Essential business magazine issue 9 2015 by Optic Juice

Africa

www.essentialbusinessmag.com|Issue No.9

A New Lease of JOSHCO, providing affordable social housing to the citizens of Johannesburg.

Also in this issue: Juwi p28 SECO p34 DSV p40 Jonker p46 Trilogiq p52

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P R O D U C T I O N Scott Jameson

Publisher sjames@essentialbusinessmag.com

Zain Millington

Production Manager

Sam Wright Editor-in-Chief

Lily Bradic

Associate Editor production@essentialbusinessmag.com

Magazine Design and Production: www.opticjuice.co.uk design@opticjuice.co.uk

P R O J E C T S David Taylor

Head of Projects dtaylor@essentialbusinessmag.com

Amelia Nazer

Senior Projects Manager amelia@essentialbusinessmag.com

Uzzal Hossain

Project Manager hossain@essentialbusinessmag.com

elcome to the latest issue of Essential Business. As usual, we have features covering a number of companies that demonstrate hard work and innovation across the continent.

First of all, we have JOSHCO, a company works to provide affordable homes for those in need of a helping hand.

Maria Alempic

Next is juwi, a firm that is involved in South Africa’s hugely successful Renewable Energy Independent Power Producer Procurement Programme (REIPP).

S A L E S

We also have SECO, a Kenya-focused business involved in construction projects across the country’s oil, gas and renewables sectors.

Project Manager malempic@essentialbusinessmag.com

Adam Caan

Head of Sales acaan@essentialbusinessmag.com

Johann Van Wyk

Sales Executive E:jvwyk@essentialbusinessmag.com

The European logistics heavyweight DSV is also featured. The company have recently gained the third largest industry footprint on the continent.

Miah Dizer

Next we have Jonker Sailplanes, a leading manufacturer of gliders. We spoke to chief executive Uys Jonker about the company’s future plans.

E X E C U T I V E

Finally, we have Trilogiq, a designer of modular solutions with a focus on lean manufacturing that is broadening its range of products.

F I N A N C E Finance Manager accounts@essentialbusinessmag.com

D I R E C T O R S

Adil Nazer | Rahim Ali | Daniel Goha Essential Business Publishing 145-157 St John Street, London, EC1V 4PW, England www.essentialbusinessmag.com © Essential Business Publishing 2015

Enjoy the magazine, and we’ll see you next month!

Sam Wright, Editor in Chief

@essentialbizmag

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Contents Lead feature

Africa’s Black Monday fall out and the effect of China’s policies on its economy.

Expert interview

Ugo Amadi, chief correspondent for energy at Champion Newspapers in Lagos, talks about IPPs in Nigeria.

News round-up

Essential Business takes a look at the biggest stories in Africa this month, including how the president of the African Development Bank (AfDB) called for a “new deal on Energy in Africa”.

Joshco

Essential Business takes a closer look at JOSHCO: a company working hard to provide affordable social housing in Johannesburg, for those in need of a hand up – not a hand out.

Juwi

Putting the spotlight on juwi: a firm that is involved in South Africa’s hugely successful Renewable Energy Independent Power Producer Procurement Programme (REIPPP).

SECO

We take a look at SECO, a Kenyan-focused business involved in construction projects across the country’s oil, gas and renewables sectors.

DSV

The European logistics heavyweight DSV has recently gained the third-largest industry footprint on the continent. Essential Business finds out more.

Jonker

The sky’s the limit: Uys Jonker of Jonker Sailplanes tells us what the future holds for the company.

Trilogiq

Trilogiq - a designer of modular solutions - continues to broaden its range of products with a focus on lean manufacturing.

Black Mountain Mining 54 Located in the Northern Cape Province, Black Mountain Mining is a major name in the zinc industry. Essential Business finds out more.

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Africa’s In November 2013, China held its Third Plenum, a fourday, closed-door meeting of the Communist Party’s highestranking officials. Shortly afterwards, President Xi Jinping outlined his long-term social and economic plans for the country, describing his aim of bringing economic policy closer in line with the markets — and away from the government’s traditional investment-led approach.

he transition, he warned, would be far from easy. At the time, Premier Li Keqiang warned that it would be a long and “very painful” process, which could “even feel like cutting one’s wrist”.

“Hard landing”

For years, China has enjoyed double-digit growth due to its top-down focus on its economy. However, by switching to a focus on domestic consumers in order to drive this forward, Beijing has also been predicted to be at

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risk of its economy slowing down sharply or being tipped over into outright recession after a period of rapid expansion. This so-called “hard landing” may now have arrived, bringing with it much of the pain of which Li warned.

On August 11, Beijing devalued the Chinese Yuan by about 2% —its largest single-day drop since 1994 — in a surprise bid to prop up its economy by lowering the cost if its exports for overseas buyers.

With many African currencies falling against the US dollar and the pound sterling, they may be inclined to strengthen or impose currency restrictions. Long-term these restrictions tend to cause more damage to the underlying economies

OnTopic

fallout This came after the end of a yearlong rally in Chinese shares in June, which had largely been funded by investors borrowing heavily to buy shares. As a result, the government stepped in with a number of measures, including ordering state firms to buy huge volumes of shares in order to maintain momentum. This failed to stem the tide. As confidence eroded on August 24, the Shanghai Composite, China’s main stock exchange, dropped by 8.5% — the worst decline since the start of the global financial crisis in 2007,

and a figure that prompted further falls in markets worldwide. The following day, the Shanghai Composite lost an additional 7.6%. At the same time, commodities such as crude oil and copper tumbled to multi-year lows on the back of investor fears of weak demand from the world’s leading consumer of raw materials. For Africa — which counts on China as its largest trading partner — the economic outlook now looks to be very troubling indeed.

Falling down

Already several currencies in subSaharan Africa have been weakened, with countries such as South Africa — the continent’s largest economy— Angola and Zambia under particular pressure as exports of gold, wine and copper have become cheaper.

