel Namibia is a Namibian company and a registered reseller of Siemens Enterprise Networks, supplying

Siemens

Communication

Solutions

to

Telecom Namibia that range from small PABX systems up to fully fledged unified communication solutions.

OmniTel services further consist of local marketing, installation, commissioning and specialized technical services. With the support of the regional and global Siemens Enterprise network, OmniTel Namibia is able to supply and maintain the latest communication solutions in Namibia.

Other services include a fully fledged electronic workshop where OmniTel Namibia provides local repair facilities on a selected range of customer equipment to Telecom Namibia.

From a business perspective, access to telecommunications is critical in the development of all aspects of Namibia’s economy and impacts on key areas such as manufacturing, banking, education, agriculture and government. “Our future aim is to enhance our national footprint, supporting the tourism and agricultural sector in rural areas and keeping up with the demand for bandwidth, speed and convergence,” explains Ndoroma. “The West Africa Cable System (WACS) will be operational towards the end of 2011.”

Since gaining its independence 18 years ago, Telecom Namibia has grown substantially, especially through its voice solutions; however, there is now a strong push to become the market leader throughout the whole information and communications technology (ICT) value chain.

“We have adopted a new strategic blueprint that

“The commitment of Telecom Namibia to economic growth and development has been strengthened and a strong common platform is being set up to invest in a new generation of ICT products and services”

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Te l e c o m N a m i b i a

will consolidate the company as the major ICT player in Namibia, not just offering telephone to its customers but the whole value chain,” Ndoroma reveals. “The diversification challenge is to keep focused and transparent business cases in order not to cross-subsidise services. These often require setting up strategic partnerships.”

And the network of partnerships are crucial as the continent receives continued infrastructure upgrades such as fibre optics, putting extra onus on the systems on the ground that have to be able to handle the increased flow of information once the data hits land. Indeed, Ndoroma suggests that Telecom Namibia may well target opportunities within its landlocked neighbours like Botswana and Zambia, depending upon requirements and viability.

This process of updating the legacy systems has to be done early and accurately to ensure the foundations are correctly in place before the fibre optics are laid. The process has not been helped by incidents of vandalism which saw some fibre optic cables cut and a need for costly repair work; but the company remains committed to its long-term goals. “Telecom Namibia has invested over N$1 billion into updating the legacy network systems, creating a strong foundation for the infrastructure to develop as the company grows and develops,” Ndoroma says. “This will help us to diversify by eliminating the dependency on voice only and will allow us to add extra services along the ICT value chain.”

However, national infrastructure is not just about good telecommunications—to help develop Namibia requires corporate commitment, an area Telecom Namibia is very proactive in, as Ndoroma explains. “Sponsorship for the company is about building relationships by connecting with consumers, building brand awareness and extending our business reach.

“Our sponsorship strategy allows us to play an integral role supporting various community initiatives and we focus our sponsorship participation in the areas of education, empowerment of women, sports, health, disaster relief, charity and poverty alleviation, and the provision of telecommunications access to poor communities.”

An example of this approach came in April this year, when the company, in partnership with Dimension Data, announced the introduction of the unique e-Thena HIV and Aids Programme from the

latter’s partner, Self Empowerment International (SEI). This software package provides essential HIV and Aids and antiretroviral education for the employees of corporations, government departments and organisations associated with the fight against HIV and Aids.

For now, Telecom Namibia’s operations are focused on keeping up to speed with bandwidth and broadband developments and securing independent access to international bandwidth.

The company is also currently setting up a new billing platform and other operation and business support systems. Customer service is of paramount importance and includes residential support 24 hours a day, every day of the year.

Ndoroma believes that the company’s annuallyreviewed strategies deliver a sustainable competitive edge, and sees these as a highlight of his time in charge at Telecom Namibia. “We

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Ericsson Ericsson is the world’s leading provider of technology and services to telecom operators. Ericsson is the leader in 2G, 3G and 4G mobile technologies, providing support for networks with over 1 billion subscribers and a leading position in managed services. The company’s portfolio comprises mobile and fixed network infrastructure, telecom services, software, broadband and multimedia solutions for operators, enterprises and the media industry.

operate extensive staff training and business management that delivers improved performance and we have invested in and developed technical capabilities to deliver ICT products and services.

We have established excellent relationships with our customers and owners and we have a

committed workforce that is committed to making it happen,” he summarises.

“Our plans over the next three years are to grow the company through new products and services, including wholesale, as well as exporting our wholesale model to neighbouring countries. We also want to protect our brand by focusing on service delivery and quality and to improve cost efficiency.

“Above and beyond that, we want to position ourselves in the market as a leading ICT service provider and become a strong regional player— to achieve this we must remain customer-driven and become a lean ICT business. This in turn will create shareholder value.”

With its plans in tandem with government feeling and national recognition, Telecom Namibia is very much on target to achieve its goals and bring the country firmly up to date with the finest 21st century communications. www.telecom.na

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Hybrid hydro

South Africa has ambitious targets for increasing its electricity with not all of it coming from coal generation plants, as Alan Sw 36

www.bus-ex.com September 10

id o

supply— waby learns

Eskom: Ingula

C

onsidering that South Africa is floating on a bed of coal, it’s not surprising that 93 per cent of all the country’s electricity comes from that particular energy source. Wherever minable amounts of coal have been found, there too you’ll find an Eskom power station.

Eskom’s generation capacity prior to starting their current new build programme was around 39GW, of which 2GW are hydropower or pumped storage and the remainder are thermal (coal, gas and nuclear). They have now added almost 5GW of additional capacity from a programme which includes 4GW of ‘return to service’ or refurbishment of existing plants, 2GW of gas generation, 9.5GW of coal generation and the 1.3GW Ingula Pumped Storage Scheme. These schemes are all under construction, with completion dates scheduled over the next few years. The longer term target is to add a total of 40GW by 2025.

Coal fired power stations represent 87 per cent of Eskom’s current capacity, and as they provide continuous ‘base load’ power give an even higher proportion of the annual energy generation. But the state electricity body has not centred exclusively on coal. South Africa has nuclear power that contributes a further 5.5 per cent, which leaves the balance made up of a collection of other options such as hydro, wind and pumped storage.

At this stage, Eskom has found no role for solar, although tests continue and some pre-feasibility studies are being planned.

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Eskom: Ingula

Cliffe Dekker Hofmeyr As a full-service business law firm, Cliffe Dekker Hofmeyr is able to assist clients such as Eskom with the full range of business legal services to support their strategic and operational needs. Our Public Law team has in-depth knowledge, expertise and experience to help companies ensure compliance with this area of law. We prioritise providing practical and commercially focused legal solutions.

Instead, the alternative option of choice for Eskom is pumped storage. At just a smidge over one per cent of annual energy, the absolute contribution to the grid from the two installations already up and running is small but it is nevertheless carving a valuable niche for itself by virtue of its ability to fill in during peak periods. And when the Ingula plant (currently under construction) is complete, this contribution will be upped by a further percentage point.

“Coal, and to a lesser extent nuclear,” explains Avin Maharaj, project manager for the Ingula pumped storage plant, “provide the base load for the country’s needs. But twice a day, while the country wakes up or then settles down for the evening, demand shoots up. This means of generation is ideally suited to meeting short term demand.”

In fact, within 10 minutes of demand going into the red, a power station such as Ingula can be pushing electricity into the grid. And considering that unlike the US, South Africa has a central national grid, increasing the supply via Ingula ensures that more power becomes available during peak periods.

A pumped storage system is a ‘hybrid hydro’ scheme which relies on water head differential. In other words, water under gravity flows downwards to a turbine and generates electricity much as any other hydro scheme would do. The difference is, though, that instead of using the water once, it is recycled time and again by pumping it back to the upper storage dam.

Unlike solar, wind or waves, a pumped storage system does require an input of electrical energy in order to pump the water from the turbine level back to the head dam. The economic justification for the scheme is that cheaper off-peak electricity is used

to generate more expensive peak electricity.

It’s costing Eskom R20 billion to construct Ingula. Before work began on the 9,000 hectare site, Eskom evaluated 90 potential locations before whittling the choice down to a shortlist of three, in some of the country’s most spectacular mountain scenery. The selection was a site north-east of Van Reenen’s Pass, spanning the escarpment of the Little Drakensberg and straddling the provincial boundary of Free State and KwaZulu Natal. This is also the continental watershed between the Vaal, flowing into the Atlantic Ocean, and the uThukela catchments, flowing into the Indian Ocean.

In fact, the head reservoir, called the Bedford Dam, lies on the Vaal River system in the Free State and the lower reservoir, called the Braamhoek Dam, is on the uThukela River system, 468 metres below in KwaZulu Natal. Between them is a series of tunnels varying in diameter from five metres to nine metres, depending on the exact role the tunnel has to play. From the Bedford Dam reservoir, water will travel two kilometres at up to eight metres per second down the two headrace tunnels which branch and reduce in diameter in order to power the four 333MW turbines.

In order to minimise construction costs for the Bedford Dam, engineers have chosen an area requiring a relatively small dam wall but plenty of space behind to store the water needed. The lower, Bedford Dam is also sited at a natural narrow point in the valley which gives an efficient dam.

This dam has a larger catchment which will supply most of the water to the scheme. “Although the dams are sited on existing rivers,” says Maharaj, “they are little more than creaks. Fortunately, we are in the wet part of the El Nino cycle South Africa experiences, so we are hopeful that the dam will be full by the time it should go on line in 2013.”

Once the dam is filled, the water is continuously recycled so future water requirements are small.

The remoteness and beauty of the mountainous location for Ingula have combined to make the project more arduous. Long before construction began, a considerable amount of work was needed to protect the environment. In 2004, Eskom entered a partnership with BirdLife South Africa and Middlepunt Wetland Trust to mitigate the adverse impact on the environment. The partnership continues to monitor the effect of the construction on birds, veld management, eradication of alien

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Eskom: Ingula

plants and the state of the wetlands.

Despite its remoteness, the scheme has had a positive impact on the indigenous population— largely small land holders and farmers. Eskom’s stakeholder management team works with local residents, traditional leaders and government representatives. This is to help affected local communities to become re-established away from land directly occupied by the dams and other infrastructure.

A pre-requisite for the scheme to get authorisation was the construction of dedicated access roads. In total, 67 kilometres of new asphalted roads have been built. Road works started in January 2007 and were completed by 2009.

The expected completion date for the Ingula project is December 2013, with each unit commissioned in each quarter of that year.

However, Eskom’s well documented need to reschedule its cash flow has had a ripple effect on many projects—Ingula for one is behind schedule and an assessment is currently being made to measure the full extent. However, once work is complete at Ingula, there are another two proven sites that Eskom can then tackle. In comparison with the contribution from coal, renewable generation will be of minimal percentage but pumped storage schemes have definitely earned a place in the Eskom mix. www.eskom.co.za

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Electri

outlaws

W

e’re familiar with gun armistices where illegal weapons are handed in without fear of reprisal. Some countries do something similar when trying to coax illegal immigrants out of the shadows and into the mainstream. But in Uganda, they have their own variation—an electricity armistice.

Umeme is Uganda’s main retail power distribution company, which established its operations in Uganda in March 2005 under a 20-year concession with the government of Uganda. It’s been financed by a major investment from the Actis Infrastructure 2 fund which, in turn, has the UK government’s Commonwealth Development Corporation (CDC) as its largest investor.

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Providing improved infras challenge for all developin and energy theft is not he situation, as Jeff Daniel d

Umeme

ical

s

tructure is a ng countries; elping the iscovers

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Umeme

Tanelec Limited Tanelec Limited’s distribution transformers are used by utilities in over 10 countries in the East & Central Africa region. Our range of low voltage and medium voltage switchgear is used in factories, housing, shopping malls and multi-user developments as well as being supplied to utilities in the region.

Our capacity to service, repair and refurbish distribution and power transformers from any manufacturer in the world sets us apart as the solution provider of choice to industry and utilities.

All our products are manufactured to meet local needs and conditions and tested in accordance with IEC specifications, meeting international standards.

Actis takes an exclusive interest in emerging markets, investing widely in Asia, Africa and Latin America. It has over 100 investment professionals in nine offices worldwide who currently manage funds of US$4.8 billion across a portfolio of around 60 investments, on behalf of more than 100 institutional investors. Its aim is to promote sustainable growth in the private sector of emerging markets by ensuring that the capital raised and managed makes a lasting, tangible and positive difference; creating opportunities for the companies in which it invests, as well as their stakeholders in the process.

When Umeme took over responsibility for energy distribution in Uganda, it inherited an outdated network which, for a long time, had received little investment and even less maintenance.

Not surprisingly, there was a drastic need for a national refurbishment programme of the entire network if Umeme was to meet its objectives of a stable and reliable power supply for all.

Not least of the many problems Umeme faced was the highly dangerous practice of consumers helping themselves to free electricity. Alongside relatively dangerous tampering with electricity meters, Umeme has to contend with the highly dangerous installation of illegal supply lines.

To counter such behaviour, Umeme is taking a carrot and stick approach. A rolling programme of updating the network is taking place throughout the country, typical of which is that recently completed in the Acholi quarters of Kireka, in

Kampala. For the extremely modest cost of €14,000, a new three phase supply has been commissioned in this suburb. Umeme staff found that most of the meters had been tampered with and needed to be replaced—but provided residents undertake to protect the meters as though they were their own, Umeme has agreed that no further recriminations will occur.

At the same time, though, residents have had to enter a partnership with Umeme and Uganda’s police force to ensure all electricity connections remain legitimate. A hotline has been established though which consumers can report illegal tampering—not to mention theft of copper wire, transformers and feeder pillars, which not only causes danger to the public but also inconveniences the customer and damages the economy because of lost production. Umeme hopes to convince the majority that having a reliable supply, backed by the promise of rapid repairs, is sufficient incentive for reporting the minority.

In the past, though, wrongdoing has been a two-way street, with unscrupulous employees of Umeme collecting money from residents but then pocketing it rather than handing it in. As a result, Umeme now has an absolute zero tolerance policy against corruption at any level. Consumers are encouraged to demand identification for all those claiming to be on official business.

But Umeme is well aware of the task it faces on both sides of the equation. It didn’t help that there were difficult economic conditions across the country as a whole when one of the company’s first acts was to introduce price increases of about 100 per cent in the end user tariff. Nevertheless, against this backdrop, Umeme is reasonably satisfied with the start it made. In its first three years, the company managed to bring down power theft losses to 33 per cent from a high of approximately 40 per cent in March 2005 when it took over the business.

Under the terms of its agreement, Umeme has a contractual obligation to invest US$65 million in the first five years of operation. Approximately half of this is coming from its shareholder, Globeleq, while the remainder is from its own resources.

Over and above its contractual obligations, Umeme intends to invest up to US$100 million during its contractual period in the business.

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Umeme

Toyota Uganda Toyota Uganda, established in 2005, is owned 100 per cent by Toyota Tsusho Corporation, a wholly owned subsidiary of Toyota Motor Corporation. As the exclusive distributor of Toyota vehicles, it is the only company offering the Toyota manufacturer’s warranty in Uganda.

We supply brand new Toyota passenger, SUV, light 4WD, heavy 4WD and light commercial vehicles with professional after-sales support and genuine Toyota spare parts.

We have a fully supported 3S (sales, service and spare parts) centre in the capital city, Kampala, with 2S (service and spare parts) centres in Northern and West Nile regions of Uganda where major UN/ non-Governmental operations have spokes for their humanitarian and relief work.

We have highly skilled professional teams to meet customer automobile requirements, with 100 per cent technical and operational support from Toyota Tshuso Corporation and Toyota Motor Corporation.

Our vision is to be “the leading provider of quality service, delighting customers through valued people.”

risks as had once been the case.

The government is also feeling the benefit of a more professional regime behind electricity distribution. Under the terms of its agreement, Umeme must pay a monthly lease fee into Uganda’s coffers. Surprisingly, Umeme’s consistent payment record is the first time on record that the sector has met its obligations in this way.

Umeme is not the only distribution company; but where once different suppliers saw themselves in opposition, there is now better cooperation. A total of 32 rural schemes constructed by Uganda Electricity Distribution Company Limited/Rural Electrification Agency have been connected to the Umeme grid, in support of the national development effort.

Indirectly, Umeme has helped create over 1,000 jobs by subcontracting much of the refurbishment work to experienced local engineering firms but under the condition that they work with the same strict adherence to safety, health and environmental regulations.

Internally, the transformation process for Umeme has focused on splitting the core of the business into engineering (wires) and customer service (retail, billing and corporate communication)

“Residents have had to enter a partnership with Umeme and Uganda’s police force to ensure all electricity connections remain legitimate” At the heart of Umeme’s capital expenditure programme is the refurbishment and strengthening of the medium and low voltage reticulation networks. New substations are being constructed and others brought up to date. At the time of the concession, localities across half of the network were suffering from blown transformers or distribution poles that were either rotten or leaning over in a perilous state. As part of its operations and maintenance programme, Umeme has replaced hundreds of transformers and tens of thousands of poles. Not surprisingly, with safety holding a new level of importance, the improvements to equipment—and considerable emphasis on training—have made a significant difference to the safety and wellbeing of employees who no longer need to take the same

in order to improve upon existing business processes, something that was achieved within the first 12 months and has contributed to the overall improvement in service to customers.

In the background, Umeme has been working on presenting a professionally managed business by working towards compliance with international standards. As part of achieving its Vision 2010 programme, best practice procedures have been put into place to satisfy ISO 9001 certification and by the end of this year, it should also have achieved ISO 14000 certification.

One of the first steps taken after the restructuring was to create a new call centre with the aim of quickly resolving issues and disputes with customers that were holding back timely collection of dues. Since then the centre has been upgraded and its role

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Umeme

widened when it was ultimately integrated into a new billing system in the first part of 2009.

A considerable contributor to the administrative headaches for Umeme was its partly unknown customer base. In March 2006, Umeme commenced a countrywide electricity connection audit referred to as the “customer verification programme”. Within the first year, over half of the 300,000 known customers had been visited.

In addition to establishing exactly who Umeme’s customers were and where they were located, this data clean-up exercise checked on the connection at each of the premises to determine whether a customer/consumer was legal or not.

Such exercises are vital in reducing power theft, which ultimately is the best contribution possible to lower electricity prices.

The demand for power continues to increase and by the end of 2008 was running at 3,000 applications per month—more than double the situation at the outset. In fact, the level of consumer contact is at an all-round high. Part of the agreement was that Umeme should contact 60,000 customers within the first five years of operation—a target that was exceeded after just three and a half years.

Once the basic improvements had been set in motion, Umeme decided that it should measure its performance; and in July 2007, it implemented a customer satisfaction measurement tool called Maxicare. Each month, the satisfaction levels of over 200 customers are sampled, with the results forming the basis of its customer focus programme. Umeme has an overall target of achieving 80 per cent customer satisfaction, which would put it in line with internationally recognised performance levels for utility companies. From an average score of 62 per cent at the initial survey rating period, results are now in the upper 70s for all aspects of the business, including safety, the call centre, technical issues, accounts/payments, the environment and overall service delivery.

October 2007 saw the commencement of the installation of a new customer care and billing system, its role being to improve upon billing processes and customer relations management.

By presenting a more reliable and caring face to consumers, Umeme is hoping that the need for armistices will soon be a thing of the past. www.umeme.co.ug

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A

powerfulc for

expansio

A slowdown in nuclear projects is posing no problem for Lesedi Nuclear Services. The company is successfully drawing on its comprehensive base of resource and skills to further cement its reputation as a well-established and reliable player in all sectors of the energy market, as Andrew Pelis discovers

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Lesedi Nuclear Services (Pty) Ltd

S

outh Africa is a nation that has developed significantly over the past 30 years. As the country’s infrastructure has improved, so the demand for power has increased, with alternative sources of energy leading to the construction of the Koeberg nuclear power plant in the 1980s. As requirements have continued to escalate, the nuclear debate has resurfaced, positioning Lesedi Nuclear Services in the driving seat for any future programmes.

