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Europe €10, Ghana C1.8, Kenya Ksh200, Nigeria N330, South Africa R25, UK £7, USA $12
May 2014
African Review of Business and Technology
P52
May 2014
Ensuring crane safety
P44
Volume 48 Number 4
Developing
renewable
resources www.africanreview.com
Improving performance in platinum mining P62
Transport:
Finance:
Business:
Developing Swaziland’s rail freight network P34
Ecobank moves towards cashless banking P32
Turkish investment in Tanzania P26
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UP FRONT
Editor’s Note
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Europe €10, Ghana C1.8, Kenya Ksh200, Nigeria N330, South Africa R25, UK £7, USA $12
May 2014
P52
D
evelopments within the fields of business, finance, technology, transport, power, construction and mining are key themes within this issue of African Review. Following our regular round-up of the latest industry news, pages 20 to 29 examine the changing landscape of commercial prospects across the continent, covering bilateral trade, investment opportunities and growth sectors. On pages 30 to 33, stories focus on financial growth and the rising influence of mobile money throughout sub-Saharan Africa. The future of rail transport is examined on pages 34 and 36, while page 38 highlights Africa’s luxury car market. In terms of power, pages 40 to 44 detail how the upcoming African Utility Week is looking to emphasise energy efficiency, while renewable energy also comes to the fore. The contruction section (from pages 45 to 58) features the latest developments from Volvo Construction Equipment and Mantrac Group, while also offering insights into the cement sector, crane safety and youth training projects. Pages 60 to 70 focus on mining, exploring topics such as rising foreign investment and mechanised mining alongside detailing the latest innovative solutions from Magni Telescopic Handlers.
Ensuring crane safety
P44
Developing
renewable
resources Improving performance in platinum mining P62
Transport:
Finance:
Business:
Developing Swaziland’s rail freight network P34
Ecobank moves towards cashless banking P32
Turkish investment in Tanzania P26
Main cover picture: Asherlove Inset, bottom left: Dale Hes Inset, top left: Dimitris Agelakis Audit Bureau of Circulations - Business Magazines
Lizzie Carroll, Acting Managing Editor
Contents
REGULARS 04 Agenda:
14 Bulletin:
The latest news from across the continent
FEATURES
73 Solutions:
Investment and mining developments
In Memory of David Clancy
20 Business and Finance Fostering trade between India and Africa; debit card revolution in Nigeria; stabilising the Kwacha in Zambia; bilateral trade between Tanzania and Turkey; growth of natural gas in Mozambique; economic growth in sub-Saharan Africa; and boosting cashless banking
34 Transport and Logistics
1956-2014 IT IS WITH great sadness that we have to report that David Clancy, editor of Oil Review Middle East, has died after a long battle with cancer. David had been with the company for 25 years providing high
Developing Swaziland’s rail freight network; and Africa’s luxury car market
42 Power
quality editing for Oil Review Middle East, Technical Review Middle
East and other magazines before them.
Building solar PV stations in South Africa; reaping the benefits of wind power in Kenya; and promoting energy efficiency at African Utility Week
As a result of David's professionalism, knowledge and application, the titles have acquired a reputation for authoritative and pertinent
45 Construction
content. Throughout his illness, David maintained his
Equipment giant announces fresh developments; combatting carbon emissions in the cement industry; key equipment dealer discusses African operations; emerging industry trends; the basics of crane safety; providing skills training for youth in South Africa; and constructing Morocco’s new highspeed rail link
work output, fitting it in between his numerous sessions of unpleasant treatment. There can be few people who would show the same resolve. His expertise and guidance to others and his quiet sense of humour will be sorely
60 Mining Reinvigorating Angola’s diamond industry; opportunities offered by mechanised mining; China increases investment in Sierra Leone; and new telescopic handlers for the industry
Managing Editor: Andrew Croft andrew.croft@alaincharles.com Editorial and Design team: Bob Adams, Hiriyti Bairu, Lizzie Carroll, David Clancy, Ranganath GS, Prashant AP, Rhonita Patnaik, Genaro Santos, Zsa Tebbit, Nicky Valsamakis, and Ben Watts Publisher: Nick Fordham Advertising Sales Director: Pallavi Pandey
www.africanreview.com
Innovative equipment for industry
Advertising Sales Manager: Jane Wellman Tel: +44 114 262 1523 Fax: +44 7976 232791 Email: Jane.wellman@alaincharles.com
South Africa: Annabel Marx Tel: +27 218519017 Fax: +27 46 624 5931 Email: annabel.marx@alaincharles.com
China: Ying Mathieson Tel: +86 10 8472 1899 Fax: +86 10 8472 1900 Email: ying.mathieson@alaincharles.com
UAE: Camilla Capece Tel: +971 4 448 9260 Fax: +971 4 448 9261 Email: camilla.capece@alaincharles.com UK: Steve Thomas Tel: +44 20 7834 7676 Fax: +44 20 7973 0076 Email: stephen.thomas@alaincharles.com USA: Michael Tomashefsky Tel: +1 203 226 2882 Fax: +1 203 226 7447 Email: michael.tomashefsky@alaincharles.com
India: Tanmay Mishra Tel: +91 80 65684483 Fax: +91 80 40600791 Email: tanmay.mishra@alaincharles.com Nigeria: Bola Olowo Tel: +234 80 34349299 Email: bola.olowo@alaincharles.com
missed. He leaves behind his wife,
David Clancy
Antonia and two daughters.
Head Office: Alain Charles Publishing Ltd, University House, 11-13 Lower Grosvenor Place, London SW1W 0EX, United Kingdom Tel: +44 (0)20 7834 7676, Fax: +44 (0)20 7973 0076 Middle East Regional Office: Alain Charles Middle East FZ-LLC, Office 215, Loft No 2/A, PO Box 502207, Dubai Media City, UAE, Tel: +971 4 448 9260, Fax: +971 4 448 9261 Production: Nathanielle Kumar, Donatella Moranelli, Nick Salt and Sophia White E-mail: production@alaincharles.com Subscriptions: circulation@alaincharles.com
Chairman: Derek Fordham Printed by: Wyndeham Grange Ltd US Mailing Agent: African Review of Business & Technology, USPS. No. 390-890 is published 11 times a year for US$140 per year by Alain Charles Publishing, University House, 11-13 Lower Grosvenor Place, London SW1W 0EX, UK. Peridicals postage paid at Rahway, New Jersey. Postmaster: send address corrections to Alain Charles Publishing Ltd, c/o Mercury Airfreight International Ltd, 365 Blair Rd, Avenel, NJ 07001.
ISSN: 0954 6782
Serving the world of business
African Review of Business and Technology - May 2014
3
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NEWS
Agenda / North Construction begins on Kharroub dam HM King Mohammed VI of Morocco has launched construction of Kharroub dam, which has been estimated to cost in the region of US$197mn. The project will attempt to consolidate drinking and industrial water supply in the Tangiers-Tetouan region. Located over the Kharroub river, 45 km south of the city of Tangiers, the dam has been designed to contribute towards the consolidate of water facilities in northern Morocco in order to meet rising drinking and industrial water needs. The hydraulic structure will have a storage capacity of 185mn cubic metres
and has been financed by the state general budget and the UAE. The Moroccan state already has a programme in place that will attempt to consolidate the drinking water supply to the city of Tangiers and neighbouring localities, which has been carried out by the Office of Drinking Water and Electricity (ONEE), with investments worth US$166mn. The programme will aim to benefit more 1.7mn people by 2030 and constitutes the expansion of the El Hachef plant for the treatment of water coming from the '9 April 1947' dam. Kharroub dam will be located 45 km south of Tangiers
GE signs US$300mn manufacturing facility deal with Sonelgaz
G
E and Sonelgaz have signed an agreement to build a US$300mn manufacturing complex in Algeria's Batna province. The complex will produce gas turbines, steam turbines, generators and control systems constituting blocks of power, which will generate 2,000MW of power from 2017. To build and operate the complex in Ain Yagout, a new joint venture (JV), General Electric Turbines Algeria, will be established, of which 51 per cent will be owned by Sonelgaz and 49 per cent by GE Industrial, a subsidiary of GE. Amara Benyounes, minister for industrial development in Algeria, said, "It will be one of the biggest plants of GE in the world. This also shows that foreign investment is returning." Algeria has been seeking to increase production capacity to put an end to frequent power cuts, especially during the summer. GE invested US$2mn last year in Algeria to build gas turbines with Sonelgaz. The current agreement between GE and Sonelgaz follows the international tender for the supply of equipment for power generation, in which bidders were required to commit to an industrial complex for the production of its equipment in Algeria.
EU to provide US$95mn for water project in Egypt The European Union (EU) has announced it will make a contribution of US$95mn towards Egypt's Improved Water and Waste Water Services Programme. The project, which will be built in two phases, has been estimated to cost more than US$1bn and will aim to improve and expand existing water and wastewater treatment plants. EU officials said that the first phase of the project would improve access to water to three million people in the Gharbeya, Sharqeya,
4
Damietta and Beheira governorates. The second phase will cover Qena, Sohag, Assiut and Minya governorates in Upper Egypt, aiming to provide water to one million people and improve water services for four million people. The EU has committed to implementing various water sector projects across Egypt, which will benefit the Ministry of Housing and the holding company for water and wastewater. The organisation has said it was
African Review of Business and Technology - May 2014
keen to establish an improved regulatory system and management resource process for drinking water quality reporting and auditing, customer services, water company performance measures, and licensing. Egypt's Ministry of International Cooperation recently signed a new agreement, IWSP II, with a number of European organisations, which will supply Egypt with US$349mn to improve water and wastewater services for nearly 15.3mn Egyptians. www.africanreview.com
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NEWS
Agenda / East Proflight Zambia and Fastjet to set up new routes Proflight Zambia has partnered with Fastjet to strengthen its route network across East Africa, with new routes to be launched to 15 destinations across Zambia, Malawi and Tanzania. Keira Irwin, commercial director for Proflight Zambia, said "We have strengthened our partnerships with a number of airlines recently, [such as] Emirates, Kenyan Airways and Ethiopian Airlines as well as Precision Air. "We are willing to bring in more inclined partners on board to widen our route network that serves the existing travelling public and hoping to expand in small
ContactXchange launched by MTN Uganda
U
gandan-based mobile service provider MTN has rolled its ContactXchange service, which will allow users to share contact details with a caller. "The service prompts customers to send their contact details after a call, therefore enabling customers to effortlessly share, and update contacts as well as connect instantly with each other. The key message here is convenience for our customers. MTN Uganda is keen on developing products and services which add value to the lives of customers," Ernst Fonternel, chief marketing officer of MTN Uganda stated. This service is available on the MTN menu, allowing users to send their details locally and internationally, including receiving and adding contacts to the existing phonebook free of charge, stated the company. "In the ever fast paced world we live in, it is our role to come up with time saving and yet cost effective solutions that help our customers achieve their goals," Fonternel added. MTN Uganda recorded 8.8mn subscribers across Uganda in December 2013, the mobile operator revealed.
6
Proflight Zambia has teamed up with a number of international and regional airlines in recent years (PHOTO: Dylan Walters/Wikimedia Commons)
regional destination ourselves." Proflight will maintain its current domestic routes in Zambia and its link to Lilongwe in Malawi, from Lusaka, while Tanzania low-cost
airline Fastjet will primarily service the air link between Dar es Salaam and Lusaka beginning in May 2014, as well as local Tanzanian routes from Dar es Salaam.
Kenya to begin construction on US$14bn railway line Kenya will begin construction on the Mombasa-Nairobi standard gauge railway once funds required to start the project have been released by China from a loan deal that should be finalised in June 2014, according to Kenyan Deputy President William Ruto. Ruto said that Chinese Prime Minister Li Keqiang would sign the "commercial agreements" during an upcoming visit to the East African country. "The initial preparations are on course. We have made budget allocations for compensation and other suppliers and come 2018 the railway will at least be working up to Nairobi," Ruto remarked. Phase one of the US$14bn project will cost US$3.8bn. Kenya has set aside US$254mn from its 2014 budget for the railway development levy, as well as dedicating 1.5 per cent of all imports, which raised more than US$173mn for the levy. The railway will stretch from Mombasa in Uganda to Kigali in Rwanda, and Juba in South Sudan.
Ethiopia businesses set to benefit from Civil Society Fund Approximately 3,000 businesses in Ethiopia will be expected to benefit from a 5.5mn Br (US$283,000) project that will attempt to empowering small-scale, non-state businesses. The two-year project, supported by the Civil Society Fund and funded by the Ethiopian government and the European Union (EU), will look to develop market chains, while also offering entrepreneurs with training and marketing opportunities. The project has been designed to support
African Review of Business and Technology - May 2014
Micro and Small Enterprises (MSEs) who have faced a number of business constraints in recent years. According to Akalewold Bantirgu, programme manager of the Civil Society Fund, the Addis Ababa Chamber of Commerce & Sectoral Association (AACCSA) was selected out of a total of 154 applicants by EU representatives to receive part of the fund, of which it will take a seven per cent chunk of the total sum. www.africanreview.com
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NEWS
Agenda / South Leviev Group targets phosphate mining off the Namibian coast Israeli investment company Leviev Group (LGC) has plans to begin mining phosphate off Namibia's coast by 2018. LGC is planning to demonstrate a processing plant at the port of Luderitz — a harbour town in southwest Namibia. The project will be developed by LGC's subsidiary, LL Namibia Phosphates. Phosphate is a major crop nutrient, along with potash and nitrogen. Environmental concerns led the Namibian government to previously impose an 18-month freeze on new permits for marine mining, despite the potential for deep sea mining to open the way for new resources that could replace depleted land mines. Erez Mishal, vice president of business development and operations at LGC, said, "Through a demonstration, we would address environmental concerns, allow full-scale construction to proceed so production can begin in 2018, and maybe even obtain a licence." The Namibian cabinet, however, approved a recommendation in September 2013 that a moratorium on issuing Environmental Impact Assessment (EIA)
clearance certificates on bulk seabed mining — for industrial minerals, base and rare metals — in Namibian waters, be in place for a minimum of three years.
