Energy Focus - Q1 2016 by CMB Media Group

THE BUSINESS MAGAZINE FOR ENERGY LEADERS

EMEA

ENERGYFOCUS January 2016

www.emea-energy.net

E.ON:

Clean European Energy

ALSO IN THIS ISSUE:

Exxaro / Shell SA / IPSS / ExxonMobil

EDITOR’S LETTER

Joe Forshaw EDITOR joe@emea-energy.net Timothy Reeder SUB EDITOR tim@emea-energy.net Hal Hutchison SALES MANAGER hal@emea-energy.net Sophie Bolderstone SENIOR PROJECT MANAGER sophie@emea-energy.net Sam Hendricks SENIOR PROJECT MANAGER sam@emea-energy.net Nathan Murphy PROJECT MANAGER nathan@emea-energy.net Shannon James PROJECT MANAGER shannon@emea-energy.net John Mulley FINANCIAL DIRECTOR john@emea-energy.net Jane Larkman ACCOUNTS MANAGER finance@emea-energy.net Design by Naked Marketing +44 (0) 1953 850211 www.nakedmarketing.co.uk Published by CMB Multimedia Chris Bolderstone – General Manager E. chris@emea-energy.net Sackville Place, 44-48 Magdalen Street, Norwich, NR3 1JU, T. +44 (0) 20 8123 7859 E. info@emea-energy.net www.emea-energy.net CMB Multimedia does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/ or in advertisements included in this magazine do not necessarily represent those of the publisher. Any resemblance to real persons, living or dead is purely coincidental. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. © CMB Multimedia Ltd 2016

Welcome to our latest edition…

Following on from the uncertainty in the Chinese stock markets in January and late-2015, the global energy business began to feel the pinch. Oil prices are predicted to continue tumbling, investment is expected to slow and the constant problem of demand outstripping supply is expected to continue; pilling pressure on local governments and producers. For end consumers, the falling price of oil is perhaps a welcome respite after years of high prices. In recent times, prices have dropped by more than 60% since June 2014, from $115 per barrel to less than $35. But for producers, this of course represents a big problem. The IEA has reported that Opec members lost about $500 billion in revenue last year alone. And with renewable producers becoming cheaper, more efficient and more stable than ever, and nuclear getting an increasing amount of attention, it seems like oil and gas is going to face significant trials in the coming months and years. But fortunately, that’s what we like. We want to see how company’s overcome these challenges. In this edition we look at E.ON, which has had to navigate the web of regulations surrounding building offshore windfarms in Europe, and USbased ExxonMobil which has had to find themselves a suitable replacement for long-term President, Rex Tillerson. Tell us about the challenges facing your company! Email me directly or head over to www.emea-energy.net for more info.

Joe Forshaw EDITOR

GET IN TOUCH +44 (0) 20 8123 7859 joe@emea-energy.net

www.emea-energy.net / Issue No.12 / 3

06/NEWS: The Month that was...

12/E.ON : Clean European Energy From E.ON

A round up of some of the latest news stories in the industry

E.ON has a lot of experience when it comes to the construction of offshore wind farms. Following its success in Germany with Amrumbank West and the equally pleasing Humber Gateway project in the UK, E.ON is now looking to its Rampion project of the southern coast of England for another boost in its total generated clean energy figures.

08/FEATURE: Project Solaris flying high after certification milestone The innovative and exciting Project Solaris, based in Limpopo, has reached another milestone after being certified by the Roundtable on Sustainable Biomaterials (RSB).

86/EXHIBITION CALENDAR: Key Upcoming Events Across the Market Our regular update to help you keep track of important events and exhibitions taking place across the energy sector.

12/

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CONTENTS 24/

16/EXXONMOBIL: Exciting Times for ExxonMobil Ending 2015 with announcements of success and expansion in Europe and Africa, and also electing a new President at its headquarters in the USA, ExxonMobil has started 2016 in an extremely strong position.

20/ENERGINET: Interconnection is Vital for European Energy Security Denmark’s owner of the country’s electricity and gas system, Energinet.dk, is making moves to further stabilise its future green power supply.

24/ABB: Energy, Rail, Mining ABB Powers All In South Africa, ABB is a dominant force in the power and automation business. With huge contracts underway in energy, rail, mining and many other industries, the future looks bright for this innovative organisation.

34/SHELL SOUTH AFRICA: Shell in the driving seat for future energy When you’re sat on the fifth largest reserve of shale gas in world, it helps to have experts like Shell South Africa on your doorstep.

44/EXXARO: A Cool Coal Strategy As Exxaro enters a new phase in its history, under the leadership of Mxolisi Mgojo following Sipho Nkosi’s retirement, it seems that the strategy will not change and carbon fuels will continue to drive this ambitious business forward.

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70/

52/CASTROL SOUTH AFRICA: Slick Marketing Cements Castrol as Industry Leader Castrol South Africa has recently invested in a product that could improve the safety of the thousands of drivers.

56/INGULA PUMPED STORAGE SCHEME: Ingula Supply to Start Soon The Ingula Pumped Storage Scheme is set to supply 1332 MW of peaking energy to South Africa’s grid when it is fully commissioned next year.

62/KUMBA IRON ORE: The Iron Giants Whilst Kumba Iron Ore may not be a household name for us, there is a high probability that our homes contain products or are located close by to structures that are made with the iron ore that this company source.

70/TANESCO: Keeping the Lights On in Tanzania and Beyond With numerous projects both large and small under its belt since inception in 1931, TANESCO owns most of the electricity generating, transmitting and distributing facilities across the Tanzania Mainland.

80/SOUTHERN AFRICAN SHIPYARDS: Sailing Towards Success As Africa’s largest building and repair company for commercial ships, naval vessels and a range of other marine structures, Southern African Shipyards is at the forefront of the growth and development of the African shipbuilding industry.

www.emea-energy.net / Issue No.12 / 5

SHELL TAKES FINAL INVESTMENT DECISION TO BUILD SOLVENT DEASPHALTER UNIT AT PERNIS REFINERY IN THE NETHERLANDS

RWE SUPPLY & TRADING HAS SOLD LYNEMOUTH POWER STATION TO CZECH UTILITY COMPANY ENERGETICKÝ A PRUMYSLOVÝ HOLDING (EPH) RWE Supply & Trading GmbH is pleased to confirm that agreement has been reached on the sale of Lynemouth Power Limited (Lynemouth Power), which is operating Lynemouth power station, to EP UK Investments Limited (EP UK), a subsidiary of Energetický a prumyslový holding (EPH), a leading Central European energy group. The acquisition of Lynemouth Power Limited in 2012 was part of the Principal Investments business of RWE Supply & Trading GmbH. Lynemouth Power owns and operates a 420 MW (gross capacity) coal fired station in the north east of the UK and has been working with contractors to design a technical solution for a full conversion of the power plant to run on biomass. Lynemouth Power received clearance from the European Commission on 1st December 2015 for its supporting Investment Contract (Contract for Difference) from the UK government.

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Shell announced in December that it had taken the final investment decision to build a major new unit at the Pernis refinery in Rotterdam, the Netherlands. The solvent deasphalter (SDA) unit will remove heavier fractions from crude oil, allowing the refinery to upgrade a larger proportion of its oil intake into lighter, high-grade products. “This important investment demonstrates our ongoing commitment

to refining,” said Lori Ryerkerk, Executive Vice President for Shell’s global Manufacturing business. “The Pernis refinery plays a key role in the European market and this modern and innovative unit will further improve its performance and competitiveness.” Construction work is planned to this year, subject to permit approvals, with completion expected by the end of 2018.

FIRST GAS FROM THE CORRIB FIELD Operator Shell announced in December that gas production has started from the Corrib field off the northwest coast of Ireland. Statoil holds a 36.5% participating interest in the field. The Corrib gas field is located 83 kilometres off Ireland’s northwest coast in water depths of almost 350 metres. At

peak annual production, the field is expected to produce around 260 MM scf/d of gas, which is 45,000 barrels of oil equivalent per day (boe/d). “We are very pleased to see production start at Corrib. The output from Corrib will be an important addition to Statoil’s international production portfolio,”

says Tove Stuhr Sjøblom, Senior Vice President for Statoil’s development and production activities in the UK and Ireland. The Corrib project is a joint venture between Shell E&P Ireland Limited (45%), Statoil Exploration Ireland Limited (36.5%) and Vermilion Energy Ireland Limited (18.5%). Shell E&P Ireland Limited is the project’s operator.

NEWS ROUNDUP CONGO: TOTAL STARTS UP MOHO PHASE 1B DEEP OFFSHORE PROJECT Total has brought on stream the Moho Phase 1b project, located 75 kilometers off the coast of Pointe-Noire in the Republic of the Congo. The project is operated by Total and has a production capacity of 40,000 barrels oil equivalent per day (boe/d). “Moho Phase 1b is our ninth start-up since the beginning of the year (2015) and will contribute to our strong production growth in the years to come,” commented Arnaud Breuillac, President Exploration & Production. “The start-up of this project, in line with the original schedule, constitutes a further success for Total’s growth strategy in deep offshore, particularly in West Africa. It follows the start-up of Dalia Phase 1A on Angola’s Block 17 in July this year and more recently, the Lianzi field which straddles the deep offshore of Congo and Angola.”

SIEMENS TO BE CLIMATE NEUTRAL BY 2030 Siemens aims to be the world’s first major industrial company to achieve a net-zero carbon footprint by 2030. The company plans to cut its carbon dioxide (CO2) emissions – which currently total about 2.2 million metric tons a year – in half by as early as 2020. To achieve these goals, Siemens will invest some €100 million over the next three years in order to reduce the energy footprint of its production facilities and buildings. By investing in innovative technologies - such as energy management systems and automation systems for buildings and production processes as well as energy-efficient drive systems for manufacturing Siemens expects to slash its energy

costs by €20 million a year. “Cutting our carbon footprint is not only good corporate citizenship, it’s also good business”, said Joe Kaeser, President and CEO of Siemens AG. To reduce its CO2 emissions over the long term, the company will also apply three additional levers. First, it will use distributed energy systems at its production facilities and office buildings to optimize energy costs. Second, it will systematically employ low-emission vehicles and e-mobility concepts in its global car fleet. And third, it will move toward a clean power mix by increasingly tapping sources of energy - such as natural gas and wind power that emit little or no CO2.

BP AGREES TO SALE OF ALABAMA PETROCHEMICAL COMPLEX BP has agreed to sell its petrochemical complex in Decatur, Alabama, to Indorama Ventures Public Company Limited, as part of a previously announced effort to refocus its global petrochemicals business for improved profitability and long-term growth. The divestment is in line with BP’s global petrochemicals strategy of pursuing a competitively advantaged portfolio through world-scale, low-cost facilities that utilize BP proprietary technology, including the

production of purified terephthalic acid, or PTA, a key raw material in the production of polyester. “This agreement allows us to focus investment on our world-class PTA production facility in Cooper River, South Carolina, and a key PTA feedstock producer in Texas City, Texas, as well as to maintain a strong position in the important U.S. petrochemicals industry, “said Rita Griffin, chief operating officer of BP Global Petrochemicals.

www.emea-energy.net / Issue No.12 / 7

FEATURE

PROJECT SOLARIS FLYING HIGH AFTER CERTIFICATION MILESTONE EDITORIAL BY: Joe Forshaw

The innovative and exciting Project Solaris, based in Limpopo, has reached another milestone after being certified by the Roundtable on Sustainable Biomaterials (RSB). The partner companies involved in the project are now keen to press on and get started with test flights as soon as practically possible.

Back in December 2014, South African Airways, Boeing, SkyNRG and Sunchem SA announced that their partnership, named Project Solaris, was close to harvesting its first crop of Solaris – a cross-bred variety of the tobacco plant that is capable of producing bio-energy. Seeds can be harvested three times a year. Seed oils are then processed into jet fuel, with each hectare producing around three tons of oil and over six tons of oil and protein rick cake, which can be used as animal feed. The project is a collaborative effort to develop an aviation biofuel supply chain with the Solaris plant, a nicotinefree variant of the tobacco plant. Over 300 varieties of the tobacco plant were crossed to create the Solaris variety, which is GMO free. Initially, just 50 hectares were planted with Solaris crop in Limpopo at Marble Hall and Boeing remains confident that switching to the use of

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biofuels can reduce carbon emissions by as much as 80%. This unique project has attracted attention from aviation industry commentators from all over the world and whilst other projects are in the pipeline for other parts of the world, Project Solaris is still at the forefront of all industry research as it’s the first operational feedstock project of its kind. “The official launch of Project Solaris is an important milestone for SkyNRG as it marks the start of our first operational feedstock project. Commitment of all partners in the supply chain is crucial to realize our joint ambition and make this project a success, and that’s why we’re proud to work together with Sunchem SA, Boeing and SAA. We also want to thank the Dutch government for their strong support in this project, and for the development in sustainable jet fuel in general,” said Maarten van Dijk, Chief Technology Officer of SkyNRG.

While the project has been the subject of much debate in the age old food vs fuel debate, the partnering companies are confident that farming Solaris will not impact negatively on the amount of food stock that is farmed for national consumption. “Having to undergo a systematic process of evaluating the social and environmental ramifications of this development as prescribed by the RSB has allowed us to feel confident in promoting Solaris, not only as a financially viable crop for farmers in the region, but also one that will not affect food security or lead to environmental degradation,” explained Joost van Lier, Managing Director of Sunchem South Africa. RSB CERTIFICATION Last month, Project Solaris announced that it had earned certification from the RSB for the production of the energy rich tobacco crop, marking a milestone for the partnership. The RSB is an independent and global multi-stakeholder coalition which works to promote the sustainability of biomaterials. According to the coalition, RSB’s user-friendly certification scheme is the strongest and most trusted of its kind. J. Miguel Santos, Managing Director for Africa, Boeing International

PROJECT SOLARIS

FEATURE

said in a release: “We applaud South African Airways and the South African Government for ensuring the sustainability of their emerging aviation biofuel supply chain as it is being developed. This milestone marks a very significant step forward in ensuring positive economic, social, and environmental outcomes for aviation and the planet.” “Project Solaris has demonstrated that it can deliver sustainability on the ground in line with the RSBs global standard,” said RSB’s Executive Director, Rolf Hogan. “This is the result of a serious commitment to working with local stakeholders, rural development and reducing greenhouse gases while safeguarding the Limpopo’s unique natural environment.” “The RSB certificate is a key factor for our company and development process,” said Sergio Tommasini, CEO of Sunchem Holding. “With RSB

we proved our Solaris technology under different aspects respecting sustainability criteria. Thanks to all partner efforts, we earned this important certificate. RSB believed in our technology and gave us the right advice to improve it during our scale up program.” “SkyNRG, as one of the main founders of Project Solaris, believes that the RSB standard should play a central role in the aviation sectors’ efforts to develop truly sustainable jet fuel supply, meeting environmental and social safeguards. By receiving RSB certification, Project Solaris is achieving an important milestone for itself and for the aviation industry as a whole,” says Maarten van Dijk. FLYING HIGHER The future of Project Solaris looks extremely bright, with plans already in place to increase the production

of Solaris which will create jobs and money for the local economy. In the next six years, Project Solaris is aiming for at least 50,000 hectares of Solaris under cultivation in South Africa. This would result in an estimated 50,000 direct and indirect jobs; a huge increase from the current 350 who currently work on the project. Increasing the area under cultivation would also lower the price of Solaris biofuel, which is presently more than twice as expensive as fossil jet fuel. SAA is committed to using several hundred million litres of biofuel a year in the next eight years so demand is sufficient to drive the process and bring costs down. One of the major positives of using biofuels of this kind, apart from reducing the impact of air travel on the environment and the creation of jet fuel without taking focus away from food production, is that aircraft engines don’t