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This has continued a downward trend for African currencies tied to commodities, which began to slip earlier this year after China missed its official economic growth target. At the same time, fears are growing that Beijing’s enormous investment in Africa, which ranges from the building of vast swathes of roads and other infrastructure to mining and oil gas production, could be about to dry up. “As growth in China declines, it is inevitable that its need for resources will fall and this reduction of imports will be felt by the many African jurisdictions that have the country as a major trading partner,” says Greg Stonefield, a partner at global law firm Mayer Brown.

On August 24, the Shanghai Composite, China’s main stock exchange, dropped by 8.5% — the worst decline since the start of the global financial crisis in 2007 As he points out, the falloff in demand from a more developed, industrialised China making its path towards a market-driven economy has already, pre-Black Monday, impacted on exports from sub-Saharan Africa. Recently, a report by the International Monetary Fund found that a 1%

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fall in China’s investment growth would lead to sub-Saharan Africa’s export growth rate dropping on average by 0.6%. “The recent turmoil in the market will no doubt reinforce this and possibly accelerate it,” says Stonefield. “The question though is the extent of this longer term trend we are witnessing.” However, he adds, the outlook is not wholly negative. “The severity of the slowdown may be offset by the cut in Chinese rates — this may boost China’s economy and lessen the impact on China’s African trading partners. On the infrastructure side, there may be a slowdown in the short term but it is unlikely that China will stop investing in African infrastructure projects in the longer term.”

Adjusting

This is a fair point. Although the immediate pressure is severe, Africa will still remain attractive to Chinese investors for years to come. Despite this, the continent should still look to insulate itself from turmoil over in Beijing. One way to achieve this is with an increased focus on inter-African trade. As it stands, this accounts for just 12% of the continent’s economic output — a figure that is woefully low, especially when compared to the 70% seen in Europe. Again though there is promise here. In June, 26 African

nations signed an initial deal to create a free trade zone (FTZ) running from Cape Town to Cairo, a move that could bring the volume of domestic trade up to 30% of overall output. In the meantime, Stonefield warned that “African governments should not make knee-jerk decisions” following China’s stock market crash. “With many African currencies falling against the US dollar and the pound sterling, they may be inclined to strengthen or impose currency restrictions,” he continued. “Long-term these restrictions tend to cause more damage to the underlying economies. In addition, a devaluing Chinese currency may raise competitive threats for local companies who may face competition from cheaper Chinese imports — accordingly local costs will come into focus and there may be pressure on governments to impose import taxes in due course.” In balance, this will probably benefit countries such as Ethiopia, Kenya, and Mozambique, all of which are heavy importers of Chinese products. Yet for everyone else, the outlook is turbulent, to say the least. Whether China’s decline is indeed a longterm trend remains to be seen, but the signs do certainly appear to be pointing in that direction.

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The need for

IPPs What are the main issues in the energy sector in Nigeria that you are focusing on?

As a matter of importance, I am focusing on the issues that will help the energy sector move forward in Nigeria. With the coming of a new president in Nigeria, I wish to join forces with him to see that good reportage is given to the entire energy sector. I am looking at renewable energy and the need to ensure many IPPs are working in the country. For us, power is critical to development and industrialization. We need more IPPs to meet our energy needs. Iâ&#x20AC;&#x2122;m optimistic that the privatization of the power sector will yield good results in no distant time. I am calling on our government to ensure

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Ugo Amadi, Chief correspondent for energy, oil and gas at Champion Newspapers in Lagos, talks here about the necessity of IPPs (independent power producers) in Nigeria. that 90% of the rural dwellers are connected to the national grid before the end of 2015 and power is working 24/7.

What would you say are the main challenges that the sector is facing?

For me the challenges are surmountable. Paramount to us is smooth passage of the Petroleum Industry Bill, which has lingered for several years. The delay caused by non-passage of the bill has led to a lot of

divestment by the IOCs and stagnation to some sought in the energy industry. I believe that if the PIB is passed in an acceptable way, it will boost the confidence of foreign investors and ensure effective and efficient running of the energy sector. Another thing I want the incoming government to do is ensure the unbundling of the gas sector. For me it is good to put infrastructures for the commercialization of gas, ensure quality pipelines and aggregators of gas, so that gas commercialization will be meaningful. Also, pipeline vandalisation and oil theft must be checked adequately. Frequent vandalisation of gas pipelines has really caused poor power generation in the country.

ExpertInterview There are more than

but most projects are restricted to small-scale or model projects

I am calling on our government to ensure that 90 % of the rural dwellers are connected to Also, lack of the national political grid before will as well as poor the end of access to finance are 2015 and major reasons power is why Nigeria lags behind its working African peers in 24/7 renewable energy development. There should be a clear strategy statement from the government backed by the commitment to implementing a renewable energy policy. As a matter of fact, commercial banks in Nigeria largely finance short-term projects, while renewable energy projects usually tend

to be long-term projects but we hope finance could come from other sources such as the Development Finance Bank. There are more than 100 renewable energy companies in Nigeria, but most projects are restricted to small-scale or model projects. For me renewable energy is an opening that Nigeria should clutch, otherwise others will grasp it and we will be lagging behind because oil is finite. But renewable energy is infinite. So, the earlier Nigeria embraces this, the better for the country. Nigeria is endowed with large fossil resources as well as potential renewable energy resources, but regrettably these potential resources have not been utilized for the benefit of sustainable development. Industrial energy use in African countries is characterized by the rapid growth of the industrial sector of between 5.1% and 7.3% through 2030. There is, hence, an opportunity for moderate use, increased industrial sustainability, improved competitiveness, and adding more value to the product though a reduced energy intensity in the industrial sector.

Are there success stories that you can share?

We have been at the vanguard of good and in-depth reportage of the energy sector. We are highly celebrated and pride ourselves as one of the nationâ&#x20AC;&#x2122;s foremost newspaper brands enjoying a readership spread that cuts across all classes and with product visibility across the length and breadth of the country. Our niche is very well celebrated and the market rates us as the media gate way to the East. We publish every day of the week; each of our offerings comes with regular features, Energy, oil and gas, Business News, Insurance, Politics, Infotel, Law, Arts, Travel and Tours, Brands Edge, Motoring, Properties and Environment, Consumer affairs and sports. The newspaper titles in our stable are authoritative national brands that provide reliable and analytical information on local, National and International issues. They are masscirculating and geared towards enhancing a better society. Our Champion Better Society lectures have been a veritable source of information, agenda setting and advocacy platform for the Nigeria economy.