S
outh Africa's Transnet Freight Rail (TFR) has signed an agreement with Bombardier Transportation South Africa (Pty) Limited for the supply of 240 electric TRAXX locomotives worth US$1.2bn. According to TFR, the order is part of a larger agreement for more than 599 electric and 465 diesel train engines from four different suppliers – the largest locomotive supply deal in the country's history.
LGC hopes to be able to mine phosphate of the coast of Namibia by 2018 (PHOTO: Laika ac)
LGC has estimated that it can mine two million tonnes of phosphate rock per year, at a depth of 300 metres, adding that it would provide finances worth US$20mn in the preliminary stages, before seeking an industry partner to complete development that would cost in the region of US$800mn. LGC said the project would offer the lowest phosphate rock production costs in the world at a projected US$16.61 a tonne, supported by an acid-based processing technique that reduces the need to remove impurities first from the rock.
African Union rolls out Internet exchange point in Swaziland The African Union Commission (AUC) has partnered with the Ministry of Information, Communications and Technology of the Kingdom of Swaziland and Internet Society (ISOC) to set-up an Internet exchange point in Swaziland to keep local internet traffic within the local infrastructure. "The Internet Exchange Point in Swaziland will contribute to bringing efficiency in the routing of intra-country internet traffic and hence faster and more secure exchange of intracountry internet traffic," , said AUC editorial officer Tankou Azza Esther. The African Union (AU) has recently expanded capacity building support to assist in the establishment of internet exchange points in 24 member states including Swaziland. "In addition to the capacity building support, the AU has so far donated equipment and services to set up and launch the Internet Exchange Points in Namibia, Burundi and Swaziland," the commission stated. "The total cost of the support extended to realize each internet exchange point is US$63,000. The Kingdom of Swaziland is the third Member State to launch the Internet Exchange Point with the support of the African Internet Exchange System Project of the AU," it added.
8
Bombardier wins South African rail contract
African Review of Business and Technology - May 2014
Bombardier will work with local companies on the design and construction of the locomotives
TFR will use the 240 TRAXX Africa dual-voltage electric locomotives for its general freight business, with Bombardier Transportation South Africa (Pty) Limited set to produce the new locomotives in South Africa until the end of 2017. The first delivery of the locomotives, designed for speeds of up to 100 km per hour, will be expected in April 2016. Lutz Bertling, COO of Bombardier Transportation, said, "This landmark order demonstrates how Bombardier Transportation continues to grow local roots in key emerging markets such as South Africa. The evolution of mobility is a global promise to drive economic growth with products and a supply chain that benefit the communities in which we operate." Bombardier Transportation South Africa (Pty) Limited has said that it would seek suppliers and subcontractors as it gears up to build the trains, with more than 60 per cent of the contract set to be executed locally. www.africanreview.com
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NEWS
Agenda / West Aggreko to double C么te d'Ivoire output Temporary power generation firm Aggreko has announced its aim to double its output in C么te d'Ivoire to 400MW within the next two years, targeting increasing power demand arising from the country's growing economy. C么te d'Ivoire has registered GDP growth of close to nine per cent and has invested heavily in its long-neglected power infrastructure in an effort to boost output and maintain its rapid economic expansion. Marc Vatel, operations director of Aggreko in Africa, said, "We hope to double our electricity production in one or two years as we have that capacity." The West African country, home to offshore natural gas reserves, supplies power regionally
to Ghana, Burkina Faso, Togo and Mali, and has plans in place to add Liberia, Sierra Leone and Guinea to its power grid. The nation's total electricity capacity stands at close to 1,600MW, which the government aims to push to 4,000MW by 2020. Exports to its neighbours have, however, declined in recent years as domestic demand has outpaced new power generation. "Our cooperation with the Ivorian government could legitimately increase as our power station functions with gas, producing cheap, clean energy with Ivorian gas," said Vatel. Aggreko recently began supplying 50MW of emergency power to Conakry, the capital of neighbouring Guinea.
CWG reveals 81 per cent growth on PAT
C
omputer Warehouse Group Plc (CWG) has revealed its audited financial results to the Nigerian Stock Exchange for the year ending 31 December 2013, with the results revealing that the company's revenues rose by 10 per cent to US$128.4mn, while Profit After Tax (PAT) soared by 81 per cent to US$3.7mn.
JCB India to export new excavator engine to Africa JCB India Limited has introduced the JS360's new Dieselmax 672 engine, which will be exported to Africa and Middle East. The company stated that the new engine could provide up to 25 per cent fuel savings over the outgoing model, while a closed boxsection revolving frame would increase strength and reduce stress on the machine. JCB India Limited, a 100 per cent subsidiary of JCB UK, has been looking to expand in Africa, according to recent reports. The company has been manufacturing excavators ranging from 8T to 22T, which are currently operational in West, East and South Africa.
Jaswinder S Vilkhu, AVP of export sales at JCB, said, "Our biggest market in Africa has been South Africa and Algeria but we have consolidated our position in East and West Africa as well, and the market is improving." JCB India Limited has announced that it will also introduce a larger Excavator JS360 soon, which will be useful for large-scale operations like mining and earth works in India. Vilkhu added that JCB attended the CII Africa India conclave in New Delhi in March 2014 for the first time and the response was "tremendous".
Renovation work starts on Nigeria road The Federal Ministry of Works in Nigeria has started the renovation of an 80 km stretch of highway from Obajana through Kabba to Ilorin. The project is expected to cost NGN8.22bn (US$50.7mn) and will be completed within a 36-month time period, according to works minister Mike Onolememen. CGC has been awarded the construction contract and is expected to open major links to the continent's largest cement factory in Obajana, as well the Ajaokuta Steel Plant. Onolememen said, "The road connects Kogi and Kwara States, while also serving as a connector highway that links the North-South Arterial route A1 (Lagos-Ibadan-IlorinKaduna-Katsina) to the North-South Arterial route A2 (Warri-Benin-Lokoja-AbujaKaduna-Katsina)."
10
African Review of Business and Technology - May 2014
CWG founder and CEO Austin Okere (left) speaking with Ngozi Okonjo-Iweala, Nigeria's minister of finance and coordinating minister of the economy (right)
Upon reviewing the figures, Austin Okere, the group CEO, said in 2013 CWG consolidated its operations by investing in new systems and processes which has resulted in the percentage growth. Okere also stated that CWG planned to make a number of further acquisitions as part of its pan-African expansion strategy. "This shall give CWG a cost leadership position while delivering superior service to its customers. We shall continue to make investments that would make CWG a global brand to behold. The focus in the future would be to continue growing the brand through initiatives directed towards empowering the African entrepreneur," Okere said. "This would be done by making IT available to SMEs on a subscription basis, thereby lowering the entry barriers to the use of information technology. It is also a social impact investment," he added. www.africanreview.com
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NEWS
Events / 2014 June 10-11
Connecting West Africa Dakar, Senegal westafrica.comworldseries.com 10-11
Cloud World Forum Africa Johannesburg, South Africa africa.cloudworldseries.com 10-12
East Africa Oil & Gas Summit London, UK
eastafrica-oil-gas.com
17-19
22-24
2-4
SAITEX
Water Africa
Johannesburg, South Africa www.exhibitionsafrica.com
Accra, Ghana www.ace-events.com
24-25
2-4
ZIMEC
West Africa Building & Construction
Lusaka, Zambia www.zimeczambia.com 24-25
Accra, Ghana www.ace-events.com
VAS Africa 2014
2-4
Johannesburg, South Africa vasafrica.comworldseries.com
Cape Industries Showcase 2014
July
2-4
Cape Town, South Africa www.exhibitionsafrica.com
Refrigeration and Air Conditioning Exhibition
Card, ATM & Mobile Expo Africa
Cape Town, South Africa www.exhibitionsafrica.com
Lagos, Nigeria www.cardatmandmobilexpo.com
1-2
18-20
Johannesburg, South Africa www.terrapinn.com
23-25
1-2
Bulawayo, Zimbabwe zitf.net/mine-entra
Africa Energy Forum Istanbul, Turkey
africa-energy-forum.com
Africa Rail
Africa Ports and Harbours Show
22-24
Africa’s Big Seven Johannesburg, South Africa www.exhibitionsafrica.com
Mine Entra
Johannesburg, South Africa www.terrapinn.com
AEF set to address the continent's energy challenges The Africa Energy Forum (AEF) will return in June looking to address the issues facing the growing demand for energy across the continent and the requirements of this vital industrial sector. The event, which this year celebrates its 16th anniversary, will act as an international gathering place for governments, African power utilities and the global energy industry, providing each stakeholder with the chance to discuss the future of the continent's power infrastructure. Set to take place in Istanbul, Turkey, the event is expected to attract a wide ranging list of professional experts who will be able to deliver knowledge and information on how the energy sector can meet the demands of an economically vibrant continent. Described by organisers Clarion Events as "the biggest and most interesting conference on African energy in the world", AEF 2014 will feature new workshops on 'Mastering Communications, Managing Expectations' for public and private sector organisations, as well as hosting a national pavilion from Kenya showcasing how the country's power industry will hope to deliver 5,000MW within a time period of 40 months. The 'Africa Talks' platform will include presentations from the likes of Standard Bank and Azura Power, while the Special Session will focus on nuclear power within the political agenda.
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African Review of Business and Technology - May 2014
The event will also look to engage the next generation of engineering, legal and financial experts by bringing a number of talented students to AEF as part of the EnergyNet Student Engagement Initiative (ESEI). Among the key industry players in attendance at the event will be a number of government representatives and global power investors, and leading manufacturers and suppliers from across the energy industry. The list of confirmed speakers at the event set to share their expertises and experiences includes Salvador Namburete, minister for energy in Mozambique; Prof. Sospeter Muhongo, minister for energy and minerals in Tanzania; Turkish minister for energy Taner Yıldız; and Neside Tas Anvaripour, director of business development at the African Development Bank. Following the 2013 edition of AEF, Alex Katon, executive director of Infraco Africa said, "AEF is the only event that I would recommend for those wishing to develop, finance and build power projects in subSaharan Africa." AEF will take place from 18-20 June 2014 at the Hilton Istanbul Bomonti Hotel & Conference Center. africa-energy-forum.com www.africanreview.com
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NEWS
Bulletin / Investment Growth in Africa set to hit 5.2 per cent in 2014
EU and African leaders look to increase trade and investment ties
Strong investment and household spending
Leaders from across the EU and African have
is helping fuel economic growth in sub-
called for a "fundamental shift" in cooperation
Nigeria could "learn from the US in terms of expertise".
Saharan Africa, which has been forecast to
Atlas Mara Co-Nvest to acquire African Bank
rise from 4.7 per cent in 2013 to 5.2 per cent
Atlas Mara Co-Nvest, the investment
in 2014; according to the World Bank’s twice-
company backed by the former Barclays chief
yearly analysis report Africa’s Pulse, rising
executive Bob Diamond, has agreed to take a
investment in infrastructure and natural
majority stake in ABC Holdings, which
resources, along with strong household
operates the African bank BancABC, and to
spending has aided Africa’s economic
acquire its controlling shareholder ADC
prospects with notable growth evident in
African Development Corporation for close to
resource-rich countries such as DR Congo and
US$265mn in cash and shares; the deal marks
Sierra Leone, steady growth noted in Côte
the first acquisition made by Atlas Mara since
d’Ivoire, and rebounding buoyancy in Mali's
it was formed last year by Diamond and
economy supported by the country's
entrepreneur Ashish J. Thakkar, and led
improving political situation.
Cape Verde joins Africa Finance Corporation
Atlas Mara Co-Nvest co-founder and former Barclays chief executive Bob Diamond (PHOTO: World Economic Forum)
at a recent meeting in Brussels where leaders
Cape Verde has joined Nigeria and a number
from both continents pledged to deepen
of other West African countries, including
trade and investment ties by developing more
Ghana, Chad and Liberia, as the latest
productive supply capacity, building up
member state of the Africa Finance
markets, and implementing infrastructure and
Corporation (AFC); Cristina Duarte, Cape
governance reforms in Africa; the summit was
Verde's minister of economy and finance, who
the EU’s largest ever summit, bringing
signed the Instrument of Accession and
together more than 60 heads of state, and led
Acceptance of membership of the AFC on
to a joint declaration that stated, "We are
behalf of the country, said, "I am very pleased
convinced that trade and investment and
to formalise Cape Verde’s membership of the
closer economic integration on each of our
Diamond to declare, "Our objective is to build Africa's premier financial services group leveraging the access to capital, liquidity and funding that we at Atlas Mara can provide."
South African credit provider targeted by France's largest bank
continents will accelerate growth."