“We are a project management and design engineering company but also carry out maintenance activities at the Koeberg nuclear power plant,” explains Eric McDonald, managing director of Operations for the Cape Town-based company.

McDonald goes on to explain the origins of Lesedi Nuclear Services. “Intens Engineering was initially founded in 1984 to provide commissioning services to Koeberg Nuclear Power Station. In 1999, we formed Lesedi Engineering, a start-up Black Economic Empowerment [BEE] company, to provide services to Koeberg. In 2001, Intens and Lesedi Engineering amalgamated to form Lesedi Nuclear Services. We sold 45 per cent of the company to AREVA; then in 2006 we sold another six per cent to AREVA and became a full subsidiary.

“Lesedi’s integration into AREVA has been beneficial for both companies,” McDonald continues. “Lesedi now has access to crucial nuclear expertise. We have already sent some of our engineers, technicians and artisans to obtain experience in different parts of the world where AREVA is present. They return with extremely valuable knowledge that is immediately applicable in the work that we do for Eskom in South Africa. So, strategically, obtaining a parent company of AREVA’s magnitude was highly fruitious for Lesedi.”

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Lesedi Nuclear Services (Pty) Ltd

Over time the company has evolved and built on its capability and capacity in areas like project management, design engineering, maintenance and operations, plant engineering and technical personnel. This has given the company greater stability by diversifying away from the nuclear energy market and today, 80 per cent of Lesedi’s work is non-nuclear, although that may change in the future.

Apart from ongoing maintenance and refuelling work at Koeberg Nuclear Power Station, the company’s recent project delivery for Eskom involved the construction of South Africa’s first open cycle gas turbines (OCGT) in Atlantis and Mosselbay. “We were involved in two lots of 150 megawatt gas turbines,” explains McDonald. “Five were installed in Mosselbay on the Southern Cape and nine more in Atlantis on the Western Cape.

Lesedi was responsible for the mechanical erection of all 14 turbines in a contract with Siemens. In addition to this, Lesedi also carried out full EPCC (engineering, procurement, construction and commissioning) of the balance of plant (BOP) in contract with Eskom.” The BOP consisted of fuel offloading, fuel cleaning, fuel forwarding, fire water systems and potable water systems.

Government discussions in 2008 on the construction of a further nuclear power plant have been suspended as a result of the global economic crisis, but as demand for energy soars in South Africa, plans are not yet dead in the water. Lesedi, as the only BBBEE company in the country with nuclear experience in its field, is well-placed to take advantage of any nuclear renaissance.

“The talks of 20,000 gigawatts of nuclear power by 2025 have been put on hold for now; however, we have also developed into other areas of the non-nuclear market,” McDonald asserts. “We have ventured into conventional power stations because there simply weren’t enough nuclear power stations in the country.”

The shift in strategy began in 2002 when the company acquired an engineering company, Signum Engineering, and was transformed into a project management and engineering entity. The move precipitated a need to train staff in new skills and McDonald says that the current workforce of roughly 160 (comprising of 105 permanent staff and long-term contractors) has embarked on the EIT (Engineers-in-Training) programme with the aim of multi-skilling.

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Lesedi Nuclear Services (Pty) Ltd

“Because of the chronic shortage of nuclearrelated skills in South Africa, we provide 18 months of training in a nuclear environment so that we can generate a base of skilled workers,” McDonald states. “As part of AREVA—a major international company and global nuclear industry employer—Lesedi recruits international talent and frequently sends key employees overseas for international training and exposure. As a proud South African company, Lesedi clearly believes in the future of its home country. Our investments are therefore varied and long-term in nature. We have invested in developing a variety of business support skills for different levels of our employees in order to ensure high standards of delivery.

Crucially, we have also established a highly successful Engineers-in-Training programme aimed at providing real life nuclear project work to recently qualified young engineers of all backgrounds. After a careful selection process, the graduates are introduced into existing project teams and guided along over a two-year period.”

we are also pursuing the OSHA 18001 standard for health and safety. So from an organisation perspective we are really focused, and as you can appreciate, within the nuclear industry, everything needs to be of the highest standards and obviously our procedures and processes reflect that.”

McDonald says that the role of technology cannot be understated in the company’s operations; in particular, he earmarks the engineering calculation package as vital within the design phase. “You need proper control and management on these projects and about three years ago we implemented an IFS system which has proved invaluable and provided a quick return on our investment.”

Social responsibility is something else that Lesedi takes very seriously, as McDonald describes. “We have a definite social responsibility programme in the area where we are based. We provide financial support to an institute in the local black community close to Koeberg, where we draw our lower-skilled resources from. We also

“We are a project management and design engineering company but also carry out maintenance activities at the Koeberg nuclear power plant” Lesedi’s success can largely be attributed to the company’s highly evolved project management capabilities, coupled with the group’s diverse multi-disciplinary engineering skills. “Our project managers are well trained and highly qualified to execute projects—either on a turnkey or individual project basis,” says McDonald. Lesedi’s project management processes were developed in accordance with the philosophies detailed in the Project Management Body of Knowledge Guide (PMBOK Guide). Each project is managed in accordance with the principles of fixed cost, defined scope, WBS (work breakdown structure) and agreed completion dates.

Safety is equally of paramount importance to Lesedi, which has to comply with AREVA’s stringent guidelines. “We have also attained the NOSA Five Star rating within South Africa—standards are the core of all of Lesedi’s operations,” says McDonald. “The company’s ISO 9001:2008 and ISO 1400 accreditation are important indicators of our determination in this regard. At the moment

support a local school for disabled children and support the local soccer team, providing kit and funding their transportation to games.”

While plans for further nuclear power plants in South Africa remain on hold, McDonald has many reasons to be upbeat about Lesedi’s future. “At the moment our order book is full for 2011 and 2012 and we only operate in energy markets presently.

“If growth happens quickly we have to be prepared for the implications and at the moment we can look to our resource pool and tender for work. Of course we may need to redefine this if demand increases significantly—having the skills in place is crucial.”

Earlier this year, Lesedi opened its new head office in Century City, Cape Town—a 3,500 square metre site, purpose-built to allow the company to carry out its work. “We invested around R50 million on the project and it not only improves communication by bringing everyone under the same roof, but gives us the scope for future expansion in anticipation of the nuclear return,” McDonald concludes. www.lesedins.co.za

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gdeep Deputy director of Boskalis Offshore Bas van Bemmelen talks to Jane Bordenave about the company’s cradle to cradle approach to projects and how it has come to be a world leader in subsea soil intervention

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ounded in 1995, Boskalis Offshore is the specialised oil and gas organisation within the Royal Boskalis Westminster Group. It is based in the Netherlands, but operates globally and has realised projects on every continent. It works to excavate trenches and provide coarse gravel cover for subsea cables and pipelines.

While Boskalis Group is a leading dredging and marine contractor, as deputy director Bas van Bemmelen explains, its oil and gas clients quickly set themselves apart in terms of what their projects required. “Around 20 years ago, it became clear that the needs of these customers were different from those of our other clients. The work that we were doing for them was smaller scale, but required greater precision, specialist techniques and brought with it, especially in the early days, even greater safety considerations. In order to service these clients fully, a dedicated division was established in the shape of Boskalis Offshore.”

Boskalis Offshore targets specifically oil and gas related projects and clients, and has globally divided its activities by region: North West Europe, Middle East, Far East, Russia, South America, North America and Africa. The boundaries of each of these areas are defined not by geographical size, but by turnover and number of projects. For each region Boskalis Offshore makes use of the local knowledge, the infrastructure and resources of the Boskalis Group’s vast network of local offices and other establishments.

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Boskalis Offshore

Visser & Smit Hanab Visser & Smit Hanab is active in the field of cable and pipeline infrastructures. We develop, build and maintain connections, networks and installations for water and energy. Our goal is to be the best in our professional field. Thanks to our staff, our advanced techniques and customer-oriented approach, we are able to provide our customers with the optimum support for their needs.

Together with Boskalis we successfully realize international projects in the field of land- and outfalls for cable- and pipeline systems and offshore cable installations.

Visser & Smit Hanab is part of the VolkerWessels Group—an international construction group.

While the organisation’s core business is the soil related part of a project (dredging and/or rock installation), it will carry out and oversee an entire project for the client. “What we are looking for,” says van Bemmelen, “is a good balance between our core business and other elements we would be overseeing in a managerial role.” Recently the firm worked in partnership with offshore pipelay and subsea construction company Allseas Group to complete the €180 million Magellan Strait Crossing—a 38 kilometre long, 24 inch wide pipe running from Tierra del Fuego to mainland Argentina. Boskalis carried out complete pipeline installation in the near shore areas, where the water was very shallow. It also carried out the subsea connections to the deepwater pipeline that had been installed by Allseas.

What allows the company to become involved at this level and even before a project has started is its dedicated engineering department. Responsible for undertaking feasibility studies, designing specialised vessels for the fleet and providing continuing project advice as required, this department has also helped in the organisation’s investigations of how to mitigate the environmental impact of its operations. “We are very active in participating in and leading studies into the effects of what we do. We also take practical steps to advance technology so we can reduce any impact we have,” impresses van Bemmelen.

Historically, many port areas requiring dredging

works have been forced to put projects on hold due to the absence of an environmentally safe solution for the disposal or processing of contaminated sediments. However, in the past five to ten years, Boskalis has established through its engineering department a number of measures designed to reduce the environmental impact of its actions.

One example is a special valve ensuring that any sediment overflowing during the excavation process resettles in the same area, so as to avoid contaminating other potentially sensitive areas.

Another example includes development of a hybrid dredging system combining precision dredging of contaminated soils with a robust, integrated system to sieve out debris. After sieving, sediments can be hydraulically transported to a processing plant or settlement lagoons. Sand separation then takes place, prior to disposal at repositories.

As a group, Boskalis has deployed its expertise in environmentally sensitive dredging activities across the globe, including at various locations in Abu Dhabi; at the Port of Gothenburg, Sweden; at the Trans Thailand Malaysia Gas Pipeline Project in Thailand; at the port of Melbourne in Australia; numerous locations in the Netherlands; at Daya Bay in Guangdong Province, China; and in Mejillones, Chile.

As well as caring for its own operations, Boskalis is a company that is willing to help when disaster strikes. When the Deepwater Horizon exploded in April this year, the firm did not hesitate to send in vessels to aid the rescue. “We had just merged with another Dutch company, SMIT, which has a large salvage operation. They were among the first crews on site fighting fire and keeping the rig afloat. In the meantime we were in active conversation with some of the main parties involved to see where we could apply our vessels to try to mitigate what was going on,” explains van Bemmelen. “The Stuyvesant, one of our US-built vessels, is currently on site working on the sand barriers that are being created.”

Boskalis has offered its Trailing Suction Hopper Dredgers in combination with ‘oil sweep arms’ to the clean-up effort, along with specialists to instruct crews on US-built vessels on how to use them. Hopper Dredgers are self propelled dredging vessels with an internal hold (hopper). The hopper is used for internal storage of sand and internal pumps are used to increase the efficiency of the process.

Boskalis’s concern for the environment also

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extends to its involvement with EcoShape, a consortium of Dutch specialists with a history of solving coastal infrastructural challenges in the Netherlands and abroad. EcoShape holds invaluable knowledge relating to land reclamation, sea and river defences, dyke building, dredging and protecting nature—and is committed to making this knowledge available for the benefit of sustainable coastal development worldwide.

Building with Nature is EcoShape’s long-term research programme aimed at developing new design concepts for the layout and sustainable exploitation of river, coastal and delta areas.

Ecology and technology are involved at all phases of a project, which includes design, assessment, selection, construction and management. The primary goal is ecologically, technically and socially sustainable development.

Safety is another key issue for Boskalis; and in July this year, it launched its new safety programme, NINA (No Injuries, No Accidents). The programme is focused on developing a value-based culture, where people are committed to safety and happy to approach one other about safety issues. NINA comprises a vision statement which is supported by five core values and five rules. Worldwide implementation is currently underway, during which time NINA will be presented through training sessions, start-up meetings and site visits. A new quality management system integrating the NINA principles will also be launched, as well as the new NINA website, to further assist all those involved.

So what does the future hold for Boskalis? “I think that one of our main objectives for the future is to become a more fully integrated construction management company,” says van Bemmelen. “If you look group-wide, we have moved from just doing the job and leaving to being able to get involved with the planning phase of a project, thanks to our engineering department. We can help find the best technical and commercial solutions and are increasingly taking a management role— finding subcontractors for the whole endeavour, not just our part in it. This is the area into which we are headed; this is how we see our company evolving.”

It is an evolution that is both natural for the organisation and that makes good business sense—and looking at the way Boskalis Offshore works, there is little doubt that it will succeed. www.boskalis.com

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Prospecti

belowice

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ince its relatively recent establishment in 1997, specialist oilfield services division Wagenborg Offshore has concentrated on bringing its expertise to bear on the needs of oil companies developing the Kashagan oilfield and other identified resources in the Caspian Sea. Wagenborg Kazakhstan and Wagenborg Foxdrill are the two subsidiaries of the offshore division. The first manages the company’s fleet operations in the Caspian while the latter is a specialist in assembling and moving drilling rigs. It carries out, for example, most of the rig moves for the Aberdeen-based drilling company KCA Deutag, which has major operations in Northern Russia as well as the Caspian.

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Wagenborg Offshore is parent group Royal Wag of experience in providi Sea. Operations directo O’Hanlon why its expert operations in Kazakhsta

Wa g e n b o r g O f f s h o r e

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a Netherlands based company whose genborg has more than a century ng maritime services in the Baltic or Johan Adriaanse explains to John tise is in demand to support oilfield an

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The Baltic and the Caspian share some important characteristics. Both are relatively shallow and both experience icy conditions at certain times of the year. Wagenborg Offshore established its operations office at Bautino at the tip of a promontory in the northern Caspian, and also an administration office 100 miles further south at Aktau, quickly becoming the largest marine services operator in Kazakhstan, says operations director Johan Adriaanse. “We don’t do any engineering work there. The only reason for our office is to have a shore-based management team controlling and supporting our fleet of supply vessels, barges and accommodation platforms.”

Altogether around 350 people are employed in onshore and offshore positions, the latter working back to back, four weeks on and four weeks off.

Sixty-five per cent of staff are Kazakh nationals.

The fleet started with two ice breaking supply vessels, Arcticaborg and Antarcticaborg, which were specially designed for the conditions encountered in the Caspian. These were deployed in 1998 when Wagenborg Offshore entered the Caspian as the first marine contractor of OKIOC (the initial name of the consortium holding the North Caspian Sea Production Sharing Agreement—NCSPSA). “The ice breaking supply vessels are the core of our fleet, it might be said,” says Adriaanse. “When we came in with them they were a novelty—two ice breaking supply vessels that had been specifically designed and built for the shallow north Caspian where you have to cope with under keel clearances of half a metre under the keel or even less! We know all about shallow waters along the Dutch coast, and all about ice in the Baltic, and that knowledge allowed us to come up with the right solution.”

Since then the overall size of the fleet has increased to some 30 units—which may sound like a dramatic increase, but it’s only a fraction of what it might become in the next 10 years, he says. “The potential just within the Kashagan field is massive—and there are more reserves to be explored and exploited in the North Caspian. Since April 2008 we have brought in six accommodation vessels each able to house 320 people to provide accommodation in the Kashagan field for the offshore workers. Our customer there is local branch of Saipem but they are utilised in general for Agip KCO operations.” It was a remarkable

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feat, he emphasises, to build or refurbish these units within the space of 18 months and then ship them from the Netherlands to the Caspian via the Rhine, Main and Danube waterways and the Black Sea, where they were reassembled.

Kazakhstan is a large country with a relatively small population and little maritime background to draw on. Overseas companies operating there are required to train and develop local staff, but it made real commercial sense for Wagenborg Offshore to support the local authorities in establishing their own maritime academy. The only establishments remaining after the collapse of the USSR were Russian, and after effectively 100 years of Russian rule the government was understandably keen to follow a path of self-reliance. However, Wagenborg was eventually able to persuade the Kazakh authorities to support the idea, and the academy was established at Aktau with the help of the Willem Barentsz Maritime Institute of Terschelling and with some funding from the Dutch government. “Between us we brought in the knowledge to start the college,” explains Adriaanse. The college really took off in 2004/5—the facilities have been limited up until now but the classrooms are there and we are working on a programme to further educate the teachers.”

At present the college is able to qualify students up to the level of Second Officer/ Engineer, but it is planned to bring the level up fairly quickly so that future Chief Officers and Masters can be trained there to the same standard as at the Terschelling campus. At the same time a considerable amount of money is being allocated for the establishment of a sophisticated Maritime Simulator Training Centre. At the maritime academy the students are currently learning to cope with shipboard operations using desktop simulators—while this software is very suitable for theoretical education, it is no substitute for full-blown simulator suites, allowing further training in conditions close to reality. The MSTC should be in place by November this year, according to Adriaanse.

The medium of instruction at the academy is English, reflecting the importance of universal and instant communication throughout the oil and gas industry. In practice, if a crew is made up entirely of Kazakhs they will probably speak to one another in Russian, but they need to be able to deal with other nationalities in normal operations, or even more importantly in case of emergency.

Wa g e n b o r g O f f s h o r e

Hatenboer-Water Hatenboer-Water

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There is nothing new about this, though the recent disaster in the Gulf of Mexico has certainly concentrated minds on HSE matters. “Kashagan is high-risk compared to other reserves round the world because of the extremely high concentration of ‘sour gas’ (hydrogen sulphide), so if something

went wrong here the consequences would be that much worse,” Adriaanse points out. “It just gives all the more reason for the contractors and consortium to be very careful in their operations.”

Wagenborg Offshore is eager to bring its expertise to other areas in the world with conditions similar to the North Caspian. For example the open sea off Russia’s Sakhalin Island may seem fundamentally different from the shallow waters of the Caspian but the all-important ratio between ice thickness and operating depth is similar.

Wagenborg provides a number of vessels in a joint venture with the Russian company Femco, which operates them. “Sakhalin is an important operation for us and we would like to extend it and continue it,” says Adriaanse, adding that there are many other ice-affected coastal oilfields where Wagenborg Offshore could play a similar role. www.wagenborg.com

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ndia’s industrial growth has achieved almost mythical proportions and the country’s transformation is increasingly fuelled by homegrown entrepreneurial talent. McNally Bharat Engineering Company Ltd (MBE) has emerged as one of India’s leading engineering companies. Last year, it managed to shrug off the world’s economic woes and report net income growth of 50 per cent and a 19 per cent increase in net profit. Turnover has more than quadrupled over the last five years to stand at approximately £310 million.

MBE builds turnkey plants and installations in the areas of power, steel, aluminium, material handling and disposal, mineral beneficiation, pyroprocessing and the pneumatic handling of powdered materials, particularly fly ash handling. Since it began to aggressively address the opportunities that India had to offer in 1998, the company has built up a portfolio of over 300 different projects.

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McNally Bharat Engineering Company Ltd

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Srinivash Singh is managing director of McNally Bharat Engineering Company Ltd, one of India’s leading diversified engineering companies. Here, he talks to Jayne Flannery about the company’s meteoric growth

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Managing director Srinivash Singh explains that success did not come easily at the outset. “There are many areas in engineering that were previously dominated by foreign companies. These were traditionally seen as having greater capacity and expertise, particularly in open cast mining. Indian companies found many segments of the engineering market difficult to enter,” he comments.