//THIS MILESTONE MARKS A VERY SIGNIFICANT STEP FORWARD IN ENSURING POSITIVE ECONOMIC, SOCIAL, AND ENVIRONMENTAL OUTCOMES FOR AVIATION AND THE PLANET//

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PROJECT SOLARIS

//BY RECEIVING RSB CERTIFICATION, PROJECT SOLARIS IS ACHIEVING AN IMPORTANT MILESTONE FOR ITSELF AND FOR THE AVIATION INDUSTRY AS A WHOLE// not have to be changed, meaning no extra cost to airlines and consumers. In modern aircraft, Solaris and other biofuels are blended in a maximum 50:50 ratio with conventional jet fuel. With so many experts involved, it looks certain that it will not be long before there is a significant biofuel supply chain in South Africa. The model has already been proven in other parts of the world and Boeing is involved in many of the other biofuel initiatives that are underway. In 2011, Boeing, and its partners Air China and other aviation organisations, conducted the first test flight using biofuel. This was a two hour mainland flight from Beijing Capital International Airport using a Boeing 747-400 powered by Pratt & Whitney engines. After the flight, Boeing Commercial Airplanes Vice President of Environment and Aviation Policy, Billy Glover said: “The recent

success of our biofuel initiatives with government, energy and aviation organisations in China and around the world underscores the tremendous support that exists for the macro-economic benefits and value aviation provides through its unique ability to connect people, cultures, goods and services. Working closely with the Chinese and U.S. energy agencies we can reduce carbon emissions in the two largest aviation markets, while helping to ensure sustainable industry growth.” If Project Solaris proves to be a long-term success, it could put South Africa in the centre of a hugely important global industry. It is estimated that 14% of the arable land in South Africa is under-utilised or unutilised. If just a small portion of that 14% were used for Solaris or other similar feedstocks, South Africa would provide enough fuel for all of SAA’s

needs. “It’s not displacing essential food crops [and] it’s a drop in the bucket in terms of total land footprint to produce quite a bit of what is needed,” claimed Darrin Morgan, Director Sustainable Fuels Strategy at Boeing when talking to BusinessGreen. This is an idea that has huge potential for South Africa and there are a number of big-name organisations currently planning their own investments into biofuel production so a statement of intent from Project Solaris will hopefully attract more funding to the region. Several international air carriers have already discussed their intentions, including British Airways and Virgin Atlantic Airways, and investment from just one of these heavy weights would undoubtedly create more jobs and stimulate more direct foreign investment for an economy which is crying out for it.

www.emea-energy.net / Issue No.12 / 11

E.ON

Clean

European Energy PRODUCTION: Karl Pietersen

In an important development for the European renewable energy market, and acting as an example for future projects to follow, the Amrumbank West offshore wind farm was completed in October last year by international power producer E.ON. Located off the coast of Germany in the North Sea, Amrumbank West is about 40 kilometers from Helgoland Island, where the operations and maintenance centre for the wind farm is located. Wholly owned by E.ON, the project received considerable investment, reportedly around €1 billion. Construction began in January 2014, the first turbine began generating electricity in May 2015 and the project was fully operational in October 2015. With 80 turbines, Amrumbank West can produce 288 megawatts of clean power; enough to fuel 300,000 homes and

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offset carbon emissions of more than 740,000 metric tons each year. E.ON is known as a renewable energy specialist after making a strategic decision to focus solely on renewables, energy networks and customer solutions, which the company calls ‘the building blocks of the new energy world’. Headquartered in Dusseldorf, Germany, E.ON employs more than 58,000 people and sells energy to more than 33 million customers. In 2014, the company’s sales figures reached €112 billion, underlining the importance of the business to the European and global energy industries. WINDY UK FUTURE While Amrumbank West is a German project, E.ON also recently completed the Humber Gateway project off the

BUSINESS PROFILE

coast of Spurn Point in the UK North Sea. This 219MW, 73 turbine was a major feather in the cap for E.ON. “We’ve commissioned two large offshore wind farms - Amrumbank West and Humber Gateway off the U.K. coast - in just one year,” E.ON Management Board member Bernhard Reutersberg said. “Both were completed on time and on budget, which underscores our ability to expand renewables.” Eckhardt Rümmler, CEO of E.ON’s Renewables unit, sees the successful projects as evidence of the company’s offshore capabilities: “The simultaneous development of large-scale projects in the waters of different countries demonstrates our ability to meet substantial challenges and solidifies our position as a leading offshore wind company. The synergies and experience from the two projects will help us make this technology more economic.”

//WE’VE COMMISSIONED TWO LARGE OFFSHORE WIND FARMS - AMRUMBANK WEST AND HUMBER GATEWAY OFF THE U.K. COAST - IN JUST ONE YEAR// The UK is a market that E.ON wants to continue to explore with large –scale opportunities for development. In September 2015, the company announced the start of work on the Rampion Offshore Wind Farm. Rampion is set to become a 400MW, 116 turbine array that will reduce CO2 emissions by 600,000 tonnes each year and provide clean power to more than 300,000 homes. Located of the southern coast of England, approximately 13km from the Sussex coastline, the offshore construction phase will last for three years and when complete, the project will have created around 500 jobs. In the initial stages, the project work involved clearing the seabed in readiness for the installation of the first foundations. Chris Tomlinson, E.ON Development Manager for the Rampion Offshore Wind Farm, said in September: “After five years in development, following successful consultation, consent and contracting, we’re delighted to be able to confirm that work will commence this week to prepare the seabed for turbine installation. “Assessment of the number of boulders is still underway but is likely to be in the thousands and up to six vessels will be on site to undertake the work over the next many months.

//BOTH WERE COMPLETED ON TIME AND ON BUDGET, WHICH UNDERSCORES OUR ABILITY TO EXPAND RENEWABLES// 14 / Issue No.12 / www.emea-energy.net

E.ON

Great efforts will be made to replicate the seabed as it is now and all boulders moved will be weighed and the new position recorded. Details of the new positions of the boulders will be made freely available to sea users. We will continue to issue Notices to Mariners to keep sea users informed of these works.” As a partnership between E.ON, the UK Green Investment Bank and Canadian energy company Enbridge, Rampion now has the expertise of three proven partners. Mike Winkel, E.ON board member, said: “Our Rampion project starts from a strong position. Technically, the project is an optimized evolution of our four most recent offshore wind projects. We rely on proven technology and installation processes. With these preconditions E.ON will demonstrate its top-class competencies that we have developed in managing the construction and operation of offshore wind farms.”

ITALIAN INVESTMENT At the end of 2015, away from its wind farm business, E.ON announced the acquisition of Italian company Heat & Power. Heat & Power is a leading company for high efficient on-site power and heat generation solutions for commercial and industrial customers in Northern Italy. E.ON’s international unit for integrated energy solutions, E.ON Connecting Energies, purchased 100% of the shares. Headquartered in Tortona in northern Italy, between Milan and Genoa, Heat & Power has 22 megawatts of currently installed capacity and it owns and operates a portfolio of decentralized cogeneration assets across commercial and industrial sites. “Joining E.ON Connecting Energies will enable Heat & Power to accelerate its growth” said Andrea Tomaselli, CEO of Heat & Power. “Our skills will be combined to better address the growing demand for on-site generation and energy efficiency solutions.” “With the acquisition of Heat &

Power, we are adding an important piece to becoming a major player in the promising Italian on-site generation market”, said Robert Hienz, CEO of E.ON Connecting Energies. “Combining E.ON Connecting Energies’ international background and skillset with Heat & Power’s successful track record and sound footprint in the Italian market, we will reach an even higher level in both customer proximity and quality of solutions for our customers.” With the sheer amount of activity that E.ON is involved with, and the burning desire to bring renewables to the forefront of the European and global energy markets, the future certainly looks bright for this innovative, driven organisation.

E.ON +49 2 011 8400 info@eonenergy.com www.eonenergy.com

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EXXONMOBIL

Exciting Times

for ExxonMobil PRODUCTION: David Napier

Ending 2015 with announcements of success and expansion in Europe and Africa, and also electing a new President at its headquarters in the USA, ExxonMobil has started 2016 in an extremely strong position.

As one of the world’s largest businesses, effecting the operations of countless others, ExxonMobil is a vitally important entity. Employing more than 75,000 people all over the globe, the company’s work is significant in all territories. Whilst not strictly an EMEA-based company (headquarters in Irving, Texas), ExxonMobil has subsidiary companies and partners in Europe, Middle East and Africa. A company with such a wide-reaching influence requires strong leadership with industryknowledge, lengthy experience and unrivalled strategic planning skills and fortunately, ExxonMobil has this and this was proved in October 2015 when the company announced earnings of $4.2 billion in the third quarter of 2015. In December, the company bolstered its leadership with the election of the experienced Darren Woods as President of ExxonMobil Corporation. His new responsibility (effective Jan 1st 2016) sees him also become a member of the board of directors and progress from his previous role of senior vice president and a member of the management committee.

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Woods is vastly experienced in the industry and with the company. He joined Exxon Company International in 1992 as a planning analyst. He held a number of domestic and international assignments for ExxonMobil Refining & Supply Company, ExxonMobil Chemical Company and Exxon Company International, and he served as manager of investor relations for Exxon Mobil Corporation. He also held positions as vice president of supply and transportation and director of refining for Europe, Africa and the Middle East for ExxonMobil Refining & Supply Company and vice president of ExxonMobil Chemical Company. In 2012, he was appointed president of ExxonMobil Refining and Supply Company and a vice president of the corporation. The 50 year old American earned a bachelor’s degree in electrical engineering from Texas A&M University and a master’s degree in business administration from Northwestern University’s Kellogg School of Management. Originally from Wichita, Kansas, Woods was a perfect candidate

for ExxonMobil Presidency after 23 years with the company. Many industry commentators have given Woods the unofficial title of ‘heirapparent’ to ExxonMobil’s Chairman and CEO Rex Tillerson, who is set to retire in 2017 when he reaches the company’s retirement age of 65. If Woods does end up taking over as CEO in the next couple of years, it would follow on from previous promotions from within after the Tillerson and his predecessor Lee Raymond were both elevated internally. It will be an important decision for the company as, aged 50, if Woods was to succeed Tillerson, he would likely be in the top job for more than a decade during a time in which the company is certain to face many challenges including declining commodity prices, market uncertainty, climate change principles and political issues in the Middle East and Russia. ERHA NORTH Away from the company’s headquarters, in one of its ‘new’ key markets, ExxonMobil found success in the second half of 2015 when the Erha North Phase 2 project off the coast of Nigeria started oil production. Announced in September, the news was particularly welcome for ExxonMobil and its local subsidiary Esso Exploration and Production Nigeria Limited because the project

DARREN WOODS, NEW PRESIDENT EXXONMOBIL

BUSINESS PROFILE

started up five months early and $400 million under budget. The deepwater subsea development is located 60 miles offshore Nigeria in 3,300 feet of water and four miles north of the Erha field, which has been producing since 2006. The Erha North Phase 2 project includes seven wells from three drill centres tied back to the existing Erha North floating production, storage and offloading vessel. “Executing successful projects such as Erha North Phase 2 ahead of schedule and under budget results from ExxonMobil’s disciplined project management approach and expertise,” said Neil Duffin, President of ExxonMobil Development Company. “We are able to create additional shareholder value by optimising

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existing infrastructure, which reduces capital spending requirements and improves capital efficiency.” Duffin said the ahead-of-schedule start-up was supported by strong performance from Nigerian contractors, which accounted for more than $2 billion of project investment for goods and services, including subsea equipment, facilities and offshore installation. “These contracts are bringing direct and indirect benefits to the Nigerian economy through project spending and employment, consistent with project objectives,” he said. Originally discovered in 2004, the Erha North field is owned by operator Esso Exploration and Production Nigeria Limited (56.25%) and Shell Nigeria Exploration and Production Company (43.75%).

EUROPEAN EXPANSION In Europe, ExxonMobil is expanding its offering to meet the demand for quality products. In October 2015, the company announced that it had plans to expand the hydrocracker unit at its Rotterdam refinery to upgrade heavier byproducts into cleaner, higher-value finished products, including EHCTM Group II base stocks and ultra-low sulfur diesel. The facility is operated by local subsidiary, Esso Nederland BV and after the expansion will use ExxonMobil’s proprietary hydrocracking technology and be the first to produce EHC Group II base stocks in Europe. “This investment demonstrates ExxonMobil’s long-term view and disciplined investment approach,” said Jerry Wascom, president of ExxonMobil Refining & Supply Company.

EXXONMOBIL

//WE ARE ABLE TO CREATE ADDITIONAL SHAREHOLDER VALUE BY OPTIMISING EXISTING INFRASTRUCTURE, WHICH REDUCES CAPITAL SPENDING REQUIREMENTS AND IMPROVES CAPITAL EFFICIENCY// “Despite a challenging industry environment, we are committed to our long-term strategy of investing in projects in advantaged locations where we can continue to increase competitiveness and profitability.” Loic Vivier, vice president of Wholesale and Specialties for ExxonMobil Fuels and Lubricants said: “This investment underscores our commitment to provide high-quality base stocks in Europe and follows

previously announced expansions at ExxonMobil’s Baytown, Texas and Jurong Singapore refineries this past year. Combined with ExxonMobil’s existing manufacturing capabilities, this project will enable us to offer a global EHC Group II base stocks product offering to meet current and future customer needs.” The Rotterdam hydrocracker project, coupled with the refinery’s advantageous location in an integrated

petrochemical cluster, will strengthen the refinery’s position as a leader in the global refining industry. With exciting investments happening continuously for this global energy player, 2016 looks set to be another interesting year for the company. With a new President, who will look to instil his ideals throughout the business, perhaps this will be a year where ExxonMobil regains ground in the race to be the world’s number one energy company.

EXXONMOBIL +32 2 722 2111 info@corporate.exxonmobil.com corporate.exxonmobil.com

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Â© ENERGINET.DK, PALLE PETER SKOV

ENERGINET.DK

Interconnection is Vital for European

Energy Security PRODUCTION: Joe Forshaw

At a time when Denmark’s security of supply of electricity and gas is stable and among the best in Europe, the owner of the country’s electricity and gas system, Energinet.dk, is making moves to further stabilise its future green power supply.