Nigerian prince calls for further US investment
BNP Paribas is France's largest banking (PHOTO: jyhem/flickr.com)
A Nigerian prince has called on the US
Cape Verde has become the latest African nation to join the Africa Finance Corporation (PHOTO: Quiebrajano)
government to reverse the trend of US
France's largest bank BNP Paribas has started
companies ceding investment opportunities
negotiations on the purchase of a South
to Chinese investors in the West Africa
African consumer credit provider owned by
country, which recently overtook South Africa
Standard Bank and Foschini; BNP Paribas
as the continent’s largest economy; in an
started talks to buy RCS Investment Holdings,
interview with The Washington Times, Prince
which was formed as a joint venture between
Adetokunbo Sijuwade, whose family holds
clothing retailer Foschini, who owns a 55 per
royal status in a region in southern Nigeria,
cent stake, and Standard Bank, for US$254mn
AFC – Cape Verde and the AFC have enjoyed a
said the Obama administration should
and follows BNP Paribas' 2011 purchase of a
very productive and collaborative
increase its focus on Nigeria, asserting that
controlling stake in the securities unit of
relationship over the last few years."
China had surpassed the USA in most major
South African-based Cadiz Holdings.
sectors of the Nigerian economy and that
14
African Review of Business and Technology - May 2014
www.africanreview.com
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NEWS
Bulletin / Mining De Beers targets 1.16 million carats in Namibia
mine; according to Anglo America
Otto Shikongo, CEO of DEB Marine Namibia
manager Mpumi Sithole, Unki Platinum
– a 50-50 venture between De Beers and
Mine was currently operational as usual and
the Namibian government – has said the
studies have been underway to determine
firm will hit its production target of more
the optimal expansion of the mine to a
Platinum's media and external relations
China Kingho could mine an estimated 30 million tonnes a year of iron ore in Sierra Leone (PHOTO: Peter Craven)
level that would contribute to a significant reduction in the company's operating cost base.
Tanzania to set aside funds for small-scale miners The Tanzania government will put set up a set aside more than US$1mn towards the development of the country's small-scale miners, following an announcement by Prof. Sospeter Muhongo, the country's minister for energy and minerals; Muhongo said the government had made the move in order to aid small-scale miners carry out
Namibia's diamond industry suffered a prolonged slump following the 2008-2009 global financial crisis (PHOTO: Swamibu)
their operations with the use of better and
energy and iron ore mining in Sierra Leone,
modern tools, in order to increase
on which exploration works began in 2011
productivity, raise incomes and improve
and mining has been scheduled to start in
Tanzania's overall GDP.
2017; Kingho signed a Memorandum of Understanding (MoU) with Sierra Leone's
Mining production falls in South Africa
Ministry of Mines & Mineral Resources in
than 1.16mn carats in the ongoing financial
Mining production decreased by 4.8 per
US$6-10bn to mine an estimated 30mn
year; DEB Marine's projections could prove
cent year-on-year in February 2014,
tonnes a year of iron ore in Sierra Leone,
to be a key indicator of the steady recovery
according to the latest Mining and
but stated it would not go it alone on the
of the Namibian diamond industry, which
Production Sales statistical release from
project.
has been recovering following the slump
Statistics SA, with the department noting
the global diamond industry experienced
the largest negative growth rates were
from 2008 to 2009 due to the global
recorded for PGMs at -35.8 per cent,
Botswana mining body announces iron ore discovery
economic crisis, with its production target
building materials growth rates dropping
The CEO of Botswana Chamber of Mines,
for this year expected to be within the same
by -10.3 per cent and diamonds falling -8.4
Charles Siwawa, has announced that
margin as last year's production.
per cent; in addition, seasonally-adjusted
mining giant Rio Tinto may have found
mining production decreased by seven per
"huge" iron ore deposits in southern
cent during the same period, the
Botswana; the discovery, located in Werda,
department added.
is believed to be an extension of South
Expansion resumes at Unki Platinum Mine Anglo America Platinum's Zimbabwe
May 2013 and said it could spend between
Africa’s Sishen deposits, which are currently mined by Anglo American’s Kumba Iron
temporarily put on hold in 2013 following
Potential partners piling up for China Kingho's investment in Sierra Leone
the fall of global platinum prices, after a
China Kingho Energy Group has claimed to
with South Africa, on which it has been
twin-decline shaft system was put in place
have more than 10 interested parties for its
working for the past three years.
to provide staff access to the underground
US$6bn-plus investment in infrastructure,
platinum mining arm, Unki Platinum Mine, has resumed its expansion, which was
16
African Review of Business and Technology - May 2014
Ore, and Rio Tinto will continue exploration work in the area near Botswana’s border
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African Review/On the Web A selection of product innovations and recent service developments for African business Full information can be found on www.africanreview.com
EIB signs energy training investment agreement with ATI The European Investment Bank (EIB) has signed a US$2.8mn deal with the African Trade Insurance Agency (ATI) to boost training within Africa's energy sector. An institution with expertise in risk mitigation on investment, ATI will use the grant to obtain specialist skills for underwriting energy sector projects. Over the years, EIB has shown interest in investing in the energy sector, including in the Lake Turkana Wind Project – the largest project of its kind in Africa. africanreview.com/energy-a-power/power-generation
Economy boost for Metrofile's business in Mozambique Strong economic growth in Mozambique has contributed to a significant business surge at information provider and record management company Metrofile Records Management Mozambique. According to company sources, the Mozambican economy grew by 6.5 per cent in the first six months of 2013, compared to the same period last year, with the strongest growth of 23.3 per cent recorded in the financial services sector. africanreview.com/financial/business
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African Review of Business and Technology - May 2014
EIB has invested in a number of energy projects including the Lake Turkana Wind Project in Kenya (PHOTO: Andrea Kratzenberg/freeimages.com)
Gold mining begins in South Sudan New Kush Exploration & Mining (NKEM) and the state government of Eastern Equatoria have begun the first gold mining exploration in three counties of the Kapoeta region in South Sudan. Anthony Viljoen, director of NKEM said, "We have been granted a license of operation to undertake gold mining and exploration in the state by the central government in Juba. New Kush has conducted wide-ranging consultations with leaders in the counties of Kapoeta North, South and East." africanreview.com/construction-a-mining/quarrying
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Kenya Airways takes delivery of first Dreamliner Kenya Airways has acquired the first of the nine Dreamliner 787 jets it expects to receive from Boeing by July 2015. Under the Mawingu Project, Kenya Airways (KQ) has embarked on a 10-year fleet expansion plan, increasing its capacity and boosting its air traffic market share in Africa. "The next Dreamliner delivery shall be in July, then August, September and the final one for this year in October when we will take a break until next year," observed KQ chief executive officer Titus Naikuni. africanreview.com/transport-a-logistics/aviation
Kenya Airways will take delivery of nine Dreamliner 787s by July 2015 (PHOTO: Boeing)
South African firm to aid Nigerian mining sector The Industrial Development Corporation (IDC) of South Africa has announced that it will invest in Nigeria's mining sector. IDC said that it was prepared to partner with local investors in the development of project plans, financing and executing, provided the cost is not less than US$10 million. Ashley Petersen, senior business development manager of IDC, Africa Unit, said, "Nigeria's huge population and natural endowment places it as a destination for sustainable investment." africanreview.com/construction-a-mining/quarrying
GSK to invest US$216 million in Africa's healthcare sector Pharmaceutical major GlaxoSmithKline (GSK) is to invest US$216 million in Africa's healthcare sector, which includes the development of a lab, expansion of manufacturing facilities and training of community healthcare professionals. GSK will invest US$41 million in creating the world's first research and development open lab for non-communicable diseases in Africa, which will improve the understanding of NCD variations across the continent. Possible research topics could include the apparent higher prevalence of treatment-resistant hypertension and aggressive breast cancers in young women. These insights will help prevent and formulate treatment strategies so that scientists and academics can develop new medicines to address the specific needs of African patients, the company stated. africanreview.com/manufacturing/industry GlaxoSmithKline will invest US$41 million to create an open lab to research noncommunicable diseases in Africa (PHOTO: Ian Wilson/flickr.com) www.africanreview.com
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ADVERTORIAL
10th CII-EXIM Bank Conclave on India Africa Project Partnership
Africa, India ties get better over the years I
ndia and Africa have a lot to give and learn from each other. According to the recently released McKinsey report, India can aspire to quadruple revenues from Africa to US$160bn by 2025, by developing its presence in sectors like IT services, agriculture, infrastructure, pharmaceuticals and consumer goods. These are areas where India has a unique value proposition and African nations have high needs. With this quid pro quo perspective, the annual CII-EXIM Bank Conclave on India Africa Project Partnership was held recently in New Delhi, India. Media partner African Review spoke with Noel Tata, the chairman of CII Africa Committee, to gather more in-depth knowledge of the business that took place this year It’s been a decade since CII Africa India Conclave showcased its first edition. How has the journey been so far? The event has gone from strength to strength since it was launched in 2005, organisers said. “This year we organised the 10th edition of the Conclave, which is a milestone for any international meet involving such a large number of countries.” The conclave, which was initially conceived to promote Indian exports to Africa and identify the development needs of African countries, saw the annual event acquire several new dimensions down the years to become the most powerful platform for cementing bilateral and multilateral business collaborations. To illustrate this, in the first nine editions, 985 projects worth US$172bn were discussed; 4,684 delegates from Africa and 4,292 delegates from India participated in the deliberations. This year, over 500 delegates from 45 African countries participated in the Conclave and 549 projects worth about US$85.37bn were discussed. The conclave is also known for its high level participation. Every edition has seen the presence of heads of state and
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Arancha Gonzalez, executive director of International Trade Centre; Anand Sharma, minister of commerce and industry, Government of India; and Dr Motsoahae Thomas Thabane, Prime Minister, Kingdom of Lesotho, inaugurate the 10th CII-Exim Bank Conclave on India Africa Project Partnership
government of African countries. This year, Dr Motsoahae Thomas Thabane, Prime Minister of The Kingdom of Lesotho, ‘Partner Country’ of the Conclave, and representatives from DR Congo, namely the ‘Focus Country’, were present at the meet. What are the business opportunities in African countries that were opened up at this summit? Which countries have been extremely responsive and eager to let India invest in Africa? African leadership has always recognised the critical role of Indian government and industry in promoting economic development in the region. This year, the African delegates laid particular emphasis on Indian private sector participation in their respective countries’ agriculture and industrial sectors. As a case in point, Dr Motsoahae Thomas Thabane, Prime Minster of The Kingdom of Lesotho, said that India’s development model is ideally suited to African economies. He cited education and training, science and technology, infrastructure development, and agriculture and food security as the most promising areas for bilateral partnerships.
African Review of Business and Technology - May 2014
Likewise, the Republic of Congo leadership said that Indian private companies could play a key part in the African country’s march to become an emerging economy by year 2025. Agriculture and agro-processing, mining, oil, building and construction, tourism, hotels, and financial services were cited as areas where Indian investments could make a big difference. Uganda called for Indian investments in the country’s oil and mining sectors. The country has made significant oil discoveries and has huge reserves of minerals like cobalt, uranium, graphite, etc. Mozambique, one of the fastest developing economies in sub-Saharan Africa, sought Indian investments in areas like agriculture, telecom and communications, financial services and trade. Countries like Sierra Leone, Sudan and Zimbabwe also made similar pitches for Indian investments. What are the incentives provided to Indian private companies operating in the continent? While there are no specific incentives offered to Indian companies investing in www.africanreview.com
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10th CII-EXIM Bank Conclave on India Africa Project Partnership
Africa, the African leadership underlined the advantages that India will derive by participating in Africa’s industrialisation. They pointed to the immense potential for India in tapping Africa’s mineral and hydrocarbon resources. Africa also has a large youth population that can be trained for industrial activities. So, Indian companies looking to globalise their operations could consider Africa as a base for connecting with different geographies. What are the major sectors in Africa that CII is looking at aiding, besides mining, oil and gas and agriculture? Manufacturing is clearly a focus area for India-Africa partnerships. CII is actively involved in furthering partnerships in this space. IT/ITeS, education, healthcare, nonconventional energy development, drugs and pharma, and R&D are some of the other areas that hold much promise for crossborder collaborations. What has the business growth rate been in the continent since the CII Africa India Conclave’s inception? What are the sectors rapidly growing in Africa? Africa as a whole has maintained healthy GDP
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growth since 2005. The region recorded 6.1 per cent GDP growth in 2005, 5.9 per cent in 2006, 6.3 per cent in 2007, and 6.6 per cent in 2008. Even in the difficult years following the global economic meltdown, Africa maintained reasonably good GDP growth, such as 5.4 per cent in 2009 and five per cent in 2011. 2012 saw a significant spike with 6.6 per cent GDP growth but it dipped to 4.8 per cent in 2013. In terms of sectoral growth, Africa has derived the benefits of rising global
ADVERTORIAL
commodity and fuel prices. Now the time has come for the region to diversify its economies and drive industrial growth.