MBE’s response was to bring in the best foreign technology it could find. Then, as the company grew, it began to design and develop its own solutions. A major milestone was entry into the fly ash handling business. “When we became involved around the year 2000, there was no recognition of the value of pneumatic handling of this material. Traditional methods were extremely wasteful of water and also had a huge environmental impact. We were able to guide people towards alternative solutions and provide better technology. Now we are one of the largest players in this sector,” he says.

From this base, many new opportunities in mineral handling became apparent. MBE quickly became known as a pioneer in initial business areas—coal preparation, mineral beneficiation and bulk material handling. “At this point, we started buying up competitors who had good technology and also to reduce the impact of competition on the business.”

A key acquisition was Sayaji Iron & Engineering Company Ltd, a leading manufacturer of crushing and screening equipment. With the input of McNally’s technological and design expertise, the acquisition meant that MBE could begin to directly manufacture many of the products required for its projects. McNally Sayaji Engineering Ltd (MSE) now has a wide portfolio of crushing, screening and milling equipment, pressure vessels, material handling equipment, steel plant equipment and process equipment like flotation cells, thickeners and slurry pumps.

MBE soon went on to develop global ambitions.

Realising that overseas acquisition was a short cut to developing a global presence, MBE bought out the coal and mineral technology division of KHD Humboldt Wedag, Germany, in 2009. Singh envisages that the German acquisition will be used as a springboard to develop a network of subsidiaries across the world. China, Australia, Mongolia and South America are all within the company’s sights.

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Again, differentiation through superior technology will be the key to market entry in new geographical areas. “Research and development is of critical importance to us and we invest heavily,” Singh states. “In terms of our technology in materials handling solutions we have two main drivers. On the one hand we want all our mineral dressing equipment to consume less power and function in a more environmentally friendly way, but at the same time we believe we can achieve big gains in efficiency and productivity.”

A subsidiary company, EWB Hungary, is in partnership with the Technical University of Budapest for finding new solutions to handle ash and other powder materials using dense phase pneumatic conveying and other innovative methods. The research and development department of MBE also works closely with a number of globally renowned research institutions including CMERI Durgapur, the Indian School of Mines at Dhanbad, the National Metallurgical Laboratories of Jamshedpur, the Indian Institute of Minerals at Bhubaneshwar and the Structural Engineering Research Center at Chennai.

As a next step, MBE plans to set up its own Centre for Engineering Excellence. It is currently in the process of implementing a design automation platform through the acquisition of PLM and 3D modelling analysis software.

The company is particularly keen to support and empower Indian engineers— at the outset, expatriate Americans took care of major engineering, design and manufacturing projects, but the focus is now strongly on using Indian personnel. “We have clear plans in place to create a human bank of expertise,” says Singh. “By the year 2015 we have a vision of having 1,500 young engineers who are also familiar with our business and how it operates.”

The organisation itself is structured into distinct business groups, which each take full responsibility for a given activity. “I believe that this de-centralised style of management and the creation of separate profit centres is a strong motivational factor. Incentives are tied directly to output and unlike a departmentalised culture there is nowhere else to allocate blame if things go wrong,” he says.

Within the business, power and steel—the fundamental building blocks of any industrialised economy—stand out as being particularly fast growing.

However, the company is nothing if not ambitious. “There are three new sectors that are very attractive to us,” he continues. “They are oil and gas along with nuclear power and the construction of cement plants.”

Singh expects to announce new contracts in each segment within the next year. In terms of oil and gas and opportunities within nuclear power, he is looking to India’s huge domestic market. India’s rapid growth continues unabated and he is determined to play a major role in its future. The cement business meanwhile will be global from the outset. “There is a clear synergy with our existing business and we already have the infrastructure in place to establish a global footprint,” he concludes. www.mcnallybharat.com

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Proactivit in

piling

It’s vital to build on solid foundations; and underneath an increasing numb bridges and buildings in South Africa is piling work undertaken by Fairbroth Geotechnical Engineering. Ruari McCallion finds out more from Adrian Meer

F

inding out where some good ideas originate can be surprising.

Fairbrother Geotechnical Engineering was established because the company founder, mechanical engineer James Fairbrother, got fed up of waiting for a company to install a borehole in his back yard. He designed a drilling rig using part of a forklift and a gasoline motor and drilled his own borehole. His neighbours saw what he’d done and asked him to do the same for them. Pretty soon, he had enough work to give up his day job and found himself drilling irrigation wells in the agricultural operations of Cape Flats. The nature of the area— sandy soil—led to the acquisition of expertise in geology, so the logical development was to expand into geotechnical core drilling services.

The geotechnical core drilling services later expanded into lateral support, pipe jacking, dam grouting and piling. Fairbrother Geotechnical Engineering now provides a full range of geotechnical services which include both design and construct solutions.

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“Geotechnical contracting involves subsurface investigation and construction,” says Adrian Meerburg, operations director, who is a partner in what remains a privately-owned, family company.

“When you’re constructing a building, a bridge or anything, large or not so big, you have to understand the soil conditions. You have to do tests and check the suitability of the ground to support the structure and provide a suitable economic solution to your client. For example, a bridge will almost inevitably be built where poor foundation conditions exist on the surface. Placing suitable foundations below the water table is often impossible without creating a large impact on the surrounding environment. The solution would be to drive concrete piles down to suitable founding conditions and then build the bridge footings on the piles.”

Fairbrother has left small well drilling behind, which may be seen as a shame by some but it is a benefit to, for example, the core drilling investigation for the newly built Cape Town sports stadium constructed for the FIFA World Cup, as the site was drilled by Fairbrother. The build-up to the 2010 World Cup in South Africa involved a lot of infrastructure work and Fairbrother won a significant share of the geotechnical work in the southern part of the country.

“There has been upgrading of interchanges on the highways and of the public transport system,” says Meerburg. “Public transport isn’t particularly popular among the middle class in South Africa as it is thought to be unreliable and unsafe and most of the poorer people use minibuses—so the World Cup has provided an opportunity for government to improve our public transport system and encourage more people to use it. The 2010 FIFA World Cup will leave a legacy of improved public transport with the development of a rapid transit system that runs from middle class areas to the town centres—the idea is to encourage people to leave their cars at home.”

Whatever the reasoning and whatever the project, Fairbrother has had a big part to play in upgrading the Cape Town area’s infrastructure.

Redevelopment of city centre areas presents particular challenges—which Meerburg clearly relishes. “Building the underground levels of a commercial building requires excavation of 10 to 12 metres, hard up against the street,” he says. “The excavation would collapse without the application of lateral support solutions. We

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provide design and construct solutions for deep basement excavations.”

New developments require new services such as optic fibre cables, sewer lines and water lines.

These services cross existing roads, rivers and rail lines and must do so without disrupting the city and its services. Fairbrother offers trenchless solutions such as thrust boring and pipe-jacking ranging in sleeve sizes from 300mm diameter and extending up to 3,500mm diameter. “Thrust boring,” he says, “involves pushing a metal sleeve up to 650mm in diameter below the roads, rivers and rail lines. Pipe jacking covers concrete pipes ranging in size from 900mm to 3,500mm diameter—the sort of things that carry water, sewage and electrical services.”

Fairbrother has two self erecting work platforms (SEWPs) that have been designed and built in-

house. These SEWPs have been used for marine geotechnical investigations for the construction of the new deep water Port of Coega near Port Elizabeth, the deepening of the Port in Cape Town, the deepening of the Port of Saldanha (deep water port north of Cape Town), the Port of Luderitz in Namibia, the new quay wall in Luanda, Angola and for the new Chevron Texaco LNG plant in Soyo in Angola. Fairbrother is currently busy with further work at Coega, Port Elizabeth for the new PetroSA refinery which is to be sited next to the newly built Port of Coega.

The company is owned by two of James Fairbrother’s sons, Ian and Peter, and Adrian Meerburg. Ian tenders on work and is responsible for design and construction of the plant, Peter manages the finances and Adrian is in charge of operations management. The company also designs and constructs certain equipment instead of purchasing very expensive, electronic European equipment which is often not suited to local conditions.

Fairbrother is relatively small compared to some other civil engineering companies—it has around 100 employees—and it differentiates itself by its adaptability, flexibility, depth of expertise and its service excellence.

“We have been in business for 35 years and have a very stable and skilled employee base. Some of our people have been here 30 years,” Meerburg says. “They have mostly learned from the bottomup. Our on-site teams typically consist of a very skilled foreman, skilled technician, experienced and skilled operators and skilled and unskilled labours. We have a comfortable organogram, from skilled to unskilled. We source managerial staff from colleges and universities; operators and foremen are trained here, from the grass roots. They learn to operate rigs, earn promotion and proceed that way. It’s a mentorship scheme, which has served us pretty well.”

The whole structure also seems to serve South Africa well. The three directors meet pretty much every day; they know all their staff by name and exactly what is going on, across all their sites. So if you happen to see a piece of equipment on a civil engineering site that maybe looks unfamiliar but seems, somehow, to be just right for the job, you can be pretty sure that’s Fairbrother Geotechnical Services, bringing its experience, knowledge and innovation to bear. www.fairbrother.co.za

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In

deepinDurb

The Port of Durban, catering for all cargo sectors and especially conta bulk liquids, continues with its infrastructure investment programm needs of shippers and the South African industries they serve. Dave W for Transnet National Ports Authority (TNPA), told John O’Hanlon how Entrance Widening & Deepening (DHEW) project is taking the port into th 78

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ainers, automotive and me in order to meet the Ward, project manager w the Durban Harbour he era of the big ships

Port of Durban

D

urban has one of those magnificent natural harbours that must have seemed a godsend to early navigators. The haven is guarded by a bluff that reaches up like a finger and the southern breakwater is actually further north than its opposing northern counterpart.

Shipping approaches the harbour from the north, and the primary reason for widening and deepening the entrance channel was to improve the safety of navigation of vessels into and out of the port in line with international standards.

From the port users’ point of view the channel is now more accessible in all states of weather. When it was narrower and shallower the Port experienced occasional downtime due to weather conditions. With it now widened and deepened, the Port has now reduced disruption of that sort. There were restrictions on the larger vessels, and those restrictions have now been removed.

However, there’s a more important strategic reason behind the R3.9 billion investment. The largest ships that could be handled prior to 2007 were 4,000 TEU (20 foot equivalent unit—the standard measure for container ships). The original design increased that to 6,600 TEU, but Korea’s Samsung, a shipyard that has led the development of large container ships, had started to build

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9,200 TEU vessels. As that was clearly the way the market was going, the design was changed to accommodate these ‘post-Panamax’ behemoths.

The revised design specification will give Durban a distinct competitive edge over other ports and enable it to accommodate the larger container vessels—which deliver lower freight costs to shippers and industrial end-users alike but so far do not call at African ports.

The project was an opportunity to clear out a number of hazards from the harbour, including four concrete caissons deliberately positioned to prevent U-boats from slipping in during World War II. These had to be removed ahead of the dredging operation, and the original plan was to lift them intact and dump them out to sea, says project manager Dave Ward. “Achieving this was quite challenging because the structural integrity of these caissons had deteriorated with the result that we could only do that in sections. We did manage to float one caisson out, but the rest we had to cut up into much smaller pieces using advanced technologies such as underwater diamond saws.”

Another surprise that turned up well into the contract was the discovery of an unknown wreck in the channel for which historical records were unavailable. “The approach to the identification of the wreck and rendering it harmless to shipping while meeting the objectives of the project was in itself a significant achievement,” says Ward, who emphasises that the speed and efficiency with which this project was brought to completion in February 2010, a month ahead of schedule, can be attributed mainly to good communication between the Port authorities, the shipping lines and the contractors and subcontractors. “We

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were able to execute some of the dredging work ahead of time, even in the navigable channels, without disruption to shipping and the working Port. It was business as usual.”

With around 8,000 ships utilising the harbour every year that was quite an achievement, he adds. “Throughout the project we were able to keep the traffic going in the Port by doing all the work on the north side first, then diverting all the traffic into the channel on the north while we then turned our attention to the south channel. That proved to be very successful.”

In February 2003, coastal engineering consultants Prestedge Retief Dresner Wijnberg were appointed jointly with the CSIR Stellenbosch to undertake the preliminary design work. The main contract for the works was awarded in May 2007 to a consortium comprising Dredging International of Belgium and Group Five of South Africa, while project management was carried out by Transnet Capital Projects and its joint venture EPCM (engineering, procurement and construction management) contractor HMG (Hatch, Mott MacDonald, Goba).

The type of contract used was the New Engineering Contract (NEC), and Ward believes this was a key factor in managing risk and controlling the project, thereby overcoming potential problems. “The NEC form of contract is based on mutual trust and cooperation between contractor and client. This assisted all stakeholders to focus on project objectives and find solutions.”

Safety is always a good indicator of how well a project is being approached, and the project achieved one million hours without an LTA (lost time accident). “Health and safety were constantly enforced,” Ward says. However, the outstanding safety record also depended on the quality of collaboration between the contractors and project management teams, and their experience.

“We were pleased that even the newer but more innovative subcontractors found in the project an excellent opportunity to stretch their capability in partnership with a global player like Dredging International. This assists in demonstrating the expertise available in South Africa and is good for the construction industry. An example of this is the Durban-based commercial diving and marine construction company Subtech, for whom this was a significant contract where they were

Port of Durban

Maritime Craft Services (Clyde) Ltd Maritime Craft Services (Clyde) Ltd is a well established tug and workboat company that primarily supply vessels to the dredging and marine construction industries. Operating worldwide, all vessels are modern, fully in class, and equipped with the latest technology. They are also operated by experienced, highly skilled and trained crew. We pride ourselves on being approachable, adaptable and professional in the services we provide.

responsible for the numerous underwater tasks prior to and during the contract, including such work related to the removal of an old service tunnel under the harbour.�

No two marine projects are the same and what

makes Durban unique, says Ward, is the geographical position of the Bluff headland and its extension to the South Break Water. This is a great asset to the Port in creating natural protection to the harbour and was thus not suitable for widening the channel to the south side. “In the event we decided to do all our widening and deepening on the north side.

Apart from strengthening and raising the southern breakwater by two metres, we left other structural aspects of the South Break Water unchanged.�

The successful delivery of the DHEW highlights the need for deeper berths to realise full value in the Port. Various developments are underway to deepen berths in the Port to ensure that vessels meeting the design capacity of the entrance channel may be serviced. Several feasibility studies in this regard are underway while the reconstruction of some berths has commenced. www.transnetnationalportsauthority.net

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Mozambiq the

Mozambique is on the brink of a transformat and Riversdale Mining is bringing some much the party, as chief operating officer Andries E 82

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Riversdale Mining

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on que e

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tion driven by its mineral resources; h needed expertise and capital to Engelbrecht tells John O’Hanlon

iversdale Mining, a resource company with its headquarters in Sydney, Australia, was set up in late 2004 by a group of experienced coal mining professionals interested in exploration, mining and development projects.

The company currently has no assets in Australia itself, and is named after the Riversdale Anthracite Colliery (RAC), near Vryheid in KwaZulu Natal, South Africa.

Riversdale’s first opportunity was in the form of the Zululand Anthracite Colliery (ZAC) based in the province of KwaZulu Natal. The colliery was purchased as a going concern from resources giant BHP Billiton in 2005. Anthracite is a hard, high rank coal containing a high percentage of fixed carbon and low percentages of volatile matter and ash. Due to the high fixed carbon content of the anthracite found at ZAC, it is sought after in the metallurgical markets, both domestic and abroad.

“We purchased ZAC with a three year projected life,” says Andries Engelbrecht, who joined Riversdale six months later as a manager at ZAC, of which he had intimate knowledge as a BHP Billiton manager. “The first thing we did was to start an extensive programme of exploration and development, and as a result of that the productive life of ZAC has been extended to 2023—and we are still prospecting there.”

ZAC is the only true anthracite mine in South Africa, he adds. “We are expecting it to yield 980,000 tons of run-of-mine material this year, and with at least ten years’ life, it has huge upside potential.”

Engelbrecht’s role has been expanded and he is now chief operating officer for all African projects.

In 2006 Riversdale acquired 16 coal tenements in the Lower Zambezi Coal Basin in Mozambique and in 2007 a further six in Tete province, adjoining large holdings of the Brazilian company Vale. In all it now controls 250,000 hectares in Mozambique, close to the railhead at Moatize from where there’s a link to the port of Beira on the Indian Ocean.

Though it doesn’t feature at all on present day league tables, Engelbrecht believes Mozambique has the potential to become a really important exporter of hard coking coal, second only to Australia which is currently the largest exporter of seaborne hard coking coal to world markets. The primary market that will absorb this production will be the global steel industry, where massive expansion in the BRIC group of countries is certain to take place.

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Riversdale Mining

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parastatal authority that oversees the railway and port systems, are working together to upgrade the port’s coaling Berth 8, ready for export cargos from the two mining companies.

If that were the end of the story, it would be a huge boost for the Mozambique economy, which will get substantial revenues from royalties and taxes. The country further benefits from the inflow of mining expertise from both Australia and South Africa (not to mention Brazil). Working in

“We are expecting it to yield 980,000 tons of run-of-mine material this year, and with at least ten years’ life, it has huge upside potential” Mozambique is singularly well placed to supply hard coking coal to India and Brazil. Not only is the steel industry booming in these countries, but a large number of new coal-fired power stations are being built. Mozambique coal will have a significant freight advantage over Australia and Canada because of the easy shipping route from Beira to the west coast coal ports from Maharashtra to Gujarat.

So the Mozambique operations are really exciting, Engelbrecht says. Not all the 21 tenements can be developed at once; however coal from one of them—the Benga mine in Tete province—will provide Riversdale with its first shipments out of Beira in the second half of next year. It is a four billion ton resource developed in a smart joint venture between Riversdale and Tata Steel of India, with Riversdale holding a majority 65 per cent share. Tata Steel will be taking up 40 per cent of the hard coking coal produced from the Benga mine. Production from the mine will equal 5.3mt of run-of-mine during phase one. The feasibility for phases two and three have commenced; and phase three will see the Benga mine producing 20mt of run-ofmine coal per annum.

The 575 kilometre Moatize to Beira rail link already existed, but was severely damaged during the conflict years and had to be repaired. The aforementioned work was completed in January 2010 with the first train in 25 years arriving at the Moatize Station. The Port of Beira requires extensive repairs and upgrading in order for it to cope with the approximately 6mt of product to be exported through the facility between Riversdale and Vale. Riversdale, together with Vale and CFM (Portos e Caminhos de Ferro de Moçambique), the

Mozambique, despite its relatively low stage of development, is not the uphill struggle one might expect, Engelbrecht insists. “Mozambique’s legislative system is modelled on that of South Africa, and we are expected to apply world best practices in all aspects of operations, health and safety, and environmental responsibility.”

He is keenly aware of the company’s social impact, which starts simply through employment.

The Benga project currently employs more than 600 people, predominantly contractors; and though the project is in its early stages, he regards support for local education, agriculture and the control of endemic disease like malaria and HIV/Aids as being very much in the interests of the business.

The government of Mozambique has been very supportive and it is easy to see why. Not far away from the Benga project lies Riversdale’s Zambeze Coal Project which Engelbrecht confidently describes as one of the biggest open pit coal resources in the world. It has, he says, been assessed as a resource of nine billion tons, easily accessible, on relatively flat terrain and not far from Tete and the Zambezi River.