Back in 2014, Energinet.dk said in its annual report that one of the keys to sustainable energy solutions in the future was cross-border cooperation. Relationships with Sweden, Norway, Germany and the UK are good for Energinet.dk and with a growing percentage of its energy coming from renewables, where supply is capricious, Denmark’s approach to energy production, working closely with its neighbours, looks to be an example that will soon become the norm. The country is a European leader in terms of security of supply of electricity and gas and has set ambitious targets for the future for the development of its energy mix. It has been reported that by 2020 the Danish parliament wants half of the energy consumed in the country to come from wind power and by 2050 to be completely independent from fossil fuels. But this of course will rely upon cooperation with partners across borders. “We must continue to strengthen the interconnections and develop the European electricity and gas markets,” said Energinet.dk President and CEO Peder

Østermark Andreasen. “This is absolutely crucial for the transition to succeed. But we must also find new ways. We cannot overcome the challenges of the future with yesterday’s tools. We have incorporated 40% wind power in the existing power system, but we must create a brand-new energy system, and integrating the next 20-30% will be much harder.” In September 2015, steps towards strengthening Demarks connectivity with neighbouring producers were taken when the company confirmed that it would proceed with a planned partnership with Germany’s 50Hertz to establish a 400 MW offshore interconnection between the two national power grids. An integrated market enables energy production at lower costs and increases the security of supply. Additionally, the new connection helps managing both countries’ energy transitions by enabling the transport of renewable energy over long distances and cross-border. The new interconnection is planned between the Danish region of Zealand

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BUSINESS PROFILE

and German Mecklenburg-Western Pomerania. Operation is planned to start by the end of 2018. “The new interconnection will contribute to guaranteeing the same high level of security of supply for consumers in Eastern Denmark going forward. It will allow producers and consumers to buy and sell more power across the borders. This adds more value to renewable energy and the green transition,” said Andreasen. Chief Executive Officer of 50Hertz, Boris Schucht said: “The approval by the European Commission is an acknowledgement to our work in integrating renewable energy sources with innovative approaches while strengthening the European electricity market. It shows that cooperation between the European transmission system operators is the right answer to the challenges of the energy transition. With the Combined Grid Solution we create the nucleus for an offshore grid

//WE MUST CONTINUE TO STRENGTHEN THE INTERCONNECTIONS AND DEVELOP THE EUROPEAN ELECTRICITY AND GAS MARKETS// in the Baltic Sea, a milestone in the development of European grids.” DENMARK-GERMANY Back in April 2015, Energinet.dk had already started strengthening the connection between Denmark and Germany and the company announced that it would work with TenneT TSO GmbH to reinforce electricity connection across the Danish-German border. The announcement suggested that capacity would increase to 2,500 MW between Germany and Denmark on Kassø-Flensburg-Dollern. The total line connects electricity production of renewable sources in Denmark and Schleswig-Holstein with

PEDER ØSTERMARK ANDREASEN © ENERGINET.DK

the load centres especially in the greater area of Hamburg and Lower Saxony. It has a total length of almost 150 km. “The transmission line will significantly reinforce the connection between the Nordic electricity system and Central Europe. Cross-border connections and open electricity markets are of the essence if we are to ensure an efficient transition to renewable energy and, for instance, transmit the large volumes of wind power and solar energy that we produce in the region to Norway, or vice versa, if hydroelectric power from Norway is to be transmitted to Denmark and further on to Central Europe during periods without wind,” said Andreasen. “Both Northern Germany and

//THE TRANSMISSION LINE WILL SIGNIFICANTLY REINFORCE THE CONNECTION BETWEEN THE NORDIC ELECTRICITY SYSTEM AND CENTRAL EUROPE// 22 / Issue No.12 / www.emea-energy.net

ENERGINET.DK

Denmark currently produce large volumes of renewable energy, and they will continue to do so. The power grid is therefore being expanded considerably in these years, and expanding the connection will not only benefit the Danish-German border region, but an even greater area. The transmission line will significantly improve the possibilities of transmitting power between producers and consumers as well as contribute to the security of supply in both Germany and Denmark,” added Urban Keussen, Chairman of the Management Board of TenneT. The German sections of the line are planned to be ready in 2019. Including the Danish section, the new line is scheduled to be in operation in 2019-2020. FUTURE-PROOFING Of course, all of Energinet.dk’s investments are made with the goal of future-proofing the supply and security of the country’s energy and in September 2015, the company teamed up with a number of other energy companies, consumer

organisations and government authorities to formulate plans and agreements on the best ways to safe-guard supply in the long-term. Forecasts were offered for the period up until 2030 and Søren Dupont Kristensen, Vice President for System Development and Electricity Market at Energinet.dk said: “A great many organisations have contributed input, participating in numerous meetings and working groups, and there is every reason to thank everyone involved for their constructive approach. “A well-functioning market is crucial not only to consumers and generators, but also to our ability to assure a costeffective green transition. And we need to rethink the market design – not just in Denmark, but throughout the EU – because the electricity system is currently undergoing fundamental change.” Together with its partners, Energinet. dk has come up with a ‘Market Model 2.0’ project, a framework of ideas covering areas that require innovative thinking. This includes capacity, flexibility and critical properties. In all, Energinet.dk has 24

recommendations to introduce changes and innovation into the electricity market. Some can be implemented almost immediately, while others will require new legislation and regulations, or common European solutions. Energinet.dk is a forward thinking business with a mind-set of creating the greatest possible value for Danish society rather than generating a profit for itself and because of this it is quick to adapt to market conditions and responsive to developments in technology and legislation. As the drive towards connectivity between Denmark and its neighbours continues, Energinet.dk will be in the driving seat and this will only benefit the Danish energy market.

ENERGINET.DK +45 7010 2244 info@energinet.dk www.energinet.dk

www.emea-energy.net / Issue No.12 / 23

ABB SOUTH AFRICA

Energy, Rail, Mining -

ABB Powers All PRODUCTION: Karl Pietersen

In South Africa, ABB is a dominant player in the power and automation business. With huge contracts underway in energy, rail, mining and many other industries, the future looks bright for this innovative organisation, despite the bleak economic outlook. Managing Director, Leon Viljoen tells us moreâ&#x20AC;Ś

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BUSINESS PROFILE

//THE MARKET IS TOUGH BUT THERE ARE STILL HUGE OPPORTUNITIES. IT’S NOT A DECLINING MARKET//

26 / Issue No.12 / www.emea-energy.net

ABB South Africa needs no introduction. The local entity of the global power and automation engineering company is involved with several important projects across the SADC region and further afield. In SA, the group has a strong local manufacturing capability with three manufacturing sites in Gauteng. Having operated in SA since 1988 with the Swiss BBC (1891) and Swedish ASEA (1883), ABB SA now employs up to 1200 people. When we talk to businesses around Southern Africa, especially those of a similar size to ABB, there is always talk of the current economic climate and how it is making business very difficult. Yes, it is true that unemployment is high, GDP growth is low and confidence is waning because of low commodity prices, but shouldn’t businesses of significant size and importance be prepared for fluctuations in the market?

Well, simply put, yes they should and ABB SA is a perfect example. In 2012, when the global economic slowdown was at its worst in many cases, ABB SA increased its order book by 36%, increased revenue by 2% and improved productivity at its facilities in Longmeadow. In 2013, revenue and orders significantly increased again and 2014 saw a strong order backlog and the realisation that the African growth strategy was on course. ABB Southern Africa Managing Director, Leon Viljoen, tells Energy Focus: “The market is tough but there are still huge opportunities. It’s not a declining market. There’s also a few large orders that we have landed, including the projects with Kusile Power Station and Venetia Mine and all of this assists us in reaching our targets. “The South African operation is responsible for what we call ‘Southern

ABB SOUTH AFRICA

//I THINK THE REALITY IS THAT IT’S GOING TO BE A TOUGH MARKET FOR THE NEXT 12 TO 24 MONTHS// Africa’ and that’s anything south of the equator – everything up to Angola, DRC, Kenya, and Tanzania. In these countries there is much larger growth, sometimes up to 7% GDP growth, and there is a lot of focus on infrastructure spend. We are working in an interesting, dynamic region compared to Europe or other regions. “We’ve got 11 offices in our region outside of SA and most of these are sales and service offices. We are well positioned in the region and growing our market share, so from that perspective we are better positioned to leverage our business. “I think the reality is that it’s going to be a turbulent market for

the next 12 to 24 months. From the customer perspective, there is a lot of change in the sense that the mining and oil companies are not spending on Capex. However, this means that there are opportunities in OPEX spend because they need to keep equipment running for longer and there’s a lot of focus and pressure, specifically on the mining companies, to get their productivity up and you can do that by making sure that the equipment is reliable. So for us it’s a change in focus from new capital spend to maintenance, service and refurbishment spend. Call me an eternal optimist but I believe there’s a lot of work.”

MICROGRIDS, MACRO OPPORTUNITIES One growth area for ABB, both internationally and especially in Africa, is with Microgrids. Microgrid solutions enable very high levels of wind and solar power penetration in dieselpowered grids, reducing dependency on fossil fuel supplies and curtailing CO2 emissions. ABB’s comprehensive Microgrid offering includes a range of technologies for off-grid applications like islands, isolated grids, remote communities as well as commercial and industrial facilities, ensuring utilitygrade power quality and grid stability. ABB is a global leader in Microgrid technologies with a proven track record of more than 30 installations. Recently, the company announced two new micro grid projects, one in Kenya and one at its own headquarters in Longmeadow, Gauteng, South Africa.

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“Microgrids is one of the areas that ABB internationally is focussing on. It’s one of four growth projects in the 2020 strategy for ABB and very applicable to the African continent,” explains Viljoen. “With Microgrids, we take solar, wind and other renewable types of generation, and also diesel, and we make sure that it works effectively. It’s easy to install renewables but it is extremely important to control the mix and within ABB we have excellent products for this.” In September, ABB SA announced that it had received an order from Socabelec East Africa Ltd to design, supply and install a PowerStore™ flywheel-based Microgrid stabilization solution for the Marsabit wind farm in northern Kenya. Currently relying on diesel generators and two 275 kW wind turbines for all of its power, Marsabit is an oasis at the edge of

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the desert in a windy area, 530 km north of Nairobi. The city has a population of 5,000 and is not connected to any national grid for its power needs. “What we’re doing in Kenya,” says Viljoen, “is installing the flywheel for stabilization where the wind turbines are coupled to the weak grid. If you look at a traditional grid, the amount of harmonics is small and do not impact on the quality of supply. With wind that is intermittent and brings a lot of harmonics into the system, you can destabilise a system that is not very robust and this was the case in Kenya. ABB is putting in a system to stabilise that - with a flywheel that

produces energy and feeds it into the grid when needed and absorbs energy as it is needed to stabilise what the wind turbine is causing within the grid. There is huge potential for this in Africa because many of the networks are weak and they can’t handle high penetration of renewables, specifically wind, because of the nature of its generation.” A Microgrid will also be erected at ABB’s Longmeadow facility in SA which boasts 96,000 m2 of warehousing, factory, office space and manufacturing facilities. Announced in September, this project includes a rooftop solar photovoltaic (PV) field and a

//IN MICRO GRIDS, WHAT WE DO IS TAKE SOLAR, WIND AND OTHER RENEWABLE TYPES OF GENERATION, AND ALSO DIESEL, AND WE MAKE SURE THAT IT WORKS EFFECTIVELY//

ABB SOUTH AFRICA

//IN LONGMEADOW, WE’RE BUILDING A MICRO GRID AT OUR HEAD OFFICE. THAT’S BASICALLY COMBINING ROOFTOP PV SOLAR WITH A BATTERY STORAGE SYSTEM, TOGETHER WITH A DIESEL GENERATOR AND THE MICRO GRID PLUS SYSTEM THAT CONTROLS THE SOURCES, SO ITS LOOKS AT WHAT IS NEEDED// PowerStore™ grid stabilizer, that will help to maximize the use of clean solar energy and ensure uninterrupted power supply to keep the lights on and the factories running even in the event of a power outage on the main grid supply. “In Longmeadow, we’re building a Microgrid at our head office. That’s basically combining rooftop PV solar with a battery storage system, together with diesel generator and the Microgrid

Plus™ system that controls the sources, so its looks at what is needed. It’s also grid connected, so we’re not taking Longmeadow off the grid, we will be connected to the grid and use whatever source is available and cheapest to run our building. In the day, if the sun is shining we’ll use the solar, at night we’ll use the energy stored in the batteries and if we need to we’ll use the grid,” says Viljoen. “This project should be

completed around May 2016. These projects can be turned around quickly and that’s the beauty of the Microgrid. We talking about 750 kW of solar and 1 MVA of battery storage so it’s quite a lot of power needed for a building but we do a lot of manufacturing here – it’s more than just an office,” he explains. RENEWABLE FUTURE The Longmeadow headquarters is an energy efficiency hallmark in the industry. Renewable energy is becoming a major component of ABB’s strategy, both globally and in SA. The government has put plans in place to fundamentally change the way the country sources its power and renewable energy is a key factor in this policy. “Renewables if not a new concept for ABB,” says Viljoen. “We’ve been using these technologies for over 25 years. In South Africa, we’ve been part of five

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BUSINESS PROFILE

//THIS INDUSTRY WILL DEFINITELY GROW, NOT ONLY IN SA BUT ALSO IN THE REST OF AFRICA, WHERE THE COUNTRIES ARE TRYING TO FAST-TRACK THE START OF RENEWABLE INDUSTRIES// solar farms – two in Polokwane and three in the Northern Cape. That was from an EPC perspective and we also have maintenance contracts for two of them, namely Witkop and Soutpan. Globally, ABB are moving away from the EPC concept and are working more on the Electrical Balance of Plant (EBoP). Our systems and products are used in EBoP so we will focus our attention in this area.” One of the main drivers behind the growth of the renewable energy industry in Africa, apart from the obvious reduction in CO2 emissions, is the speed in which infrastructure can be developed. “There’s a huge shortage of power all over Africa, including SA currently, so it’s very difficult to get an economy

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to grow, especially at the rates that African countries want to grow, if there’s no power available. The quickest way to increase the power supply that you do have is with renewables because a coal-fired or nuclear or hydro system takes many years to build but you can build a 50-75MW renewable plant in just one year. “This industry will definitely grow, not only in SA but also in the rest of Africa, where the countries are trying to fast-track the start of renewable industries. There’s plenty of sun available in Africa so I think it’s a natural way to go. “The products we have are wellresearched and developed for the renewable market. It is a difficult market

to penetrate if players do not have the relevant products but there are areas where new entrants can play such as rooftop PV for houses,” explains Viljoen. BUSINESS DEVELOPMENT Currently, the biggest contract that ABB SA is working on is in a more ‘traditional’ area of energy – coal. The organisation was awarded a contract from Eskom back in March 2015 for Control and Instrumentation (C&I) work at Kusile power station. “ABB SA was awarded the contract after Eskom had cancelled their contract with their previous supplier,” explains Viljoen. “The Balance of Plant (BoP) and the first unit will be completed in 2016. This is a five year contract for all six units and the BoP – it’s the C&I work for the whole of Kusile. “At the moment, this is by far our biggest contract. Over 30% of the engineers working on this contract are South African. For us, it’s a major breakthrough as we will have the ability to support Eskom when the project is finished. We will be able to

ABB SOUTH AFRICA

support and maintain anything we have commissioned directly from South Africa going forward. For me, and for ABB, this is very important. We don’t want to do parachute types of contract where we fly people in and fly them out and then the customer needs to battle from distance to get things done. We have the expertise and the people that have been intimately involved, all located in South Africa.” Another South African highlight for 2015 was winning a contract with De Beers for work at its Venetia mine. The Venetia mine is being converted from an open-pit mine to an underground mine and the conversion is expected to extend production at the site to 2043, with reports suggesting that the diamond site has potential to deliver an estimated 96 million carats. The project is the biggest capital investment in SA in the company’s history.