The summit has also set the ground for Africa to effectively utilise concessional financial flows from India for supporting the development of its infrastructure industry and services
What steps is the organisation taking to increase more presence in the continent? CII has played a catalytic role in strengthening the India-Africa ties. CII works to strengthen ‘Brand India’ in Africa by building long-term, sustainable partnerships between the two regions. The CII Africa Committee drives CII’s engagements with Africa. The committee, having both large and small enterprises as members, develops strategies to improve bilateral economic, industrial and trade relations, and addresses areas of concern while presenting recommendations and probable solutions for deeper bilateral engagements. The Committee also draws up new guidelines and checklists for different bilateral industrial cooperation activities. The focus areas are: • Promoting Brand India • Finance and banking • Consulting and investment promotion • Knowledge management and skill development • Agriculture and allied services
African Review of Business and Technology - May 2014
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10th CII-EXIM Bank Conclave on India Africa Project Partnership
What is the objective of the India Africa Forum Summit? The summit is guided by over-arching goals straddling economic cooperation, political understanding, cultural ties, among others. Here, I will touch upon the economic dimension. Africa and India have reiterated the mutual desire to expand bilateral economic cooperation and trade and investment linkages. The summit has also set the ground for Africa to effectively utilise concessional financial flows from India for supporting the development of its
infrastructure industry and services. Besides, India and Africa have reaffirmed their commitment to cooperate for increasing agricultural output and achieving the Millennium Development Goal of halving the proportion of people who suffer from hunger and malnutrition by 2015. At the summit, leaders emphasised the importance of harnessing the latest scientific research for raising productivity and for the conservation of land and the environment to ensure food security. Hence, India has agreed to
Jindal Steel and Power: Drilling its way into the heart of Africa Jindal Steel and Power Limited (JSPL) forayed into Africa in 2006 and currently has business interests in mining and power projects across the continent with presence in more than 13 countries. Hervinder Singh, senior vice-president – mining at Jindal Steel and Power, said, “Our main focus is on the mining and power sector in Africa with plans to manufacture and export value-added products as well”. Talking about the company’s expansion plans, he mentioned that the vision is to be a US$20bn company in terms of turnover by 2020. JSPL has an operational mine in Mozambique, which produces three million tonnes of semi-hard coking coal and thermal coal. “We have plans to expand to 10 MTPA, and we are also working on having our own port jetty and railway connectivity. We also own a coal deposit in Botswana and have planned a pit head power plant once thepower purchase agreement (PPA) is finalised.” With regards to South Africa, the company has an operational 1.3 MTPA
anthracite mine at Kiepersol. “We are also developing an iron ore project in Melmoth, South Africa, where most of the exploration has already been carried out and currently detailed work and feasibility studies areunder progress.” In Namibia, Jindal Steel and Power owns concessions for exploration of iron ore and manganese. In Senegal, the company has signed a MoU for a power project and is at an advanced stage of finalisation of a PPA.” The company said that it is very bullish with its development in the region. However, Singh cautions that despite the growing interest in Africa, there are major concerns related to supporting infrastructure in terms of ports, rail and road networks. He mentions that the policies in the African countries are not yet fully developed. “Most countries are very young, having recently attained freedom and have a long way to go. While evaluating investments one has to calibrate and mitigate the risk factors in these countries.”
collaborate in the implementation of the Comprehensive Africa Agricultural Development Programme (CAADP). Indian government and industry has taken up major capacity building initiatives in Africa following the summit meetings. As Africa moves towards rapid industrialisation, there is a growing recognition that SMEs offer significant avenues for supporting industrialisation, generating employment and enhancing local capacities. This is another focus area for bilateral cooperation.
KBL looks for human connections in Africa Kirloskar Brothers Limited (KBL) made a marked presence at CII Africa-India Conclave 2014. Chairman and managing director of KBL, Mr Sanjay Kirloskar firmly believes that Indian companies operating in Africa would do well by tapping the skill-sets of available talent and nurturing their capabilities through an intensive industrial training programmes. “A trained local workforce is a key to Africa’s sustained industrialisation.” He also pointed out that Indian AAA technologies have great relevance in Africa’s industrial sector. Talking about business in Africa, Mr Kirloskar said, “We’ve been supplying farm equipment in Africa since 1960s or even earlier than that. In the 1930s when a Dutch company exported our sugarcane crushers and a large number of diesel pumps into East Africa, Kirloskar became a generic name in the African region. In the year 1978, we established our base in Kenyaand made investments in manufacturing facilities in 2003 and 2008 in South Africa.” Mr Kirloskar added that he sees huge potential in Egypt, Sudan, Ethiopia, Senegal and all over southern Africa.
JCB India gears up for further push in Africa JCB India Limited started operations in 1979 and today it is the fastest growing company in the Indian earthmoving and construction equipment industry. The company is a pioneer in the industry and has been recording excellent growth rates year-on-year. JCB India is a 100 per cent-owned subsidiary of JCB UK. JCB is looking at aggressively creating a stronghold in the African market place. JCB machines can be seen working on almost all sites in construction, mining, plant and hiring. JCB has more than 375 models manufactured globally catering to various applications. JCB India has three factories in
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India and is constructing another plant in Jaipur. Worldwide, JCB has 22 factories. Talking about the company strategy, Jaswinder S Vilkhu, AVP – export sales, said, “Our biggest markets in Africa have been South Africa and Algeria, but we have consolidated our position in East and West Africa also and the market is improving. We started exporting machines into Africa from Pune as well as Ballabgarh plants in the last three years.” JCB India is also introducing a bigger Excavator JS360 soon which will be useful in mining and earth works applications in India.
African Review of Business and Technology - May 2014
This machine is highly productive and is very economical to operate. The JS360’s new DIESELMAX 672 engine provides up to 25 per cent fuel savings over the outgoing model, while a closed boxsection revolving frame increases strength and reduces stress, according to the company website. Subsequently these will be exported into Africa and the Middle East from India. Vilkhu also added that JCB India has been manufacturing excavators ranging from 8T to 22T which can be seen operational in East, West and South Africa. www.africanreview.com
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Nigeria
BUSINESS
Encouraging financial inclusion
MasterCard debit cards will be issued in Nigeria under a new 10-year deal
A
new debit card issurance agreement between MasterCard and Ecobank has recently been signed in Nigeria. The deal follows a licensing agreement made between the two organisations in January 2014 to provide MasterCard payment solutions across 28 sub-Saharan African countries. Patrick Akinwuntan, executive director domestic banking at Ecobank Group, said, “Electronic payment platforms provide a costeffective way to improve financial inclusion in Africa, which is at the core of the vision of Ecobank. In teaming up with MasterCard, we are providing our customers with a ‘best of breed’ solution, combining local market knowledge and proven technological
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expertise with the economies of scale.” Nigeria is currently on a drive to accelerate the adoption of electronic payments, with various stakeholders – including the Central Bank of Nigeria – launching consumer education campaigns. Nigerian banks, for example, working with the Nigeria Interbank Settlement Scheme (NIBSS), have commenced a consumer awareness campaign to explain the benefits of electronic payment platforms, with the aim of increasing acceptance of the method. Jibril Aku, managing director of Ecobank Nigeria, said, “In Nigeria, increased urbanisation, a growing labour force and the rise of online shopping are fuelling demand for more convenient payments.
“Using electronic payments to penetrate the country’s unbanked population of nearly 80mn also represents a market with huge, untapped potential.” Daniel Monehin, division president - subSaharan Africa at MasterCard, commented, “We envisage a world beyond cash in Nigeria and Africa, where consumers can enjoy the security, efficiency and convenience of electronic payments. Our vision can only become a reality through collaborations with key industry stakeholders, such as the Ecobank Group. “Working together with governments, financial institutions, merchants and businesses, we will be able to help modernise the payment industry in Africa,” he added. ■
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BUSINESS
Zambia
The Bank of Zambia has tightened monetary policy by raising the statutory reserve requirements from eight to 14 per cent for non-government deposits
Zambia looks to stabilise Kwacha Bank of Zambia pumps US$70mn into the country’s economy to support domestic business growth
R
ecent developments in Zambia’s foreign exchange market have raised concerns among numerous stakeholders, including the public. In line with the government policy, the central bank continues to pursue a flexible exchange rate policy which it believes is vital for achieving timely macroeconomic adjustment. It is in this regard, that from time to time, as and when necessary, it is important that the bank intervenes. As a way of stabilising the volatile Kwacha, the Bank of Zambia (BoZ) has injected US$70mn (about K385mn) into the financial sector, the government has revealed. This is part of a number of interventions being undertaken by the central bank to stabilise the Kwacha against major convertible currencies, particularly the US dollar. According to the Treasury Information, Kwacha trading against the US dollar has depreciated by over one per cent. The Ministry of Finance indicates that the BoZ
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supplied US$70mn to the market in a bid to support the local currency. “The exchange rate of the Kwacha against the US foreign exchange market have raised concerns dollar depreciated by 1.33 per cent during the week closing at K5,7853 from K5,7095 recorded on February 18, 2014. This was largely driven by increased demand for dollars, coupled with lower supply,” the brief says. Another intervention to be effected in March this year is the increment of the statutory reserve ratio from eight to 14 per cent. ‘’The Bank of Zambia has tightened monetary policy by raising the statutory reserve requirements from eight to 14 per cent for non-government deposits. This measure is effective March 10, 2014 and is aimed at reducing the high levels of liquidity in the banking system and should support greater stability in the exchange rate,’’ the brief read. Isaac Muhanga, assistant director of financial markets at BoZ, said that the Kwacha
African Review of Business and Technology - May 2014
is expected to recover the losses following the statutory reserve intervention and policy rate to about 10.25 per cent. The central bank has raised the policy rate by 50 basis points to 10.25 per cent effective March 2014, from the 9.75 per cent in February 2014. This has been attributed to high inflationary pressures that have continued on the upward trajectory from 7.3 per cent in January to 7.6 per cent in February. The 7.6 per cent is higher than the 6.5 per cent target set by government for the year 2014. However, while the interventions are expected to mitigate the Kwacha volatility, the response by financial institutions is expected to determine the currency’s direction. Meanwhile, the Kwacha, which has been in the past months traded on a downwards trend, is anticipated to recoup the losses in view of the market witnessing significant US dollar inflows from corporatations meeting their month-end tax obligations, financial analysts have said. www.africanreview.com
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Zambia The Kwacha on 7 March 2014 breached K6 to a dollar, a record low, for the first time in over two decades, financial analysts have said. BoZ explains that the depreciation trend in the exchange rate observed over time is due to a combination of domestic and international market developments. The consistent economic growth that Zambia has recorded over the years has led to a steady increase in imports, particularly capital goods critical for sustaining such growth. Although exports have also continued to show impressive growth, demand for imports has relatively been stronger, thereby contributing over time to the exchange rate depreciation. In addition, Zambia’s increased integration with the world economy, achieved through liberalising its external current and capital account transactions, has implied that international economic developments have had a significant impact on the exchange rate. More recently, for instance, it is important to observe that the US Federal Reserve Board’s decision to reduce the amount of US dollar liquidity supplied through its quantitative easing programme has
www.africanreview.com
BUSINESS
Although exports have also continued to show impressive growth, demand for imports has been relatively stronger, thereby contributing over time to the exchange rate depreciation
broadly affected several emerging markets, including Zambia. Specifically, the Federal Reserve’s course of action has led to fears of slower growth of major emerging economies, particularly China. Consequently, the price of copper, Zambia’s major export earner, remained subdued, thereby undermining investor optimism. Further impact has also been
felt through a slowdown in portfolio investment inflows, which have hitherto played an important role in financing our current account deficits. Financial market analysts say the local unit is expected to gain against the greenback owing to expected increased dollar supply in view of the month-end tax obligations by corporates. ■
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BUSINESS
Tanzania
Seeking solutions through bilateral trade Turkey and Tanzania continue to enjoy good commercial and political relations, as Turkish ambassador to Tanzania, Mr Ali Davutoglu, reveals in an interview with African Review
B
eing rich in natural resources, Tanzania has been attracting various Western and Asian countries to invest and trade with both the government and local private companies. For example, an oil and gas industry delegation from the UK recently visited the country to explore the growing investment opportunities for British businesses. And the Finnish Prime Minister Jyrki Katainen led a business delegation of 27 companies to the east African nation, seeking to open up trade relations with the Tanzanian government and various companies. Amongst the most prominent and proactive nations is Turkey, who is determined not to be left behind in the pursuit of investment opportunities. In an exclusive interview with African Review, Turkish ambassador to Tanzania Ali Davutoglu advised both local and international companies to focus on making huge investments in the country rather than concentrating on trade so that Tanzanians could benefit from their resources. The Turkish envoy reported that Turkey is actively encouraging investment projects in Tanzania, and that it is doing so in order to benefit society as much as to realise business potential. Turkey is aiming to use investment in Tanzania to help solve the nation’s youth unemployment problem. Mr Davutoglu stated that youth unemployment is a critical issue in Tanzania and that both local and international companies should make more investment in order to create job opportunities. According to various studies, at least 50 per cent of the world’s population is under 25 years of age and Tanzania has the 10th largest youth population in the world, with a rate of more than 50 per cent youth unemployment. Whilst new entrants to the labour market, from schools and colleges, stands at approximately 700,000 annually, it is estimated that only three per cent gain formal employment, with the remaining 97 per cent participating in the informal sector. According to the envoy, the Tanzanian economy presently needs investment as much as trade, if not more. He said that investment creates employment, the importation of technology, increasing revenues and income to both investors and employees. “What we need is a win-win situation in this area, there should be a focus on investment that will help Tanzanians and bring income to the investors as well,” he added. Tanzania's trade and investment potential Mr Davutoglu said Tanzania was among the prime candidate countries for Turkish trade and investment. He added that the two countries have been working together since the 1980s. Turkey exports various
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African Review of Business and Technology - May 2014
Turkish Ambassador to Tanzania Ali Davutoglu
construction materials such as iron, steel, tiles, and PVC doors and windows to the East African country. Moreover, the country imports spare vehicle parts, as well as electronic goods. According to the envoy, there are at least 20 Turkish companies in Tanzania that are focusing on the importation and distribution of various products from Turkey. Moreover, there are big companies in the mining and construction sector. From Tanzania, the principal exportation is in the leather, cotton and tobacco sectors. Commercial and economic relations between the two countries gained momentum following the opening of the Turkish Embassy in 2009. The volume of bilateral trade rose to US$156mn by 2012, up by 400 per cent as compared with 2004. Moreover, Turkish companies have managed to penetrate various areas, being well-known for managing construction projects and managing to bid on and win some big construction tenders in the country. He stressed that the Mafia Island airport, which was under renovation, was completed by the Turkish company Kuanta www.africanreview.com
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Tanzania
BUSINESS
Turkish companies are basically looking for investment opportunities in various areas including renewable energy in coal