Riversdale has signed a non-binding memorandum of understanding (MoU) with Wuhan Iron and Steel (Group) Corporation (WISCO) and a logistics partnership agreement with the China Communications Construction Company (CCCC) for the development of the Zambeze Coal Project (Zambeze). The MoU provides for the acquisition

by WISCO of 40 per cent of the Zambeze Coal Project (EPL 946L) for a total consideration of US$800 million, to be paid in three tranches and subject to achievement of certain milestones.

When completed, the transaction values Zambeze at US$2 billion. www.rivmining.com.au

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Trading

places

Since the liberalisation of trade in India, MMTC has flourished grown, but the journey to success hasn’t been easy. Marketing Sunir Khurana explains to Gay Sutton how the company has be country’s largest non-oil importer and the largest exporter of m

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s

and g director ecome the minerals

MMTC

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he growth of the Indian economy since 1991—when the first of a series of economic reforms was introduced—has been impressive and spawned many global business giants. By 2007 India was declared the second fastest growing major economy in the world, only surpassed

by China, which has been liberalising its economy since 1978.

One of the companies to rise to the challenge of liberalisation is MMTC, which today holds the position of India’s largest international trading company. Originally established in 1963 as the state-owned Minerals and Metals Trading Corporation, the company was responsible for exporting minerals such as iron ore, chrome and mica, and importing non-ferrous metals such as tin, zinc, lead, nickel and aluminium, and it held a monopoly on the trade through India’s canalisation system.

In the 1970s, fertilisers and diesel oil were also canalised to import through MMTC, and in the 1980s diamonds and bullion were added to the company’s portfolio.

However, all this changed in 1991 with the beginning of India’s economic reforms. The liberalisation of trade was one of the first acts on the government’s agenda and MMTC was hit hard. Most of its trading markets were decanalised almost overnight and competitors sprung up left, right and centre, all eager to snatch a slice of the cake.

“It was essentially a free-for-all,” explains marketing director Sunir Khurana.

“And it caused a sudden and dramatic drop in our turnover in mid-1992. However, we did have a head start in some market areas. We knew the minerals buyers and suppliers and we had good trade relations with most of them.” The company did very well retaining its iron ore trade too, as it had an excellent logistics network capable of moving the iron ore from the producer to the port iron facilities, and exporting it to stable long-term buyers in countries such as Japan.

“What was more difficult for us was where we were importing goods for enduser companies. They could now go directly to the suppliers and import the products without going through us,” Khurana explains. “They didn’t need us any more—it was as simple as that.” And this hit several key trade channels.

The company developed a two pronged strategy to survive in this completely new business environment. Firstly, it began the process of consolidating its existing business by building on its areas of expertise and its market knowledge. And in 1993 it changed its name officially to MMTC Limited. Today, the company is the country’s largest exporter of minerals and pig iron, the largest importer of bullion, non-ferrous metals, agro products and steam coal, and continues to be a major player in the import of fertilisers.

The second prong of the growth plan was to diversify into closely associated industries through a range of joint ventures and linked activities. The first step was to invest in an integrated steel plant in Orissa under the company name Neelachal Ispat Nigam—a joint venture in which MMTC holds over 49 per cent of the shares, the remainder being held by the state of Orissa, the mining company NMDC and various financial institutions. Set up in the mid-1990s largely to produce pig iron (one of MMTC’s major export lines), the venture has been so successful that it is now India’s largest producer of pig iron. “We

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suffered for the first five or six years while the steel industry was going through a bad phase,” Khurana says. “But at the beginning of the decade it took a turn for the better and the project took off. Steel making facilities are currently being set up at the plant, and should be ready to commission by the beginning of next year.”

Paradeep is the plant’s main export port—and when this project reaches completion in 2013, it will support growth in the plant’s output.

The other area of considerable expansion and diversification in recent years has been in bullion, where MMTC leads the field as an importer.

Nearing completion is a joint venture with world

“We have been allotted a coal block in the main coal producing belt in east India. The coal reserves are estimated to be around 800 million tonnes” In 1994, the company also began to extend its reach in the global marketplace by setting up a 100 per cent wholly owned subsidiary company in Singapore to take advantage of the south-east Asian market, and this step has also been hugely profitable. “As a public sector owned company in India, our hands were literally tied as far as trading was concerned. We felt that a subsidiary in Singapore would have more freedom to operate and take decisions more quickly,” Khurana explains. “We opened the subsidiary with the share capital of $1 million, and it has delivered dividends far in excess of the initial capital. Last year its profits were in the range of $7 million.”

In the intervening years, the company has moved into other joint ventures and public private partnership, and currently has five at various stages of implementation, all of them complementing the company’s core trading channels.

Currently, India only has two ports capable of handling vessels of 110,000 tons, but that is about to change. Ennore near Chennai is being developed as an alternative port for the export of iron ore, and is being expanded to handle vessels of this size. As part of the joint venture partnership undertaking the expansion, MMTC has invested some $7.3 million in the project in return for 26 per cent equity holding, and expects that the port will be operational by the end of August this year. “It will give us many advantages. We will not only use the port for our own exports but also for associate exports, so it should generate significant revenue.”

The company is also in the initial stages of a similar project to double the capacity of the port at Paradeep in Orissa and construct a permanent deep draft iron ore berth. Located some 150 kilometres from the company’s pig iron factory,

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leading medallion manufacturer, Pamp SA of Switzerland, to set up a medallion manufacturing company in India some 60 kilometres from Delhi. MMTC will hold 26 per cent equity share in the company, and will supply the gold. Civil construction of the manufacturing is almost complete; and commercial production of gold medallions is due to begin in April 2011. Alongside this, the company is also constructing a refinery at the site, which will enable it to import lower purity gold and refine to the required level.

It is, however, another of MMTC’s joint ventures that will change the face of the company throughout India and make it visible to the public for the first time. The company has linked up with India’s leading diamond jewellery retailer, Gitanjali, and is in the process of launching a chain of retail stores selling gold and diamond jewellery, medallions and silverware. Aptly named Shudhi, which means purity, the stores will be located across India, not only in prestigious districts and large cities but also in small towns, making MMTC a household name. At present, the target is to open 63 stores in the next three years, and 14 of these are already operational.

MMTC has also extended its trading capacity by setting up a commodity exchange—Indian Commodity Exchange (ICEX)—as a joint venture with Indiabulls. The fourth of its kind in India, the exchange currently trades in bullion and agro products, but the plan is to extend this to include iron ore.

Looking to the future, there are several projects in the pipeline, all of them linked to existing lines of business. Applications are in place to set up a beneficiation plant to upgrade lower grades of iron ore for export, and a feasibility study is planned for the future.

MMTC

“The final move is really a feather in our cap,” Khurana says. “We have been allotted a coal block in the main coal producing belt in east India. The coal reserves are estimated to be around 800 million tonnes and are largely of coking coal, which is in short supply in India.”

The block is expected to produce something in the region of two million tonnes a year, which will be a step towards energy independence for a country that currently imports around 30 million tonnes of coking coal annually. Exploration work is now in progress and, providing everything goes well, the company hopes to begin commercial production in around five years’ time.

There are still challenges ahead for MMTC, though—and finding staff with the right skill sets is at the top of the list. With each of the joint venture projects, the relevant skills are supplied by the joint venture partner who has expertise in that area.

However, in the core trading activities the company employs over 1,800 people in 20 offices across the country. “And the number of people who can really deliver is just a fraction of that. With the changing economic environment, and the salary scales we can only offer as a public entity—our salary scales are decided centrally by government—we are only able to attract a few with the right talent. It is a problem, and there is no easy solution at the moment.”

However, MMTC has come through economic liberalisation very well. Today, it has a healthy balance sheet, strong backing from the financial institutions and solid plans for future growth. “We hope to end this year with a turnover of around 500,000 million rupees, which is 10 per cent up on the previous year; and our profit margin will be about the same. However, in five years’ time,” Khurana concludes, “our aim is to be able to double this year’s turnover.” www.mmtclimited.com

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Fromrough

diamon

Moves by Namibia to capitalise on its extensive diamond resources have stepped up a gear since the creation of the Namibia Diamond Trading Company. Andrew Pelis talks to CEO Shihaleni Ndjaba to find out more

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amibia has long been renowned for its extensive diamond resources, yet until recently its reputation for turning rough diamonds into gems was far from the finished article. All that changed in 2007 with the creation of the Namibia Diamond Trading Company (NDTC), a business that focuses on sorting, valuation, sales and marketing the country’s most glittering resource.

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“The company is relatively new and its main function is to sort, value and sell diamonds produced by Namdeb (the joint venture responsible for all mining activities in Namibia),” NDTC’s CEO Shihaleni Ndjaba explains. “We are a fifty/fifty joint venture between De Beers and the Namibian government.”

De Beers and the various companies within the De Beers family of companies are in the diamond mining, diamond trading and industrial diamond manufacturing sectors. It is by far the largest company in all these categories and is active in every category of diamond mining: open-pit, underground, large-scale alluvial, coastal and deep sea.

Namibia had been seen as a centre for diamond mining for many years; however, Namdeb’s entire production was exported to London for aggregation purposes. So in 2007, De Beers and the Namibian government decided to pool resources with the view of building the country’s profile and generating dividends that could be reinvested into the Namibian education and health systems.

“One of the key considerations for creating NDTC was to increase diamond value addition activities within Namibia, using Namibian skills,” Ndjaba says. “Today we run a training academy with a focus on two categories: generic management (which requires an understanding of diamonds, the diamond pipeline and marketing) and the technical aspects. The technical issues are very important to us and the people sorting the diamonds. Providing valuations needs an in-depth technical knowledge in order to differentiate the different colours and qualities of each diamond,” Ndjaba emphasises.

The sorting process is a mixture of automation and manual techniques and Ndjaba says that NDTC operates within De Beers’s guidelines, which provide assistance in the art of sorting diamonds by shape, clarity and size. “Each individual goes through several months of training until they are fully conversant on diamonds, and we also provide continuous refreshment courses.

This has been an important development tool and is good for Namibia as it is introducing new skills to the country—as we didn’t previously have these efforts to add value to the diamonds.”

It has also played an important role in ensuring that each of the sightholders (purchasers of the

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“One of the key considerations for creating NDTC was to increase diamond value addition activities within Namibia, using Namibian skills” diamonds) has the right schedule information and that diamonds arrive on time, so that NDTC does not lose out to its rivals. “We also purchased state of the art machinery in 2007 that helps us to determine the colour of each diamond. In addition, we recently updated the software linked to this machinery,” adds Ndjaba.

Among the changes that the move brought about was a focus on selling to companies within Namibia. “Previously all of the diamonds were sold to sightholders in London, but today we supply over N$1 billion worth of diamonds which includes unaggregated diamonds equal to 10 per cent of the value of Namdeb’s production to the Namibian market,” Ndjaba continues. “We have forged links with local companies who have trained Namibians in skills like cutting and polishing of diamonds.

Today we have selected eleven local companies as sightholders, who we supply diamonds to on a regular basis.” The required level of competency was not readily available in Namibia; and NDTC initially involved individuals from renowned diamond cutting countries like Belgium, India and Israel to share their knowledge with the local workforce.

NDTC is located in Namibia’s capital city of Windhoek and with one exception the sightholders are situated in close proximity. The relationship between the parties has proved successful, in spite of the economic downturn, which Ndjaba says hit hardest last year. “2009 was a nightmare for many businesses and the diamond industry did not escape. There was a demise in the price of diamonds, especially in the United States (our biggest market), but we managed to pay out dividends regardless.

“As our sightholders have gained more experience, they have been able to add more value to Namibian diamonds. In April this year we announced plans to offer a one year extension to their current three year supplier of choice [SoC] contracts in order to give the companies more time to concentrate on their recovery efforts. The extension will start on 31st March 2011 and run until 30th March 2012.”

The result of this stability has paid dividends for shareholders and Ndjaba says that both the De Beers family of companies and the government have received good shareholder returns off the back

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of the operation’s quick success. However, despite the return on investment, 2009 was a challenging year and saw the company reduce its workforce from around 105 to just over 70 employees.

On a more positive note, Ndjaba feels the industry may now be turning the corner. “We have seen a marked improvement in the markets this year and comparing last year to 2010 is like comparing zero to a lot,” he asserts. “That said, we will remain cautious for now with our business approach.”

One of the initiatives that NDTC is party to is an aggregation policy whereby the sorted diamonds from Namibia and neighbouring Botswana and South Africa arrive in London before being aggregated according to size and shape. A certain amount of these goods are then brought back to Namibia for the local market. This supports the efforts of the government and De Beers to develop a sustainable local downstream diamond industry in Namibia; and the manufacturing jobs the move has created will support the country’s economic imperative to drive job creation and value creation from its diamond resources. “We have already helped to create employment through the supply of diamonds locally, while the dividends we pay to the government help to fund the construction of hospitals and schools,” Ndjaba reflects.

With government investment ensuring Namibia has an excellent transport infrastructure, Ndjaba says that the country has a distinct advantage and that this is an attractive proposition for overseas investment in the country.

NDTC has also worked on several ad-hoc social programmes and in recent years has assisted people displaced as a result of terrible floods that engulfed areas of Namibia. As Namibia develops its own infrastructure, businesses like NDTC have an integral role to play. “We have the idea to create a local Namibian brand; and when we started out, it was important to tell the world what we do and how we differentiate from Namdeb. We still need to do more work on this and ultimately want to see NDTC as a leading diamond marketing company in the world.

“We want to build a vibrant diamond polishing, cutting and manufacturing sector in Namibia and help to establish the country as a diamond centre,” he concludes. www.debeersgroup.com

N a m i b i a D i a m o n d Tr a d i n g C o m p a n y

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At epicentre the

Australia is enjoying a boom in oil and gas exploration and development. Frans Roozendaal, managing director of Technip Oceania, tells Gay Sutton how the company is thriving in this increasingly competitive environment, and responding to the challenges it presents

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ff the coasts of Australia and New Zealand, the race is on to locate and quantify the rich hydrocarbon resources that lie beneath the seabed, and to develop them into commercial operations. There are the enormous coal seam methane reserves off the eastern coast of Australia, while off the western coast lies the North West Shelf region, a geological feature which has already spawned a number of prolific natural gas (NG) wells and associated facilities. The opportunities for further development here are enormous.

Among the many west coast exploration initiatives are the Browse, Pluto, Ichthys and Wheatstone projects. “All of these are on the drawing board at the moment,” explains Frans Roozendaal, managing director of subsea, offshore and onshore engineering company Technip Oceania.

Technip Oceania is part of the Technip Group’s Asia Pacific region, which has its headquarters in Kuala Lumpur, Malaysia and reports to the Group Corporate Head Office in Paris. Technip is a world leader in the fields of project management, engineering and construction for the oil and gas industry. With its main office in Perth, an office in Brisbane and a new office recently opened in New Zealand, Technip Oceania has been operating in Australia since 2002 when the Group acquired subsea engineering specialist Coflexip, which had been operating in the region since 1995. It has, in addition, diversified into offshore and onshore engineering, drawing on expertise and support from the Group’s Asia Pacific headquarters in Kuala Lumpur as well as worldwide.

For subsea installation work, the company owns and operates its own vessels. However, the majority of offshore and onshore construction work is contracted out, leaving Technip to concentrate on its areas of expertise: engineering design, project management, procurement and conceptual work.

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Gaylin International Pte Ltd Gaylin International Pte Ltd has been one of the leaders in the steel wire rope, rigging gears and ship chandling business for more than 30 years. We have grown from a small business in a 500 sq ft office with only five employees to our present location boasting 24,500 sq mtrs with 100 employees. Over the years we have built up a reputation as a leader in the provision of products and services in the offshore oil and gas industry, shipping industry and construction sector.

KNM Group Technip has been KNM’s valued client since the early 1990s. We have worked together on numerous projects ranging from process plants, modules and equipment to technologies and turnkey solutions for the oil, gas and petrochemicals industries worldwide. Today, with our reputable brands, global facilities and support in 14 countries, KNM is poised to provide its customers with unbridled quality of deliverables and services.

“Our main assets, therefore, are our people,” Roozendaal says. “And we invest heavily in them.

Australia is rapidly becoming one of the global epicentres for the oil and gas industry—many of our clients are planning massive investments off the east and west coasts, and in New Zealand.

And if only a quarter of those go ahead, it will certainly be an enormous investment, but it will also create a massive issue in terms of sourcing engineering and construction resources locally.”

If you add into the equation the expansion also underway in the mining industry, there is the potential for a seriously damaging skills shortage on the horizon. Skilled engineers and skilled labourers are already in short supply, driving costs up.

One way that Technip Oceania has been tackling the issue is by using modular design techniques, whereby facilities are designed in large modules, manufactured in factories offsite, transported in and bolted together onsite, therefore reducing the onsite labour footprint.

This technique allows for overseas manufacturing if using local fabricators is not a viable option.

Technip has also been working, through its long term graduate programme, to ensure a continuous flow of high quality engineering graduates into the industry and overseeing their training and career development.

Over the past seven years, the company has built a close working relationship with the University of Western Australia whose engineering department is geared to the needs of the oil and gas industry; and the University of Tasmania, which specialises in subsea construction. “We generally recruit between 10 and 15 graduates a year and guide them through training and career development.”

The scheme has certainly found favour with undergraduates. This year alone, the company received over 1,000 applications for just 10 graduate placements. Once appointed, the graduates take part in a carefully designed training programme managed jointly by the HR department and departmental managers, which provides them with a set of learning experiences and assesses them on their performance.

The upshot is that Technip has an attractive engineering career structure which helps ensure that graduates remain interested in the job and stay with the company in the long term.

Technip engineers also have the stimulus of becoming involved in some groundbreaking engineering challenges. Current work includes providing the front-end engineering and design for what may well become the world’s first floating LNG liquefaction plant for the Shell Prelude Project. The company is also working on the front-end engineering design for a massive 35,000 ton fixed offshore platform for the Chevron Wheatstone Project in Western Australia. “If it does go ahead it will be the largest such platform in Australia,” Roozendaal says. “It’s an enormous technical challenge, and we’re very keen to continue working on it.”

One of the most prestigious projects that Technip is currently engaged in is the Gorgon Project.

Gorgon is Australia’s largest LNG project to date, and is an enormous subsea development for which Technip is providing engineering and procurement support as well as the subsea work linking the well with the onshore gas facility at Barrow Island.

The ability to verify a good safety record or environmental performance is becoming more and more important. From the environmental, economic and social sustainability viewpoint, Technip has

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great credentials. It is listed on the Dow Jones Sustainability Index, a strictly audited and verified league table that identifies the best performing 10 per cent of the largest 2,500 companies listed on the Dow Jones Global Total Stock Market Index.

These sustainability principles permeate every aspect of company operations. Health and safety, meanwhile, is driven through every aspect of the business via a clearly defined training programme, Pulse, that begins at the top with training for the leaders, and is cascaded through the business.

This spans everything from operational safety practices and contractor/supplier performance through to engineering safety into a project from the initial design stage.

Looking to the future, as exploration and development opportunities increase in Australia and New Zealand, competition in the marketplace is going to intensify. “All of our competitors now have either a sales office or fully fledged operation here and there are strong established local players, so we have strong competition, but I think this is always healthy in any industry,” Roozendaal says.

The company is currently bidding on a number of new contracts. “If we are successful in the contracts we’re pursuing, then we will see significant growth in terms of our employees, and also our revenue over the next three years,” he concludes. Backed by strong internal practices and the support of a powerful global group, there is no doubt that Technip Oceania will be playing a major role at the epicentre of Australia’s rapidly expanding oil and gas industry. www.technip.com/en/entities/australia

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fripack was founded in 1933 and CEO Arnold Vermaak is keen to point out that this makes it one of South Africa’s oldest packaging companies. The company began life by creating a niche in a small segment of the packaging market, namely cement sacks for industrial usage. Over the years came a steady process of consolidation and expansion. This was fuelled firstly by organic growth and then more recently by diversification and acquisition, which culminated last year in the acquisition of the flexible packaging division of Astrapak.