ROAD TRANSPORT SPECIALISTS We offer our clients an extensive network of transport services across South Africa and across borders from 1 tonners to superlinks, as well as crane trucks and lowbeds for abnormal loads. All our vehicles and drivers comply with industry standards and safety requirements. Crane trucks, their associated equipment and drivers are certified and the necessary documents are available for inspection upon offloading where required. Our office liaises extensively with the loading and offloading points to ensure that any special requirements are met. With more than twenty years’ experience in the transport business, we are able to provide cost effective solutions from day to day deliveries to planning transport budgets for tenders. We pride ourselves on maintaining the highest level of service and our dedicated attention and innovative planning helps to ensure the safe and timeous delivery of every load.

(011) 452-8292 | 082 892 7027/8 info@tswelo-pele.co.za

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BUSINESS PROFILE

//RAIL IS DEFINITELY A FOCUS AREA FOR US

BECAUSE WE’VE GOT PRODUCTS LIKE TRACTION MOTORS AND TRACTION TRANSFORMERS AND WE’VE GOT A VERY NICE ORDER FROM BOMBADIER AND TRANSNET// “ABB won scope related to the mine winders at the Venetia mine. Out of that, although the contract is signed between Venetia and ABB SA, we will produce around 50% of the contract and 50% will be done from Sweden. The design work will be done in 2015/16, manufacturing in 2017/18, and installation and commissioning will happen in 2019/20. “For us, it’s part of our area of expertise and things that we focus on; we look at process control and electrification, and mine winders on existing mines so we are very happy to have received this contract,” explains Viljoen. Philippe Mellier, De Beers CEO, said in a press release: “We’re proud to have been part of the country’s past

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– and, through this, our largest ever investment, we’re ensuring that we’ll be part of its future too.” Away from Africa, ABB SA has also picked up work in Russia, something which Viljoen refers to as “a major breakthrough” as this was the first time the company had received a really large international contract for mine winders. “ABB SA bought a company called Coilmech in March 2011 and they focus on mechanical mine winding equipment. We won a contract just over two years ago for Uralkali in Russia together with ABB Sweden and will produce the mechanical hoists for 12 shafts,” he says. Partnering with other regionaldivisions of ABB is not uncommon

and Viljoen says that teaming with international colleagues can often have huge benefits for business. “ABB SA is a centre of excellence for double and single drum winders, whilst Sweden is a centre of excellence for friction winders. This skills combination greatly benefits customers with a range of shaft depths and applications. At Kusile, we are working with ABB Italy and ABB Germany and we won the contract as one team.” RIDING THE RAILS Another opportunity that has the Managing Director excited is in the transportation business and specifically Africa’s rail industry. In March 2014, Transnet announced the R50bn contract with four manufacturers to build a 1,064-strong locomotive suite. This investment is part of a wider strategy from Transnet designed to turn the country into a key player in the global freight industry. “Rail is definitely a focus area for us because we’ve got products like traction motors and traction transformers and

ABB SOUTH AFRICA

we’ve got a large order from Bombadier. We are building traction transformers in Switzerland and then localising the production by setting up a factory in SA,” says Viljoen. “When that factory is set up, we will have the ability to supply other OEMs with traction transformers from SA. We’re doing something similar with traction motors where we will localise manufacturing. We’ve also got an order from Transnet for a prototype that they’re building where we are handling the propulsion system for them. From all of this, we see that rail is definitely growing; there’s the Gautrain expansion project, PRASA is expanding, Transnet is expanding and they’re also looking at the rest of Africa. There’s possible projects in Zambia and Mozambique and all over the continent so we are positioning ourselves as a local South African supplier so that we can capture quite a bit of that market through the product range that we sell,” he adds. Earlier this year, Mike Asefovitz, Senior Media Relations Manager at Transnet told rail-technology.com of the organisations ambitions, saying: “We are looking at growing a business, we are looking at becoming the fifth-largest railway in the world, and we are on track to do that.” This is good news for ABB SA who look set to become a supplier of choice in this growing rail business. The scale of all of these opportunities means that ABB will have a strong order book for the foreseeable future and where others might struggle due to economic pressure, ABB has set itself up well to ride the wave and maintain its position as a leader in power and automation technologies within Africa and further afield.

ABB SOUTH AFRICA CEO, LEON VILJOEN

ABB SOUTH AFRICA +27 10 202-6995 contact.center@za.abb.com new.abb.com/southern-africa

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Â©ISTOCK.COM/IGMARX

SHELL SOUTH AFRICA

Shell in the

driving seat

for future energy

PRODUCTION: Rose Samuel

When youâ&#x20AC;&#x2122;re sat on the fifth largest reserve of shale gas in world, it helps to have experts like Shell South Africa on your doorstep.

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SHELL SOUTH AFRICA

Since their arrival in 1902 to supply paraffin and kerosene to help light and heat communities, Shell South Africa has a long-held understanding of the country’s energy requirements. During that time, their mission has both changed beyond recognition and hardly changed at all. While you could argue that the company’s aim remains broadly the same - to supply communities with the energy they require - the challenge is how they achieve that. “Some 10 million South African’s have no access to electricity,” said Shell

South Africa Chairman, Bonang Mohale, last year. “The country has in recent years experienced power blackouts with dire consequences for the economy. South Africa is in a position where, because of the huge gap in the energy supply, it will need to invest in all types of energy sources.” The South African government’s Department of Energy (DoE) is placing an emphasis on broadening electricity supply technologies (to include gas, nuclear, biomass and renewable energy resources) in order to meet the country’s future electricity needs while at the same time reducing CO2

//SOME PEOPLE TALK ABOUT KAROO SHALE GAS AS IF IT’S THERE. THAT’S NOT THE CASE. I THINK EVERYBODY NEEDS TO MANAGE EXPECTATIONS HERE//

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emissions. In 2013, Cabinet approved the Household Electrification Strategy, which will ensure that electricity is supplied to all households. South Africa produces about 5% of its fuel needs from gas and it faces a number of challenges in the liquid fuels sector, namely that gas stocks from offshore fields are declining. The DoE believes that the best option to secure ongoing stocks and keep marginal costs low would be to invest in gas fields close to those that already exist in the southern Cape. In the longer term, the Mossel Bay Refinery could use either liquefied natural gas or imports and then there’s the Karoo Basin and its potential shale gas reserves. Which is where Shell South Africa join the story. The DoE views natural gas as an evolving energy source, despite the country’s limited reserves. There are projects underway to explore the potential of importing natural gas, both

BUSINESS PROFILE

©ISTOCK.COM/ MAURO GRIGOLLO

as liquid natural gas and compressed natural gas, but according to the USA Energy Information Administration, technically recoverable shale gas resources in South Africa form the fifth largest reserve globally. Even if the actual recoverable amounts of the gas are much lower than currently estimates, shale gas has the potential to contribute a very large proportion of South Africa’s electricity needs. In upstream exploration, Shell South Africa holds the rights in the Orange Basin Deep Water area, off the country’s west coast, and has submitted applications for shale gas exploration rights in the Karoo in central South Africa. The belief is the Karoo has such a plentiful supply of natural gas in the shale rock formations deep beneath the surface that these reserves would help to secure South Africa’s energy future for centuries. Until very recently, it looked like the energy giant was readying itself

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SHELL SOUTH AFRICA

//IN MY BOOKS, THE FISCAL TERMS HAVE TO REFLECT NOT ONLY THE RISK, BUT ALSO THE FINANCIAL EXPOSURE THAT THE COMPANIES TAKE TO ACTUALLY EMBARK ON THESE ACTIVITIES// for a full-scale move into the area, with plans for test drilling in the search for gas reserves at an advanced stage. Shell’s Jan-Willem Eggink, who heads up the exploration project as South Africa Upstream GM, spoke candidly about the Karoo project last November during a Fracking Masterclass for biznews.com. Shell, said Eggink, knew there was shale gas in the area thanks to the Soekor wells that were drilled there in the Sixties. But the 50-year-old drillings wouldn’t provide the detailed data required to

make an informed decision about any kind of quantity. Shell needed to run their own tests, at an estimated cost of $200m for exploration alone. “Some people talk about Karoo shale gas as if it’s there,” said Eggink. “That’s not the case. I think everybody needs to manage expectations here. For us, it’s key to drill a few wells to get more information and on the basis of that we can see what the rocks look like at two to three kilometre depths, as well as whether we can extract gas from it in commercial quantities.”

Estimates by the US Energy Information Administration (EIA) put the shale gas reserves under the Karoo Basin at some 480 trillion cubic feet, although it has subsequently been revised down to a mere 390 trillion cubic feet. “That’s a humongous amount of gas,” said Eggink. “In Holland, where I come from, I live on top of the Groningen Gas Fields. It was discovered in the Sixties and put on stream, and Holland is rich already for 50 years because of that gas field and that’s 100 trillion cubic feet.” In investigating the potential for accessing shale gas in the Karoo Basin, the government decided little could happen until a proper regulatory framework had been put in place. A task force was charged with evaluating the use of a hydraulic fracturing technique in the extraction

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BUSINESS PROFILE

of shale gas and the potential environmental risks and the negative and positive social and economic impacts of shale gas exploitation. Cabinet approved the team’s report and lifted the stop on processing applications for exploration in the Karoo Basin on condition that the appropriate regulations, controls and coordination systems were established. Despite the apparent solution to securing the country’s energy needs sitting, literally, under their feet, Shell’s proposal to drill six exploratory wells stalled when the required licenses from the government were delayed by the prolonged legislative process that involved updating the Mineral, Petroleum & Resources Development Act (MPRDA) and the publication of the long-awaited hydraulic fracturing regulations. But the biggest sticking point

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40 / Issue No.12 / www.emea-energy.net

SHELL SOUTH AFRICA

in negotiations was believed to be the 20% free stake the government required. While it’s believed Shell would agree to the figure if the quantities of gas proved accurate, it would only do so after they’d recovered their extensive exploration costs. “We still need a significant amount of money invested before we can produce,” explained Eggink. “In my books, the fiscal terms have to reflect not only the risk, but also the financial exposure that the companies take to actually embark on these activities.” And then in March 2015, amid claims of further legislative foot dragging, stories began to emerge that Jan-Willem Eggink had been pulled out of South Africa by Shell along with his team. “As part of a review due to falling oil prices, the company had adjusted its activities in shale oil and gas

//SHELL NEEDED TO RUN THEIR OWN TESTS, AT AN ESTIMATED COST OF $200M FOR EXPLORATION ALONE// opportunities outside of the Americas,” read a statement from Shell HQ, which went on to say it had also adjusted staffing in local exploration in South Africa. The company said it needed clarity on legislation and technical regulations in the country before making any further decisions. On 3 June 2015, the government finally gazetted the long-awaited fracking regulations in the MPRDA. The new act provided the very legislative and technical clarification that Shell sought and without which they were unable to acquire a licence to begin exploratory work. The Act’s 52 pages should now open the door for that

exploration at the very least. Neither party has made any further comment following the publication of the MPRDA, but with so much at stake it will be interesting to see who blinks first. While shale gas has been taking up much of headlines where Shell South Africa are concerned this year, there has been another innovation afoot that if successful would be equally game changing. Recognising a skills shortage in geophysics and petrolum engineering specifically in Africa, Shell are attempting to bridge the gap by working with the University Of The Witwatersrand (Wits), part

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www.emea-energy.net / Issue No.12 / 41

BUSINESS PROFILE

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funding their Seismology Reflection Centre to the tune of R5m over the next five years. The centre, at the Wits School of Geoscience, will conduct research, train and teach students from all spheres from across the continent, which in turn will lead to an increase in the number of highly skilled geosciences professionals across the oil, gas and minerals industry. “Shell South Africa has invested in the centre because we want to be a good neighbour to the communities in which we operate, where we focus on addressing various challenges in the country including poverty, inequality and unemployment,” Shell South Africa upstream GM Jan-Willem Eggink during a tour of the facility in April 2015. “At Shell, we support skills and capacity development, innovation and technology to help develop a more prosperous future and responsibly unlock energy to power lives and improve living standards.”

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SHELL SOUTH AFRICA

//THIS PARTNERSHIP BETWEEN SHELL AND WITS IS A WONDERFUL EXAMPLE OF HOW WE CAN BRIDGE OUR INSTITUTIONAL BOUNDARIES TO ADDRESS OUR COLLECTIVE CHALLENGES// Dr Musa Manzi, Wits Seismology Reflection Centre director, said that the centre hoped to collaborate with private sector, governmental organisations and the minerals and oil and gas industries to try and help fill the skills gap. He said that the research undertaken at the centre could lead to better mapping and characterisation of the oil and gas reservoirs from some of the major South African basins, with particular interest in the offshore Orange basin and onshore Karoo basin. The centre aims to attract students from a wide range of fields, from

geophysics to engineering. With the increasing number of new petroleum and natural gas discoveries being made in Central and Southern Africa, the centre hopes to provide a first-class training facility to provide the necessary expertise for this growing field. “With the opening of the centre, we anticipate increased interest from those interested in the petroleum and natural gas sectors,” said Wits School of Geosciences head Professor Roger Gibson. “This partnership between Shell and Wits is a wonderful example of

how we can bridge our institutional boundaries to address our collective challenges,” said Wits vice-principal and chancellor Professor Adam Habib. “The net effect is that we all benefit. Students have world-class facilities to train in and industry gets both enhanced human resource capacity and innovative solutions to their operational challenges.” Shell South Africa and geophysical service company CGG were jointly responsible for funding the computer hardware for the centre, which cost R1-million.

SHELL SOUTH AFRICA +27 11 996 7000 www.shell.com/zaf.html

www.emea-energy.net / Issue No.12 / 43

EXXARO

A Cool Coal

Strategy PRODUCTION: David Napier

As Exxaro enters a new phase in its history, under the leadership of Mxolisi Mgojo following Sipho Nkosi’s retirement, it seems that the strategy will not change and carbon fuels will continue to drive this ambitious business forward.