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News A

new report from the Council for Scientific and Industrial Research (CSIR) has been endorsed by the South African Wind Energy Association, and reveals that wind energy saved the country R1.8 billion more than it cost for the first half of 2015.

The study follows up from the original report, which covered 2014, when the saving was R800 million over 12 months. Earlier this month, the president of the African Development Bank (AfDB) addressed ministers from over 40 nations in Paris and called for a “new deal on Energy in Africa” as well as proposing a binding agreement towards limited carbon dioxide emissions for the upcoming COP21 conference in December. The AfDB president, Akinwumi Adesina, called for immediate action in three key sectors in Africa: building integrated energy systems using both conventional and renewable energy; smart agricultural and forestry systems; and boosting urban renewal by creating more resilient cities with climate-friendly infrastructure. Meanwhile, CEO of Genesis Energy Group, Akinwole Omoboriowo II, has been appointed as board member of African Utility Week and Clean Power Africa. The appointment will see Omoboriowo II team up with a number of other utility experts to help shape the future of the African Power and Water infrastructure sectors.

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E N E R G Y & M I N I N G

T R A D E

outh Africa is set to host the second summit of the Forum on China-Africa Cooperation (FOCAC) later this year.

“As co-chair of FOCAC for the period 20122018, South Africa looks forward to hosting this historic event. This will be the second summit since the inception of FOCAC in 2006 and the first on the continent, ” said International Relations and Cooperation Minister Maite Nkoana-Mashabane. The summit — to be held in Johannesburg this December — is timely, given the recent stock market crash in China and its resulting impact on numerous African economies. Meanwhile, Barclays Africa Trade Index has identified South Africa as the number-one investment destination for UK businesses in sub-Saharan Africa. The index combined a range of measures to assess openness and opportunity for investment across 31 countries in the region. According to the index, “while South Africa is the standout performer in the overall index, Nigeria arguably represents the most exciting long-term opportunity.”

News CONSTRUCTION

n a bid to diversify revenue and increase its footprint in Africa, the Airports Company South Africa (Acsa) is looking to partner with several construction companies across the country and the continent. According to CEO Bongani Maseko, state-run Acsa was good at designing airports, but was not a construction company.

“Some countries would say bring your own construction companies to partner with ours. Acsa would bring aviation expertise,” said Mr Maseko. Elsewhere on the continent, the new railway line connecting Ethiopia with Djibouti is set to open early 2016, Ethiopian Railways Corporation told the

press. The project is part of Ethiopia’s long-term plan to construct 5000km of railway across the country by 2020. “By October 2015, a considerable portion of the Addis Ababa-Djibouti project will be completed. We will start in early 2016,” said CEO Getachew Betru. In South Africa late last month, president Jacob Zuma inaugurated the first unit of the new coal-fired Medupi power station, just north of Johannesburg. The plant is set to produce 4800MW of electricity by the time it reaches full capacity in 2019. “Today we open an important and exciting chapter in our country’s energy history,” said Zuma. “Shortage of energy is a serious impediment to economic growth.”

outh Africa’s ports, rail and pipelines operator Transnet has announced plans to pursue opportunities across Africa and the Middle East in an attempt to reduce its dependence on its home market.

“We have a fairly good idea where it’s going to come from and how,” Gama said. “We are not just looking at Africa, we are also looking at the Middle East. There are a number of things that we are working on.” According to CEO Siyabonga LOGISTICS Gama, Transnet aims for 25% of all revenue to come from outside South Africa by 2025. This will come under a new unit, Transet International Holdings, which is in the process of being formed. Meanwhile, Frontier Services Group has acquired a South African freight forwarding business for R49 million. The Johannesburg-based logistics firm, Transit Freight Coordinators Group (TFCG), moves freight across road, sea, rail and air and has operational hubs in Zimbabwe, Zambia and South Africa. Chief executive of Frontiers Services Group, Gregg Smith, says that the acquisition of TFCG will help the company provide more complete logistics solutions across the continent.

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JOSHCO w w w . j o s h c o . c o . z a

futures Foundations for

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Construction

outh African citizens earning between R3500 and R7500 are in a difficult position when it comes to housing. Those in this income bracket earn too much to qualify for free housing under the RDP scheme, but not enough to qualify for a bond or mortgage. JOSHCO was created as a solution to this problem, and has been providing quality, affordable social housing to its tenants for the past eleven years.

JOSHCO (Johannesburg Social Housing Company) was formed by the City of Johannesburg in 2004 to provide affordable social housing to families who would otherwise be unable to afford a home. Eleven years later, JOSHCO is continuing to change lives.

“We’re able to reach families who conventionally would not be able to access these kinds of products because of affordability constraints,” says CEO Rory Gallocher. “As an extension and agent of the City of Johannesburg, we’re able to use the budget that we leverage from public funding to produce the product. The grant is just for the construction — to allow us to put the unit onto the ground in the first place.”

We had a traffic jam outside JOSHCO for an entire week — just people wanting to apply for the units

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This funding and state support means that JOSHCO does not need to recover the full cost of the product from the consumer, and is something that sets the company apart from other affordable housing providers in Johannesburg. While JOSHCO is generally working on numerous projects at any given time, the demand is still much higher than the supply. Proof of this can be found in the popularity of the City Deep Development. Formerly derelict hostel dormitories, City Deep’s transformation into 300 quality, affordable family apartments and 328 new built medium density social housing units was completed last year, earning JOSHCO the South African Housing Foundation (SAHF) award and recognition in the SAHF Best Social Housing Project in 2014.

In the coming year, we are going to be creating 45 new work packages — that’s several hundred stable permanent jobs The repossession and refurbishment of buildings like these makes up a significant part of JOSHCO’s work. “The development is complete, and now we’re busy tenanting the last phase of it. We had a traffic jam outside JOSHCO for an entire week — just people wanting to apply for the units,” says Gallocher.