Construction and that other companies are also engaged in various construction projects like road and power stations, for example, and are bidding for the renovation of other airports in the country. The envoy said that in recognition of the potentiality of Tanzania in doing business, his government was encouraging Turkish companies to come to Tanzania for investment opportunities. The aim was to enable both Tanzanian and Turkish companies to operate in the country by forming a joint venture or through a public-private partnership (PPP) policy. The Turkish deputy minister of energy and natural resources Murat Mercan visited the country in February 2014, together with a business delegation, precisely to support this initiative, bringing together local investors and Turkish companies. Investing in energy According to ambassador Davutoglu, Turkish companies are basically looking for investment opportunities in various areas including renewable energy in coal and many other areas. Inadequate electric power is seen as a main challenge to Tanzania’s economic growth. The Tanzania Electric Supply Company (TANESCO) is responsible for the supply of 98 per cent of electric power in the country. However it generates only 773MW to the national grid. The country’s power generation system encompasses the use of hydro, thermal and gas power. The envoy suggested that the national grid should be enlarged by generating more power from different sources such as coal, gas and other sources. He said there must be diversity on power generation. According to the envoy, the government may take immediate measures on implementing renewable energy projects also besides focusing on gas projects alone. He added that the Tanzanian deputy minister for energy and natural resources is in a good position to talk about Turkish involvement in gas and oil exploration projects as well as renewable energy projects in Tanzania. Tourism and trade The establishment of Turkish Airlines’ direct flight from Istanbul to Dar es Salaam and Kilimanjaro has been a boost to the tourism business in the country. The envoy said the establishment of the direct flight has opened up business between Tanzania and other European countries. According to Tanzania National Park (TANAPA), Tanzania received 6.73mn tourists between the 2001/2002 and 2011/2012 seasons. The increasing number of tourists in recent years such as 2011 (1,019,027 tourists) and 2012 (945,794 tourists) have contributed in one way or another to the establishment of Turkish Airlines’ direct flights into the country from Istanbul. ■ Florence Mugarula www.africanreview.com
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BUSINESS
Mozambique
Natural way forward Mozambique looks poised to emerge as a formidable force in natural gas production in Africa
M
ozambique is on the cusp of becoming a leading player in the natural gas market - the country sits on an estimated 1.27 trillion metres of proven natural gas reserves. It has also been producing gas for a couple of years – in 2011 it generated 3.8bn cubic metres of natural gas from Pande and Temane. 3.3bn cu m of this was pumped to neighbouring South Africa through petroleum company Sasol’s 861km gas pipeline and the rest was set aside for domestic consumption. However, it is expected that Mozambique will start exporting natural gas on a much larger scale in the form of liquefied natural gas (LNG) by 2018. This imminent explosion of the natural gas sector is due to a number of natural gas discoveries made by leading oil and gas companies like American firm Anadarko and Italian company Eni in Mozambique's Rovuma basin since 2010. “We have made tremendous progress over the last couple of years. We have secured 170mn square metres, which will accommodate initial projects as well as expansion projects in Area 1 and Area 4,” said John Peffer, country manager of Anadarko Mozambique. He added that his company recently submitted an environmental impact report to the Mozambican government, which it expects to be approved in May 2014. The company is also in talks with the government about the contractual framework for projects. In March, Anadarko announced that it had inked long-term supply deals with Asian buyers. “There is a lot of interest in the market. We have found buyers for two-thirds of volumes for first project,” added Peffer. The company hopes to sign such agreements in the future, as it feels these deals are essential to raise capital for large scale LNG projects, which have de-risked Anadarko’s LNG plans, according to the company’s CEO. Since 2010, Anadarko has drilled more than 20 deepwater wells in its Offshore Area 1 Block, a 2.6mn acre area in Mozambique’s northern deepwater Rovuma basin. As a result, it has discovered around 1.2 to 1.9 trillion cu m of
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The Mozambican government is working to ensure that the legal framework necessary for the emerging oil and gas industry is put in place
recoverable natural gas. In addition, Anadarko is moving forward on its plans for development of commercial LNG onshore. The initial cargoes are anticipated to be ready by 2018. Meanwhile, Eni’s Area 4 gas field, also in the Rovuma basin, is believed to have 2.1 trillion cu m of gas in terms of potential reserves, making it Eni’s biggest gas discovery to date. It could also be the largest ever deepwater gas find. Eni is making steady progress raising huge amounts of capital it needs for LNG projects. It recently announced that Bank of America Merrill Lynch will advise on its plans to sell a 15 per cent stake of its gas fields, which could raise nearly US$5bn. The development comes after Eni sold a fifth of its offshore gas site to China’s CNPC in 2013, a deal worth a solid US$4.2bn. The Mozambican government is also working to ensure that the legal framework necessary for this emerging new oil and gas industry is put in place. “We need to finalise the decree law and its components with the government. They have the same timeline as
African Review of Business and Technology - May 2014
us, and they recognise the need to get things done in the next couple of months,” said Peffer. The technical challenges are not necessarily that tough, however, according to the Andarko country manager. “In terms of the technical challenge offshore, we have done it before in the Gulf of Mexico so we are very confident. And in terms of getting the product onshore, there is a lot of progress being made in terms of infrastructure – roads and ports especially. Furthermore, we have actually done a project on a similar scale in Algeria. From a logistics perspective, that was more difficult because we were working thousands of miles from the coast,” explained Peffer. “This is a project management challenge and we have picked contractors, who are among the most experienced LNG contracters in the world,” added Peffer. “The project has a simple design in terms of pumping the gas. So, although this is a massive project, conceptually there is nothing special about it. We see it as a very straightforward operation." www.africanreview.com
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Mozambique Asia is set to be the biggest market for Mozambican natural gas. Peffer cites Japan, Korea, Taiwan and Thailand as particularly interested. In January, Japan’s Ministry of Economy, Trade and Industry announced that it has agreed to carry out high level talks with Mozambique this summer about the LNG sector. India is also an important potential market for Mozambican LNG. In January 2014, India and Mozambique signed a MoU; India has promised demand starting at four trains of LNG, which will then increase to eight. Energy firms are typically positive about the regulatory environment in which they are operating in Mozambique. “The existing contract that we have with the government in terms of the exploration and production is modern and fair. The government is also making necessary changes to the legal framework. For example, it is updating the petroleum law in Parliament right now.” “The situation in Mozambique is unique in that there has been a lot of industry participation in legislation. We have been asked to comment on changes and they have taken on board our input, which in the end makes the legislation more fit for purpose,” elaborated Peffer.
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Nonetheless, there is a need to further develop Mozambique’s oil and gas laws, according to Peffer. “We need a decree law specific to LNG law that deals with issues like sale purchase agreements and project financing – something beyond what the petroleum law provides,” feels Peffer. According to Pedro Couto, a managing partner at Mozambican law firm CGA, the existing PPP law does not cater to gas projects. “As a result, the government is preparing new legislation, which will hopefully clear up some key issues." Couto feels that participants in the oil and gas sector have a number of other concerns like taxation and the Mozambican law that doesn't allow an extensive level of local participation in oil and gas projects, though he argues that the latter does not necessarily put Mozambique at a disadvantage compared with other gas-producing countries.Corruption is another big cause for concern as well. Some have also questioned whether interest in shale gas, especially in the United States, could harm global demand for natural gas in the long term. Not only is the United States set to become the energy selfsufficient by 2035 due to shale according to
BUSINESS
some estimations, but the world’s leading economy is set to start exporting to Asia too. Korea and Japan have already signed long term agreements with the United States. Nonetheless, those in the natural gas industry in Mozambique seem unperturbed. “I think people working in shale gas are going to struggle to make it a truly global phenomenon outside of the United States,” said Peffer. “I don’t think we will see widescale exploitation of shale gas outside the US in the foreseeable future.” With Tanzania also set to start exporting natural gas after a series of major discoveries by Statoil, ExxonMobil and BG and Ophir Ener, some have questioned whether Mozambique and Tanzania may now be locked in a zero sum race to become the first country in eastern Africa to pump out natural gas on a large scale. Peffer is confident that Mozambique will beat Tanzania in the scramble. “From what I see I think it is fair to say that Mozambique will be the first out of the two to produce natural gas. Mozambique also seems to have a competitive price advantage. In Tanzania, the gas seems to be spread in multiple blocks and multiple operations, as well as longer pipelines, which adds complexity," he said. ■
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FINANCE
Development
Africa growing from strength to strength A tale of growth, inequality and promise in the sub-Saharan region
T
he World Bank cautioned on 12 April 2014 against any complacency in tackling Africa’s enduring development challenges. The warning came even as the World Bank praised Africa for being on course to mark 20 years of substantial growth, with the region forecast to post a GDP growth rate of 5.1 per cent in 2014. “The last two decades have been very good for Africa which continues to reverse decades of decline vis-à-vis other regions of the world,” said Francisco (Chico) Ferreira, chief economist for the Africa region at the World Bank. He was speaking at the Spring Meetings of the World Bank and International Monetary Fund (IMF) in Washington, DC. Speaking at the same event, Benno Ndulu, governor of the Central Bank of Tanzania, said Africa’s last two decades of growth “represent a quantum jump” especially when compared with the average annual growth rate of 0.8 per cent posted by the continent over a 34-year period, from 1960 to 1994. Ndulu said, “Sub-Saharan Africa’s economy used to be compared to Belgium’s, only to point out that Africa’s economy was smaller than Belgium’s.” According to Ndulu, “The GDP of sub-Saharan Africa (SSA) is now US$1.7trn, while Belgium’s is US$500bn, meaning that the SSA economy is now three times bigger than Belgium’s.” The African economy, he added, is now bigger than Australia’s (estimated at US$1.5 trillion) and is about the same size as the economies of Canada and India. “Africa’s problem going forward is not only to invest more, but to invest better,” according to Jean-Claude Brou, the industry and mining minister for Cote d’Ivoire, who spoke on behalf of Prime Minister Daniel Kablan Duncan. Africa’s growth is not yet a tide that is lifting all boats. While the middle-income countries in Africa have risen from six in 1995 to 23 in 2013, inequalities have expanded and Africans today enjoy less than one-twentieth of the living standards of Europeans. All is not bad news, though. Africa’s GDP per capita has expanded 40 per cent since 1995. Some of the fastest per capita growers include Equatorial Guinea (15.7 per cent increase in the last 17 years); Liberia with a 23 per cent increase over the last seven years; Mauritius with a more than 3.9 per cent increase for the past 29 years; and resourcepoor Burkina Faso, whose per capita income has risen over the last 18 years. Sources of Africa’s growth Africa’s growth is widespread and has, almost everywhere, been investment-driven (rather than consumption-led), according to Chico Ferreira, increasing the possibility of impacting more Africans than otherwise. Thanks to the improved performance by the continent’s so-called
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African Review of Business and Technology - May 2014
Benno Ndulu, central bank governor of Tanzania Caption
“population giants” (Nigeria, Ethiopia, Kenya, etc.), 60 per cent of Africans now live in the 22 fastest growing countries. A majority of the 22 countries – 13 countries in all – are resource-rich (five of them oil producers). However, and happily, fast growth is not a preserve of resource-rich African countries. Nine of Africa’s 22 fastest-growing economies are non-resource-rich countries. Even countries emerging from violent conflict (such as Angola, Mozambique, Uganda, Rwanda, Liberia, Sierra Leone, etc.) have benefitted from what the World Bank vice president for the Africa region, Makhtar Diop described as “the catching up effect”. Four major changes are unfolding at sector level across Africa, www.africanreview.com
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Development according to Ferreira. First, African agriculture is growing faster than agriculture anywhere else. Second, growth seems to be bypassing Africa’s manufacturing sector – now accounting for only seven to eight per cent of GDP – and performing at about the same level as in other developing countries. Third, Africa’s natural resources sector has tripled its contribution to growth. Fourth, the growth in Africa’s services sector has been enormous and is bound to be a lot higher than estimated now, given the recent rebasing of the Nigerian economy. Growth has also been fuelled by a higher contribution from taxation, according to Ndulu and by a better integration of Africa with international trade, according to Ferreira. Wanted: More pro-poor growth So far, Africa’s growth has, sadly, not been inclusive and has had a lower impact on poverty reduction in comparison to other developing regions, according to the World Bank. “The richest Africans have seen their fortunes increase by eight per cent over the last decade, while the poor have seen theirs increase by only one per cent,” Ferreira said, adding, “While growth is essential for poverty reduction, it is not sufficient.” Ndulu called for Africa’s growth to be made more pro-poor, jobcreating, supportive of the integration and employment of African youth and women. He urged African leaders to foster “wealth preservation” by investing revenue earned from extracting natural resources (depleting them in the process) in the much-needed structural transformation of African economies. Boosting shared prosperity and curbing inequality can use the help of a “redistributive tax policy” that puts money back in the wallets of
FINANCE
the poor, said Diop citing the success of a similar policy in Brazil. Brou called for action to boost regional integration and intraAfrican trade which, according to him, currently accounts for less than 20 per cent of Africa’s total trade, being far below the 60 per cent and 50 per cent figures reported respectively for intra-European and intra-Asian trade. In addition to calls for African countries to maintain macroeconomic stability, panelists stressed the positive impact investments in value-added agribusinesses can do for a continent that is still heavily dependent on agriculture. In order to have the most impact on poverty, growth must create jobs, especially for youth and women. Investments must also aim to reduce the exorbitant costs of energy and transportation, which render “Made in Africa” goods less competitive globally. Projecting Africa’s Future Growth Looking into the future, panelists at the event were unanimous in agreeing that Africa can be expected to grow in the foreseeable future, judging among others from the ever growing number of natural resource deposits being discovered on the continent. Besides extractives, the modern services sector holds great potential for boosting Africa’s growth, according to Ferreira. “We need to promote labour-intensive industrialisation and technology-driven innovations,” said Ndulu, stressing the “leapfrogging potential” technology and cheap, young labour offer an African continent that needs to do everything “to preserve the gains made in peace and stability over the past decades” and avoid the “turning back of the arms of the clock” effect that violent conflict has on Africa’s development. ■
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FINANCE
Ecobank
Staying ahead of the numbers game African firm Ecobank Transnational is growing steadily across the sub-Saharan continent, by charting new paths in finance
T
he lightning-quick expansion of panAfrican banking group Ecobank Transnational saw the company’s profits grow by a staggering 65 per cent in 2013, a growth which prompted suspicion amongst rivals and resulted in the removal of CEO Thierry Tanoh in March 2014. But shortly prior to Tanoh’s dismissal – and amid calls for the group to reign in its breakneck expansion pace – Ecobank had already entered into partnerships with banking and telecoms giants, which will see its impact stretching even further into Africa. In Ecobank’s most recent financial report, the company revealed that profit earnings for the first nine months of 2013 totalled US$300mn. The group is already the leading independent regional banking group in West and Central Africa, and has quickly crossed the borders from its home territory in Togo, to maintain a presence in 32 countries across Africa today. Ecobank’s highly successful business model is centred largely around capitalising on the developing continent’s rapidly-emerging trends, including the transition to a cashless society and an increased dependency on mobile phones. A deal struck with MasterCard in January as part of an MoU signed between the two bankers, marks MasterCard’s biggest ever multi-country licensing contract, allowing Ecobank customers in 28 sub-Saharan countries to access MasterCard’s electronic payment solutions. The agreement is a landmark climax to the MoU originally signed in November 2011, and enables electronic payments access to more than 60 per cent of Africa’s population. “The provision of convenient, reliable and accessible financial products and services forms the bedrock of Ecobank’s pan-African strategy,” said Patrick Akinwuntan, Ecobank’s executive director for domestic banking. A vital driver of this ambitious strategy for growth is collaborations with global
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Ecobank’s profit earnings for the first nine months of 2013 totalled US$300mn
heavyweights such as MasterCard, which share similarly pan-expansionist philosophies to Ecobank. “We recognise that partnerships with leading global players are key to accelerating the migration of our customers to a ‘cashless society’ throughout Africa,” said Akinwuntan. Significantly, the deal is MasterCard’s biggest ever multi-country project in Africa. “We are proud to partner with Ecobank, which is quickly growing its presence in Africa. This is a great milestone for us, as we aim to achieve our vision of a world beyond cash by bringing the benefits of electronic payments to an increased customer base in sub-Saharan Africa,” said Daniel Monehin, head of MasterCard’s sub-Saharan Africa division. Although 85 per cent of financial transactions in Africa are still conducted in cash, companies such as MasterCard and Ecobank are literally depending on the exponential growth of technology to bring down this percentage.