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Afripack Pty Ltd is today flexible packaging marke Jayne Flannery about the a simple manufacturer o

Afripack Pty Ltd

kack

y a leading player in South Africa’s et. CEO Arnold Vermaak talks to e company’s evolution from being of paper sacks

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Airconditioning Amalgamated The owners of Airconditioning Amalgamated, Mr. Stuart Jenkins and Mr. Gordon McRae, have 60 years of experience between them in the air conditioning and refrigeration industry. Some 14 years ago, a project came about with Plastop in Prospecton that, after its acquisition by Astrapak, has grown into further contracts, many requiring unique solutions, with the Astrapak Group/Afripack. The scope of projects/capital business has run to in excess of R40 million and has been underpinned with Group maintenance contracts. Furthermore, at the Group’s Annual Award Dinners, the company has consistently received awards for its innovative solutions and service delivery.

The R184 million deal effectively doubled Afripack’s turnover overnight and created a powerful new contender in South Africa’s R11 billion per annum flexible packaging industry. The company is now positioned as one of the most diverse flexible packaging operations in South Africa with a strong intended orientation towards what Vermaak describes as high end, added-value products.

He attributes the company’s transformation to a three pronged strategy centred on market focus, advanced technology and developing and motivating the best people in the business. Here, he takes up the story, beginning with the company’s expansion into consumer markets: “Although we were very successful in industrial markets, particularly as a sack manufacturer, we knew we were missing an opportunity if we did

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Bigfoot Express Freight Bigfoot Express Freight prides itself on 100 per cent PDI ownership and conforming to BEE requirements.

Superior service and excellent customer care further distinguish our company from our competitors; and our commitment to quality has led us to obtain ISO 9001.

Our strategically placed branches provide an extensive national footprint. A process-driven and constantly monitored operation combined with highly skilled staff enables us to offer a reliable, speedy, secure and costeffective freight solution. We have a fleet of 170 gps tracked vehicles, which are maintained by the relevant agents. Services such as internet track and trace and in-house solutions further benefit our clientele.

not develop a presence in consumer packaging.

Our aim was to diversify, but to retain a very clear focus on flexible packaging. We were not looking for something the size of the Astrapak division, which included a total of five companies, but it was too good an opportunity to pass over,” he explains.

The acquisition of Astrapak’s flexible packaging division was finally concluded in August 2009 and Afripack has now succeeded in integrating Astraflex, Cape Wrappers, DLC, Tamperpak and Astra Repro, as well as Standard Labels in Mauritius.

The new corporate entity is known as Afripack Consumer Flexibles, or ACF, and its formation has also entailed a radical rethink of how the much bigger business should be structured. The new organisation centres on two primary clusters—flexibles, which

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Cartonal Italia Cartonal Italia is a reputable and well-established supplier of flexible packaging material in RSA. Among others, Cartonal has supplied Afripak for almost 15 years. The essential principle guiding this longterm business collaboration is the commitment to professionalism, integrity and quality.

Cartonal built its reputation on financial strength, stability, experience and continuing relationships, with technology also playing a significant role in improving its efficiency in communications, logistics and management.

Cartonal employs bright and innovative experts from a variety of fields, giving the company flexibility and a wealth of experience. This allows it to offer an array of resources that can be tailored to the individual needs of each customer.

The Consumer Flexibles division, known as ACF, now offers an extremely broad product portfolio geared towards premium product offerings with the flexibility to tackle both long and short run work. There are various wax paper products and a wide range of both solvent based and solvent free laminated packs. Tamper-proof banding is a particular growth area and Afripack holds the South African licence for the Fujiseal system.

A recent fire at the ACF KZN plant in Durban was quickly turned into an opportunity to improve the ACF facilities even further and resulted in another tranche of investment in state-of-the-art plant. The ACF Cape plant in Paarl is being augmented with an Uteco gearless press, as well as an upgrade of the existing F&K gearless press to 10 colours and GPS computerisation, making it arguably the premier flexographic press in the country.

Already, the Cape plant has won many printing

“We were not looking for something the size of the Astrapak division, which included a total of five companies, but it was too good an opportunity to pass over” includes the former Cape Wrappers and Astraflex— and secondly, a dedicated labels division.

The ACF Flexibles division features two dedicated consumer flexible plants situated in Durban and Paarl.

The division has a total of eight flexographic presses, including an F&K gearless press, numerous modern slitters and several Nordmechanica laminators.

The ACF Labels division has three narrow web consumer flexibles plants—DLC in Durban, Standard Labels in Mauritius and Tamperpak in Gauteng. This division has several Aquaflex and Mark Andy narrow web flexographic presses, slitters, a Stanford shrink sleeve line and a Seamer. The new division has pioneered the development of shrink sleeve labelling and has received numerous awards for its innovative use of films, inks and coatings for premium brands.

At the time of the purchase, Vermaak stated clearly Afripack’s view that the purchase represented the best in people and technology, with an excellent combined customer base and strong supplier commitment. “It has given us the perfect platform from which to grow a highly successful consumer flexibles business,” he states.

and packaging accolades, notably the FTASA Print Excellence and Gold Pack Awards. Equally telling, Afripack is a packaging supplier of choice to the South African operations of a number of leading global brands, including Unilever, Nestlé and Cadbury.

“It is our technological advantage within ACF that enables us to print on such a wide range of flexible materials including cellulose films, PVC, polyester, polypropylene and poly-ethylene, as well as on a variety of paper substrates and their coated and metallised counterparts,” Vermaak explains.

The other plant in the Consumer division is based at Durban and this is due to see a new Rotomec gravure press from Italy installed early next year.

“We see the quality of our technology as a very important differentiator,” he continues. “From a technological perspective, when our new gravure press is introduced, we will then have both the best flexographic and gravure technology in South Africa.

These are First World investments which is big news here and the most significant addition to South Africa’s overall printing capability in a number of years.

“Strategically, we made a decision a number of

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Covinil Films

Fima

The company has always been known in the market

Fima currently serves the Afripack Group from its

for the development of speciality films. Covinil has

plant in Chamdor, South Africa and has been servicing

developed different films for the Twist wrap market

them for many years with a range of packaging and

coming from PVC, CPP and now introducing the

labelling products. At Fima, we live for innovation

new products manufactured in the new PET line.

in the packaging industry and working closely with

Afripack and Covinil have always worked together

our partners like Afripack, who also succeed to be

in the R&D field in order to create possible solutions

innovative, we work well together to produce products

for their clients.

beyond those of our competitors.

years ago that the quality and waste reduction benefits derived from leading technology justified the higher upfront investment,” he continues. “We have chosen to buy the best brands from the best manufacturers in the world. We may not be the largest player in the flexible packaging marketplace, but when the gravure press is commissioned in January 2011 we will be able to offer the best equipment in South Africa.”

Afripack has further strengthened its position

through strategic alliances which give access to an even wider range of packaging solutions—all of which share Afripack’s commitment to high-end offerings manufactured to the highest standards using the best technology available.

In 2007, an agency agreement was signed with Mondi Coating Zeltweg (MCZ) in Austria, an international producer of extrusion-coated and laminated consumer packaging materials which targets the food, pet-food,

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Henkel South Africa Afripack Consumer Flexibles and Henkel South Africa have enjoyed a highly successful business partnership since the late 1990s. Henkel, as the world’s leading supplier of laminating adhesives under the Liofol brand, ensured that Afripak remained at the cutting edge of technology through the adoption of ‘Smart Cure’ technology. Henkel strives to partner with innovative companies looking to constantly add value to the supply chain.

non-food and pharmaceuticals industries. As a result, ACF can supply the local market with a wide range of laminated packaging solutions. MCZ has stateof-the-art extrusion coating technology which lends itself to a complete product portfolio ranging from polyethylene coated papers to highly sophisticated multilayer laminates and high-end direct coated aluminium foil and polymer films.

Last year, the partnership with Mondi went a step further when ACF entered an agreement with Mondi Consumer Flexibles Europe. The company has extensive experience as a manufacturer and supplier

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“It is our technological advantage within ACF that enables us to print on such a wide range of flexible materials including cellulose films, PVC, polyester, polypropylene and poly-ethylene” of film extrusion products and flexible packaging solutions from film extrusion and printing to the converting of films and flexible packaging solutions.

It means that Afripack can offer another new range of high performance solutions, including for the first time, new products like stand-up pouches to the local market. These pre-made, stand-up pouches constructed from high-performance laminates and barrier materials were previously unavailable in South Africa and represent a new and very convenient, user-friendly packaging format that is chemically and physically durable and can also be sterilised.

The other big partnership which has supported Afripack’s rapid penetration of the consumer market is with promotions company Autopack, which supplies promotional items such as stickers, tattoos

and scratch cards. The company is located in Pablo Podesta in Argentina and has more than 100 blue chip clients, including Unilever, Avon Cosmetics, Wella and AGFA. Again, the emphasis is on providing a continuous stream of innovation. Autopack’s laboratories are engaged in a continuous quest to design new cutting edge campaign proposals and product offerings, constantly experimenting with different techniques and materials to achieve maximum impact on the consumer.

The overall range and scope of Afripack’s product portfolio may have a distinctly sexier new edge, but Vermaak is keen to point out that the company’s former industrial business has also been carefully nurtured. “We are still a very strong player in our original sack market, with leading edge technology

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and long standing exclusive supply relationships to local cement companies like PPC and Lafarge.

We realised some time ago though that this was far too narrow a focus and that there were other opportunities in the industrial packaging market.

In 2004, we started to take these opportunities seriously when we invested in a reel-to-reel plant with two gearless eight-colour flexography printers and an extrusion coater, enabling us to supply the paper industry with ream wrap. We have since gone on to develop extensive supply relationships with paper companies Mondi and Sappi,� he says.

Sack manufacture takes in many complex equations.

From handling in the distribution chain, from the point of filling the bag to delivery at the end user, the sack is subject to many distinct forms of stress. Even the flow characteristics of the product that will go into

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the sack and the type of filling machine to be used bring an influence to bear on how manufacture should be approached. Afripack has close to a century of experience in optimum sack construction—knowledge that has been complemented by investment in stateof-the-art plant.

Afripack has spent in the region of R175 million over the last decade in enhancing its industrial capability.

The result is Afripack Industrial Flexibles (AIF), which is now recognised as a leading player in the industrial flexible packaging market, supplying multi-wall paper sacks and flexographic printed and extrusion coated products. The plant operates 24 hours a day, seven days a week, and relies on two fully automated, high speed sack lines supplied by Windmoeller and Holscher of Germany. These have a massive combined capacity of 140 million sacks per annum.

However, the finest machines in the world are only as good as the people tasked with operating them. Vermaak is convinced that the best long-term sustainable advantage in the marketplace is derived from having empowered and motivated people. “Our people are our most fundamental asset and we have to have the right culture in place before we start adding other elements, such as technology,” he states.

Black Economic Empowerment is a vital part of both the company’s past and its future. Until 2004, Afripack was wholly owned by Pretoria Portland Cement (PPC). The following year, the company completed a BEE transaction and the current shareholding is now dominated by Nozala, a broadbased black female group with major secondary holdings in the hands of PPC, South Africa’s largest cement company and a management consortium. All take an active interest in the company’s development.

Vermaak believes that the cultural values that have become embedded in the organisation have a particular South African slant. “Our culture is characterised by empowerment, ownership and a high degree of transparency and trust. As an organisation, we have a distinct culture and style.

It features flat organisational structures and fast decision making and all of our people are involved in the day-to-day running of the business. We have total transparency when it comes to results and performance and our people understand that they are wholly accountable for the results they produce.

At every level of the organisation we are performance driven and everyone shares the same belief that giving long term sustainable value to customers is what really matters,” he says.

An acquisition of the size of Astrapak’s flexibles division could not have happened without the unqualified support of all shareholders—a large portion of the purchase price was funded by shareholder funds. The Afripack motto “SISONKE”, or “we are together” seems particularly apt in this instance. Meanwhile, the new business is in the fortunate position of having funding available for further growth opportunities.

Vermaak believes that while the integration of Astrapak’s flexibles business and subsequent restructuring has effectively created a powerful cohesive entity with a single, shared vision, it is only an interim step. “We are a progressive, far-sighted company which still has much more to achieve,” he concludes. www.afripack.co.za

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Drivingthe

The importance of a reliable an be underestimated in South Af talks to Andrew Pelis about how driven home a competitive adva 120 www.bus-ex.com September 10

G r e a t N o r t h Tr a n s p o r t

usindustry

nd safe bus service cannot frica. Mphumudzeni Muneri Great North Transport has antage based on reputation

P

ublic transport in South Africa has long been a topic of much debate. Today, competition remains as rife as ever, despite the recent downturn in the economy. One company that has ridden out the tough times better than many has been Great North Transport (GNT).

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Marcopolo The relationship between Marcopolo and Great North Transport goes back a decade already. We can proudly say that GNT was the main reason why Marcopolo decided to invest in a manufacturing plant in South Africa. From there until today Marcopolo has grown to be the biggest bus body builder in South Africa. A decade later we can also proudly say that GNT is running over 500 buses all with Marcopolo bodies. To have a partner like this is really important for our company. We thank GNT for the loyal support during these years and wish to continue growing this successful partnership together.

years and we began to see the benefits of the upgraded fleet by 2005.”

At the moment, GNT operates 540 buses with the oldest bus 10 years old and the newest one a mere 18 months old. In total, Muneri estimates that the company has invested in the region of R200 million on its new fleet.

With South African road conditions not always conducive to regular travel, it is not surprising to learn that GNT has a big focus on maintenance. “Road conditions are not great,” Muneri admits. “Most roads have an impact on tyres in particular and the bus lifespan can be affected by the movement of the bus on bad roads. However, the kind of equipment we use includes an excellent chassis on each vehicle and this can withstand most of the bumps in the road.

“The kind of equipment we use includes an excellent chassis on each vehicle and this can withstand most of the bumps in the road” With headquarters in the Polokwane region of South Africa, the company operates a further 11 bus depots which serve as home to a vast fleet of modernised coaches. “The company had its roots in two separate companies that formed more than 30 years ago,” states Mphumudzeni Muneri, CEO at GNT. “The two companies (called Gazankulu Transport and Lebowa Transport), which were previously homeland-based, were transferred after the dawn of democracy in 1994, following the release of Nelson Mandela. There was a new dispensation and the two businesses were amalgamated in 1996, to form Great North Transport.”

Today, GNT operates within Limpopo province and part of Mpumalanga province; its operational model is based upon negotiated and interim contracts, both governmental and private. “Our customers are more local for now and we operate in rural areas, providing commuter services,” Muneri explains.

At the time that GNT came to fruition, the company inherited a fleet of old buses—which was a situation that the shareholders, board of directors and management team felt needed to change, as Muneri describes: “Around the turn of the century we formed a strategic plan to turn around the business and we started to introduce modern buses. The process continued for several

“As a company, our core function is commuter services and our responsibility is to sell seats on buses—we leave the maintenance to the experts (Scania) who also manufacture our vehicles. They take full responsibility for maintenance and have staff based at all of our depots.”

Aside from maintenance concerns, the fluctuating cost of fuel is something Muneri says is hard to predict, which creates its own challenges when planning a budget. Effective revenue collection remains another priority for the business. “When dealing with cash you have to be on your toes all the time.”

Security is another issue, he says, as when the buses are running the safety of the bus is essential.

“The various parts of that equation include how safe the bus is, our premises and also people and investments. We have outsourced those elements of physical security.”

Part of the challenge to ensure that the operations run smoothly is also to get the ‘people factor’ right.

“Perhaps our biggest challenge is skills, people and capacity,” says Muneri. “We have 1,250 employees and training plays a significant role within the company. Without the necessary skills, no company can grow, so we view our people as the most valuable asset we have.

“Our staff development programmes focus on training people up for requisite skills and includes

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on-the-job training for drivers. We encourage all of our workers to enrol and this includes formal education with external institutions—our drivers have to learn not only how to drive a bus, but also the value of customer service skills. Those in managerial positions are trained not only on how to manage but also on how to approach conflict resolution.”

Following the investment in its new fleet, GNT saw customer numbers progressively rise to a peak of 40 million; but the onset of the economic downturn resulted in falling numbers of passengers as jobs were lost, meaning fewer commuters. Muneri feels that despite the economic problems the country faced, competition remains strong. “You have not only the bus companies to contend with, but also the taxis and informal bus and taxi operators that operate without proper or adequate permits,” he explains.

“During the boom period the market really opened out and continues to be competitive; our advantage is based around the safe, reliable service that we provide. Our drivers are well trained and our buses are well maintained. We also have a good operating system and a schedule that we stick to that ensures the bus will be at its destination on time. Those are the most important aspects to a customer.”

Part of the secret to that success has been investment in technology. Muneri is quick to extol the virtues of the GNT’s tracking systems: “We have systems in place that are used to monitor the buses and driver behaviour. Our auto-data system is pretty up to date and monitors the bus itself in terms of how it is driven and fuel consumption.

We also run an electronic ticketing system which works superbly and helps to improve efficiency.”

The recent FIFA World Cup opened up a number of temporary opportunities which Muneri says GNT were happy to accept, including the shuttling of more than 70 buses from the park & rides to the football stadium. However, other than making a good impression, he does not feel there was a lasting legacy.

That said, Muneri remains optimistic for GNT’s long-term goals. “The future looks bright and we will continue to explore opportunities, which we feel are unlimited. We will explore markets and will take advantage of opportunities when the market dictates— which could include acquisitions.

“We will also aim to maintain a young fleet of vehicles all the time, so that as the market grows, we can also grow in terms of fleet size,” he concludes. www.gntpassenger.co.za

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welloperation W

est Africa has become a haven for oil and gas exploration and production since Nigeria joined OPEC in the seventies.

The latest country to see benefit from this rich natural resource looks likely to be Ghana, following Tullow Oil’s discovery of the Jubilee Oil Field with its joint venture partners Kosmos Ghana HC, Anadarko WCTP Company, Sabre Oil and Gas, the EO Group and the Ghana National Petroleum Corporation (GNPC).

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In recent times Ghana h major new oil player in W region. Tullow Oil Ghana’ Pelis of the challenges at

Tu l l o w O i l G h a n a

-oiled n

has emerged as a potential West Africa’s resource-rich ’s Stuart Wheaton tells Andrew t the forefront of discovery September 10 www.bus-ex.com

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PW Ghana Limited The discovery of oil and gas in commercial quantities in

Ghana

has

heralded

exciting

new

business

opportunities. Tullow Ghana Ltd and PW Ghana Ltd are among many companies collaborating to develop this sector. PW Ghana Ltd, with over 40 years’ experience in the West African sub region, has undertaken most of the civil engineering preliminary contracts for Tullow Ghana Ltd. PW Ghana Ltd is mindful of the environmental risk and concerns challenging this industry. Together with Tullow Ghana Ltd, we pledge to remain conscious of these.

Both companies are focused on profitability and returns to shareholders, and also on maintaining high contractual health and safety standards.

We celebrate Tullow Ghana Ltd’s success, and will work towards sustaining a sterling business partnership.

Indeed, Jubilee’s journey from discovery to production has been a meteoric tale of progress marrying the ambitions of the Ghanaian government with the expertise of London-listed Tullow Oil’s global resources and its partners.

“Many projects of this scale have been developed in West Africa before, but none as quickly as the Jubilee field,” admits Stuart Wheaton, Ghana development manager for Tullow Oil Ghana.