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We’re able to reach families who conventionally would not be able to access these kinds of products because of affordability constraints

JOSHCO has a number of very large projects under construction at the moment, including the Dobsonville Project in Soweto — consisting of 502 units — with the first phase to be completed at the end of September 2015. Then, there’s the Devland project on the Golden Highway, for which the road infrastructure, utilities and infrastructure is already complete and the first set of blocks are being constructed. “There’ll be a total of 588 units that will come out of the Devland development,” says Gallocher. “We’re going to be

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under construction for the next 48 months, and will be finished towards the end of 2017.” There’s also the Turffontein development, which will be built on a piece of vacant land in the heart of Turffontein West and is set to yield 528 units. This is currently at the Town Planning objection stage. JOSHCO has also just awarded tenders for Hoek Street and Union Square, and has just completed a number of land and building purchases in the area — all of which adds up to a big program of work in the inner city of Johannesburg.

email: production@essentialbusinessmag.com

Supplying affordable housing is not all that JOSHCO does for the local community. As part of Jozi@Work — a “hand up, not hand out” initiative launched last year by the City of Johannesburg to create employment opportunities for citizens — JOSHCO sets itself targets to create municipal jobs for unemployed members of the communities it serves.

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JOSHCO sets itself targets to create municipal jobs for unemployed members of the communities it serves

“In the coming year, we are going to be creating 45 new work packages — that’s several hundred stable permanent jobs in the projects that we are developing or managing. This will create employment for hundreds of people who don’t currently have any form of income,” explains Gallocher. “We’ve got an entire community development program and have

Construction

a strong emphasis on a participatory approach to development. So in all of the projects weâ&#x20AC;&#x2122;re developing, we have social facilitators who steer us through the entire consultation cycle from the inception and concept stage right through to the commissioning stage. And thereâ&#x20AC;&#x2122;s a number of economic programs, health programs, job creation programs and empowerment programs that are linked to the way we do this.â&#x20AC;?

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While JOSHCO is without doubt having a positive impact on the lives of many Johannesburg citizens, the work isn’t without its challenges. The pressures of rapid urbanization are pulling the company in multiple directions.

For JOSHCO, being resource-conscious means ensuring that its product doesn’t consume unnecessarily high amounts of energy, or produce unreasonable volumes of waste, or consume excess water. “It was our first decade last year, and I would say that the challenge we face now is to balance the demand for higher volumes of product against the expectation that the quality and especially the sustainability — including the environmental sustainability of the product — is in line with international trends,” Gallocher tells us.

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Construction

For JOSHCO, being resourceconscious means ensuring that its product doesn’t consume unnecessarily high amounts of energy, or produce unreasonable volumes of waste, or consume excess water. “We are resource constrained. So the biggest challenge is to balance the demand for volume against responsible product,” he says. Despite this, JOSHCO’s resolve is strong, and its dedication to providing world-class affordable housing is carrying the company — and the citizens of Johannesburg — towards the goal of a sustainable, resilient, and livable city by 2040.

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Juwi Renewable Energies w w w . j u w i . c o . z a

skies

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Energy

subsidiary of the German juwi group, juwi Renewable Energies has been present in South Africa since it first became involved with the early stages of the country’s popular renewable energy independent power producer procurement (REIPPP) initiative. Off the back of several successful Round One bids, juwi established an office in early 2011 and has been building on its reputation ever since. “juwi, as a leading solar PV (photovoltaic) EPC company, tracks market developments globally. When the first REIPP RFP was announced, juwi sent a team out here to participate. This landed us with four Round One projects of the REIPPP,” says managing director Greg Austin. “So

Juwi Renewable Energies plans, constructs and operates renewable energy plants across South Africa, with a particular focus on wind and solar energy. Here, we take a look into the company’s recent growth and involvement in the REIPPP (Renewable Energy Independent Power Producer Procurement) programme.

we’ve only really been in South Africa for about four years.“ The solar side of the business has two core focuses, Austin tells us, which can effectively be broken down into utility-scale projects and commercial- and industrialscale projects. For internal purposes, and to allow for better allocation of resources, Juwi draws a line somewhere around 5MW for the utility projects, which generally tend to be part of the REIPPP programme. But demand for larger private offtake systems is also growing. The commercial and industrial projects, on the other hand, typically cater to private sector clients with suitably sized energy demands and premises with sufficiently sized rooftops or unused land to accommodate a PV plant. “Towards the end of 2013, as the outcome of an internal strategy process, we identified the coming opportunity on the commercial and industrial side of things, which we understood to be about to take off in South Africa,” explains Austin.

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“We consequently invested in resources — people, facilities and tools — in order to accelerate sales and the sales support side of things in the C&I space. It’s quick turnaround we’ve invested in, with ongoing technical support from our colleagues in Germany. So while it’s a relatively new and therefore relatively small area for us, we expect that in five years it will be a substantial minority component of our overall solar business.” On the commercial and industrial side, juwi has just finished a

580kWp (kilowatt-peak) project for the CSIR (Council for Scientific and Industrial Research) campus in Pretoria. It’s a ground-breaking project that provides the CSIR Pretoria campus with electricity at a levelised cost of ZAR0.83 per kWh, even at that relatively small scale, says Austin, and will be launched in the next couple of months as part of the CSIR’S 70th anniversary celebration.

month, and the company is also busy with the construction of the large 86MWp Prieska project, owned by French company Sonnedix with whom juwi also works with in Japan, the US and the UK. Prieska is due for completion by Q3 of 2016. The trenching and cable-laying stage is complete, which means it’s now time for the part Austin finds most interesting.