The South African mining industry has historically been the driving force behind the growth of the country’s wealth, continually developing what is already Africa’s most advanced economy. Modern mining began after the discovery of a diamond in the banks of the Orange River by Erasmus Jacobs in 1867. Today, it’s not just precious stones and metals that are mined. South Africa remains full of mineral riches. It is the world’s largest producer of chrome, manganese, platinum, vanadium and vermiculite. It is the second largest producer of ilmenite, palladium, rutile and zirconium. The Rainbow Nation also produces huge amounts of iron ore and in 2012 it overtook India to become the world’s third biggest iron ore supplier to China. South Africa is also the world’s third largest coal exporter and much of the country’s coal is used for power

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production. Reports suggest that around 77% of the country’s energy needs are provided by coal. But even with the historical success of the industry, nothing can stop an economic slowdown once it has set in. The 2008 global financial crisis had its impact on the mining industry and recovery has been slow and difficult. Now, the international economy is facing further doubt as problems in the Chinese stock market are having knock on effects in global markets. In August, Economic Development Minister Ebrahim Patel said South Africa’s mining sector is “in trouble” after huge job losses and plummeting commodity prices as a result of Chinese uncertainty. Mineral Resources Minister Ngoako Ramatlhodi entered urgent talks to try and ease the concern over job cuts and stabilise the industry which contributes around 7% to the economy. The problems have been felt by all

EXXARO

EXXARO CEO DESIGNATE - MXOLISI MGOJO

//WE NEED TO STEER THIS COMPANY THROUGH THESE STORMY WATERS AND IT’S NOT AN EASY JOB. THE INDUSTRY NEEDS TO RESPOND TO THESE CONDITIONS AND WE AS EXXARO ARE NO EXCEPTION// 46 / Issue No.12 / www.emea-energy.net

the major mining houses with Lonmin, Anglo American and Harmony Gold all reporting difficulties and job cuts. But one of the largest South African-based diversified resources groups, Exxaro, is managing to find reasons to be positive in amongst all the doubt and concern. Exxaro has interests in the coal, titanium dioxide, ferrous and energy commodities and current operations and projects in South Africa, Botswana, Republic of Congo, China and Australia. The group is the second-largest coal producer in South Africa with current production of 39 million tonnes per annum and it seems that coal will be a

market that provides a boost in these difficult times. In March, the company announced that longstanding CEO, Sipho Nkosi would retire and be replaced by Mxolisi Mgojo who was the executive responsible for carbon operations. But even after Nkosi’s retirement, he has been clear on the strategy that was left behind for his successors to implement and certainly surrounds coal. CARBON FUTURE At an investor presentation in August, Nkosi said: “We need to steer this company through these stormy waters

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and it’s not an easy job. The industry needs to respond to these conditions and we as Exxaro are no exception. “In the next three to five years, carbon business is key. Our focus is going to be on the coal business. We see a lot of value in that business and we are in control of that business. In terms of capital allocation and growth, our focus will be on coal and you won’t find too much capital spend in other areas. “We will remain a diversified organisation as that is our long-term aspiration.” CEO-designate, Mgojo reiterated this when he spoke to CNBC Africa

in August saying: “We have a very strong coal story; one which talks of a future of growth. We are seeing many opportunities in domestic and export markets. We have long term contracts in place with Matimba and Medupi power stations. We have short term contracts with commercial mines and we have not had any complaints from Eskom regarding the quality of coal. “I was part of the Executive Committee with Sipho from the first day that Exxaro was created. We all subscribe to the strategy that he led and we are focussed on building a robust carbon business. It’s a strategy that I fully

//NORTON ROSE FULBRIGHT NORTON ROSE FULBRIGHT IN AFRICA Africa has seen its fastest economic growth to date in the energy and infrastructure, mining and commodities sectors. Investment in other sectors ranging from financial institutions to technology and food security is also rising, along with Africa’s appetite for consumer goods and services such as financial services, mobile commerce and retail brands. We have worked with a wide range of clients in Africa (some for many years) particularly in corporate, M&A and securities, banking and project finance, and dispute resolution and litigation. Africa’s industry growth trends are a perfect match for our key sector strengths: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare. Our lawyers are working on transactions from Morocco in the north to Nigeria and Senegal in the west, Kenya and Tanzania in the east, and across southern Africa. We advise on a variety of common and civil laws, including English, Tanzanian, French, Moroccan and South African law, and have experience in Lusophone jurisdictions, specifically Mozambique and Angola. We have offices in Morocco, South Africa and Tanzania, and alliances with firms in Uganda, Burundi and Zimbabwe. Our global presence enables us to manage transactions across the developing axes of growth between Africa, Australia, Canada, China, India, Russia and the United

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States. Africa’s trade volumes with these and other emerging partners have doubled in value over the last decade, and inbound investment from trans-national corporations continues to rise. Our clients include Africa’s major banks, development funds, private equity funds, export credit agencies, and government agencies, and companies active in mining and resources; transport; technology; media; telecommunications; energy; utilities; and financial institutions. Our experience covers more than 40 African countries “Best trade finance law firm in sub-Saharan Africa” Global Trade Review 2012 - 2015 “Tier 1 Financial and corporate (international firms) Ghana, Mozambique, Nigeria, Uganda, Zambia” IFLR 1000 2013 - 2015 “Tier 1 - Corporate/Commercial (Africa wide)” Chambers Global 2012 - 2014 “Tier 1 - Projects and Energy (Africa wide)” Chambers Global 2012 - 2014 “Tier 1 - Projects and Energy: Mining and Minerals (Africa wide)” Chambers Global 2014 www.nortonrosefulbright.com T: +27 11 685 8500 | F: +27 11 301 3200

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BUSINESS PROFILE

//WE ALL SUBSCRIBE TO THE STRATEGY THAT HE LED AND WE ARE FOCUSSED ON BUILDING A ROBUST CARBON BUSINESS// endorse as I was part of the team that crafted that strategy with the board.” Nkosi has had a long and successful career in South Africa’s commercial sector. The 60 year-old has a reported private wealth of around R1.4 billion and this has been built up over 30 years. Nkosi and Mgojo co-founded Eyesizwe Coal, which became Exxaro Resources in 2006 with the addition of assets from Kumba Iron Ore, BHP Billiton and Anglo American. “The Exxaro Board would like to thank Sipho for developing Exxaro into a leading South African resources company and for delivering significant value to stakeholders. The Group has a strong balance sheet, solid growth potential and is poised to move to the next level of growth,” said Dr Len Konar, chairman of the Exxaro Board. “The appointment of Mxolisi is the

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culmination of a thorough succession plan that was implemented over several years. The Exxaro Board is pleased to welcome him as our CEO-designate and we look forward to the strategic management, business acumen and operational know-how that he will bring to bear in the roll-out of the Company strategy,” he added. “Mxolisi will draw on the support of executives who between them have extensive experience in all facets of the business,” added Dr Konar. Exxaro expects to export around four million tonnes of coal for the full 2015 financial year. API4 export prices had averaged about $63/t at the start of 2015, declining to lows of $59/t in June. A strategic purchase that was finalised in August was Exxaro’s acquisition of Total SA’s South African coal unit (TCSA). This is in line with

the carbon strategy outlined by Nkosi and Mgojo and will bolster sales and production. TCSA is the fifth largest coal producer in South Africa and has a majority interest in two main operating complexes, Dorstfontein and Forzando, located in the Witbank coal basin in South Africa’s Mpumalanga province. TCSA recorded combined sales of approximately 4.5 million tonnes per annum in 2013. The majority of TCSA’s production is export coal which is shipped through Richards Bay Coal Terminal (RBCT) to international markets, mainly India and China. However, even with these impressive statistics, the purchase agreement was amended in August reflecting at least a 19% price decrease compared to when first announced amid a slump in prices for coal. Exxaro said it will pay $262 million in cash and make five annual payments totalling as much as $120 million, depending on average prices at RBCT, the world’s largest single facility for the fuel. When the deal was first announced, Exxaro said it would cost $472 million.

EXXARO

//THE GROUP HAS A STRONG BALANCE SHEET, SOLID GROWTH POTENTIAL AND IS POISED TO MOVE TO THE NEXT LEVEL OF GROWTH// “In the 12 month period since the acquisition was announced, commoditymarket conditions have deteriorated significantly. As a consequence, Exxaro and Total have agreed to a reduction in the purchase consideration to take into account the change in market circumstances,” the company said. MATLA COAL & WATER Significant investment has been made in Exxaro’s Matla coal mine in Mpumalanga and in April, the company announced that it will build a new R250 million water treatment plant at the site to reduce the safety risk posed by large quantities of water that have filled mined-out underground cavities while simultaneously benefiting the environment and local water users. Exxaro expects the facility to treat 10 mega litres per day and says that it will form part of the organisations holistic group-wide water management strategy which promotes responsible and sustainable water management. The Matla underground mining operations experience significant water ingress into the workings from surface, leading to flooding risks to the safety of workers and to the surrounding environment which could be impacted by the contaminated water should this water be released back to the surface without prior treatment. The treatment entails underground water being pumped to the surface where it undergoes comprehensive treatment using innovative filtration processes to remove contaminants and purify the water. The water treatment plant will treat 10 mega litres per day and of this some 6.5 mega litres will be discharged to the Olifants River and the remainder will be used in the Matla operations or for potable water needs at the mine. “Water is a strategic natural

resource in South Africa and it is our duty to ensure that we reduce the impact of our mining activities on this precious resource,” said Nkosi. “We are committed to protecting and improving water quality by ensuring the water we discharge is of the same or better quality than the original consumption. The Matla water treatment plant is a prime example of this approach and is one of three water treatment plants in our Mpumalanga region which are part of our long-term water management strategy,” he added. It is expected that construction of the plant will be completed in 2017. This is encouraging news for

investors, showing that even during the extremely difficult market conditions, Exxaro is still ready and willing to spend. Many coal optimists say that we are in a cyclical downturn and the price will bounce and Exxaro will share this optimism. When the Chinese drama calms and when the delayed Medupi and Kusile power stations eventually reach full completion, the local and international demand for coal should increase and this will play straight into the hands of Exxaro thanks to the carbon strategy set out by Nkosi and Mgojo.

EXXARO +27 12 307 5000 info@exxaro.com www.exxaro.com

www.emea-energy.net / Issue No.12 / 51

CASTROL SOUTH AFRICA

Slick Marketing

Cements Castrol as Industry Leader PRODUCTION: David Napier

Castrol South Africa is preparing to supply its world class products to one of the world’s most ambitious engineering products, set to take place in SA in 2016. It has also recently invested in a product that could improve the safety of the thousands of drivers who enjoy live sports events around SA.

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Castrol South Africa is on the cusp of a very exciting time. The global oil and lubricant giant is a company whose work often goes unnoticed but its presence certainly does not. With a number of very important projects under way, Castrol is ensuring that its name is not one that is overlooked. The British company opened its doors in SA in 1929 in Jo’burg, Durban and Cape Town before moving into Zimbabwe in 1939. A blending plant and more branches followed in 1945 and by 1946 SA was the third largest of Castrol’s overseas markets after Australia and India. The mining industry was a big consumer of Castrol’s products and over the years, the brand continued to grow adding more product lines, more facilities and more advanced technology. Today, the company is the country’s leading oil and lubricant supplier and is well-known because of its conspicuous marketing strategy. Castrol sponsors and supplies racing teams, sports events, aerial challenges, and many more widely-viewed public spectacles. One of the biggest and most important of these spectacles is set to take place soon in Hakskeen Pan, Northern Cape where the Bloodhound supersonic (SSC) rocket car will attempt to break the world land speed record by 33% and reach a top speed of 1050mph. Castrol has been named as the provider

//THIS PARTNERSHIP GIVES US THE CHANCE TO SHOWCASE HOW OUR HIGH PERFORMANCE PRODUCTS SET NEW STANDARDS AND PUSH BOUNDARIES// of high performance lubricants, brake and hydraulic fluids, drawing on its historic achievements where the land speed record has been broken 21 times using Castrol products. The company says: “Man has always dreamed of going faster, pushing boundaries to break the land speed record. Castrol’s pioneering spirit helps to achieve the impossible - driven by restless ambition for innovation and technology. Going faster and faster with almost a century of land speed records, to reach 1000mph in 2016, Castrol has been at the heart of all of this – fuelling the dreams of pioneers.” Paul Waterman, Global Chief Executive of Castrol said: “We are delighted to support the Bloodhound project. At Castrol, we have a proud history of fuelling

pioneers and this partnership gives us the chance to showcase how our high performance products set new standards and push boundaries.” Bloodhound Project Director, Richard Noble said: “We are delighted that Castrol has joined the team. Their brand is synonymous with racing at the highest levels and, of course, with many pioneering achievements in Land Speed Racing – I am happy to continue a 30 years relationship with Castrol having worked with them on both Thrust 2 and Thrust SSC projects. They are a great brand and will not only work with us on the technical side, they will help us share this engineering adventure with a global audience.” Obviously, the Bloodhound SSC is a highly complex vehicle that needs the most advanced care

possible. It has been developed with industry-leading expertise from all over the globe at the Bloodhound headquarters in Bristol, UK. The car is named after the Bristol Bloodhound 2 missile that could accelerate from standstill to Mach 1 in 2.5 seconds. Hakskeen Pan was chosen as the location for the record attempt after a detailed research programme undertaken by the Bloodhound team and the University of Swansea. The desert fit the criteria of having no vegetation and having at least a 10 mile space for a track. The strip is also flat and quite smooth, although it has needed work, and under the surface it is hard meaning that it won’t break up easily under pressure. A 12 mile long, 1500 metre wide track was needed and has been built, with a lot of hard work from the local community, and the area is almost ready for testing to begin. The team in the Northern Cape had to shift 16,000 tonnes of stone by hand in order to smooth the surface. However, the surface is still not perfect and special suspension has

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BUSINESS PROFILE

//TOP SCIENTISTS AND ENGINEERS HAVE WORKED ON THE DEVELOPMENT OF THE MOTOR OIL AND IT HAS UNDERGONE RIGOROUS TESTING IN HUNDREDS OF INDIVIDUAL CAR ENGINE TESTS, EQUIVALENT TO COMPLETING NEARLY 1.9 MILLION MILES, OR MORE THAN THREE MILLION KILOMETRES// been designed to keep the car and people safe when testing begins. Castrol will be supplying a number of advanced products during testing, qualifying and for the record attempts. One of the main products will be Castrol EDGE, the company’s strongest ever engine oil. The 135,000 thrust hp car will also use motorsport formula brake fluid - Castrol React SRF and Castrol hydraulic fluids previously used by NASA.

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Castrol EDGE, boosted with TITANIUM Fluid Strength Technology (FST), was introduced to South Africa in June 2014 amid much fanfare. TITANIUM FST was developed at the Castrol Technology Centrein the UK and is designed to double the film strength of motor oil, prevent oil film breakdown and reduce friction. It physically changes the way oil behaves under extreme pressure and helps form

a protective shock-absorbing film that prevents damaging metal-to-metal contact. The oil has been developed in response to car manufacturers’ downsizing, turbocharging and advanced engine designs, such as direct fuel injection and variable valve timing. This has resulted in engine pressures tripling in the last 20 years, causing greater stress on the oil. Advances in engine designs and technologies being developed by car manufacturers aim to deliver greater efficiency, but also mean that engines are working harder and under higher pressures than ever before. The only thing keeping metal engine components apart is the oil, so it needs to be strong and remain strong. The launch of Castrol EDGE saw experienced racing drivers from various manufacturers drive cars at high speeds around courses in total

CASTROL SOUTH AFRICA

darkness, illuminated only by beams of light from the edge of the track. The drivers raced against the lights which quickly flashed on and off, revealing the twists and turns for just a few seconds. South African driver and competitor in the Super Trofeo Series, Adrain Zaugg, took part in the local trial in a Lamborghini Aventador. This type of promotion is typical of Castrol’s energetic marketing strategy. Castrol technology manager for Africa, Rob Bowen said of the oil: “Top scientists and engineers have worked on the development of the motor oil and it has undergone rigorous testing in hundreds of individual car engine tests, equivalent to completing nearly 1.9 million miles, or more than three million kilometres.” Away from oils and engines, Castrol South Africa has been looking out for its end users in a safety campaign that is focussed on drivers who attend sporting events. As a big sponsorship partner of some major sporting occasions, Castrol has invested in an innovation that could mean the difference between life, death or prison for drivers who head to the game and like to have a drink. The Vuvu-Lyza is a type of breathalyser developed by Castrol and Ogilvy Cape Town which indicates whether or not consumers are over the legal blood-alcohol driving limit. Shaped and designed to work exactly like a functioning vuvuzela, you simply blow and receive a greenlight if you’re safe and a red light if you’re over the limit. Brand Manager of Castrol South Africa, Pooja Desai said: “We are so proud of this safety initiative inspired by something so synonymous with our local football culture. We are sure the

Vuvu-Lyza will be a hit once it becomes available to public.” In a promotional video, Castrol explains the technology behind the innovation: “Whenever there’s a big match, thousands of drivers make their way to stadiums and sports bars. While many of them choose Castrol to take care of their engines, they forget about other dangers on the road, like when they’re driving back home, unaware that they might be over the legal alcohol limit. “So how can we give soccer fans a safer experience through innovation and protect them just like we protect their engines? The breathalyser test is the most common method for alcohol testing but it’s invasive so we combined the vuvuzela that everybody loves, with the breathalyser that everybody hates and created the Castrol Vuvu-Lyza. We placed a

//WE ARE SO PROUD OF THIS SAFETY INITIATIVE INSPIRED BY SOMETHING SO SYNONYMOUS WITH OUR LOCAL FOOTBALL CULTURE//

circuit board with an ethanol sensor and LED lights that run off a nine volt battery inside a vuvuzela and piloted the technology at soccer matches and sports bars. For the first time ever, drivers could use vuvuzelas to enjoy the game and to arrive home safely.” This fantastic innovation proves that Castrol is committed to its customers in South Africa and as it continues to innovate and offer world class products, it is certain to remain at the forefront of the industry, leading the way in lubricants and motor oils.