African Review of Business and Technology - May 2014
Surging mobile money payments on the continent have caused the two companies to sit up and take action. In sub-Saharan Africa, about 16 per cent of adults used a mobile phone to pay bills and send or receive money in the past year. According to Aaron Oliver, MasterCard’s head of emerging payments for the Middle East and Africa, there are approximately 42mn active mobile money users in the region, representing a remarkable 70 per cent of the global population of active users. The continent is home to around half of the world’s mobile money services. The popularity of the concept is best evidenced in the meteoric rise of M-Pesa, a mobile money service for Safaricom and Vodacom in Kenya, which has developed into the most advanced such system on earth. More than 19mn of Kenya’s 44mn people are M-Pesa subscribers. “It has become an industry as opposed to the next best thing. We have to work on it, bring on new partners so that early adopters can get www.africanreview.com
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Ecobank
good experiences, convenience, safe and secure transactions,” said Oliver. In January, Mastercard announced it had partnered with mobile payment solutions company Oltio to deliver their Mobile Money Partnership Programme, which aims to get more than 2.5bn people globally to use their mobile phones to access mainstream financial services. Ecobank had already launched Mobile Money services in 2012, and are continuing to strike partnerships with mobile communications companies in a bid to replicate the smash-hit success of M-Pesa. In March, the company entered into a partnership with telecoms giants MTN, allowing MTN Mobile Money users who are also Ecobank customers to transfer cash between their Mobile Money and Ecobank accounts. “This roll-out further demonstrates our commitment to make branchless banking a reality. Ecobank’s unique pan-African footprint will enable us to be at the forefront of developing the market for cross-border mobile money services in Africa,” added Akinwuntan. The service was initiated in Ghana and will soon be launched in Liberia, Uganda, Benin, Cote d’Ivoire, Zambia, Guinea Bissau, the
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Ecobank launched Mobile Money Services in 2012 and continue to strike partnerships with mobile companies
Republic of Guinea, Rwanda, DR Congo, South Sudan and Cameroon. The success of M-Pesa and other mobile banking providers is based on a very simple fact – that only 10 per cent of Africa’s population own a bank account, but more than 60 per cent own a mobile phone. The revolutionary M-Pesa has now found its way into Europe, after Vodafone decided to establish the service in Romania at the end of March. Vodafone said that it had chosen Romania in order to target the seven million people there who still mainly use cash over cards.
FINANCE
Meanwhile, the effervescent Ecobank is looking to recover from the Tanoh controversy by consolidating under the tenure of new CEO Albert Essien. "As an institution, we grew very fast. We have made a series of acquisitions in Nigeria, in Ghana and elsewhere. These were all costs. We now have to extract efficiencies and make sure our platforms in East and southern Africa, which are quite embryonic, also start making money," explained Essien. With considerable assets, heavyweight new partnerships and what appears to be a shrewd understanding of what it takes to succeed in Africa, it would be foolhardy to bet against Ecobank continuing its spectacular upsurge. Ecobank continues to pique the interest of competitors looking to emulate the group’s success, and there are whispers that Nedbank will look to acquire a 20 per cent stake in Ecobank in order to get exposure to highgrowth markets in West and Central Africa. This is part of Nedbank’s medium term strategy to become a pan-African bank, a goal which is undoubtedly based on the massive accomplishments of groups such as Ecobank. ■
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TRANSPORT Rail
On the right track Why the development of Swaziland’s rail freight network mirrors southern Africa’s rail growth
T
he future of rail transport in southern Africa hinges on advances that ensure the region’s rail systems work in harmony. Never has the development of a transportation industry been so firmly dependent on correcting past practices. During the 19th and 20th centuries, when African nations’ rail systems were linked to the rail technology of the respective colonial power that administered their territories, rail systems developed independently. Buses or trucks could drive anywhere. An aircraft could land on any airport runway. Imagine the difficulty if each bus required its own road width, and each aircraft needed a particular runway configuration? Rail lines of the 15 member nations of the Southern Africa Development Community (SADC) must now conform to a common gauge of 1,067 mm and efforts are underway to do so. Conforming on all other technical matters from maintenance to signalling systems is ongoing, involving constant meetings of rail officials and technicians. “Regionally, we want to integrate all rail services internationally, and expand the rail system. We must provide our customers with similar service for landlocked countries. The regional rail systems will be made compatible. Goods will move from one point to anywhere in the region without interruption,” Stephenson Ngubane, newly appointed CEO of Swaziland Railway, told African Review. Swaziland’s rail system is undergoing its most crucial line expansion in three decades, and by doing so is filling one of the six main “gaps” in southern African rail system, according to the Southern African Railway Association (SARA). Rail and rehabilitation Two other gaps are being filled in Angola and Mozambique, where rehabilitation continues on rail lines destroyed during lengthy civil wars in those nations. By building a rail line to Angola, Namibia will be strengthening the regional system by facilitating rail traffic through the western edge of the subcontinent. Neighbouring Botswana’s line traversing the Kalahari Desert will offer cheaper movement of the country’s coal
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SADC wants to integrate all international rail services
mining output. Movement of bulk goods like ores and agricultural products like raw sugar (in the case of Swaziland) is more cost effective by rail than road. For this reason, Zambia is filling another regional gap by expanding its rail network. An immediate beneficiary will be the country’s copper mines, which need to move huge quantities of ore out of the landlocked country to sea ports for export. “The focal point is unit cost. How much does it cost to move one tonne the distance of one kilometre? Rail is slower than road but long, heavy, slow moving trains use less fuel than trucks. But you need a quantity of cargo to fill the trains, which is why rail is better for minerals and heavy cargo,” noted Ngubane. For Swaziland Railway, which cannot sustain itself on the small country’s locallygenerated rail freight business, regional rail integration ensures profitability. Never used for passenger traffic, the line was built in 1964 to move iron ore from a mine to the port of Maputo. Fifty years later, the terminus of the rail system’s 301 km of track, the old iron ore mine, will be connected to the South African province of Gauteng with new line scheduled for operation in 2017. In partnership with South Africa’s Transnet Freight Rail, Swaziland Rail will build a new line to the country’s Western border and link it from the rail head at Lothair in South Africa, allowing cargo from Mpumalanga and
African Review of Business and Technology - May 2014
Gauteng provinces to travel east and north through Swaziland’s rail system. Currently, South African rail traffic must skirt Swaziland’s northwest edge and enter the country through Komatipoort, South Africa, enroute to Maputo or Durban and Richard’s Bay in South Africa but on the other side of Swaziland. “The line is on schedule, and we are entering Phase 3. Phase 1 was concept and Phase 2 was the probability study, when we explored four route options. Where we are now, because we’ve selected the route, is the design phase, economic viability studies, land issues, everything that goes into planning. Phase 4 is construction,” Ngubane explained. For a rail line dependent on transit traffic — this past year 2.8mn tonnes of magnetite and 1.7mn tonnes of phosphate, originating in Phalaborwa, South Africa, were transported through Swaziland enroute to the sea — the new line is expected to raise company profits by 90 per cent, Ngubane projects. Not only South African rail freight users will benefit, customers using rail in Zambia, Zimbabwe and up to DR Congo, which with Kenya is SARA’s northern-most member country, can move freight southward more swiftly and more cheaply through Swaziland. A programme for growth “I am looking at a programme to extend the network to broaden our revenue base at www.africanreview.com
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TRANSPORT Rail Swaziland Railway. We want to connect all of Swaziland’s sugar mills to rail. We want to ensure that we offer the most economically affordable transport. It bears repeating that for bulk transport, rail is more cost-efficient,” said Ngubane. His rail company’s expansion mirrors the incremental development of Southern Africa’s rail system. The British colonial authorities who administered the Swazi territory as a British protectorate from 1902 to 1968 only consented to a local rail line in the 1960s, for freight purposes only. However, they agreed to a 1902 Portuguese proposal to build a rail line to the Swaziland border from present-day Maputo, which was accomplished by 1905, and agreed to a Zululand Rail line in South Africa to terminate at Swaziland’s eastern border at Golela in 1927. Swaziland’s original line connected with the Maputo line in 1964, and a line was built to connect with the South
African line at Golela in 1978. The line to Komatipoort opened in 1986, allowing South African rail freight to pass through Swaziland from one side to the other.
For Swaziland Railway, which cannot sustain itself on the small country’s locally-generated rail freight business, regional rail integration ensures profitability. The line was built in 1964 to move iron ore from a mine to the port of Maputo. 50 years later, the terminus of the rail system’s 301 km of track, the old iron ore mine, will be connected to the South African province of Gauteng, with a line scheduled for completion in 2017.”
The growth of the rail systems of other countries in the region was just as fitful, expanding when needed on an ad-hoc basis or else interrupted by conflicts. Interestingly, one of the first threats issued by the Mozambique political party Renamo, opponents of the current governing party Frelimo during the 1975-1992 civil war, was against the country’s transport systems. However, the return of Mozambique’s rebel group is considered a concern but not a crisis that threatens the country’s resurgent economy. SARA feels the requisite security and stability exists throughout Southern Africa to concentrate on its master plan of regional rail integration. Tiny Swaziland’s rail system is proving a key link in that system that will soon see vastly more volumes moved by rail. ■
Investing to improve transportation of minerals in southern Africa Mining is important to Africa because most countries within the continent are either major consumers or major producers of mineral commodities. It is a source of mineral commodities that all countries find essential for maintaining and improving their standards of living. Southern Africa has myriad resources; from diamonds to gold, copper to coal, precious metals, rare earths and gemstones. According to the US Geological Society, South Africa has the world‘s largest manganese and platinum group metals (PGMs) reserves. In recognition of its unparalleled investment opportunities, China, India and Japan have invested substantial amounts into mining minerals, metals and stones in southern Africa. The region’s major exports are unwrought platinum, coal, iron ore, ferroalloys, rolled stainless steel and aluminium. Nevertheless, although the mining industry has been responsible for a large part of employment and economic growth, many of these resources remain
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Transnet Freight Rail livery passing through Boughton in KwaZulu Natal
untapped because of investment and production barriers. Parts of the region are still underdeveloped. There is a need for investment in exploration, transport, education, infrastructure and exports. However, increased political stability, improved legal frameworks and infrastructure have been lauded by mining industry professionals for improving
African Review of Business and Technology - May 2014
productivity in the African mining industry and for facilitating access to the mining sites. Governments have finally begun to concentrate efforts on industry development. The South African state-owned transport company, Transnet, will be redeveloping the rail infrastructure to improve transport efficiency when delivering minerals to South African ports. By 2018, Transnet aims to deliver 11.7mn tons of manganese, a substantial increase from the 4.8mn tons delivered in 2011. Transnet Freight Rail, the largest division of Transnet maintains an extensive rail network, which connects with other rail networks in the subSaharan region, with its rail infrastructure representing about 80 per cent of Africa's total. In addition to its Mineral Mining and Chrome business unit, the company maintains business units for coal, and for iron ore and manganese transport. Remaining divisions address agriculture, container and automotive, and steel and cement transportation.