Meanwhile, the REIPPP is keeping juwi busy as well. One commissioned project reached commercial operation this

“We’re beginning the integration of various elements, which will now be our default mode for the rest of the project. We now have

On the commercial and industrial side, we’d like to think that we’re at the cutting edge of a boom of the uptake of private renewables at scale

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Energy

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Greg Austin, Managing Director

the PV racking system, cables and inverter foundations going in, so it’s the civil, mechanical and electrical components that are now being built simultaneously on-site. Given the scale of the project (105 hectares), it’s quite an exciting and challenging time, as we have to be everywhere at the same time,” he tells us. While there’s plenty to occupy juwi in the present, the company has an impressive number of projects in the pipeline, too. The submission date for the next

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round of the REIPPP is at the beginning of October, and juwi is considerably well prepared. “We’re currently in the Expedited Round of the REIPPP programme, and we’re putting in a range of bids there for selected partners, for typically 75MW AC PV projects,” says Austin. “The REIPPP process has proven to be exceptionally robust. It’s probably the best managed, designed and implemented renewables program in the world, and we have a lot of certainty

The REIPPP process has proven to be exceptionally robust. It’s probably the best managed, designed and implemented renewables program i-n the world, and we have a lot of certainty in it.

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This past week has seen the additional 6.3 GW gazetted by the government of South Africa.

in it. When the announcements were made for Round Four’s preferred bidder projects, there was a simultaneous announcement from the Minister of Energy to the effect that now the first allocation of 6.7GW of renewables had been procured, there was going to be a request to the energy regulator for an additional 6.3 GW. So I think that’s given a lot of confidence to global investors and developers.”

Juwi is also hoping to sign a number of 1MW-scale rooftop projects within the coming months, and is “exceptionally busy” on the PV side of things. All in all, the year to come looks to be full of opportunity for the renewables firm. “On the commercial and industrial side, we’d like to think that we’re at the cutting edge of a boom of the uptake of private renewables at scale. If you look at analyses done on the projected uptake of PV in South Africa by 2030, the procurement in the private sector is expected to be much larger than in the public sector,” he explains. “That’s quite exciting.”

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SECO

w w w . a l p h a a f r i c a . c o m

Alpha Group has been operating in Kenya for almost three generations. The flagship company of its marine division is Southern Engineering Company Ltd (SECO), a firm that specialises in supplying construction services to the energy sector. Here, General Manager Omri Cohen talks about the company’s growth and its current work on a 310MW wind farm in Lake Turkana.

lpha Group’s core services fall into two areas — food, and logistics and engineering. On the engineering side is SECO, which was established in 1957 and provides a range of marine, civil, and offshore engineering services in addition to shipbuilding services in projects across East Africa. “SECO was the first company created in the group, and actually used to do everything before the group started growing

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and different segments and other sister companies started coming up. In the early days, SECO was actually handling the fishing operations. This is actually how we started as a shipyard — we had to take care of our own vessels,” Cohen tells us.

Moving on

As the other companies in the group began to grow and develop, SECO slowly began to focus on the specific areas of marine engineering, camps and civil and mechanical engineering in which they still excel today.

Energy

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“Firstly there’s marine engineering, which includes piling, dredging, and offshore engineering activities,” he explains. “We are the only company to run a fully operational shipyard in east Africa.” Located strategically at the entrance to the port of Mombasa, SECO’s shipyard includes dry-docks, slipways, and facilities for constructing and repairing vessels as well as ocean going and projects to vessels for rivers and lakes. “The other area that we are now very much focused on is the camps’ division, which is the division responsible for assembling and managing the camps on-site. Then, the last area

Our turnover only increased for the last year because we were smart enough not to put all our eggs in one basket is all the civil and mechanical and EPC contracts we are targeting, mainly when it comes to renewable energy and green energy projects.” Kenya’s vision of producing an additional 5000MW of energy by 2017 is spurring new projects across the country, many of which are renewables. One project of particular interest is

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Energy

the 310MW wind farm project in the area of Lake Turkana. Once complete, the project will boost the country’s installed capacity by around 20%. ‘’SECO was the fi rst contractor on site and we are very proud of it! Altogether, it’s the biggest project of its kind to ever take place in Kenya,” says Cohen. Yet it is not just the scale of the development that has posed a challenge. The location itself — the eastern shore of Lake Turkana, the world’s largest desert lake — is a remote and harsh environment, populated by indigenous tribes that have in some instances had little contact with the rest of the country. “Many have never been exposed to construction jobs on-site, so there is a lot of community coordination that’s required,” says Cohen. “Being the first ones on site, we were exposed to a lot of difficulties to begin with because we had to understand what they wanted, and we presented the whole project, as there was no-one else there initially. It was challenging, but we made it especially because of the great team we have up there.”

At the frontier

Along with renewable energy, SECO also has considerable experience in East Africa’s oil and gas sector, an area that has boomed in recent years following high-profile discoveries in countries such as Mozambique and Tanzania.

The 310MW wind farm will boost the country’s installed capacity by around

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This is actually how we started as a shipyard — we had to take care of our own vessels

As the project has progressed to first production, a moment that could transform Kenya’s economy, SECO has been very much involved.

Until recently, this resource boom had skirted Kenya, with the country struggling with hydrocarbon exploration as numerous wells came up dry, despite high hopes from international operators.

“We provide them with inspection services, steel work and specialized welding activities, all steel works, as well as fabrication of container units,” says Cohen. “And we’ve been doing this, including lifting and carriage activities, for the last four years.”

However, in 2012 Tullow Oil and Africa Oil Corp — heavyweight names in the continent’s exploration industry — struck oil in Lake Turkana, declaring their finds to be commercially viable.

Currently, the development is under some pressure as oil prices remain depressed, a situation that has led to numerous projects across Africa being suspended or cancelled.

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Given the cyclical nature of the market, and the fact that first oil is not forecast from Lake Turkana until 2018, well after prices are forecast to recover, its longterm future is not in doubt. Yet funding is still tight for SECO’s partners, meaning that its diversified portfolio has proved especially useful. “Our turnover only increased for the last year because we were smart enough not to put all our eggs in one basket,” says Cohen. At the same time, he remains upbeat about Kenya’s broader outlook. “All these energy and power projects in the country are attracting massive investments, and it’s going to be affecting the country, hopefully in a positive way. Even now you can see that Kenya has developed and it’s growing rapidly.”

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DSV Moving On

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w w w . d s v . c o m

Logistics

‘‘

e made a strategic decision to go in and partially acquire Swift Freight three years ago and we proposed the full acquisition in July last year,” says Carstensen.