“Usually these types of projects take up to five years to get off the ground but the Jubilee field was only discovered three years ago.

“We have been able to fast-track this project, thanks to government support and being able to just get on with the job, using proven technologies and designs as well as drawing on the vast experience of Tullow and partners’ global operations.”

Wheaton’s involvement with Ghana materialised equally rapidly. “I’ve been in the oil industry for 22 years now and joined Tullow back in May 2007, having worked with smaller oil companies for a few years around the world. I initially joined to work on the company’s Southern North Sea projects (the company having purchased fields and infrastructure when the bigger oil and gas companies started to sell their North Sea assets ten years ago). However, no sooner had I joined than the discovery of Jubilee happened and I was moved over to Ghana. I think the scale of the find was a welcome but genuine surprise to Tullow at the time!”

Drilling deepwater wells is an exacting exercise, but a science which benefits from the experience of Tullow’s operations. “The company has been

involved in oil and gas exploration and production in all upstream areas of finding, drilling and developing platforms for over 21 years now,” Wheaton says.

“The company’s early growth began with investments in the North Sea a decade ago but it has had a presence in Africa since the mideighties. The group took a significant step in 2004 with the purchase of Energy Africa, a South African business with a large portfolio of exploration and production assets in Africa. This opened up opportunities across the continent, but Ghana is currently the most advanced major project in Tullow’s portfolio, with Uganda close behind.”

Tullow Ghana and its joint venture partners Kosmos Ghana HC, Anadarko WCTP Company, Sabre Oil and Gas, the EO Group and the Ghana National Petroleum Corporation (GNPC)— collectively known as the Jubilee Joint Venture— are developing the hydrocarbon resources within the Jubilee Field.

Wheaton believes that the company’s open and relaxed style has helped greatly in Africa and helped to develop the relationships needed for mutual trust and to attain permits and community buy-in from local residents. This approach was equally instrumental in attracting investment partners to make Jubilee a reality.

“So far this project has cost in the region of

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Global Energy Ventures Global Energy Ventures are West Africa’s leading providers of inspection services. State of the art equipment covers tubular, NDT, lifting equipment and associated inspection, delivered from operations in Cote D’Ivoire and Ghana. We are the region’s largest inspection company, employing over 100 industry professionals covering level III NDT services to IRATA trained level III multi-skilled rope access teams. Our OCTG suite covers pipe inspection to DS1 3rd edition up to CAT 5 / API RP7-G and NS1 / NS2.

DNV-accredited Global undertake and have executed full turnkey construction projects including Sub Sea Jumper

Spools,

Platform

Extensions

to

Helideck

deconstruction and construction. Clients include CNR, Tullow, Afren, Kosmos, Expro, Schlumberger, Prosafe, Modec, Anadarko, BJ Tubular, Transocean and Attwood.

$4 billion, with Tullow investing around 35 per cent of that amount. Investors have to feel confident to invest in Ghana and Tullow. The government has encouraged our development of oil and gas, while the company has been in Africa for over twenty years—in fact, our first ever development was a gas field in Senegal.”

Jubilee represents Tullow’s first venture into Ghana and Wheaton says that there have already been subsequent discoveries made since the site was first discovered three short years ago. “We have our headquarters in Accra and a supply base at the Port of Takoradi. The first time I went over to Ghana the company comprised five people working in a house; today we employ around 240 direct workers and more than 1,000 contractor staff, which gives you a good indication of how quickly we have grown.”

The project has moved with impressive speed.

Phase 1 involved building the infrastructure that connected subsea oil and gas production wells to a floating production storage and offloading vessel (FPSO) permanently moored in the Jubilee Field. The processed crude oil will be stored in the FPSO storage tanks and offloaded to oil tanker vessels for delivery to international markets approximately every seven to 10 days.

Jubilee has an average depth of 1,250 metres and is located roughly 60 kilometres offshore.

Wheaton indicates that the FPSO is now in place, but despite the confidence behind the project, he says it has not been completely smooth sailing.

“This was a completely new oil province so we

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Expro Gulf Expro is planning a new multi-million dollar facility in Takoradi, Ghana, in support of its work in supplying market-leading deepwater electro-hydraulic subsea services to the Tullow Oil Jubilee contract. Expro has worked with Tullow from exploration and appraisal of Jubilee through to delivery of a high-end electrohydraulic subsea completion system, as well as bringing its experience in well testing, clean-up, sampling and PVT services to Jubilee. All future project activity can be co-ordinated from Expro’s new bespoke facility.

Ghana is a major focus for Expro, with significant recent contracts demonstrating its ability to offer a range of well flow management solutions to meet industry challenges.

had to build sites for storage and operational infrastructure, including helicopter facilities for transporting workers.

“One of our biggest technical challenges was presented by the undulations of the sea bed which contained large canyons and affected the flow lines. We also had to be mindful of the social and environmental impact, including not affecting local fishing boats; measures for preventing or dealing with oil spills; and waste management.

We undertook an extensive Environmental and Social Impact Assessment (ESIA) and held lots of public consultations.”

ESIAs are standard practice for Tullow, and in Ghana they are mandatory for oil and gas field development and must be presented to the general public for scrutiny prior to final governmental approval. Wheaton’s experience of such requirements played its part in securing the required permits to work in Ghana; and a vital part of the process was to gain government buy-in on the benefits to the country.

Wheaton says that Tullow has a commitment to assisting the country’s growth. “Initially we had to go to international contractors, given the specialist nature of deepwater drilling and development. However, one of the areas where we continue to grow is our procurement in Ghana.

Over the last two years we have been investing between $100,000 and $250,000 each week into the Ghanaian economy by using local suppliers;

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PricewaterhouseCoopers Ghana

Subsea 7 i-Tech, a division of Subsea 7, operates a fleet of more

(www.pwc.com/gh)

than 80 ROVs deployed in every major drilling region,

provides industry-focused assurance, tax and advisory

supporting oil and gas majors, national oil companies

services to build public trust and enhance value for

and independents onboard a wide range of installations.

clients and their stakeholders.

In July 2010, after the installation of a purpose built

Our success in meeting today’s business challenges

mezzanine deck, we completed the mobilisation of one

rest on the way we approach our work. We use our

of our Centurion QX work-class ROV systems onboard

network, experience, industry knowledge and business

the Bourbon Astyanax, and began providing ROV field

understanding to build trust and create value for clients.

support services for Tullow Ghana on the Jubilee field.

and last year alone we spent more than $75 million altogether with Ghanaian businesses. Building that up has been important to us and has been a good indicator of our commitment. In the future if we want to increase capacity at any of our sites, this will stand us in good stead regarding the government and the people.”

That capacity may well be needed too, given the progress Tullow is currently making on its second Ghanaian site, Owo-Tweneboa. In July this year the company announced that the Owo-1 exploration well in the Deepwater Tano licence offshore Ghana has intersected a significant column of excellent quality light oil. Results of drilling, wireline logs and samples of reservoir fluids have established Owo as a major new oil field requiring further appraisal.

As Tullow’s Ghanaian operations grow, it will look to employ increasing numbers of Ghanaian workers. While in-house training will inevitably play an important role given the country’s general lack of specifically-skilled people, Wheaton says that Ghana in fact has an excellent education structure. “There are direct oil and gas limitations here but there is a very high quality education system and we have recruited local graduates, while other extraction industries like gold mining and aluminium bauxite mining have produced workers with the types of experience that we can make real use of.

“When you factor in that many Ghanaians go overseas for tertiary degrees and then want to return home, we were able to recruit quite a few Ghanaians living abroad and bring them back here.

This has been a real pleasure to see and we have only just begun. We want to run a sustainable operation and develop national staff. Today we operate with 85 per cent of employees coming from Ghana; in the next five years we’ll make that over 90 per cent. We are committed to the Ghanaian government to make this a national staff-

led company and we currently have some 20 local graduates going through our training programme.”

Wheaton adds that technology plays its part in making operations a success, with satellites and survey vessels playing a vital role in the highly technical world of deepwater drilling. “Things are hugely different from when I started out in this industry and with the media as it is, there really is no place to hide if you have a problem, an emergency or even an oil spill. Today I can look in real time at activity on our development rigs, from the sanctuary of my desk in London and we do that in Accra also. I have to say also that Ghana is indeed very IT-proficient, which has helped operations greatly.”

Aside from the progress being made at OwoTweneboa, Tullow is excited by the potential shown in Uganda. “This is currently going through the exploration and appraisal phases but shows great promise,” Wheaton comments. “However, our main focus for now is on Jubilee where we would expect a payback in the next four to five years. Our initial direct Ghana infrastructure investment of around $35 million covered offices, helipads and upgraded shore facilities and to give you an idea of spend, we then spend another $60 million to $80 million per year on fuel alone.

We are now in the final stages of hook-up at Jubilee and hope that the first oil production will begin this November/December this year.”

Jubilee should be in full production next year and at capacity, Tullow’s aim is to produce 120,000 barrels a day. Jubilee is believed to contain between 500 million and one billion barrels. “It should have a lifetime in excess of 20 years although future appraisal and development of the reserve may extend this period significantly,” says Wheaton.

That is not only good news for Tullow, but also for the country that Wheaton describes as “a pleasure to work in”. www.tullowoil.com

PricewaterhouseCoopers

Ghana

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Solidas rock

a

The global economic downturn has meant opportunity for AMEC Minproc to expand its activities in Africa, as Ruari McCallion learns from Colin Kubank

N

amibia is probably best-known across the world for diamonds— but there’s a lot more to it than that. It is a mineral-rich country and one of the latest developments is a uranium mine at Swakop Uranium’s Husab project, south of Rössing, which is 70 kilometres from the coastal town of Swakopmund. Demand for uranium has been rising, which raises a question: it is a generally held view that uranium nuclear fuel is virtually endlessly reprocessable, so why the need for new resources?

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E’nI Electrical (Pty) Ltd E’nI Electrical (Pty) Ltd began business in 1984 and has grown from strength to strength through being awarded prestigious contracts around Africa based on our cost effectiveness and quality workmanship having

been

instilled

from

the

outset.

E’nI’s

management style is participative, honest, fair and open with high expectations. This style has attracted and kept highly skilled staff and has ensured that the company has attracted top tender opportunities and contracts. All projects are financed from within E’nI’s own resources. E’nI also consists of E and I Zambia Limited and E & I Electrical Ghana Limited.

“There is a lot of fuel available from reprocessing but when you look at the power generation projects for uranium consumption, demand outstrips the total reprocessing resource,” says Colin Kubank, AMEC Minproc’s managing director for Africa. According to mine developer Extract Resources, demand for uranium (U308) is expected to outstrip supply by 2015, as countries across the world turn to nuclear power to supplement or replace conventional generating sources. That is good news for AMEC Minproc, which provides a full suite of services to get mines from feasibility to operation.

AMEC, of which AMEC Minproc is part, provides services to oil and gas exploration and development companies, and to mining organisations. “We are an engineering consulting company,” explains Kubank, “and our core expertise is the provision of high value consultancy, engineering and project management services to the world’s energy, power and process industries. AMEC Minproc is a leading international engineering and project delivery business specialising in the design, procurement and construction of mineral resources projects. Within the group, we have geologists and resource estimation specialists, mining engineers, ore processing experts, environmental scientists, geotech scientists, air specialists and the full range of expertise required for the delivery of feasibility studies, detailed engineering design, and project and construction management to get the mine in to operation.”

AMEC Minproc is a true one-stop-shop for the exploitation of natural resources. Established in Australia in 1978, it became part of fellow Australian

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Grinaker-LTA Grinaker-LTA’s capability, and

multi-disciplinary

industry-leading

value-engineering,

construction

approach

ensures

the

to

safety

ability

to

provide clients with any underground and surface infrastructure/mining requirements.

Specific expertise relating to the mining and commodity sector includes the construction of all mine infrastructures, vertical and decline shafts as well as underground and opencast contract mining in the coal and hard rock sectors.

A holistic approach through The Aveng Group, in conjunction with industry-leading role players such as Amec Minproc affords access to provide turnkey solutions, design capabilities, process engineering and project management expertise.

company GRD Group in 2000, which was itself acquired by UK-based AMEC plc in November 2009. Being part of a large, global organisation has enabled Minproc to expand its range of services— it now offers geology and resource definition; mining engineering; mineral processing technology selection and design; infrastructure development; environmental studies; project management skills and proven control systems. With construction management capability, procurement services and broad technical capability, it’s small wonder that the company is seeing the need for its services rise as the demand for natural resources grows as the global economy comes out of the downturn.

“We originally opened our South African office in Johannesburg in 2003,” says Kubank, “and we delivered a number of mining projects, such as the Tenke Fungurume copper/cobalt mine in the Democratic Republic of Congo for Freeport McMoRan Inc, as well as a number of gold and platinum projects.”

The DRC project was worth a total of around US$1.8 billion; AMEC Minproc’s involvement was to the tune of around $1 billion of that.

The company’s long and impressive list of projects also includes the Munali nickel project in Zambia; reconfiguration and recommissioning of the Syama gold plant in Mali; detailed design for the Essakane gold plant, Burkina Faso; and a range of projects in Ghana. In recent years, it has designed and installed a number of large-scale semiautogenous grinding (SAG) mills at locations around the world. It has comminution (rock reduction) expertise in-house, which has been deployed at sites such as Cadia Hill and Telfer.

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“We have a lot of feasibility study work on at the moment and we expect to be back to our former size by the end of 2011” “We have around 75 people in the Johannesburg office,” Kubank continues. “We were larger but the global downturn meant that funding for projects dried up. We had to downsize to 50 people at the end of 2009—but the wheel is now turning.

We have a lot of feasibility study work on at the moment and we expect to be back to our former size by the end of 2011.”

The company’s customers are primarily Australian, which reflects its own origins.

Australian companies are busy all over Africa; but AMEC Minproc’s geographical focus is West and sub-Saharan Africa. As well as uranium, activity is on the rise in gold, platinum and copper, but not to the exclusion of other minerals. And you can’t bring minerals to market without processing.

“We recently completed a platinum concentrator on the eastern limb of the Bushveld Complex in South Africa for Platinum Australia, a ‘junior’ mining company,” Kubank says. As AMEC Minproc’s expertise reaches from end to end of the mining industry, the company believes that it makes sense to get involved as early into a project as possible.

“Early entry enables us to optimise the project and deliver our expertise to develop it in the most effective manner,” he explains. “A lot of mining projects are in locations that are difficult to get at—one of our strengths is in logistics planning, for getting heavy equipment to remote sites, for example. Whether it be by road or air, we do whatever needs to be done to access the site,

open it up and get it running smoothly.”

Working in Africa is challenging, as AMEC Minproc outlines in its capability statement. It lists seven primary issues that mean construction of a major resource project is different from other continents. There are 53 countries, which means numerous different legislative frameworks.

There are few regional agreements on mining law; currency exchange; commercial and tax law; or customs controls. There are no less than four different languages. Political instability is, unfortunately, a reality in several areas—some of the most attractive for mining and minerals among them. For a continent with such a long coastline, there are few appropriate port facilities—the transport infrastructure is nowhere near the levels of Europe, Asia and the Americas.

In addition, communications beyond the capitals and maybe coastal areas are poor, unreliable and often expensive. So the unwary can end up in the middle of a very chastening experience.

But the mineral wealth of Africa cannot be ignored.

Experience is the operative word; and AMEC Minproc has been on the continent for many years and worked in a significant number of its countries.

It also has a reputation for a sound understanding of critical project execution issues across the board.

With that level of experience, depth and breadth of expertise and the resources of a global corporation to call on, AMEC Minproc is an indispensible partner in Africa. www.minproc.com

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Comprehe

engage

An open and transparent approach to stakeholder engagement is going a long way towards helping Gold Fields fulfil the ambitions of its sustainable development strategy

G

old is one of those materials that touches us all. At one end of the spectrum, it has played a fundamental role in the foundation of global banking and finance; at the other, it is the basis for many of the most beautiful and decorative forms of art.

Behind this glossy and expensive precious metal lies the gold mining industry, run by organisations that are working together to improve their operational practices and establish their corporate responsibility credentials. In 2001, a number of the world’s top tier gold mining companies got together to form the ICMM (International Council for Mining and Metals). “This is a CEO-led organisation and its aim was to set up a platform to promote sustainable development in the industry and enable mining companies to share best practice,” explains Philip Woodhouse, head of Sustainable Development at Gold Fields, one of the world’s largest unhedged producers of gold, and an ICMM and Global Compact member.

The company is based in Sandton, Johannesburg, with operational gold mines in South Africa, Ghana, Australia and Peru. It has a long history of commitment to the environment and to the local communities in which it operates. “Sustainable development is not new to us,” Woodhouse says. “We have been investing in things like environmental

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education, socio-economic development and communities since the 1980s.”

From the corporate governance perspective, Gold Fields complies with two international standards: the King Report on Corporate Governance in South Africa and the Sarbanes Oxley act. It has a full set of protocols in place for both.

The main thrust of the company’s ethics and corporate governance policy, though, has been to set up a code of ethics. “This has been in place for quite a few years,” Woodhouse explains. “It spells out the behaviour we expect from our employees and aims to ensure they act in a manner beyond reproach.” The code provides user-friendly guidance on how employees should deal with all issues to ensure ethical behaviour.

Policing behaviour is not always easy, though.

“To support that, we make use of an independent third party tip-off provider,” Woodhouse explains.

“So if anyone suspects someone is not adhering to our code of ethics, they can phone the hotline, which is anonymous. We investigate from there, and we have a whole protocol on how we investigate and close out on these issues.”

On the subject of human rights, Gold Fields has developed a range of general practice guides on issues as wide ranging as freedom of association and upholding the right for cultural difference.

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Many of the guides are also aimed at issues that are pertinent to specific locations. In Ghana, for example, illegal artisanal mining is prevalent, so a guide has been developed to provide ways of dealing with this.

As one might expect, Gold Fields also has a well established health and safety policy, along with the relevant supporting documents and framework. As part of this, it has gained OHSAS 18001 certification; and uses the health and safety management systems to drive the process of continual review and improvement. “We have, for example, put together a Safe Production Rules document, which states our golden rules— the rules you just don’t break. And in this case, they really are prescriptive. For example, wearing your personal protective equipment is nonnegotiable—thou shalt!”

One of the key pillars of Gold Fields’ environmental policy and management system is ISO 14001 conformance, which is independently audited at each site; and there is a formal incident reporting process in place that reports regularly to the board.

Power consumption across the company, along with all the environmental initiatives, is reported to a sub-committee of the board known as the Safety, Health and Sustainable Development Committee.

“This committee is responsible for ensuring we continue to live by our sustainable development policy framework,” explains Woodhouse. “One of the important metrics they monitor is how many gigajoules of energy we are using to produce an ounce of gold.”

Working with and within the communities in which it operates has always been one of Gold Fields’ strong points—it has a long history of building schools, upgrading roads and providing access to electricity, healthcare and clean water.

But there are always new challenges. “If you can’t attract teachers to the area, the school just stands empty. So we also build living quarters for the teachers,” Woodhouse explains.

The company also carries out healthcare education in local communities. In Peru, for example, it found that historically, local people were experiencing respiratory problems. “In the end, we figured this out,” says Woodhouse. “At 4,000 metres above sea level, breathing is a challenge at the best of times. It’s cold, but more importantly, most of the houses had fires for cooking and heating but had no chimneys. So they were exposed to the health implications of wood smoke.” Gold Fields’ solution was to assist the community with putting proper cooking facilities

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into the houses, and this also helped to eradicate another health issue—posture problems.

The company also works to stimulate the economic development of the region. It has helped to improve the milk yield of the local dairy farming industry, for example, through encouraging the use of pastures.