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AUTOMOTIVE
Executive cars
Cruising in luxury The success of the African luxury car market is dependent on exclusivity, craftsmanship and even speed
W
hen money talks, we all listen. Especially when it produces the sound of a throttling engine. The hottest wheels in the 2014 Geneva Auto Show promised to make your platinum card bleed. Looking over the exotic car exhibits at the show, there were global aspirational brands that would be bound to make an executive look rich behind the wheel. Although the price in itself creates a lot of value, car aficionados believe that it’s the exclusivity which provokes a stir. “I think it’s worth my money if I know that there are only nine other people on this planet that can own this unique machine,” said a visitor at the show, as Lamborghini announced that it plans to build only nine copies of the Lamborghini Veneno Roadster in 2014. Cars, craftsmanship and commerce A car can mean a million different things to people. To some it’s a matter of pride owning an artistically-designed marvel, and to others it’s sheer horsepower and speed. For instance, the engine in the Mercedes-Benz CL65 AMG Coupe is a handcrafted V-12 that comes with a signature of the master craftsman who built it.
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On the other hand, the Ferrari F12 Berlinetta has a top speed of more than 355 kmph and reaches 201 kmph in only 8.5 seconds. Who on this planet would not like to push that accelerator? Stefan Haubold, global managing director of Carmudi said, “An expensive luxurious car is not just a first world epidemic. In the emerging markets, luxury cars are blatantly perceived as status symbols. The bigger the car, the fatter the wallet, it’s believed.” Prime automotive performers include Porsche, which again has increased deliveries to customers. With 11,061 cars sold worldwide, the sports car manufacturer had an increase of just lesser than six per cent compared to the same month last year. In the first two months of 2014, Porsche sold its customers a total of 23,286 cars. In Asia Pacific, Africa and the Middle East, Porsche sold 9,846 cars in January and February 2014, as against 9,386 for the same period in 2013. Holding the road to hold market share The Geneva Motor Show underlined its status as an essential showcase for automotive manufacturers, which have once again chosen
African Review of Business and Technology - May 2014
Pirelli to highlight the capabilities of top cars in the market. This is a key fact that emerges from observing the tyres fitted to all the main attractions of the 84th Geneva Motor Show. In total 64 per cent of the prestige cars launched at the famous Swiss show, from Lamborghini to Ferrari – not to mention McLaren and Aston Martin – wore Pirelli tyres. With a 12 per cent increase compared to 2013, the Italian firm has confirmed its leadership in this iconic sector, which has shown steady growth throughout recent years despite the worldwide economic crisis. One of the consistent themes to highlight this has been the rise in cars equipped by Pirelli at the Geneva Motor Show: a notable upward trend over the past few years. Pirelli’s presence in the premium sector is also crucial, where the percentage of fitments has exceeded 27 per cent. This statistic is made all the more impressive by the fact that the nearest competitor has a quota of 19 per cent. Pirelli’s presence at the Geneva Motor Show is consequently stronger than ever, confirming the company’s status as the preferred choice of leading manufacturers. ■ www.africanreview.com
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POWER
African Utility Week
Using energy responsibly Africa’s biggest power event will highlight the importance of energy efficiency across the continent
“I
t is our responsibility to use power responsibly,” African Utility Week programme director Nicolette Pombo-Van Zyl said in response to Eskom – South Africa’s state-owned electricity utility – recently declaring a power shortage emergency, citing a risk that rotational load shedding could be implemented. “Not only looming power shortages, but also the implementation of a carbon tax, coming into effect in January 2015, should be a spur for businesses to explore alternatives to carbon production and improve their internal energy efficiency. While it is Eskom’s responsibility to provide power, it is ours to make sure that we use it responsibly. Wastefulness around any resources, especially one we know to be finite, should be actively discouraged,” Pombo-Van Zyl added. African Utility Week, taking place alongside Clean Power Africa in Cape Town, South Africa from 13-14 May, will have a strong focus on large power users in Africa. The event will advise users on how to reduce costs while increasing productivity through energy and water efficiency solutions.
More than 5,000 power and water professionals will gather for the event
The expo floor will also play host to two days of free, practical, CPDaccredited technical workshops for all electrical engineers, technicians and contractors working in the power and water industry. Topics will include renewable energy and energy and water efficiency. More than 5,000 power and water professionals, including utility heads from Nigeria, Uganda, Namibia, Senegal, Ghana, Malawi, Tanzania, Zambia and South Africa will gather for the event. The African Utility Week Awards will also celebrate the industry’s triumphs and successes throughout 2013 in nine award categories, ranging from ‘Utility Executive of the Year’ to the ‘Best Rural Electrification Project’. The programme will commence with an opening keynote session on ‘The changing African utility landscape – adaptation for longevity’ and ‘Smarter technologies, increasing customer engagement and the quest for sustainability’, featuring Agnes Dasewicz, director of USAID’s Private Capital Group for Africa, USA; Ger Bergkamp, executive director of the International Water Association, Belgium; Frans Vreeswijk, secretary general and CEO of IEC, Switzerland; Phindile Baleni, CEO of the National Energy Regulator South Africa, South Africa; and Ayanda Nakedi, senior general manager - Renewables Business Unit at Eskom, South Africa. Further discussions will encompass the topics of metering; water; large power users; sustainable cities; smart grids; and renewable energy. ■ For more information and the full event programme visit www.african-utility-week.com
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African Review of Business and Technology - May 2014
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Profile
POWER
Marelli Motori set to hold technical seminars at African Utility Week arelli Motori will be attending African Utility Week (AUW) in Cape Town, South Africa, from 13-14 May 2014 and, for the fifth year running, the company will be ‘Platinum Sponsor’ of the exhibition. Marelli Motori’s chief technical officer, Gianluca Stanic, will be presenting a paper entitled ‘Micro Hydro – a Quick Win for Africa’, and Dean Pratt, general manager of Marelli Motori’s South African operations, will also present a speech entitled, ‘Marelli Experience in Co-generation Energy Production’. Commenting on Marelli Motori’s participation at the event, Pratt said, “We have chosen this conference as it gives us networking opportunities with some of Africa’s decision makers. “During our technical seminars we
M
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will showcase our latest product developments and technological innovations. Our local presence in South Africa since 2001 reaffirms our commitment to the African continent.” Marelli South Africa is part of the Marelli Group, whose headquarters are located in Italy. The Marelli Group is a global leading designer, manufacturer and supplier of generators and electric motors suitable for various applications, including power generation, renewable energies (hydropower), oil and gas, industrial and marine sectors. Its products are available in up to 10,000kVA for generators and 7,000kW for electric motors, in low, medium and high voltage. The South African plant carries stock at any given time to satisfy the
A Marelli generator for hydropower application
requests of the local market. It also has a dedicated after-sales department, which is available 24 hours a day, seven days a week to help customers with any technical challenges/ problems that may arise. ■
For more information about Marelli Motori, visit www.marellimotori.com
African Review of Business and Technology - May 2014
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POWER
South Africa
Solar power paves way for the future The Kalkbult PV station has provided proof that South Africa’s plans for renewable energy provision are well underway Built by Scatec Solar, the solar plant took just 10 months to build (PHOTO: Scatec Solar)
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ocated on a working sheep farm in the Northern Cape province, the 312,000 photovoltaic (PV) panels at Kalkbult cover an area as large as 140 football fields, and are capable of producing 135mn kilowatt hours (kWh) of electricity per year, enough to power 33,000 South African households. Built by Norwegian-based company Scatec Solar, the plant took just 10 months to build, and has been running smoothly in its first few months of operation. “The Kalkbult Plant is exceeding expectations and targets. It is operating as planned: smoothly, noiselessly, peacefully and with no other input than the sun’s irradiation,” says Scatec Solar South Africa CEO Raymond Carlsen. The realisation of the new plant came about as a result of the national Department of Energy’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), an initiative which allows companies in the sector to pitch their blueprints for clean energy projects to alleviate the country’s huge dependence on coal-fired energy. “Government’s key reason for promoting renewable energy is to reduce South Africa’s high greenhouse gas emissions, about 45 per cent of which are produced by coal-fired power stations. However, government is also being encouraged to procure renewable energy because costs and tariffs of solar and wind energy are declining, making these technologies increasingly competitive,” explains Carlsen.
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The REIPPPP, a public-private partnership (PPP) model, has almost single-handedly catapulted South Africa into one of the most attractive and rapidly emerging solar marketplaces in the world, and the government has made clear that it wishes to increase installed solar capacity from a mere 30MW in 2012 to 8,400MW by 2030. This, along with wind and hydro projects, will grow the percentage of renewable energy being contributed to the national grid up to 12 per cent by 2020, and electricity from solar is expected to be the cheapest energy source in South Africa by then. Experts predict that the parastatal utility provider, Eskom, will be selling coal-fired electricity for $0.171 per kWh by 2020. As the country continues to commission more solar power as the REIPPPP comes to fruition, the cost of solar electricity could fall as low as $0.075-0.127 per kWh. Kalkbult was one of 27 renewable energy projects to be awarded contracts after the first bidding window of the REIPPPP closed in 2011, and Scatec Solar has since pumped more than US$25mn into the solar power plant, ensuring that it came online three months ahead of schedule. The REIPPPP has proved highly attractive to investors worldwide, drawing bids from internet giants Google and some of the biggest names in the renewable energy sector. Thus far, three of the five planned REIPPPP bidding windows have come to a close, with 64 wind, solar and hydro projects approved, representing a combined investment value of
African Review of Business and Technology - May 2014
between R120bn (US$11.4bn) and R150bn (US$14.2bn) and a cumulative capacity of 3,933MW. The latest round of bidding elicited a frenzied response from no less than 93 bidders, signalling the increasing attractiveness of the programme. "Window three will contribute approximately R4.4bn (US$417,000) to socioeconomic development, aggregating to a cumulative investment of R9bn (US$853,000). This bodes very well for South Africa, as the programme has achieved international acclaim for fairness, transparency and certainty of programme. The progressive increase in local content and job creation numbers has also been witnessed," said South African minister of energy Dikobe Ben Martins. The Ernst & Young Renewable Energy Attractiveness Index (RECAI) report, released in February 2014, rated South Africa as the best country for solar power developers to invest in. “The ongoing success of the country’s flagship renewables procurement programme and the growing interest of international developers and funders is a strong sign that South Africa is blazing a trail across the global renewables sector. South Africa’s target of building 8.4GW of solar photovoltaic capacity by 2030, combined with the success of its large-scale tendering process in attracting investment to fulfill that goal, positions the country as the most attractive emerging PV market globally,” the report stated. ■ www.africanreview.com
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Cat® Road Construction Equipment … BUILDING YOUR ROAD TO SUCCESS Mantrac, the sole authorized Caterpillar dealer in Kenya, Tanzania, Uganda, Nigeria, Ghana and Sierra Leone is your single source for all road construction equipment. We offer Cat® complete package, including Hydraulic Excavators, Motor Graders, Rotary Mixers, Soil Compactors, Asphalt Pavers, Asphalt Compactors and Pneumatic Tire Rollers – ensuring consistent levels of performance and significant returns on your investment. High parts availability and prompt professional service are a major part of Mantrac’s commitment to customer satisfaction.
Mantrac Kenya Ltd. Mansour Complex Witu Road, off Lusaka Road P.O Box 30067 , Nairobi Tel: +254 20 4995300 SMS number: 20061 Fax:+254 20 557594
Mantrac Tanzania Ltd. Plot no 4A, Nyerere Road, P.O. Box 9262, Dar es Salaam Tel: +255 22 551 5200 Fax:+ 255 22 286 4284
Mantrac Uganda Ltd. Plot 17/41, 7th St. Industrial Area P.O. Box 7126, Kampala Tel: +256 414 304 000 +256 312 260526/7/8/9 Fax: +256 414 235 425
Mantrac Nigeria Ltd. 2, Billingsway, (Off Secretariat Road) Oregun Industrial Estate, Oregun PMB 21480, Ikeja, Lagos Tel: 01-2716300 Fax: 01-2716300 Ext. 226
www.mantracgroup.com © 2014 Caterpillar. All Rights Reserved. CAT, CATERPILLAR, BUILT FOR IT, their respective logos, “Caterpillar Yellow,” the “Power Edge”trade dress as well as corporate and product identity used herein, are trademarks of Caterpillar and may not be used without permission.