Global transport and logistics company DSV first expanded into South Africa in 2010 through the establishment of a subsidiary. spoke to Michael Carstensen, Managing Director for Kenya and Director for Africa Development, and Gordon Wyatt, head of the company’s South Africa office, about recent developments and the challenges DSV faces on the continent.

“Swift Freight has a footprint in Africa in approximately 11 countries, giving us the world’s third largest footprint of logistics companies in Africa, including South Africa, Egypt and Morocco.” With Africa being one of the largest growing markets in the world, DSV’s decision to make a quick entry into the market was a wise one that added significantly to its global footprint. “We had a presence here already in the North and then South Africa, and now we’re covering the main countries and sub-Saharan continent”.

We have a growing middle-class consumer market that’s going to keep consuming, even when the goods cost a little bit more While progress on the continent is without doubt slower than it is in Europe, the challenges of working in Africa are ones that DSV is well equipped to meet.

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“Personally I’ve been in Indonesia for fifteen years, and eight years in India, so Africa doesn’t really have any challenges that those countries don’t have in terms of the usual bureaucracy,” says Carstensen. “Things move a lot slower, and there are of course infrastructure challenges, but it’s just as smooth sailing as when we started in Southeast Asia and India.” Freight forwarding and logistics are DSV’s speciality, and providing logistics and distribution — especially into East Africa — is where the firm expects to see its growth on the continent.

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“We feel we’re here at the right time, and it’ll take us maybe two to three years to really see Africa becoming a big part of the DSV network in terms of the financials.” “We’re looking at what we call the East African Logistics highway at the moment. There are some bureaucratic bumps, but we hope they’ll be ironed out over the next few years, with more freedom and movement of goods,” he explains.

At the moment we’re looking at organic growth, given that we’ve already taken a pretty big bite with the companies we’ve taken over

Elsewhere though, there are distinct challenges ahead. Pointing to the recent stock market crash and the value of the Chinese Yuan decreasing, Wyatt says that falling commodity prices and the resulting turbulent exchange rates are having a serious impact on the South African economy. “Both importers and exporters are suffering and trying to fight through this,” he continued.

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At the same time, dealing with a lot of fast-moving consumer goods (FMC), it’s not surprising that DSV has noticed other knock-on effects too. “We’ve of course seen a reduction on the FMC imports due to the rate of exchange. We’ve a six-month slump due to exchange rate in Uganda and Nigeria, but then again it seems to be picking up now,” says Carstensen. “You need printer cartridges, and you need toilet paper, so the demand is still pushing the supply itself in terms of the necessities. We have a growing middle-class consumer market that’s going to keep consuming, even when the goods cost a little bit more.”

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Providing logistics and distribution — especially into East Africa — is where DSV expects to see its growth on the continent. The African freetrade zone agreement, signed in June this year, is intended to make it easier to move goods across the 26 member countries. What’s missing, though, is most of Western Africa — including the continent’s most populous nation, Nigeria. “We’re finding it fairly straightforward to move cargo around in Africa — there aren’t very many obstacles in that respect, other than the infrastructure, which takes time,” he explains.

“In Nigeria, though, the movement of freight and cargo is a problem. A lot of people look at Nigeria as being one of the largest consumer countries, which it is, but moving cargo from Nigeria into, say, Ghana, is not that easy as Nigeria doesn’t allow transhipments. So you don’t have any natural transhipment points in West Africa, even if you look into the airline distribution hubs,” he continues. “For example, flying from Nigeria to Cameroon, sometimes you’re better off even flying via Paris. Domestic travel in West Africa is next to none. Where air cargo is concerned, you actually have four points — Addis Ababa, Kenya Airways, South African, or you have the Middle Eastern carriers.”

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Within Africa, DSV’s competitors are fairly similar to its competitors globally, but while most are selectively present in certain countries, DSV has, broadly, more total coverage than most.

mining, oil, gas, retail, consumer products, automotive and even manufacturing. We are talking with many blue chip and global companies and they are all either

already investing or currently investigating opportunities in African countries.”

“In times where most companies are forced to streamline and look into cost cutting initiative, we are able to be very aggressive and increase our presence in order to grow our market share,” says Wyatt.

“At the moment we’re looking at organic growth, given that we’ve already taken a pretty big bite with the companies we’ve taken over,” continues Carstensen. “And the main focus for the past year has been to get the DSV name into the market, and upgrade the offices in terms of both physical locations and IT systems.”

Many markets are saturated and when looking at Africa, you see a continent that is completely underdeveloped but continuing to grow. There are opportunities in all areas – infrastructure development,

“We’d rather take things one step at a time and make sure the foundations are solid, in terms of being proactive and innovative within the industry. We like to look at new ways of doing things, and challenge the status quo.”

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Jonker Sailplanes w w w . j o n k e r s a i l p l a n e s . c o . z a

Flying High

Based in South Africaâ&#x20AC;&#x2122;s North West province, Jonker Sailplanes is manufacturing the first typecertified aircraft ever made on the continent. Here, CEO Uys Jonker explains the story behind the JS-1 Glider and tells us where the company is headed next. www.essentialbusinessmag.com

Aerospace

ince childhood, aviation has been a constant in the lives of the Jonker brothers.

“We first got involved with aviation thanks to our dad, who was constructing his own sailplane when we were young boys. He was a schoolteacher, and he didn’t have the funds to buy himself a modern sailplane so he ordered some plans from the US and was building his own glider from scratch,” says Jonker. “We were inspired to see that you can actually make things yourself. The German sailplanes were expensive, so we thought that we should try making the best sailplane someday. So there was this dream in the back of our minds that maybe we should consider constructing our own aircraft.” Uys and Attie Jonker studied engineering at university, and after finishing their studies, set to work on getting development

and funding together to enable them to design and manufacture a high-performance glider. “We were successful, too. At this stage, our aircraft is regarded in two classes as being the best sailplane in the world. We’re now exporting a huge number into Europe, even to Germany — so I guess it must be good,” he says.