CASTROL SOUTH AFRICA +27 11 488 5111 infosa@za.bp.com www.castrol.com

Wishing you safe travels this festive season! Special thanks to CASTROL SA Proud Oil and Lubricant Supplier to the Fury Motor Group for over 20 years!

Fury Motor Group Proud Retailers of SA’s Leading Motor Brands

www.fury.co.za

www.emea-energy.net / Issue No.12 / 55

INGULA PUMPED STORAGE SCHEME

Ingula Supply

to Start Soon PRODUCTION: Karl Pietersen

The Ingula Pumped Storage Scheme is set to supply 1332 MW of peaking energy to South Africa’s grid when it is fully commissioned next year. This supply is going to be absolutely vital when controlling the demand for electricity in peak times. Gibb Projects Director, Colin Logan tells us about the current state of the project and also more about the country’s development of a sound green energy industry.

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In October, Eskom announced that the country was on track for a summer without load shedding – two words that have become the bane of most people’s lives. While reminding that ‘the system is constrained but stable’, Eskom spokesperson, Khulu Phasiwe said recently that the parastatal would be investing in maintenance on the grid over the coming months with the aim of reducing plant breakdowns. “We are currently implementing our summer maintenance programme aimed at increasing the reliability and resultant availability of our power plants. “In terms of our existing Generation Sustainability Strategy, Eskom aims to achieve 80% plant availability, 10% planned maintenance and 10% unplanned maintenance over the medium term. We are implementing appropriate levels of planned maintenance in line with the Generation Sustainability Strategy, a move that has resulted in the reduction of plant breakdowns over the past few weeks,” Phasiwe said in October. But even with the risk of load shedding said to be relatively low, the threat always hangs overhead and the facts are disturbing: Electricity generated by South Africa dropped by 3.3% for July year-on-year, while the country’s GDP contracted by 1.3% in the second quarter of 2015, a statistic economists suggest was directly linked to load shedding. The problem we have is that our coal fired power stations heat water to create steam to turn the turbines – that’s all good, but we can’t turn the fossil-fired furnaces on and off at the flick of a switch, so we create huge amounts of heat — even in off-peak times when we don’t need it. If our scientists could find a way to store the large amounts of wasted electricity in a battery, energy prices would drop, reliability would be improved and availability would be constant. With demand for power always on the rise and additions to the grid,

namely Medupi and Kusile, seeming to be eternally delayed, something big is needed to provide stability during peak times of demand. Fortunately, one solution that has been years in the making is approaching its finish line and will soon be able to weigh in with a much needed 1332 MW of reliable, peak electricity. The Ingula Pumped Storage Scheme is an Eskom-led project and is South Africa’s largest hydro power project to date. It involved the construction of two large dams, and a network of ancillary infrastructure in the Drakensberg range, on the border between the Free State and KZN. In order to function, pumped storage schemes require two dams or reservoirs. At Ingula, the upper Bedford and lower Bramhoek dams are located 4.6 km apart and connected by underground waterways. During times of peak energy consumption, water will be released from the upper dam and flow through four 333 MW turbines to generate the 1332 MW of electricity. At times of low energy demand, the pump turbines will drive water 470m from the lower to the upper dam where it will be stored in readiness for the next peak event. APPROACHING COMMISSIONING According to Colin Logan, Projects Director Dams, Hydropower and THIS IS AofCAPTION, THIS IS Underground A CAPTION Works at Gibb Engineering

and Science and a lead Eskom consultant, the project is now reaching its final stages and will soon begin generating that such valuable power. “The project has entered what is primarily a mechanical and electrical phase. We are actually approaching the commissioning stages of the job and we certainly hope that early in 2016 we should be close to full commissioning and commercial operations. The idea is to have at least two units running commercially in the first half of next year if not more,” he says. “The first unit should be ready for commissioning by the end of this year or early in January. There are different stages of development and we’ve had some setbacks but we are now certainly in the critical stages of the job. “On the civils side, we are over the critical stage and we only have one or two things left to deal with to ensure watering up and we are addressing those at the moment. “Everyone is waiting with anticipation for the project to come online and hopefully deal with some of the problems we are having with electricity shortage. It’s certainly, like many Eskom projects, got some

negative public sentiment attached to it but I know that the Eskom management and everybody on the project are certainly trying to change that view. Every effort is being made to turn that around. There is a strategy but how successful it will be remains to be seen.” South Africa has four pumped storage schemes: Drakensberg, Steenbras, Palmiet and Ingula and one other that was planned, Tubatse, has been shelved indefinitely. These facilities were all commissioned with the aim of balancing the country’s supply when demand is high but Logan points out that when Ingula is complete it is unlikely that load shedding will be eradicated completely. “One of the key issues of a pumped storage scheme is that it’s a net consumer of energy and it requires baseload power stations to be supplying surplus energy to the grid to allow us to pump water to store energy. What it will do is relax the pressure that has been put on open cycle gas turbines and the cost of running those turbines. They’re not designed to run for extended periods like they have been. It’s not going to wipe out load shedding; that’s just not the case,” he says.

www.emea-energy.net / Issue No.12 / 57

INGULA PUMPED STORAGE SCHEME

Load shedding is of course the main driver behind the negative publicity surrounding Eskom and earlier this year, changes were made to Eskom’s leadership with the plan of changing the fortunes of the continents largest electricity producer. Brian Molefe was appointed group CEO, Anoj Singh got the job of Chief Financial Officer and Ben Ngubane was named Chairman of the company. Molefe is hugely experienced and most recently plied his trade as CEO of Transnet. Under his leadership, Eskom has already seen improvements. Ngubane said of Molefe: “He has changed the whole vibe and morale among employees in so doing making a significant difference.” Molefe has also already established close relationships with power station managers and brought new synergies to the company.

“A lot more positivity has come from his leadership,” says Logan. “The message has been quite clear – no load shedding - and in recent times we haven’t experienced significant load shedding to the extent that we could of. It remains to be seen how sustainable that is; it’s one thing to make a decision to say no more load shedding but it has impacts on maintenance schedules and puts existing plants under significant strain but I know the follow up to that is a focused maintenance regime, it’s not like we haven’t thought about the maintenance challenges that come with running plant for longer than it should. I certainly hope that it will translate to something positive.” Public Enterprises Minister, Lynne Brown said: “I welcome these appointments and they are part of my ongoing interventions to stabilise Eskom.

// VOITH HYDROPOWER – RENEWABLE AND SUSTAINABLE ENERGY FOR AFRICA For more than 140 years, Voith Hydro belongs to the world’s leading companies for hydropower equipment and services for both new and modernization projects. With its product and service portfolio, the company covers the entire life cycle and all components of pumped storage plants as well as large and small hydropower plants. Besides generators, turbines, pumps, electrical and mechanical power plant equipment, Voith Hydro also offers automation systems and services, including spare parts deliveries and maintenance work. In eastern Free State, South Africa, Voith Hydro is currently involved in building a pumped storage scheme, Ingula Project – set to be the continents largest ever. The complete electro-mechanical equipment will be supplied by Voith. This includes four pump turbines, each with a capacity of 342 MW, the associated motor generators, as well as the entire control and automation systems. Further, the Voith Paper division was assigned to provide heating, ventilation and air-conditioning systems. After commissioning, the pumped storage plant will make a major contribution to South Africa’s rapidly expanding 21st-century energy demands.

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A pumped storage scheme is the economically and environmentally most developed form of storing energy during base-load phases while making this energy available to the grid for peaking supply needs and system regulation. The operating mode is quite simple: Energy in form of water is stored in an upper reservoir, pumped from another reservoir at a lower rising ground. In times of high electricity demand, power is generated by releasing the stored water trough turbines like conventional hydropower plants. In times of low demand, usually nights or weekends when electricity is at a lower cost, the upper reservoir is recharged by using lower-costelectricity from the grid to pump the water back to the upper reservoir. “Pumped storage plants are real multi-talents as they combine storage, reliable performance and flexibility, all rolled into one type of power plant. The Ingula plant will be strongly contributing to grid stability in South Africa”, says Heike Bergmann, Member of the Board of Management of Voith Hydro Heidenheim. www.voith.com

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BUSINESS PROFILE

“Together with Mr Molefe, who was seconded from Transnet in mid-April 2015, they have been successful in bringing stability to the company whilst dealing with a constrained grid.” Molefe spoke about Ingula at a media roundtable discussion in September saying: “Let me tell you now, Medupi was delivered on time and Ingula units 3, 4, 2 and 1 will be delivered on time. The final units of Medupi will also be delivered on time. These are the dates based on our turnaround plan and they are permanent dates. We will not continue to shift targets.” Perhaps his optimism brings hope to the people working at Ingula and also those who are desperate for peak demand supply to be better managed as, to date, they have witnessed some extraordinary setbacks including fatalities, injuries, industrial action and huge budget increases.

GREEN ENERGY DEVELOPMENT The Ingula Pumped Storage Scheme represents an investment by South Africa into green energy. Although a baseload is still required, it is undoubtedly a greener method of producing energy than some suggested alternatives. However, although there is much hype, locally and globally, about renewable energy projects, Logan explains that much development is still needed before we can solely rely on this type of technology for all our energy needs. “We all support green energy development and investment into that. It really is a buzz word around the world but something I advocate is that it’s not the solution to our power supply but it can help to alleviate carbon emissions. Green energy alone is not really the solution, we are still quite dependent internationally on other base load power stations

including coal and nuclear. I don’t think we’re at a stage where green energy will just replace those types of technology. They have their own challenges in terms of reliability of supply – the wind doesn’t blow every day and there’s not always bright sunlight. There is still a lot we don’t understand about green energy. I think it’s important to include renewable energy in the energy mix but I don’t think it’s realistic to call it a complete solution to the problem,” he says. “Hopefully in the future we’ll find something which can sustainably remove coal fired powered stations from the grid. “Examples I can use are countries like Germany which claim to use a high percentage of renewable energy however, they’re quite dependant on nuclear energy from France in the event that renewable energises don’t meet demand so they’re not entirely sustainable as a renewable energy outfit,” he adds. Many industry commentators say there are compelling reasons for SA to invest further in renewable energy. Countries like Mozambique, Rwanda and Ethiopia, or the ‘African tiger’ economies with some of the highest growth rates in the world, all resolutely follow green growth paths. Take Ethiopia for example. With close to 10% annual growth in 2013-14, the country is determined to avoid the pitfalls of what it calls the conventional economic path of increased emissions, depleted resources, being locked into ‘outdated technologies’ and vulnerability to increasingly volatile fossil fuel energy prices. Instead, its government says: “Ethiopia is committed to building a climate-resilient green economy.” The country is planning to increase

//IT’S NOT GOING TO WIPE OUT LOAD SHEDDING; THAT’S JUST NOT THE CASE// 60 / Issue No.12 / www.emea-energy.net

INGULA PUMPED STORAGE SCHEME

//THE IDEA IS TO HAVE AT LEAST TWO UNITS RUNNING COMMERCIALLY IN THE FIRST HALF OF NEXT YEAR IF NOT MORE// electricity supply tenfold by 2030; all with renewable technology. From a pumped storage perspective, Logan is confident that this type of technology has a lot to offer and will continue to play a part in developing Africa’s energy security. “I see the technology developing a lot. In support of a variable renewable energy supply, pumped storage will have a role to play in balancing supply and demand better,” he says. However, when Ingula is completed and while Tubatse is on hold, there are no further pumped storage schemes in the pipeline in South Africa and Logan says this is because, based on information available right now, there is not an immediate need for another system, not for at least another 20 years. “There are a few that are being studied. I recently done a study with EDF from France about a project in Lesotho. We also assessed the SADC for the possible outlet for supply of energy and we came back to the point that South Africa would most likely be the market for such a scheme,” he explains. “We looked at the South African energy mix as a result, and we spoke to the Department of Energy (DoE) who developed an Integrated Resource Plan which states which plant needs to come online and projects that need to come offline because they’ve reached the end of their design life and we saw that their growth forecast for the country were set at 4-5% and were currently only achieving 1.5%. In modelling that idea with EDF in Lesotho, selling energy to the South African market, we came to the conclusion that there was no need in the short term for another pumped storage project but

if we start looking around 2035, you start seeing a time where pumped storage would make sense. “Obviously, bringing a scheme online takes 10-12 years so we’re not talking about that far in the future. Of course, this is all based on the information that was available from Eskom and the DoE but if those forecasts change and the economy turns around in a big way then everything changes significantly,” he adds. RENEWABLE FUTURE One thing that is certain, Ingula and the other green energy projects around the country have exposed South Africa’s professionals to new ways of getting difficult power generation projects successfully negotiated and completed. The 64 solar and wind projects under construction at present have involved engineering, banking, legal and many other types of company, offering experience and immersion in what is a relatively new type of business.

The key now is to finish Ingula with no more delays, connect it to the grid and let it do what it was designed to do. All being well, it could prove to be a springboard for investment into future renewable projects of a similar nature. Logan has been involved with the project from the very beginning and while some staff levels on site are now starting to decline as the finish line draws closer, he has no intention to leave until everything is 100% complete. “We have demobilised some staff in the past few months and we will continue to do so through 2016 but personally, I have every intention to be here all the way through until the end,” he concludes.

INGULA PUMPED STORAGE SCHEME +27 11 800 8111 csonline@eskom.co.za www.eskom.co.za

www.emea-energy.net / Issue No.12 / 61

KUMBA IRON ORE

The Iron

Giants PRODUCTION: Emily Ayson

Whilst Kumba Iron Ore may not be a household name for us, there is a high probability that our homes contain products or are located close by to structures that are made with the iron ore that this company source. Offering a truly superior product to their ever-expanding customer base, Energy Focus dig around to find out just what it is that Kumba are doing right.