“In each country where we operate we’ve set up a foundation dedicated to socio-economic development within the community,” explains Woodhouse. “For a percentage of profit and every ounce of gold produced we put aside funds, which are administered by a board of trustees and are used purely for socio-economic investment.”

Gold Fields’ approach to stakeholder engagement is open and transparent. “If people want to throw stones at us, we can only learn from that,” Woodhouse says. The company’s policy is to engage with local communities at the earliest opportunity and then maintain that engagement throughout

the time it is operating in the area. Even at early exploration level, as soon as geologists report that a site might be suitable for mining, the community affairs specialists move in and begin meeting with the local community in a two-pronged process of discovering their expectations and educating them about Gold Fields. Then, once mining operations are established, the company continues meeting with committees from the local community, and holds forums to continue to discuss local issues and needs. All socio-economic investment is based on a comprehensive process of engagement.

The efforts of the last few years to formalise a diverse range of policies and processes into an integrated sustainable development strategy have certainly paid off. “Sustainable development is not a just a concept in Gold Fields—it is the way we do things,” Woodhouse concludes. www.goldfields.co.za

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FMCGs,

Egyptian-st Egypt’s retail scene has barely changed in decades; but that hasn’t stopped Procter & Gamble from trying to help modernise from within, as Alan Swaby learns

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Procter & Gamble Egypt

I

t’s hard to imagine many homes in the West that don’t have at least one product from the Procter & Gamble (P&G) stable. Across the three business development areas of beauty and grooming, health and well-being, and homecare, P&G has over 300 different brands bought and used by over four billion people worldwide.

And since the establishment of P&G in Egypt in 1986, the message has been spread across wide swathes of Africa, the Middle East and into Asia. Not all of the 300 brands are available from Cairo—in fact, P&G concentrates on just 18 of the most popular products, including Ariel detergent, where the Egyptian factory has become the main producer for all of the Middle East.

Next year the company will celebrate its 25th anniversary; and the development of the business is nothing short of remarkable. With an initial capital of just US$2.1 million and two brands—Camay and Crest— P&G’s investment has grown over 100 fold. Even more remarkable is that P&G Egypt is now the country’s biggest exporter of packaged goods and one of Egypt’s top exporting companies dealing with more than 37 countries in Africa, Asia and Europe.

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Procter & Gamble Egypt

Orascom Construction Industries Orascom

Construction

international

Industries

construction

is

contractor

a

leading

based

in

Cairo. OCI provides engineering, procurement and construction services on a range of large, complex and demanding projects across North Africa and the Middle East.

Recognizing

OCI’s

tradition

for

excellence

and

achievement, Procter & Gamble Egypt established a decade-strong relationship in 2000 with the construction of P&G’s factory in 6th of October City, Egypt. This partnership has grown to encompass several projects in Egypt and Nigeria, including P&G’s current landmark EGP 250 million expansion project at its plant in Egypt. OCI aims to continually deliver excellence throughout our partnership with P&G.

What began with 50 employees has grown to around 1,200 and all but a handful are Egyptian nationals. In fact, the last two general managers in Cairo have been Egyptian and more than 35 home grown mangers have gone on to leading positions in P&G worldwide.

At the heart of the process is a 120,000 square metre factory (actually five mini-factories) featuring the largest synthetic detergent tower of its kind in the Middle East where Ariel is made.

Productivity at the plant has continued to meet all targets and has encouraged production to the extent that a second plant twice the size of the first is being built just four kilometres away.

It marks a huge step up in P&G’s investment in the Near East. Whereas EGP1.9 billion was invested in the first 24 years of operation, EGP1 billion is being invested in the next three years alone. With 250,000 square metres of new capacity, it will effectively triple production capacity in Cairo. Initially the facility will exclusively produce Pampers nappies and won’t be finally completed until 2020, but it will come on stream next year, employing a further 500 or more staff.

“In the overall context,” says Ramez Farag, external relations manager, “it won’t make much of a dint in Egypt’s unemployment figures but it will send a message to the wider community. The present government is making great strides in attracting new

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Polaris International Industrial Parks Polaris International Industrial Parks is a ‘private’ industrial park and joint collaboration between Egypt and Turkey. The project suits many industries with its professional amenities, facility management services and environmentally conscious approach. It features a housing project that offers a range of lifestyles and an array of service facilities. P&G recently established its new diaper manufacturing plant on its premises.

The project will be a state-of-the-art industrial park and valuable to Egypt’s economy.

business to Egypt and we want to lead by example.”

There are now 80 multinationals in Egypt and the P&G plant has itself attracted five new investments as P&G suppliers open local operations to feed the factory.

Unemployment can vary from nine per cent to 20 per cent or more, depending on whose figures you believe, but that doesn’t tell the whole story. Even among those with supposedly regular employment, significant levels of disposable income are low, making it difficult for all discretionary purchases.

Compared to a virtual 100 per cent penetration in Europe, no more than one in five of the Egyptian population have tried disposable nappies.

It’s a developing country but the retail scene is still more traditional than modern. “There are international retailers operating here,” says Farag.

“Carrefour, for example, and from last month, Metro Cash & Carry. But supermarkets account for no more than 13 per cent of the retail market.

The vast majority goes through kiosks or small retail stores, of which Egypt has some 270,000!”

The lack of disposable income and the retail structure of the country are not conducive to rapid adoption of western shopping patterns. Nor do poor transport links and inadequate infrastructure help. The seven distributors who buy and sell on P&G products are doing their best; but Farag estimates that they directly cover no more than half the total retail outlets.

Surprisingly, perhaps, P&G’s US parentage seems not to play a great role. “Occasionally,” says Farag, “at times of tension, there is talk of boycotts but this business has a very local face and is seen to be

contributing to the overall welfare of the population.

We are showing that commercially driven decisions can have a meaningful social impact.”

One such programme is the Mokattam Non-formal Education Project, also known as the recycling school.

Mokattam is a Cairo slum and home to one million scavengers who scour the waste dumps for any item of value. Children are forced to help their parents and consequently miss out on schooling. When P&G became aware that discarded shampoo bottles were being cleaned up and then passed off as genuine products, it developed a novel solution to deter the bootleggers and give young children an education.

Surrendering old bottles earns credits to attend school. By linking basic skills to recycling activities, children are taught to count (the number of bottles returned); to read (the labels on the bottles); do calculations (the value of what they’ve recycled); and even computer skills so that the data can be presented on a spreadsheet.

Since 1837, P&G has worked to a set of principles and values aimed at improving life for its customers.

It takes its social responsibilities seriously and perpetually develops partnerships aimed at improving the lives of the next generations. Among others, it supports programmes that provide valuable vitamin supplements and pure water to children.

In 2009, P&G was recognised as one of the best ten employers in the Middle East by international HR consultants Hewitt Associates and it holds the prestigious National Award for Excellence in Quality, awarded by Ministry of Trade and Industry’s Industrial Modernization Centre.

Behind the scenes, it applies similar thinking

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ECG Founded in 1969 by two highly qualified professional engineers, ECG has grown to become one of the world’s leading engineering companies (ranked 133

by ENR in 2009). Today, ECG enjoys a powerful workforce of over 2000 professionals covering the full spectrum of E/A consultancy firms’ services that span from project identification & design to project & construction management. ECG’s multidisciplinary expertise empowered ECG to leave its mark on many Middle East development projects including airports, buildings (residential compounds, office buildings, banks, financial institutions, commercial and recreational centers, hospitals, educational complexes, hotels, and resorts); infrastructure; oil and gas; industrial; power; and transportation.

to sustainable methods of operating. The new Pampers plant, for example, will aim to recycle all rejected nappies by reducing them to their constituent parts and reusing the raw materials while detergents are being made in concentrated form—reducing volume and all the associated costs that follow.

Future progress for P&G will be linked with the fortunes of the country as a whole; but it has demonstrated that the right level of investment can make a return and a valuable contribution. www.pg.com

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Apromisin strategy

G

old One International is an Australian and African gold resource company listed on both the Australian Securities Exchange and the Johannesburg Stock Exchange. The company, which came into existence in 2002, is a junior entrant to South Africa’s goldfields; and as CEO Neal Froneman points out, the niche positioning required to create an advantage in this mature and highly competitive marketplace demands a unique and innovative approach.

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Strategic clarity is the ke South Africa’s shallow go dynamic recent market e One International (Africa)

Gold One International

ng

ey to unlocking the treasures of old resources for the country’s most ntrant. Neal Froneman, CEO of Gold ), talks to Jayne Flannery

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KWV Mining “Commitment is vision” Gold One International Limited is one of the leading mining houses that is creating relationships with small and medium businesses, and maintaining them. KWV Mining is one of those success stories that has grown into a professional supplier of goods and services. Our vision is simple: “The right goods at the right time at the right price”. Gold One’s commitment has allowed our vision to be perfected.

KWV Mining is a professional supplier of goods and services to the mining industry.

To date, Gold One is the first junior gold mining company to bring greenfield resources to account; and Froneman explains that the company has had to negotiate formidable barriers to entry. “Firstly, there is the amount of capital required and then the inevitable risk associated with the investment.

Moreover, there is no historical legacy of support in South Africa for junior companies who more typically list on the Toronto and Australian stock exchanges,” he says.

Most market players are multinationals driven by their size and the need to demonstrate a big impact on their market capitalisation. The reserves they want offer the higher rewards that stakeholders demand, but at a higher cost and a higher risk. “Our strategy is very different,” Froneman asserts. “We are a company that is not driven by size and so we are happy to bring projects to account that the major mining houses would walk away from.”

Despite its market capitalisation of $250 million, Gold One is considered a relatively small player—but this means it can be quick off the mark when opportunities arise. The company can also display a strong balance sheet and stellar production history, so Froneman is not perturbed by unpredictable world markets or the vagaries of commodity cycles. “Marginal companies would struggle in this sort of environment, but we have significant margins and a solid asset base that can withstand volatile trading conditions,” he explains. “It would take a very large swing indeed for any of our projects to be affected, or for us to consider a major shift in strategic direction.”

The company has a clear and highly focused strategy to seek out shallow, low risk and technically accessible resources, whereas most of South Africa’s gold reserves are typically deep and technically challenging. Opportunities that fit with Gold One’s strategic approach are thus few

and far between. But when they do occur, there is a significant competitive advantage because of the lower costs and environmental conditions conducive to higher productivity.

Strategic direction and strategic clarity are critical concepts. “We have a very highly structured process that we repeat on an annual basis, starting with a strategic break away at the beginning of the year. Each year we revisit and refine our corporate strategy and it is always good news when there are no dramatic changes because this shows we got it right in the first place.”

Once the company has decided exactly where it intends to go, the message is then rolled out systematically through the organisation to every level. “Everyone must understand our strategy in order to be able to align their own input and substrategies accordingly,” Froneman says. “We must have both ownership and very good strategic alignment, which is then converted into our underlying budgets to support the next business cycle. The final aspect of implementation is the attention we pay to team effectiveness and the role and contribution of each team and the individuals within that team. At the end of the process we are left with very clear owners and a very sharp focus.”

A key short term goal is to ensure that production at the Modder East mine remains on track and in line with projections. The first new mine to be built on the historic gold mining belt of East Rand for 28 years, the site has a shallow underground mine, approximately 500 metres below the surface at its deepest point, with an integrated gold treatment facility and a production capacity of 100,000 tonnes per month. The first symbolic pour took place on 21 July 2009 and five months later the mine moved into continuous commercial production. Delivery has consistently been in line with expectations; but Froneman and his team are well aware that investors will be unforgiving if production should falter.

“A second important short term issue is to restructure our balance sheet by putting a debt facility in place,” Froneman continues. “It is not easy in the current environment but it has a number of commercial benefits as opposed to relying on our equity to fund the development of the company.”

Lastly, Froneman is keen that Gold One takes more steps to highlight its visibility to stakeholders.

“We have had an inevitable focus on operational delivery over the last few years and we have not always been good at bringing our successes to

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Lorge Software Support The Sage ERP Accpac financial software solution upon which Gold One International depends is supported and maintained by Lorge, the preferred supplier and implementer of Sage business software and technology solutions in Africa since 1986.

The solution provides special functionality essential to the gold mining industry, including financial report writing, purchasing/workflow procedures, production reporting and asset maintenance.

the world’s attention. We want to change that by adopting a far more proactive stance in marketing and communication,” he says.

In the medium term, there is already a highly promising second project in the pipeline. The 9,760 hectare Ventersburg Project is situated in the Witwatersrand Basin in Free State Province to the east of the main Free State Goldfields. Gold One was awarded prospecting rights in November 2006 and is currently in the pre-feasibility phase

after a promising scoping study.

The Ventersburg project has a resource of 3.28 million ounces and is predicted to produce its first gold in 2015. The potential of another site, Bothaville, which is also in the Free State Goldfields, is also being explored; and the company also has the Tulo concession in Mozambique and the Etendeka greenfield project in Namibia. Taken together, there is an indicated and inferred resource base of around 13 million ounces of gold.

Gold One already has 100,000 ounces of annualised production, but in five years’ time, Froneman envisages that production will have comfortably grown fivefold. “We believe our strategy can realistically support this kind of growth. Most of it will come internally from organic growth within our existing resources, but we are also excited by the possibility of other acquisitions,” he concludes. www.gold1.co.za

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A

theatre of

shopp Offering its visitors the full spectrum of all-round entertainment, Durban’s Gateway shopping centre continues to thrive, with its vision to remain the greatest entertainment and shopping complex in the southern hemisphere very firmly at its core

L

ess than a decade ago, Umhlanga Rocks was a very pretty but largely undeveloped holiday destination for South Africans who didn’t want to get involved with the hurly burly of Durban’s Golden Mile. Just 15 kilometres away from downtown Durban, Umhlanga was still largely in the business of growing sugar cane; but the seeds were already in place for immense and rapid changes.

The geography of Umhlanga meant that there was little scope for development around the existing town centre. Today, the focus of attention is in the new town, a couple of kilometres away on top of a rise which provided office developers who got in early enough with the most spectacular views down the coast towards Durban, Africa’s biggest port and the gateway to Southern Africa.

From the mid 1990s there were plans for a shopping centre in Umhlanga; but it wasn’t until October 2001 that Gateway opened its doors, with 140,000 square metres of GLA (gross lettable area).

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Gateway

Umhlanga New Town Centre is becoming a mixeduse hub developed around a series of squares, parks and boulevards surrounding Gateway. A bustling business environment, it lies 15 minutes from the centre of Durban. Developments already completed in the area include the Umhlanga Hospital and Medical Centre, offices housing many of Durban’s blue chip and multinational companies, motor dealerships, the Crescent lifestyle centre, the City Lodge Hotel, residential developments, health clubs, private schools and places of worship.

The Town Centre enjoys easy access to a network of major roads, including the N2, with Durban International Airport a 20-minute drive away.

Together with the Durban Point redevelopment, the Riverhorse Valley Business Estate and the King Shaka International Airport, development of the area is helping to improve Durban’s competitiveness and attractiveness on the international stage. The greater commercial activity increases the market for existing businesses; more work opportunities create more demand for housing; which in turn supports the property market that has become associated with the north of Durban. This, of course, can only be good news for Gateway and its tenants—at least 4,000 new homes have been built in the vicinity and Gateway now attracts over 1.8 million visitors per month. What’s more, its catchment area is one of the most affluent in the country.

South Africa’s second largest shopping centre after Sandton City, Gateway boasts 380 world class stores.

It introduced the idea of ‘shoppertainment’ for the first time in South Africa, being modelled on world-famous centres such as Mall of America in Minnesota, USA; and Canada’s West Edmonton Mall. Approximately 40 per cent of Gateway’s GLA is directed towards entertainment of one kind or another—there are cinemas and theatres, cafés and restaurants, and it has one of only two IMAX screens in the country. It opened the first artificial wave machine of its kind and provides a skateboard park for youngsters and a concert arena in the Wave House complex. There’s also the Science Centre, where students from the region’s outlying schools can come along and experience hands-on experiments. In addition, Gateway also plays host to a 6,500 square metre Virgin Active gym with two pools.

It’s perhaps the sort of complex where one would reasonably expect to find a casino among the many other entertainment attractions; but Old Mutual Investment Group Property Investments, which

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manages the centre, has resisted the temptation.

“There are already two casinos nearby,” says Adrian Raw, Gateway’s centre manager, “but Old Mutual prefers to remain with its family-oriented image and business strategy in which gaming wouldn’t be an appropriate fit.”

Other services offered by Gateway include valet parking, conference facilities and 24-hour on-site medical and ambulance services. There is space for 7,000 cars, as well as a public transport rank on the property to ensure easy access.

Gateway undertakes an enormous amount of work in providing customer service training for the members of its staff who are responsible for such roles as security, cleaning, parking, landscaping and waste management.

Gateway has developed some novel methods of training. First, it exposes all new staff to the centre’s facilities. They can go to the IMAX and experience the attractions at the Wave House. They might even have the very first restaurant meal of their lives at Gateway. It’s all part of the process of explaining how customers are attracted to Gateway by the quality of the shopping experience; and that staff are an integral part of that experience. They are trained and encouraged to interact with customers, offering assistance or directions when asked, or even when they simply sense that someone needs help. Typical real-life scenarios and case studies form part of the training process and are given to staff in the form of an easy-to-read comic book.

“It’s very rewarding,” says Raw, “to see someone with little or no customer service experience blossom and develop into a confident and capable staff member, who can then win promotion up through the ranks.”

The overall customer experience is also surely enhanced by the natural beauty of the area in which Gateway is located. Open space in the New Town Centre strives to serve as a ‘green lung’ in the midst of the urban buzz, with thousands of trees and shrubs—85 per cent of which are indigenous—allowing the developed area to blend in seamlessly with the pristine and beautiful Indian Ocean environment.

As Gateway continues to thrive, it is clear that the sensitive partnership between developers and planners has largely retained the simplicity and charm of the area, while providing residents and office workers with some of the best retail facilities in the world. www.gatewayworld.co.za

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Invest for

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Sekunjalo Investments ha companies under its umbr South Africa’s key industr alliances with global brand Saab has helped the comp of its founder and executi 172 www.bus-ex.com September 10

Sekunjalo Investments Ltd

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hen it was incorporated in 1997, just three years after the first democratic elections to be held in that country, Sekunjalo was able to ride the wave of euphoria and optimism that was infusing South Africans. Its founder, Dr Mohammed Iqbal Survé, was already well known as the ‘Struggle Doctor,’ a reference to his medical work with victims of apartheid and provision of medical care to a number of prominent South Africans after their release from Robben Island. Two years later, the company listed on the Johannesburg Stock Exchange, making 36-year-old Survé the youngest CEO of a listed diversified conglomerate.

It was definitely a moment of opportunity, an historic moment, and Sekunjalo’s name reflected that—it translates as ‘now is the time’. And its mission—to make strategic investments in growing South African businesses and bring real influence to the communities that were so scandalously held back under the apartheid regime—was definitely of its time. It was in 1997 that the BEE (Black Economic Empowerment) codes of practice came into being and with them, the requirement for new companies and overseas investors to ensure among other things that the equity in South African businesses was fairly distributed.

Since then the South African economy has flourished, proving that this policy, far from being restrictive, has encouraged entrepreneurship and achievement among groups that previously wouldn’t have had a look-in. All of Sekunjalo’s directors have their origins in these communities, including Survé, who grew up in poverty in the repressive climate of the 1960s and 70s. So when Survé and three fellow activist co-founders started the company they did not have the advantage of traditional business experience. They saw the company as a platform for empowering people, not a means of enriching themselves individually.