When you put the top aircraft in the hands of the best pilots, you tend to get the best results “My dad’s flown in it. It was quite emotional. He’s slowed down a little bit with aviation, but he’s still flying. He’s very proud of what we have achieved.” Built of glass-fibre, carbon fibre and Kevlar, the JS-1 glider saw its first flight in December 2006 and, four years later, received its Type Certification. The 18m-wingspan version glider has a maximum

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speed of 290km/h and a gross weight of 600kg, while its bigger brother, the JS1-C 21m, has a gross weight of 720kg. Achieving Type Certification is a long and complicated process. Aircrafts must comply with specific design standards and then demonstrate their compliance to the authorities. The JS-1 is the first aircraft in Africa to have achieved this certificate, based on modern certification standards. “It’s quite an expensive process as you have to go through many tests, so it’s a lot of work. The certification is not so difficult if your aircraft complies to the standard — but it can become really complex when it doesn’t comply,” explains Jonker.

There was this dream in the back of our minds that maybe we should consider constructing our own aircraft

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“Fortunately, we didn’t have to make too many changes. Currently demonstration of the certification is done in Europe. This project introduced a few additional challenges, as the design standard was recently amended requiring higher loads for crash worthiness. Because we are a new applicant in Europe, we have to use the latest certification standard, and we had to modify the structure accordingly.” “Demonstrating crashworthiness is expensive. You have to build cockpits and destroy them, possibly several times, which adds up,” admits Jonker. Certification can be a frustrating process that can take many years — the aviation authorities are frequently overloaded,

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turnaround time for feedback on certification documents can be quite slow. Jonker suggests that this is not just the case in South Africa, but worldwide. Despite this, Jonker Sailplanes has not been deterred. The JS-1 has been met with an enthusiastic reception, receiving praise worldwide. In the Open Class of the 2015 European Gliding Championships, the JS-1 won seven out of the top ten positions, including the top four places. “For the first time on European soil, aircraft from a non-European region dominated the class completely,” he tells us.

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And, in the UK Open Class Nationals a week later, the first seven positions were also occupied by JS-1 aircraft. “Our mission is to attract the top pilots. To convince these people that your aircraft is the best, it has to be the best. And when you put the top aircraft in the hands of the best pilots, you tend to get the best results.”

In the Open Class of the 2015 European Gliding Championships, the JS-1 won seven out of the top ten positions, including the top four places

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Learning from its certification challenges, and fuelled by its ongoing success, Jonker Sailplanes is tackling its next projects with great enthusiasm. “We are busy with two new product lines. One is a self-launching sailplane, which we plan to release next year. The second project is a little more confidential — and quite close to our heart — and it’s a new product line that we will be entering, but still in the sailplanes market. This will use modern, state-of-the-art manufacturing techniques. We believe our next products will even be more special than the JS-1,” he tells us. A positive attitude and dedication to realising a dream should see the company glide smoothly into its second decade.

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Trilogiq w w w . t r i l o g i q . c o . z a

Headquartered in France, Trilogiq has been designing, building and installing modular handling and storage solutions since 1992. After establishing its presence in the automotive and related industries, Trilogiq South Africa has recently branched out into other sectors with a new product called Graphit. spoke to Managing Director Leslie Scanlen to find out more.

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Manufacturing

rilogiq’s new Graphit range of modular storage and display solutions, launched last year, is already proving to be a success. This allnew composite product is suitable for a wider range of markets than its all-steel predecessor Leantek, because it is lighter, stronger, and more resistant to corrosion and easily reconfigured. “Historically our focus for Leantek was the automotive and related industries. Graphit allows us to venture into new markets such as retail, hospitality or pharmaceutical where steel systems aren’t suitable,” Scanlen tells us.

Graphit and Leantek are modular systems that provide Trilogiq’s clients with the versatility to design a vast range of storage, handling, display and lean manufacturing solutions. The systems’ brackets, tubes and accessories are assembled to create ergonomic and optimised installations that match the client’s requirement but which can be adapted quickly and easily to support progress and business change. The original Leantek system helped the company build its reputation but it looks as if Graphit will be key to its future.

We add value and make a difference by focusing on a complete solution — the know-how and service along with the product.

“Four years ago we looked at the way the world was using composite materials and realised we were onto something. We completed some tests and found we could change the way people understood and used modular systems.” With Graphit the brackets are made from composite materials while the tubing is made from aluminium, stainless steel or carbon fibre. Leantek, on the other hand, uses components made from steel only. Graphit is lighter, stronger, more versatile and more resistant to corrosion. This opens up a world of opportunities. “Graphit was launched early last year with a core range and we are continuing to develop additional components to add to its versatility,” Scanlen tells us. “The health sector wasn’t a market we could serve before because of the nature of steel but with Graphit we have a compelling offer for hospitals.”

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Versatility and adaptability is a priority for Trilogiq’s lean manufacturing customer base. The ability to reconfigure solutions and test variations makes Graphit ideal for any business that prioritises adding value, increasing efficiency, optimising resources and reducing waste. To deliver the very best solutions Trilogiq recognises it is crucial to

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maintain an open and honest dialogue with its clients. “Our business is based on supplying lean solutions. The product has been commoditised somewhat because many customers simply buy the components. We add value and make a difference by focusing on a complete solution — the knowhow and service along with the product,” says Scanlen.

“A lot of the features that we’ve built into the new products are the result of feedback from our existing market. We asked them what they’d like to see in terms of improvement, then we took their suggestions and did the development. We also looked at new markets where our expertise is transferable and that will help us diversify,” he says.

Manufacturing

“With the retail environment, for example, the aesthetics of the product are often important and Graphit looks really modern and stylish in these settings.” While Trilogiq is excited about the potential of its products, the company is still relatively unknown outside of the automotive sector. Over the coming months it will be investing in marketing to repositioning the brand more broadly and to introduce its solutions to new audiences. “Our efforts are establishing us as the market leader and promoting modular solutions as the future,” Scanlen tells us.

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“It’s a step away from what we are known for but it’s creating massive opportunities. We are refocusing our marketing efforts in each of the countries where we currently operate, including South Africa. There will be a little bit of restructuring but a lot of room for expansion. These are exciting times.”