During his time as CEO of Kumba Iron Ore, Norman Mbazima has guided his company into the realms of prosperity and international renown. In a 2013 interview, Mr Mbazima alludes to how such leadership skills were honed during his childhood, stating that ‘a family as big as mine…we had to be close knit! We learnt how to share…how to work as a team. We also needed a leader…I was able to change my position in the family when it was required, to offer guidance and support’. In 2014 alone, Kumba had a workforce of 14,040, produced 48.2Mt of material and achieved an operating profit of around R19.2bn. Thus, it seems evident that overseeing operations of a

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company with such a high reputation and presence is something that Mr Mbazima has been nurtured to do At a glance, Kumba Iron Ore is just like all other burgeoning businesses in South Africa, working hard to sate the demands of its customers and turn a profit for its shareholders. Predominantly owned by one of the largest mining companies in the world, Anglo American, Kumba is the largest enterprise of its kind in the whole of South Africa and they themselves hold the majority share in another successful mining operation, the Sishen Iron Ore Company (SIOC). With various factions of the business spread between Gauteng, the Northern Cape and Limpopo provinces and Saldanha

BUSINESS PROFILE

KUMBA IRON ORE

SISHEN MINE

Bay, the company have extended their presence and reach throughout the country. However it is not just South Africa in which Kumba are known, with international companies in Asia, Europe, the Middle East and India flocking to them to do business. Whilst this may seem like a smooth operation, Kumba have not been without their challenges. The mining strikes of 2012 greatly affected productivity for obvious reasons and even more recently, the catastrophic crash in iron ore prices and subsequent 13% revenue loss led to a 40% reduction of Head Office staff at Kumba. Yet, regardless of these hurdles, the company have soldiered on, providing South Africa, and the world, with iron ore. On average, 11% of Kumba’s product remains in the country with the other 89% being sent abroad, which has is in large part facilitated by the drastic drop in freight rates. Interestingly, 55% of total sales in 2014 were entirely to Chinese businesses, highlighting the lengths some companies will stretch to in order to obtain Kumba’s wares. In general, the importance of iron ore should never be underestimated; Kumba predominantly supply this raw material to the steel industry, who in turn provide components for the construction and automotive spheres amongst others. Iron ore is also used by the pharmaceutical, cosmetic and paint industries and so one can begin to see how ubiquitous and in-demand such a substance is in our everyday lives. As such, Kumba make huge efforts to ensure that the end product that reaches the customer is of superior quality. They hire engineers and geologists to design and maintain their mines, resulting in ore that is both high in actual iron content and breaks up less

//IN 2014 ALONE, KUMBA HAD A WORKFORCE OF 14,040, PRODUCED 48.2MT OF MATERIAL AND ACHIEVED AN OPERATING PROFIT OF AROUND R19.2BN//

in transit so that customers get more content for their cash. Furthermore, they can get ore from mine to port in just 9 hours via their dedicated rail link, the Sishen/Kolomela-Saldanha Iron Ore Export Link, offloading 10,000 tons per hour onto ships to be sent all around the globe. Clearly, Kumba as a business is a well-oiled machine and it seems that they really do live up to their mantra that ‘Our company exists to make a real difference for everyone whose lives we touch’. Obviously, proffering a good that is highly sought after is a good start for any business, but the real key cogs of this machine are the people behind Kumba – a sentiment foregrounded by Mr Mbazima in 2013 when he stated that his favourite part of working for Kumba was ‘[the] people’. As a business head, Mr Mbazima distinctly values his employees and he runs a company that is staunchly dedicated to employee equality, skills development, education and wellbeing. Of the 14,040 employees, 8191 of these are on permanent contract, 4987 are external contractors from allied industries and companies and 869 are on learnerships, a scheme which cost the company a reported R73.3 million. 86% of staff are drawn from local areas with an average tenure of 10 years. Women comprise 19% of the general workforce, 13% of core mining positions and 20% management positions. Kumba are also dedicated to ensuring that women have the appropriate facilities, receive development and mentoring training and are offered a safe environment to work in; there have been no reported cases of sexual harassment to date. Throughout their careers at Kumba, employees are offered free counselling for personal issues, fatigue management education and medical testing for diseases such as HIV and TB, which has been utilised by in excess of 90% of staff. This privilege is also extended to their dependents and external contractors may also take advantage of these schemes. Furthermore, staff are offered Continues on page 68 www.emea-energy.net / Issue No.12 / 65

//SAAB GRINTEK DEFENCE TO CUSTOMISE MOBILE MEDICAL SYSTEMS FOR LEADING SA MINE In October this year, Saab Grintek Defence (SGD) will provide a mobile medical clinic system to Anglo American’s Kumba Iron Ore business unit in the Northern Cape Province, to extend basic medical services to the company’s employees, contractors and the host communities, for early diagnosis and management of occupational diseases, as well as preventing exposure to hazards that could lead to occupational illness. This will allow access to medical services for the people located in environments where there’s limited access to healthcare. The mining industry is responsible for the majority of employment in South Africa, drawing its work force from people living near the mines, in rural communities. As mines are built in remote locations, medical attention is not easily accessible to workers. Once the system is developed and set up, mineworkers at the Kumba Iron Ore business unit will have instant access to clinic services and skills of doctors, dentists, optometrists and pharmacists. The clinic will also provide basic operating theatre services.

//THE MINING INDUSTRY IS RESPONSIBLE FOR THE MAJORITY OF EMPLOYMENT IN SOUTH AFRICA//

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Mine workers and other members of the community who fall ill, injure themselves or require regular check-ups or medication, can visit the clinic to receive the medical attention they need. The system developed by Saab Grintek Defence (SGD) consists of several containers that are moved around by trucks and trailers to form a configuration of rooms where medical services can be rendered. Drawing from its experience in integrating systems, SGD has designed its mobile medical clinic to withstand the tough off-road conditions that are typical of Kumba’s operations. The clinic is sufficiently mobile to move between the mine’s four sites in the Sishen area. While this project sees SGD’s Mobile Deployable Solutions converted into a mobile clinic, the system can also be customised to create workshops, life support facilities, command centres and mission support systems. The project is closely related to the social development initiatives led by the Anglo American mining group, with the solution being suited to other sectors of mining where production sites are far away from essential health and welfare services, such as the oil and gas sectors. www.saab.con

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BUSINESS PROFILE

custom made hearing protection devices if they are to be exposed to noise levels exceeding certain levels and the company even invested R9.5 million to expand a local district hospital in Postmaburg’s where many employees reside. The company also hosts the annual ‘Laurel Awards’, in which employees are recognised and commended for their hard work and achievements. Staff safety is also of paramount importance to Kumba, and they report that they have only ever had one fatality. Rather touchingly, in a 2014 report which can be found on the company’s website, Mr Mbazima dedicates a proportionate section to acknowledging this tragic employee death and vows to further improve safety so that it may never happen

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again. In particular, under their ‘Snakes Alive’ scheme, Kumba endeavour to ‘find the snakes before they bite us’; employees are encouraged to report and situation or conditions that may lead to untoward circumstances and staff are continually trained in risk identification. According to Mr Mbazima, such implementations are all in the name of building trust in his employees and ensuring that staff can ‘feel secure and knowledgeable about their working environment…[and]… feel confident in communicating to management at any level’. This sentiment is echoed in a recent strategy undertaken by Kumba, in which they will be working closely alongside Exxaro, a 52% black owned company hat have a 19% stake in Kumba. Their 10 year contract with

major shareholder, Mainstreet 333 expires in 2016 and so the future of Exxaro is in some turmoil. However, with a staunch dedication to Black Economic Empowerment, Mr Mbazima has vowed that Kumba will do ‘everything in its power’ to ensure that black employees of Exxaro maintain their jobs, extrapolating his care beyond the borders of his direct employment. Furthermore, such borders are breached for all shareholders of Kumba; Govermental/ Political Groups, Civil Society, Businesses, Customers and the Media; according to their website, the company believes that ‘No-one is on their own. We’re a company with a joint ambition – all working together to make decisions and get things done more effectively’. Such

KUMBA IRON ORE

KOLOMELA IRON ORE MINE

//OUR COMPANY EXISTS TO MAKE A REAL DIFFERENCE FOR EVERYONE WHOSE LIVES WE TOUCH// dedication clearly resonates with Mr Mzabimaâ&#x20AC;&#x2122;s family orientated drive to foster a safe, close-knit environment for all associated with his company. Consequently, it is no wonder that Kumba consistently appears in lists from the Top Employees Institute. However, perhaps the most significant faction of the business which is also treated with great respect is the very source of Kumbaâ&#x20AC;&#x2122;s wares; the earth and environment. The company are committed to ensuring that they

rehabilitate as much of their mining areas as possible once they are no longer in use. In place are schemes to reduce emissions of harmful greenhouse gasses and there are also protocols in place to save and reuse water. In the Kolomela mine, one of three mines Kumba currently operate in, the Aquifer Recharge Project is ensuring that ground water extracted for initial mining is returned, a scheme Kumba are also hoping to introduce this in their Sishen mine. Furthermore, the company

have even commissioned new drills which not only reduce noise pollution but also decrease the amount of dust created by machines. Overall, through providing such a superior product, demonstrating a staunch commitment to staff wellbeing and a dedication to sustainable mining, it is no wonder that Kumba are receiving attention and business on a global scale. Although already the fourth largest iron-ore producer in existence, the company certainly look set to become the Iron Giants of the world.

KUMBA IRON ORE 012 622 7000/7111 www.angloamericankumba.com

www.emea-energy.net / Issue No.12 / 69

TANESCO

Keeping the

Lights On In Tanzania and Beyond

PRODUCTION: Timothy Reeder

With numerous projects both large and small under its belt since inception in 1931, TANESCO owns most of the electricity generating, transmitting and distributing facilities across the Tanzania Mainland. In the intervening years the company has worked tirelessly to become a continually efficient and commercially focused utility, supporting the development of Tanzania as a whole and going about its operations in the most effective, competitive and sustainable manner possible.

www.emea-energy.net / Issue No.12 / 71

TANESCO

CEO, FELCHESMI MRAMBA

At the turn of the century the first public electricity supply in Tanzania, then known as Tanganyika, was established by German colonialists, in 1908 at Dar es Salaam, and served predominantly the railway workshops and the part of the town housing the majority of the colonialists. When the Tanganyika territory was then mandated to Great Britain in 1920, a Government Electricity Department was required to take over and operate the public supplies left by the Germans. Following the government’s move in 1931 to transfer the operations at Dar es Salaam to private enterprises, among those selected to benefit from this transition was the Tanganyika Electric supply Company Ltd. (TANESCO), as well as the Dar es Salaam and District Electric Supply Company Ltd (DARESCO). TANESCO commenced its operations in 1933, operating a diesel power station at Kange on the outskirts of Tanga in order to supply the town,

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and by 1936 had constructed a 90 metre dam across the Pangani River and commissioned two generators totalling 5MW. At the same time over 400km of supply lines were erected, while in the years 1947, 1952 and 1959 three more sets were installed, bringing the total capacity here up to where it stands today, at an impressive 17.5MW. An agreement signed in 1948 between the Tanganyika Government, the Kenya Government and TANESCO, meant that TANESCO was authorized to export its surplus power generated by the Pangani Falls power station to Mombasa, with certain conditions in place designed to safeguard supplies to consumers in the company’s Tanganyika concession. The supply was provided by a transmission line some 135 km long erected on concrete poles, with the company originally having sought this permission in part to diversify its customer base. The New Pangani Falls Power Plant, meanwhile, is a

hydroelectric plant situated 12 km off the Segera -Tanga highway and benefits from the total head and flow available on the lower reaches of the Pangani River, downstream of the Hale power plant where 21 MW was commissioned in 1964. The Plant’s current capacity of 68MW is four times higher than that of the Old Pangani Falls Power plant, which was closed to allow the redevelopment. The plant started its commercial operation in November 1994, three months ahead of schedule and to the relief of the country as a whole, as before its commissioning Tanzania had experienced a serious power shortage which had plagued the country since 1992. The Pangani Basin Water Office, created as an integral part of the redevelopment project, supervises the use of water, including registration and issuing of water rights, and works to stop any illegal usage of the area. In 1962, construction commenced of the 21-MW Hale hydropower station on the Pangani River, upstream from

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//MY DREAM IS TO HAVE A TANESCO CUSTOMERS PERCEIVE AS VERY RELIABLE AND A QUALITY SERVICE PROVIDER// Pangani Falls, along with an associated transmission line from Hale to Dar es Salaam. The plant is sited at Hale Township on the Segera–Tanga highway and uses a natural fall of 70 metres some 40 river miles from the Indian Ocean. Hale was commissioned and formally opened by President Nyerere in 1964, at the same time that supplies were extended to virtually all of the sisal estates in the Pangani area via the addition of branches at Kilosa, Kimamba and Lushoto. The hydro works include a storage weir across the Pangani River, 4km upstream of a diversion intake weir. As part of the intake works, a headrace tunnel leads the water via a surge shaft and a high pressure shaft and tunnel, to the turbines in an underground power station positioned 76 metres below

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ground level. Water is then returned to the river through a tailrace tunnel and an open channel. The associated underground power station, with its installed capacity of 21 MW, is formed by a cavern in the rock with power generated by two vertical units comprising Francis turbines and salient pole generators. The third of TANESCO’s Pangani hydro systems is the 8MW Nyumba ya Mungu Power station, in the Mwanga District of the Kilimanjaro Region. This is an example of one of the organisation’s smaller generation projects, completed in 1966 for the purpose of storing flood flow and subsequently allow the development of some 30,000 acres of irrigated farming and the generation of electricity. Of much larger scale,

however, was the Great Ruaha power project proposed first in 1968. This development aimed to build the first large hydroelectric power station in Tanzania, and thus the Kidatu power plant was constructed in two phases, the first of which started in 1969. This comprised a 40m high, rock-fill dam and an underground power station large enough to accommodate four 50MW machines, as well as 350km of high voltage transmission line stretching between Kidatu and Dar es Salaam. Phase 1 of this project was completed in1975 with the installation of two generating units to supply 100MW to the grid. The development’s second phase began in 1977 with the construction of a 45m concrete dam at Mtera, while the two remaining 50MW generating units were also installed, with works completed in 1981. 1980 saw the installed capacity of the hydroelectric power station at Kidatu doubled, and its capabilities further enhanced by the storage dam and

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www.iptl.co.tz

Independent Power Tanzania Limited (IPTL) is the largest privately owned power generating company in Tanzania with a current production capacity of 103MW. Being a subsidiary of Pan African Power Solutions (T) Limited (PAP), IPTL is cooperating with the government through the state owned Tanzania Electric Supply Company (TANESCO) to address the persistent shortage of power, which is a challenge to the Economic and Social Development of Tanzania. We plan to expand our production capacity by 500MW from the current 103MW, by constructing a gas fired power plant. This expansion and subsequent use of natural gas will result to selling IPTLâ&#x20AC;&#x2122;s power to TANESCO at tariffs of between 6 and 8 US cents per unit. Reduced tariffs and increased power production will be a big boost to the utility sector in Tanzania and a relief to electricity consumers. IPTL believes that the power supply to customers can be improved from the current 800 MW, which serves a growing economy whose demand could exceed 2000MW. We still believe that the market is huge and not only IPTL but also other players should share in the growth of the grid expansion and generation to meet demands of the growing economy. Phase one of the company plan intends to immediately install a 200MW gas fired power plant adjacent to the current 103MW Heavy Fuel Oil (HFO) IPTL plant. As parts of phase one, IPTL will be installing a new substation 220kv which is extremely important to TANESCO for its distribution to various new development zones in Bagamoyo and Chalinze. This includes a new 220kv line to Ubungo. The Phase 2- will entail installation of a 300MW gas fired power adjacent to IPTL. However, the current IPTL plants will be maintained to operate on HFO in the event of natural gas interruptions and diversity of fuel usage to the national grid. This is to ensure steady power supply to the national grid. With additional capacity operated on indigenous Natural Gas, IPTL will not only able to reduce the fixed cost it charges but also to retain the existing 103 MW power plant until its natural expiry. We thank the Government of Tanzania and TANESCO for accepting the power produced by IPTL. We promise to deliver the best services ever in order to support development of power sector in Tanzania.