They wanted to create a company that would employ black people and nurture them so that they could become successful managers and future business leaders. Sekunjalo’s motto was and still is ‘people before profits’; and the primary commitment was to grow black people and the economy of the country.

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as a broad portfolio of rella, covering most of rial growth sectors. Building ds like BT, Siemens and pany to realise the vision ive chairman Iqbal Survé

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Sekunjalo’s investment philosophy is to follow sound business principles and practices in its quest to create wealth for all its shareholders. “We identify and promote entrepreneurs with potential and flair in our prospective business ventures. At the same time, Sekunjalo’s investment philosophy is value-driven and we are always aware of the need to maintain and strengthen corporate governance,” CEO Khalid Abdulla has said.

A cornerstone of Sekunjalo’s philosophy is to boost previously marginalised groups by creating employment and transferring skills. In short, it has become an investment holding company that seeks to empower individuals and communities through profitable investments. Ideally it likes to acquire a controlling interest in the companies it helps, but it is happy to acquire strategic noncontrolling stakes, just as long as Sekunjalo is able to influence the business processes and add value to create wealth for stakeholders and, above all, achieve transformation.

Over the years, the company has inevitably gravitated into a number of vertical markets, and currently has investments in healthcare, marine, ICT and biotechnology. Telecoms is one of South Africa’s most vibrant sectors, in which Sekunjalo has secured an important stake with investments in Nokia Siemens and BT. In 2007 Sekunjalo made its first foray into the telecoms space by taking a 26 per cent stake in network services group Nokia Siemens Networks Holdings RSA. The BT deal in 2008 saw the investment company gain a 30 per

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cent stake in BT Communications Services SA (BTSA) for more than R27 million. BT sees South Africa as an attractive, growing ICT market and is focusing on serving the increasing requirements of the local multinational and global companies that are expanding their presence into South Africa and the rest of Africa.

It is an interesting illustration of the twin motivators for overseas investors—market capture and compliance. “When we started looking for a BEE partner two years ago, we wanted someone who could complement our business strategy,” said Stephan Grant, BTSA’s business manager for IT services and finance in South Africa.

“Sekunjalo has access to a number of multinational corporations and government contracts which are BTSA’s target markets.” However, Grant admitted that BT couldn’t enter the market without developing a credible BEE scorecard. “South Africa is a fast growing telecoms market and we saw it as imperative that we get a BEE partner to expand our reach and also to meet government regulations.”

In a further boost to its involvement with high powered global companies working in South Africa, Sekunjalo announced in June that it had taken a significant share in the defence company Saab South Africa, in a deal that will give it 25 per cent voting rights and five per cent of profits, as well as the right to two boardroom seats. Saab CEO and president Åke Svensson commented that: “With Sekunjalo as a strategic partner Saab will further strengthen its position in the South

Sekunjalo Investments Ltd

Cliffe Dekker Hofmeyr As a full-service business law firm, Cliffe Dekker Hofmeyr is able to assist Sekunjalo with the full range of business legal services to support its strategic and operational needs. We offer clients the advantage of one law firm with the depth of resources, capabilities and experience tailored to their specific needs, wherever they do business—in South Africa, across Africa and globally.

African market.” Saab has been present in South Africa for more than 10 years and has grown the South African business to serve an impressive list of clients specifically within government and the public sector, both of which are expected to grow further with this partnership.

Now, the 13 year old company has turned its

early vision into reality. On June 10 2010, Sekunjalo was named the country’s most empowered company in the Financial Mail/Empowerdex Top Companies Awards for 2010. While the award considers empowerment factors (such as black ownership, black management and employment equity) when deciding its scores for companies, additional factors such as employment equity, skills development, preferential procurement, enterprise development and socio-economic development are also taken into account.

When he heard about the award, Survé responded by saying he was mainly pleased by the high ranking that Sekunjalo received for the areas of enterprise development and socio-economic development, which recognises the company’s efforts in working towards finding solutions to poverty and unemployment in South Africa. www.sekunjalo.com

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In new territo

Andy Haslam, managing director of iron ore producer Territo to be mirroring the growth of Asia’s resurgent economies. Ja

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sia’s industrial growth is driven by an insatiable demand for steel. In turn, steel production is dependent upon iron ore, a bulk commodity that Territory Resources is uniquely well placed to supply. Production began at the company´s flagship mine at Frances Creek in 2007; and by the end of 2009, Territory had completed 40 shipments to China, totaling over three million tonnes of high grade lump and fines product.

The company occupies a prime position among Australia’s junior producers with a life-ofmine marketing agreement in place with its main shareholder, the Hong Kong-based supply chain management company, Noble Group. This is supported by ready access to world-class infrastructure in the Adelaide-to-Darwin rail line and Darwin Port.

“We have witnessed a remarkable turnaround over the last year,” states managing director Andy Haslam, who adds that just a year ago, the company faced a full blown crisis. “From a $71 million loss in the previous year we have gone to a $41 million profit. As at 30 June 2010, our debt has been reduced to $34 million from over $90 million and we project that we will be debt-free by the end of the financial year, assuming prices for our ore remain at current levels.”

This year, Territory is riding the crest of a wave. From a low point of just $47 per tonne in May 2009, prices have recovered to a heady average of $110 per tonne over the last quarter. Meanwhile, production costs have been slashed to just $58 per tonne, owing to a drive to increase productivity which has seen annualised output increase by 30 per cent to two million tonnes per annum without the use of any additional resources.

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ory Resources, is delighted ayne Flannery reports

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Consulmet Consulmet

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serving the minerals industry through the design and supply of production ready mineral processing plants.

The extreme agility of Consulmet is evident in the supply of the Territory Resources Frances Creek iron ore beneficiation plant, where the plant developed from a concept to being trial erected and tested within 16 weeks. Consulmet prepared the design basis, detailed engineering and over 350 drawings required to complete the procurement and fabrication activities during this time. This profound technical prowess allows Consulmet to rapidly progress concepts from inception to realisation, deploying robust technological solutions that exceed industry benchmarks.

made to the precise depth we require. We are also very pleased with the improvements we have witnessed through the introduction of a new ore crushing contractor, Barminco, who we brought in in March 2010. Their job is to manage the crushing operation and they have managed to consistently produce the volumes we require,” he comments.

The price upturn has meant that all the pits at Frances Creek, which contains a vein style mineral system similar to gold, have been re-optimised. In June 2010, estimates of the probable ore reserves were increased to 5.69 million tonnes and Territory has put in place a three-pronged programme to further extend the mine’s life. A budget of $4.67 million has been approved for the 2011 financial year to explore for and develop iron ore resources both in the near-mine environment and

“Improving our internal communications has had a remarkably powerful impact on the performance of the business” “The global financial meltdown compelled us to take a long, hard look at the business. At the height of the GFC, the water was lapping at the edge of the boat, but we remained optimistic and positioned ourselves so that we could take advantage of an upturn and that is precisely what has taken place,” he says.

Most important of all was a shift in the corporate mindset to highlight the importance of the company’s human assets over its capital assets.

“Improving our internal communications has had a remarkably powerful impact on the performance of the business,” he continues. “I personally brief every one of our staff on the past month’s performance and our next set of targets. Everyone understands exactly their role and the contribution expected of them. Everyone knows that they are accountable.”

The company also initiated a comprehensive ‘pit to port’ review approximately one year ago. This re-evaluated the efficiency of every aspect of the operation from drilling to final transportation and included detailed analysis of pit optimisation plans, mining techniques, transport and off-site overheads.

“We made some of the biggest gains by taking simple steps such as paying attention to timekeeping, ensuring that trucks are loaded to the maximum and checking that drill holes are

within a 35 kilometre radius of Frances Creek.

At present, the mine’s life is projected to last until at least 2014, but Haslam believes there are still further reserves to unlock. “All our experience tells us we are going to be there for a long time yet and we believe there is still additional mine life in the area,” he says.

As a long-term objective, the company is eager to identify and develop other iron ore deposits, but to date it has not identified any opportunity that compares favourably to Frances Creek. “We have spent a lot of time looking and we remain interested in growing through other acquisitions; but the search has made us appreciate the advantages of our wonderful position in relation to the strength of the local infrastructure. Darwin Harbour is the closest port to China from Australia with just seven days’ steamer time, which means we have a cost advantage over south Australian producers,” he explains.

“Many potential projects are simply not feasible when you really look hard at the costs and in particular the difficulties associated with transportation and associated infrastructure. So far nothing excites us enough to go forward, but we are very optimistic that the right opportunity will turn up.”

Meanwhile, Haslam still finds every day a new

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and exciting challenge. “I love running a small, responsive company where it is possible to see very rapid changes. Last year we were on the brink of a serious crisis, but now we face an entirely different future. Currency and commodity markets are always in flux, but we are now seeing much more stable trading conditions and I believe that the dramatic price falls of 2009 were an aberration that we will not quickly see repeated.

“The numbers are now stacking up in the right direction,” he adds. “But even if there is another storm ahead, the cuts we have achieved to our production costs have made us extremely competitive. That factor and the special advantages of our geographical location mean we are always going to be in the right part of the cost spectrum.” www.territoryresources.au

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ecent years have seen a boom in international infrastructure investment. One of the areas to benefit most from government spending has been the power construction industry which has seen demand soar; and at the forefront of the power revolution has been KEC International Ltd. The company, headquartered in Mumbai as part of the RPG Group, is very much regarded as a global entity. “Indeed, we are one of the top three companies in the world when it comes to building and constructing power transmission lines and towers; our focus is the engineering, procurement and construction of transmissions and power line construction, the construction of railway lines, telecoms towers, cables and water management,” states Mr V. Balasubramanian, vice president for International Projects.

Despite its global reach, KEC has its foundations firmly set in India.

Originally founded as Kamani Engineering Corporation in 1945, by 1950 it had established a fabrication plant in Bombay, to help supply the Bhakra Nangal Dam project.

But it was in the 1960s when the company took its first significant steps towards its future destiny. “That was when the business moved into engineering and became the first Indian company to win a railway electrification order and was also awarded a full turnkey transmission line project in Sudan,” Balasubramanian explains.

By 1982 the company was increasing its successful power transmission business and became an attractive proposition for the global RPG Group. Upon completion of the acquisition the company was re-named KEC International and received the financial backing to invest in operational infrastructure.

“At the time of the takeover the company turnover was less than $30 million, today that figure is $900 million or Rs. 4000 crore,” says Balasubramanian. “We operate out of Mumbai and have three manufacturing sites based in Jaipur in Rajasthan, Nagpur in Maharashtra and Jabalpur in Madhya Pradesh. In these facilities, the company manufactures steel structures required for transmission and distribution lines, telecoms and railways infrastructure. Overall we have the largest production capacity in the world for tower manufacturing of about 150,000 million tonnes every year,” he continues.

The sites boast state-of-the-art equipment, with CNC lathe machines hooked up to computer controls, allowing Balasubramanian’s team greater automated control and improved efficiency as they build bespoke transmission towers on single assembly lines.

Roughly 4,000 of the 7,500-strong workforce are located at these three facilities, which have greatly benefited from constant investment: “As countries have invested in infrastructure we have consistently upgraded our own technology,” he says. “We have been operating CNC machinery for quite a while but there have been radical improvements and we are now able to operate CNC programmes from our design centre. There have been lots of improved processes which have created lots of optimisation.”

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KEC International Ltd

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ernments around the world invest in power infrastructure, tition has become rife within this specialist construction sector.

Balasubramanian talks to Andrew Pelis about the strategy that lped KEC International Ltd to make the most of the opportunity

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KEC International Ltd

“We are one of the top three companies in the world when it comes to building and constructing power transmission lines and towers” Each factory operates to ISO9001 standards and the specialist nature of KEC’s work and requirements means that it typically works with the same international suppliers and customers across each project. “We predominately work with global suppliers that meet the tender specifications and individual country requirements for projects— across each of the various competencies we have a list of three preferred global suppliers,” Balasubramanian describes.

Quality, safety and protecting the environment are three key concerns for the company, he adds.

“We try to address these issues with our training.

For example, on some projects very specialist skills are needed during the stringing process to lay wire between the transmission towers; and the number of skilled people is very limited. It is a risky job and requires skilled project managers.

“We have established our own training institute based in Nagpur, which ensures people are trained to work on projects around the globe,” he continues.

“We also train our customers who are responsible for maintaining a site after installation and at any time we have up to 100 people training there. Our test bed at Nagpur is one of the best facilities in the world and can test a 1,200 KV tower.”

In addition to its vast investment in training, KEC has placed a lot of expenditure and reliance on its JD Edwards ERP system. The system was introduced around five years ago and the company is currently migrating processes to create a fully integrated platform, as Balasubramanian explains: “IT plays a critical role for us in all our disciplines, from design to manufacturing and construction.

Our ERP system is our oracle and we are currently integrating our manufacturing, design and project management systems. I don’t measure our return in terms of money but can say that our ERP system has helped us to win tenders, to improve margins and to grow revenue.”

With investment in people, IT and equipment in place, KEC has built a platform able to cope with all the challenges the current environment can throw at it. “Operationally we are in a capital-intensive industry and capital is undoubtedly a challenge for any growth,” Balasubramanian admits. “The availability of manpower also creates difficulties at times and the logistics of transporting materials to

locations in developing countries can sometimes produce problems. Over time we have also got used to the different approval requirements each government sets and communication is an important part of understanding the various processes.”

In spite of the vagaries of international business—which can also include laying down transmission lines in inhospitable terrain—KEC has emerged as a world leader, a company willing to take up the challenge and experiment. In fact, it is a preferred vendor when it comes to emergency restoration systems (ERS).

“We have always been prepared to work across country borders and to take on design challenges that other companies haven’t been able to accomplish,” Balasubramanian asserts. “This has given us an excellent reputation as we have expanded internationally over the past 20 years.”

Most of KEC’s contracts are with governments; and each one can last between 18 to 24 months at a value of up to $100 million. The company has recently won contracts in Georgia and Tunisia and has over 100 projects ongoing. “We currently operate in 65 countries—fifteen countries in Africa such as Nigeria, Ghana, Kenya, Mozambique and South Africa; CIS countries like Tajikistan and Kazakhstan; and other countries in South East Asia.

“In recent times there has been an international boom in infrastructure investment and we have seen a 70 per cent growth in demand for power in the Middle East recently, which has prompted us to build a fourth manufacturing site which will be located in Abu Dhabi through a JV over the next 18 months.” This new facility will be filled with the latest CNC technology; will produce another 30,000 million tonnes; and will create another 400 jobs, mainly for locals.

So what is in store for KEC looking forward?

“There remains huge opportunity for investment in infrastructure and our aim is to double our turnover within the next three years,” says Balasubramanian. “We are looking to Latin America now and have also looked to broaden our own services by providing water management services. Acquisitions may also feature along with new markets, new technology and new design; but our focus will remain to ensure we are competitive on margins.” www.kecrpg.com

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Very

By spotting a business opportunity and building a new organisation around it from scratch, one Indian company is making a global mark on energy conservation, as Alan Swaby discovers

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hen Margaret Thatcher privatised utilities in the UK, she transferred control from bureaucrats and civil servants to entrepreneurs and professional managers. In the process, the Exchequer received a healthy injection of funds and some individuals made a lot of money but beyond all that, the supply of vital services improved—ultimately giving the public better value for money.

Other countries have tried similar schemes but not always with the same degree of success. Take India, for example. Just like the UK model, it had state electricity boards responsible for generating and distributing energy.

The difference in performance, though, was enormous—compared with losses of, say, seven per cent in the UK, for every 100 units of electricity generated in India, the boards on average received payment for 35 units.

There was no single reason for this wastage—inaccurate measurement, poor accounting, failure to collect what was owing and pilferage all combined to produce one highly inefficient service.

In 2004, the government attempted to rectify the situation by introducing legislation which would separate generation from distribution and offer them both to the private sector. But it didn’t get off to a good start with the first state privatisation resulting in a dismal failure and even now, only the Delhi district standing out as a shining example of how it should be done.

“A key factor bedevilling the energy industry,” explains Sanjaya Singhal, managing director of Secure Meters, “has always been the problem of measuring what is being produced and consumed. In the 1980s our family business began looking at ways of getting involved with electricity metering. Since then, not only have we gained considerable market share in India, we now are truly international, with 40 per cent of our $200 million revenue coming from export sales.”

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It could all so easily have ended in failure. Singhal had found what looked like an innovative solution from the UK; but the first 50 meters tested in India simply couldn’t cope with the unexpected surges in voltage and several meters actually exploded. As such conditions simply weren’t a factor in the UK, the meter’s designer had no solution, so Singhal took the significant step of establishing his own R&D department and building a meter that could cope with India’s irascible electricity supply system.

Globally, the metering market is worth $8 billion and is dominated by three giants who account for around half the total. Beneath them is a second tier of six companies of similar size—one of which is Secure Meters. “We are an extremely self sufficient business,” says Singhal. “We make 98 per cent of what goes into our meters in factories in India and in the UK. About a quarter of the 2,000 people we employ are involved directly or indirectly with R&D; and each year we invest almost 10 per cent of our revenue in the search for new products.”

In the beginning, it was almost enough simply to have a metering system that worked accurately.

As an example of what can be achieved, one particular board in the state of West Bengal was running an annual deficit of £160 million when Secure got involved. Thanks to new equipment and systems, the loss has been turned on its head into a £150 million surplus.

“There was a lot of scepticism from suppliers and consumers,” says Singhal, “to the extent that we had to send out dozens of teams to perform tests on individuals’ meters before their eyes and give them certificates of accuracy.”

But little by little, the Indian electricity market is transforming itself from a run down third world system to a modern, efficient technology-driven one. Accuracy and reliability has bred confidence and a willingness to invest that simply didn’t exist before. Although the initial emphasis was on electricity, Secure now makes products for all forms of utility, as well as numerous applications for industry and commerce in general.

In fact, Singhal believes the company’s success is driven by its ability to respond quickly and the emphasis it places on new product developments.

“The only way we can compete with the two market leaders is by stealing business from under their noses. We can, and do, develop products for seemingly insignificant markets. For example,

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Secure Meters

Cinterion Wireless Modules Cinterion Wireless Modules is pleased to be the exclusive supplier of GSM modules to Secure Meters who is the leading supplier of AMR / AMI solutions serving a global footprint. Around the world, the majority of meters and concentrators with GSM technology is based on Cinterion Wireless Modules.

Our products stand for reliability, quality, long life and innovation. In addition, Cinterion offers true global support and a future proof roadmap.

we are now number one in Israel because we adapted our technology to the Hebrew language.

The numbers are small but do that often enough and the contribution becomes meaningful.”

With smart metering already a reality in certain countries, Secure is well placed for their wider acceptance and is already the biggest supplier to Australia. But the business is looking at the next generation of smart meters which will help consumers manage their energy consumption better.

“Energy conservation already accounts for 25 per cent of our profits,” says Singhal. “Products can be as simple as in-home devices that tell the

consumer in real time how much energy they are consuming, and comparing that with historical data. When consumers see with their own eyes the extra cost involved in boiling a kettle full of water when they only want one cup, the decision to jettison bad habits becomes so much easier.”

In the UK, Secure has installed 250,000 in-home displays which have resulted in a four per cent reduction in energy use—well on the way to the government’s target of a 10 per cent reduction.

But the possibilities are even more exciting. Soon consumers will be able to load into the system their budget for the year and let the very smart meters automatically manage energy use.

Applications have started to go in so many directions. Control units have been developed for industrial pumps and commercial air-conditioning.

Secure has been testing one such device in its own offices and reduced air-conditioning energy by 11 per cent. Not all savings are as hefty as this; but each fragment benefits conservation and adds up to smart business sense for Secure Meters. www.securetogether.com

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