With the retail environment, for example, the aesthetics of the product are often important and Graphit looks really modern and stylish in these settings

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Black Mountai www.vedanta-zincinternational.com/operations/black-mountain/

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in Mining

Mining

lack Mountain Miningâ&#x20AC;&#x2122;s parent company, Vedanta Zinc International, is on a mission to achieve sustainable production of 1 million metric tonnes of metal. While the firm is set to lose one of its major assets later this year â&#x20AC;&#x201D; the Lisheen mine in Ireland, which will close in October â&#x20AC;&#x201D; a new open-pit mine under construction in South Africa should set them back on track.

Based in Northern Cape, Black Mountain Mining has just broken ground on its second major zinc mine, the Gamsberg takes a look at Project. the history of the company and its position in the South African mining sector.

Located in the Northern Cape Province, Black Mountain Mining now consists of two assets: the Black Mountain mine, which has been productive for over three decades, and the Gamsberg Project, which is set to produce its first ore in early 2018. While the majority of South African mining operations have been in decline for the past few years, Black Mountain continues to prove itself as an efficient producer of zinc, in addition to copper, lead, and silver. Black Mountain Mine is the largest private employer in the Bushmanland and Namaqualand region. Of the 1500 people it provides with

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stable employment, 80% are local. The town of Aggeneys was established in 1976 to service the mine, and now provides accommodation and companyfunded municipal services to the majority of its employees. 30,000 tonnes of zinc in concentrate is produced each year at Black Mountain, and while the potential is there to continue production for another 20 years, steady production levels will not help Vedanta Zinc International to meet its onemillion-tonne target. Reporting a 38% decline in operating profit in the quarter ending June 2015, and citing volatile commodity prices as the primary cause, Vedanta’s focus on the comparatively stable zinc mining seems a wise decision — its Zinc International business posted a fall of just 3% in EBITDA (earnings before interest, taxes, depreciation, and amortisation), as opposed to the 12% for its iron ore business, 78% for Konkola Copper Mines in Zambia, and 102% for its aluminium segment.

of zinc in concentrate is produced each year at Black Mountain “Zinc has held up quite well in view of its strong fundamentals and is now largest contributor to our EBITDA,” said Vedanta CEO Tom Albanese. Southern Africa has one of the world’s largest undeveloped zinc deposits — with 40 million tonnes

While the majority of South African mining operations have been in decline for the past few years, Black Mountain continues to prove itself as an efficient producer of zinc

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tonnes

in the Northern Cape/South Namibia area alone — but while copper found investment early on due to the size and ease of identification of resources in the Copperbelt, zinc has historically failed to attract such interest. However, with a record shortage of zinc set to grow even larger in the next two years, it seems entirely possible that South Africa’s zinc deposits will begin to attract the attention they deserve. Analysts Kenneth Hoffman and Sean Gilmartin predict a global deficit of two million tonnes by 2017, as mines continue to close at a rate faster than new ones are opening.

email: production@essentialbusinessmag.com

“Looking a little further out, there’s a strong argument that zinc prices will rally as we go into 2016,” said mining analyst Stefan Ioannou in an interview with The Gold Report. “We’ve seen a number of large zinc mines shut down over the last couple of years. The market continues to face an undersupplied mediumterm outlook, which will drive prices higher.”

“In the medium term, say the 2016 –2018 timeframe, there is potential to see spectacular prices on the order of $1.50/ lb to $2/lb. That said, one thing to remain cognizant of is that higher medium-term pricing will prompt additional production over the longer term, which will eventually balance the market and regulate zinc pricing.”

Southern Africa has one of the world’s largest undeveloped zinc deposits — with 40 million tonnes in the Northern Cape/ South Namibia area alone

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There are concerns, though, that a decrease in demand in China will negate the shortage in supply and keep zinc prices from rising. An estimated half of all zinc is used to galvanise steel, and with China’s steel output — which accounts for 51% of crude steel production globally — reporting the worst first quarter in 20 years, these concerns are valid.

“We’ve seen a lot less restocking than we’d normally get this time of year,” said Bart Melek, head of commodity strategy at TD Securities. “There’s concern that China’s steel output will be lower because of a glut of steel, and that means you’re going to use less galvanised product, which means less zinc.” But the extent to which this will affect zinc prices is still unclear. Wayne Taylor, managing director of Heron Resources, suggests that ultimately the impact will be negligible. “The zinc market fundamentals are really great. There is a supply side issue which is improving and despite discussions about China’s economy, globally we are consuming more zinc,” he said. “We are not talking about a balanced market price going up and then fresh supply coming on, we are talking about supply coming off and a demand side that is continuing to grow.

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Additional supply will come on when prices surge but forecasts suggest that for those curves to come together, we are going to see a big increase in price.” For Vedanta, work on the Gamsberg project could not have begun at a better time. Ground was broken earlier this month to mark the beginning of Zinc International’s plans to develop an open-pit zinc mine. “We are very excited to have reached this stage of the project. We believe that this region has the highest concentration of zinc on the African continent and that we can develop integrated zinc and lead complex here, anchored around Gamsberg and the

Skorpion Refinery, which will boost economic growth and create sustainable employment,” said Albanese. “Vedanta believes strongly in the philosophy of sustainable development and we commit to protecting the unique ecosystem around Gamsberg for future generations.” In 2014, Vedanta announced its plans to invest $782 million into the mine over the next three years. With an estimated ore reserve of 186,000 metric tonnes, and more than 250,000 metric tonnes of potential reserves, the opportunity here is considerable — and while it can’t fill the 18.9-million-tonne void left by the Vedanta’s Lisheen

In the medium term, say the 2016–2018 timeframe, there is potential to see spectacular prices on the order of $1.50/lb to $2/lb

Mining Bidfreight Port Operations salutes the ongoing success of Black Mountain Mining

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Mine in Ireland, or come close to closing the deficit, the impact it will have on the local economy is still quite impressive. “We’re developing Gamsberg in a phased manner using cash generated by the VZI operations, while remaining focussed on sustainable cost reduction at both Gamsberg and Skorpion,” said Vedanta Zinc International CEO Deshnee Naidoo. “The Gamsberg project will help us to create future opportunities and to ensure that our operations create value for the communities in the region. It is expected to generate approximately 500 permanent jobs, with the potential to create a further 1,500 temporary jobs during the construction phase.”

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