IPTL/PAP IS HERE TO SERVE

BUSINESS PROFILE

reservoir opened by President J.K Nyerere, in February 1981. Today, Kidatu has generated on average around 0.8 billion units annually for the past five years, contributing nearly 36% of the total hydro installed capacity of the country. Today, TANESCO is a parastatal organisation under the Ministry of Energy and Minerals. The Company generates, transmits, distributes and sells electricity to the Tanzania Mainland, and sells bulk power to the Zanzibar Electricity Corporation (ZECO) which is in turn sold it to the public in the islands of Unguja and Pemba. Following Tanganyika’s gaining independence in 1961, the government registered its interest in purchasing shares from the private company, such as it was at the time, acquiring the company in its entirety by 1975 and

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becoming its sole shareholder. One of the principal early consequences of the government’s involvement was its bid to electrify rural areas and small townships, and bring reliable electricity supplies to previously unconnected locales. The adoption of this policy led to feasibility studies being conducted on several townships and the subsequent takeover of electricity installations at Nachingwea and Mpwapwa by TANESCO. New branches at Singida and Shinyanga were established and, in 1966, new power at both Musoma and Tukuyu was commissioned. In 1969 supplies to Mafia Island, Himo and Marangu were established. TANESCO now boasts a workforce of nearly 5,000 individuals, of which around 800 are employed at the Head Office, 450 at Hydro plants and the remainder across its 23 regional

offices, a team composed of extremely qualified personnel trained both locally and abroad. TANESCO looks set to play a major role in helping Tanzania to secure its goal of doubling the country’s energy production to 3,000MW by the end of 2015. As managing director Felchesmi Mramba explains, “TANESCO plays a key role in achieving whatever ambitions the government has in the energy sector, particularly in the electricity sub-sector. TANESCO is the only utility company dealing with electricity in this country and, being vertically integrated, it deals with almost everything from generation to transmission, distribution and sale of electricity to the mainland and also bulk supply to Zanzibar. Our role is very key as we have no competitors.”

TANESCO

//THE BEST USE OF THE COUNTRY’S HUGE RESERVE OF COAL IS POWER GENERATION// An important aspect of achieving this provision will be the introduction of coal-fired power stations, which itself throws up significant questions around the environmental impact this may entail.“It is estimated that the coal deposit in this country is around 5 billion tonnes,” states Mramba, “and the best use of that huge reserve of coal is power generation. Our concern is the environment but we are aware that there has evolved clean coal technology around the world and power generation from coal is possible through this technology.” TANESCO is currently undergoing an extensive restructuring process as

it looks to further cement its position looking forward. As well as considering meter technology and streamlining customer service, Mramba details that, “We are also doing bigger picture restructuring - unbundling TANESCO into generation, transmission, and distribution. We are also looking at what to do to bring business growth and on this area we are focussing on expanding our customer base and minimising losses.” All of this is geared toward creating an institution in which its users fully invest, and believe. “My dream is to have a TANESCO which is perceived by the customers as very reliable, that provides a quality service

and that fulfils its promises. We want to change the image of TANESCO. People think of a TANESCO which will not give them adequate power, which will not give them reliable power; they will immediately think of power outages, but we want to get out of that. Slowly we are moving away from that history. The feedback I’m getting now from the public is that they have seen a lot of changes in our services. We have witnessed a lot of improvement in many areas.”

TANESCO +255 222 451 130 info@tanesco.co.tz www.tanesco.co.tz

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SOUTHERN AFRICAN SHIPYARDS

Sailing Towards

Success PRODUCTION: Emily Ayson

As Africaâ&#x20AC;&#x2122;s largest building and repair company for commercial ships, naval vessels and a range of other marine structures, Southern African Shipyards is at the forefront of the growth and development of the African shipbuilding industry. Although with an already illustrious history, their recent R1.5 billion contract with The Transnet National Ports Authority looks set to completely blow their previous successes out of the water, as they promise to deliver nine state-of-the-art tug boats within just 42 months.

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BUSINESS PROFILE

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Located in the Port of Durban Bay, the 11 hectare site of Southern African Shipyards (SAS) boasts sophisticated facilities, equipment and space to take on multiple projects, a dedication to employee training and satisfaction and strong relationships with other allied businesses and organisations. Such a combination has evidently brought great success to the company in terms of both revenue and reputation; a position that has been over five decades in the making. The shipyard was first established in 1960 by Barends, but it was taken over in 1973 by Sandock Austral as the specialist site for a Naval Ship Building Program. Later, a deal between Oceanco and Dorbyl Marine resulted in the yard being used as a basic construction site for Oceanco’s ships. In 1995, the shipyard hit turbulent times as Dorbyl enacted the closure of all their shipbuilding operations in Durban, leaving Oceanco without a space or means to manufacture their vessels. However, the breakdown of this coalition constituted a prime opportunity for someone to acquire the site and work to ensure it would reach its full potential - one seized by Southern African Shipyards. Today, the company is thriving and continually expanding in both positive reputation and workload, with the company’s back catalogue of projects showcasing the diversity and quality of their abilities. For example, from 1977 – 1985, they were commissioned to manufacture the largest naval ship ever built in South Africa, the S.A.S Drakensberg and from 1987 – 2002, they produced 14 mega luxury yachts. As well as taking on prolific commercial contracts, SAS also serve smaller, niche marine organisations. For instance, they conducted extensive repairs to the Subhiksha, an offshore tug that was ravaged by fire and requiring a new engine, propellers and over 15km of wiring. Similarly, research vessel Save Our Seas underwent

SOUTHERN AFRICAN SHIPYARDS

//THIS IS A REAL DEMONSTRATION OF HOW THE MARITIME ECONOMY CAN BE USED TO UNLOCK THE ECONOMIC POTENTIAL OF SOUTH AFRICA// phenomenal procedures to increase the size of the ship and modernize on-board equipment. Of course, such feats would be impossible without a highly skilled and dedicated workforce and investment in their employees is a paramount tenet for SAS. Under the company’s Work Place Liaison Committee Scheme, employees own 12% of the company and so have the ability to participate in company decision making. Recognising the extreme shortage of skilled workers in Africa, since 2008 SAS have also implemented an Apprenticeship Scheme in which young Africans can gain knowledge, experience and work

towards specialised trade qualifications. The company have so far taken on 42 apprentices in various sectors of the business, with 21 qualifying as artisan boilermakers and electricians. Even more impressive is the fact that within such a labour intensive and maledominated arena, 8 of these apprentices were women. Such a proven track record of excellence within the industry perhaps made SAS the obvious selection for the Transnet contract, especially since these two parties already have some history together. Between October 2007 and July 2011, SAS built and furnished 7 Voith Schneider Tug Boats for Transnet,

not only meeting but exceeding the specifications and expectations of the client. As such, this second collaboration between SAS and Transnet attests to the shipbuilders’ trusted reputation for providing high quality wares, but also to how they strive to foster mutually beneficial relationships with other sectors and organisations with vested interests in the shipbuilding industry. The contract came about as a necessary response to the growing influx of large vessels visiting African ports including Durban, Richards Bay, Post Elizabeth and Saldanha Bay. As such, there was a crucial need to replace and upgrade the current fleet of tugs, which were becoming increasingly inadequate and obsolete for safely manoeuvring incoming ships into anchoring position. As bidding closed for the new Transnet contract in December 2012, SAS

Over 125 years Aveng has evolved in character, capability and reach Aveng Grinaker-LTA is a multi-disciplinary construction and engineering group that delivers landmark projects. The company combines African roots - and a proud South African heritage going back 117 years - with an unwavering commitment to world-class safety and quality. Our expertise in building, civil engineering, roads, earthworks, concrete, ground engineering, mechanical, piping, electrical and instrumentation contracting is delivered through focused business units acting in synergy. Aveng Grinaker-LTA, Mechanical and Electrical Division, Durban branch, has been actively involved in both the merchant and naval marine shipbuilding sectors, by providing electrical installation contracting services to the various Durban shipyards since the early 1970’s and as such is proud to be associated with Southern African Shipyards by providing these services for their past and present shipbuilding contracts. Aveng Grinaker-LTA is :• ISO 14001:2004 and ISO 9001:2008 accredited • BS OHSAS 18001:2007 accredited • BBBEE Rated Level 2 service provider

Johannesburg head office: T +27 11 923 5000 | F +27 (0) 923 5046 Durban branch office: T +27 (0) 31 705 4502 I F +27 (0) 31 705 4230 Email: info@grinaker-lta.co.za | www.avenggrinaker-lta.co.za

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BUSINESS PROFILE

//R800 million

The project will bring to the local economy

stood victorious over a host of other international companies, with actual work beginning in August 2014 and due to last just 42 months. The deal worth an unprecedented R1.5 billion; the largest contract ever awarded to an African harbour-craft construction business; will see the production of nine state-of –the-art tug boats which will be both bigger and more powerful than any of the 29 tugs currently in use by Transnet. According to Eugene Rappetti, Transnet’s Project Manager, the new tugs will benefit from the latest technology which will allow them to change direction whilst actually moving, giving ultimate manoeuvrability and reducing docking time. Furthermore the new tugs will be able to drag double the weight of the current vessels, with the largest of the fleet having a

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//AS OF MAY 2015, THE PROJECT IS 11% UNDERWAY, WITH THE FIRST TUG 35% COMPLETED AND ITS HULL AND SUPERSTRUCTURE 70% FINISHED// maximum bollard pull of up to 100 tons. This particular tug will also be one of the largest of its kind in existence. As of May 2015, the project is 11% underway, with the first tug 35% completed and its hull and superstructure 70% finished. With 5 tugs being manufactured simultaneously at any one time, SAS hopes to deliver 1 vessel every 3 months until completion, with the first due in January 2016. Pivotally, not only will this project help to increase and strengthen African

Sea Trade routes, but there are also extensive ramifications for the wider community and shipbuilding industry. Prasheen Maharaj, the CEO of SAS has disclosed that the contract will inject an estimate R800 million into the local economy, with the creation of up to 500 direct jobs and a further 3500 indirect jobs. This stems from the fact that 60% of the ships’ components will be locally manufactured by allied industries and the other 40% outsourced from other international organisations.

SOUTHERN AFRICAN SHIPYARDS

700 tons of steel have been ordered and several subcontractors have also established premises at the shipyard including Caterpillar, Siemens and local business, Bradgary Marine Shipfitters. SAS and Transnet are also dedicated to widening the opportunistic reach of the project to young people, particularly women, through the imposition of up to 60 apprenticeship places. Transnet employees have been offered project specific training within the vicinity of the yard 4 – 6 weeks before they begin work on the tugs and they have even sent staff to Germany and Norway for specialised technological training. Furthermore, Transnet are funding training for engineers and deck cadets, so that the new vessels have expert crew when they are delivered. Thus, the SAS shipyard may be the hub of

industrial activity, but the ripples of this contract are being felt far and wide. Maharaj proudly asserts that ‘[The contract]’ is a real demonstration of how the maritime economy can be used to unlock the economic potential of South Africa… Our country definitely has the skills and capacity to succeed in sectors such as marine transport and manufacturing, ship building and ship repair’. Such a statement is increasingly ringing true for SAS, for since the inception of the Transnet contract, a wave of other prolific business deals have been struck. In November 2014, the company were entrusted with major engine refits to a South African Navy ship, the S.A.S Amatola and they are currently in talks to acquire 6 other Navy ships to work on. Furthermore,

in April 2015, SAS joined forces with the world’s largest shipbuilding group, China Shipbuilding Trade Company, amalgamating their experiences and expertise to become a maritime industry powerhouse. With their superior work and reputation hauling in interest on both a national and international scale, SAS is nothing if not a quintessential example of an African company sailing towards success.

SOUTHERN AFRICAN SHIPYARDS +27 (0) 31-274 180 info@sa-shipyards.co.za www.sa-shipyards.co.za

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EXHIBITION CALENDAR

KEY UPCOMING EVENTS ACROSS THE SECTOR Our regular update to help you keep track of important events and exhibitions taking place across the energy sector.

SOLAR FINANCE & INVESTMENT EUROPE 01 – 03 FEBRUARY 2016 | LONDON Solar Media’s 6th Solar Finance & Investment Europe Forum returns to London on 1-3 February 2016. In light of recent government announcements, the landscape for European solar is rapidly changing and two key themes are emerging: the industry needs to make solar work post subsidy with new financing structures and new business models and the secondary market is as exciting as it has ever been. This is why we are bringing together: Major European asset holders looking to enlarge their portfolios; Banks ready to refinance projects; Developers with projects to sell; Institutional investors looking how to balance their liabilities and assets with long-term investments.

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INTERNATIONAL CONFERENCE ON OCEAN ENERGY (ICOE) 2016 23 – 25 FEBRUARY 2016 | EDINBURGH The ICOE is a global marine energy event focused on the industrial development of renewable marine energy. As the UK is currently the undisputed global leader in marine energy, with more wave and tidal stream devices installed than the rest of the world combined, it was the most natural choice for this event. RenewableUK always keeps the needs of the industry at the forefront of our work. Therefore, we have made the decision and are honored to be presenting ICOE 2016 in place of our usual dedicated Wave & Tidal conference in February 2016.

FLOATING LNG 2016 17 - 18 FEBRUARY 2016 | LONDON SMi’s 4th annual Floating LNG conference will provide attendees with an all-encompassing, robust and strategic insight on the latest developments within the Floating LNG market. The conference will provide the best platform for participants to optimise activities and ensure project sustainability and success. This conference will equip you with the tools to overcome the logistical, financial, technological and economic challenges associated with FLNG Facility deployment and ensure succinct transition from design to operation.

//TABLE OF ALL EVENTS: ENERGY STORAGE 2016 Radisson Blu Hotel Paris Charles de Gaulle Airport, Paris 03-04 February EUEC 2016 San Diego Convention Centre, USA 03-05 February INTERNATIONAL PETROLEUM WEEK 2016 Intercontinental, Park Lane, London 09-11 February SPE HYDRAULIC FRACTURING TECHNOLOGY CONFERENCE Woodlands Waterway Marriott Hotel, Texas, USA 09-11 February EAST AFRICA OIL AND GAS SUMMIT & EXHIBITION Kenyatta International Conference Centre, Nairobi, Kenya 10-12 February PROJECT ENERGY Cairo International Conference Centre, Egypt 11-14 February WOMEN IN ENERGY CONFERENCE Sandton Convention Centre, South Africa 15 February CERAWEEK 2016 Hilton Americas - Houston, USA 22-26 February

KUMBA IRON ORE

At Kumba, we are committed to supporting initiatives that have a positive impact on the local economy. The supply agreement that we signed with ArcelorMittal South Africa in 2014 does just that. It has allowed us to continue the reliable supply of iron ore to the local steel industry at mutually beneficial prices, which in turn has helped the local economy thrive by enabling the continued production of steel.

MICHELLE BESNAAR Kumba Iron Ore Employee

SIGNED, SEALED AND DELIVERING

Results such as these have fuelled Kumbaâ&#x20AC;&#x2122;s determination to be the developmental partner of choice for projects that benefit our country. www.angloamerican.co.za