Mantrac Ghana Ltd. Ring Road West North Industrial Area P.O. Box 5207, Accra-North Tel: 233-30-2213720 Fax: 233-30-2221950
Mantrac Sierra Leone Ltd. 6-8 Blackhall Road P.O. Box 127, Freetown Tel: 232 22 223317
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POWER
Kenya
Reaping wind benefit in the Kenyan Rift Valley European investment in low-cost wind power to support Kenya’s national grid, including the construction of a new power plant at Lake Turkana, will transform the East African country
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urope’s long-term lending institution — the European Investment Bank (EIB) — is committed to providing US$278mn to support the Lake Turkana Wind Power project in the Kenyan Rift Valley. The US$861mn scheme will transform the supply of renewable energy in East Africa and benefit from additional financial support from the European Union, through the EUAfrica Infrastructure Trust Fund and a broad range of international investors. As the largest single wind farm in subSaharan Africa, the Lake Turkana scheme is expected to generate around 20 per cent of Kenya’s power and provide 300MW of reliable, low-cost wind power to the Kenya national grid. The project, located in remote northern Kenya, will be the largest ever private investment in the country and will include 365 wind turbines, each capable of generating 850kW, as well as associated power and road connections. “Availability of affordable energy is essential for Africa and electricity from the Lake Turkana Wind Power project will support economic growth across Kenya by helping to ensure power supply during periods of peak demand. The European Investment Bank congratulates all those involved in the project over recent years and is pleased to have worked alongside a wide range of financial institution as the largest lender to the scheme. Our broad experience of large-scale renewable energy projects around the world has highlighted both energy and economic benefits, and demonstrated how innovative schemes such as Lake Turkana can inspire further schemes,” said Pim van Ballekom, vicepresident of the EIB. Lodewijk Briet, EU ambassador, said, “The European Union provided the final US$35mn to close the package of investment support but it is the size of the support from
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Over the last five years, the EIB has supported investment in a broad range of projects, covering energy, transport, water and private sector investment totalling US$15bn across the African continent
European companies and the European Investment Bank that have made this project a success. The investment available from the European private sector provides immense opportunities for Kenya and development in the wider region.” Once the Lake Turkana Wind Power (LTWP) project is complete, it is expected that Kenya will benefit from fewer power shortages and electricity, which is 60 per cent cheaper than that generated by thermal power plants. The 162 sq km site of the new wind farm in Marsabit County has been found to have some of the most consistent winds in Africa. Daily temperature fluctuations and a valley between the Mt. Kulal and Mt. Nyiru ranges will help ensure more efficient electricity generation by the project. The EIB will provide US$278mn of senior debt. The European Union, through the EUAfrica Infrastructure Trust Fund, will take a US$34.7mn preferred equity share in the project to close a financing gap not covered by current or new investors. Further financial
African Review of Business and Technology - May 2014
support will also be provided by the African Development Bank (AfDB), Dutch, French, German, Finnish and Norwegian development finance institutions and commercial banks. The LTWP consortium comprises KP&P Africa BV and Aldwych International as codevelopers, Industrial Fund for Developing Countries (IFU), Wind Power AS (Vestas), the Finnish Fund for Industrial Cooperation Limited (Finnfund), and Norwegian Investment Fund for Developing Countries (Norfund). LTWP is solely responsible for the financing, construction and operation of the wind farm. Aldwych, an experienced power company focused on Africa, will oversee the construction and operations of the power plant on behalf of LTWP. Vestas will provide the maintenance of the plant in partnership with LTWP. The power produced will be bought at a fixed price by Kenya Power (KPLC) over a 20-year period in accordance with the signed power purchase agreement. ■ www.africanreview.com
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Volvo Construction Equipment ADVERTORIAL
new head brings fresh insight The company is also working with the UK government to build and operate St. Helena International Airport to boost tourism on the island
artin Weissburg, 51, is the new president of Volvo Construction Equipment (Volvo CE). Following a successful career in equipment financing, the president of Volvo CE is going back to his roots of construction and manufacturing in his new role. Weissburg was the president of Volvo Financial Services (VFS) from 2010 until 2013. Within his position at VFS, he has worked closely with Volvo CE dealers for many years, having extensive and in-depth knowledge of the Volvo CE business. Olof Persson, CEO and president of Volvo Group, said, “I am extremely
M Martin Weissburg was previously president of Volvo Financial Services
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satisfied to see Martin as president of Volvo CE. During his time with VFS, Martin has proven to be a strong and dynamic leader who has taken VFS to higher levels. He is a proven operational expert who drives efficiencies and profitable growth, as well as develops talent and internal culture.� With many years of global leadership experience tied to distribution and sales of heavy equipment, Weissburg started his professional career in the field of construction equipment when joining a competitor out of George Washington University as a marketing management trainee.
African Review of Business and Technology - May 2014
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ADVERTORIAL
Volvo Construction Equipment
Commenting on his new role at Volvo CE, Weissburg said, “I know the Volvo Group well and, having come from outside Volvo CE, I bring a new pair of eyes and perhaps different perspectives. During my time at VFS, I worked closely with Volvo CE and many of its dealers and I now look forward to driving and developing the Volvo CE business in all markets and customer segments. It is with great pride and energy that I take on this new position within the Volvo Group.” When looking at Volvo CE, the executive believes the fundamentals of the company he has joined are good. Well-balanced geographically and with a solid product offering, the company is well-placed to benefit from an improvement in global demand, according to Weissburg. “We need to optimise our efforts so that we win more business, at a better profitability,” he added. St. Helena International Airport Located in one of the most remote islands in the world, St. Helena International Airport is the largest design, build and operate project that the UK government’s Department for International Development has ever funded. The island is located 2,000km from Africa and measures 16km by 8km. In a bid to unlock significant economic potential, access and tourism, the St. Helena Government and the Department for International Development has allocated more than US$400mn for the development of the airport. The project has been awarded to South African construction group Basil Read and is one of their largest construction projects.
The project was signed in November 2011 and following a 51-month design and build phase of this project, the operations phase of the airport contract will continue in partnership with Lanseria Airport for a period of 10 years. The scope of construction work entails a 1,950-metre concrete runway with taxiway and apron to cater for aircraft up to the size of an Airbus A320, Boeing 737-800 and Boeing 757-200. Approximately eight million cubic metres of rock fill the embankment to more than 100 metres in height; an airport terminal building of 3,500 square meters and support infrastructure; air traffic control and safety; bulk fuel installation for six million litres of diesel and aviation fuel; a 14km airport access road, and a permanent wharf facility in Rupert’s Bay with all related logistics. Volvo CE currently has approximately 65 units working on the project in the island. Until now, the island’s only lifeline to the outside world has been the Royal Mail Ship, the RMS St. Helena, which calls
I know the Volvo Group well and, having come from outside Volvo CE, I bring a new pair of eyes and perhaps different perspectives. — Martin Weissburg
regularly at St. Helena Island. The bulk of the capital is spent on maintaining and operating the RMS St. Helena. It is hoped that the new airport will address some of the socio-economic difficulties on the island, boost the prosperity of islanders through tourism. To assist in the completion of St. Helena International Airport, Basil Read has chartered a cargo vessel, the NP Glory 4 from NP Marine, for 36 months to transport fuel, materials and plant to and from the island. ■
Volvo CE currently has approximately 65 units working on the project in the island
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Cement
CONSTRUCTION
Combatting carbon emissions Making the cement industry more eco-friendly
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longside other major industrial sectors, the cement industry has a major obligation to contribute towards reducing carbon emissions, particularly since the traditionally resource-intensive cementmaking process has resulted in this industry being ranked among the world’s top contributors of carbon dioxide (CO2) emissions. Energy conservation has become a major focus area in the cement industry because, apart from ever-increasing energy costs, there are growing concerns over future energy availability. In South Africa, the thermal energy required to power the kilns is predominantly derived from coal (direct feed into the kiln) and electricity from the national grid. Every ton of clinker produced from this process burns about 200kg of coal. South Africa-based AfriSam claims to have been the first cement producer in the world to develop an environmental policy. The company implemented a CO2 reduction programme in 2000 and set ambitious targets to reduce emissions associated with its products, then took its first major step towards CO2 reduction by launching Project Green Cement that same year. Between 1990 and 2012, AfriSam reduced its CO2 emissions per ton of cement by more
than 30 per cent. In 2009, the company introduced a world first CO2 rating system on all its cement bags, which means that the carbon footprint of each AfriSam product is printed on every bag. When the company began Project Green Cement, it installed blenders that allowed the company to blend to cement with mineral components (Mic). These Mic result in a reduction in excess of 40 per cent on electrical and thermal energy used in the cement production process. AfriSam has also invested in major energy efficient upgrades of equipment at its production plants and employed a team of process engineers to extract maximum energy efficiency from each plant component. Using 2000 as its base year, AfriSam says it has reduced its electrical energy consumption by 25 per cent and its thermal energy consumption by 40 per cent. Another industry focus area is to reduce the use of natural resources through the increased production of composite cements, sometimes called extended cements. This is evidence of industry’s growing willingness to make environmentally responsible decisions and the resulting technological advancements have afforded cement manufacturers the luxury of using alternative materials that possess
AfriSam has invested significantly in research to develop and implement a CO2 measurement system on all its cement products.
cementious properties and have a low carbon footprint. Years of research at its Centre for Product Excellence have led to the composite cement technology that is today applied to all AfriSam products, including its new 42.5N All Purpose Cement, an advanced composite cement with active mineral components. This technology makes it possible to achieve greater concrete yield per bag of cement than before, without compromising performance. Interestingly, concrete made from the company’s 42.5N cement continues to gain strength past the traditional 28-day cut-off, actually improving with time to achieve stronger structures. ■
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CONSTRUCTION
Market Analysis
Supporting infrastructure development in Africa Graeme Robinson, Mantrac Group executive director, discusses the ways in which dynamic construction equipment suppliers are addressing African operations today
Mantrac Unatrac is the authorised dealer for Caterpillar in nine geographies
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or as long as it has been in business, Mantrac Unatrac has been renowned for the quality of the Caterpillar products it supplies – and also for its superior service to its core customers. The Mantrac Unatrac Group model – just like the Caterpillar model – rests on commitment to superior engagement at a local level, in all nine geographies in which it operates as the authorised dealer for Caterpillar. These geographies include Egypt, Kenya, Tanzania, Uganda, Ghana, Nigeria and Sierra Leone, Iraq and parts of Russia. As a dealer, Mantrac has invested significant human and financial
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African Review of Business and Technology - May 2014
capital in building a network of experts who can provide customers with valuable insights into which Caterpillar equipment would serve their businesses best, and how that equipment would do the job. It has taken pride in product quality. The logical step to take for the enterprise has been to understand its customers’ requirements and motivations more deeply. Investing in a changing landscape There is no resting on laurels at Mantrac. Graeme Robinson, Mantrac Group executive director, is keen to know whether his www.africanreview.com
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Market Analysis customers feel appreciated, whether Mantrac is always easy to do business with. He wants Mantrac to make its customers feel special at all times. In Africa, the landscape is changing. Investment in facilities, skill sets and support service are still entirely applicable to market leadership - but much more is required. Relative to other continents, there are more new construction projects and many with massive returns on investment projects - and new types of constructors are entering African markets to exploit new opportunities in the continent’s increasingly dynamic markets. According to Mr Robinson, speaking in a recent interview with African Review, the African market is changing, as economies become richer, as infrastructure investment rises and projects become more diverse, and as corporate governance and an emphasis on quality of completion becomes the norm. Another factor is the rise of the indigenous contractor, as African operators are now securing larger contracts than would have been the case in previous decades. Africans are working for themselves, too, with more skilled contractors being sourced from within the continent, from amongst an increasingly well-educated and trained African employment pool. And there is, of course, China; the emergence of Chinese suppliers and contractors in African markets, which has translated into a submergence of market share held by European and American manufacturers. Moreover, African economies are becoming increasingly connected. It is no secret that smartphones are far more commonly used to connect to the Web than desktop computing in Africa. Individual African constructors use mobile devices as much as their counterparts in other sectors, and so Mantrac has developed applications to enable its customers to identify equipment that might suit their purposes - and to do business, effortlessly. Manufacturers need now to be connected virtually. Increasingly, customers working on African projects are using the Internet to research and acquire equipment, and to support site operations once equipment has been delivered and deployed. Mantrac has invested this new mode of customer engagement. A secure tool called MyMantrac (at www.mymantrac.com) empowers verified customers through virtualised contact. The parts and equipment management solution allows customers to manage their fleet of equipment online through parts ordering as well as monitor the condition of equipment, including fuel utilisation, working hours and scheduled services status. As Graeme Robinson said of the newly-enabled, connected Mantrac customer, “They can search for parts. They can see the prices. They can see the availabilities. They can place those orders online.” Enhancements are in the pipeline. Mantrac is talking to financial institutions about integrating online payment options, so that all customers, verified or not, can place orders online in a style akin to the model developed by Amazon and other consumer-focused companies, possibly even using such payment facilities as PayPal to acquire products. Building business through human contact and specialist knowledge The days when a manufacturer’s representatives drove or flew between towns and nations, selling on the basis of personal or human contact at a site or contractor’s office, are not entirely gone, however. Human contact still goes a long way. As Graeme Robinson observed, Mantrac “needs to be flexible enough to adapt” to customer requirements as much as to technological or logistical developments. There will always be customers in Africa who will prefer to do business personally – and, these days, these customers may be found by Mantrac not only working in construction, but also operating in oil & gas, or in agriculture, or any of a number of www.africanreview.com
CONSTRUCTION
Graeme Robinson
Mantrac has developed applications to enable its customers to identify equipment that might suit their purposes - and to do business, effortlessly” other verticals or sub-vertical sectors. According to Mr Robinson, Mantrac has recognised this need for increased flexibility, and has changed its own internal staffing to suit. The company is renowned for its product champions, professionals who have spent decades in the company, gaining specialist knowledge of the machines sold and the applications to which they are put. The group has always served different sectors – examples include its work in Ghana on telecommunications infrastructure with Helios Towers, on the provision of backup power for the Foundation for Orthopaedics and Complex Spine, and on road-building in the Ashanti region with MSF Construction. Now Mantrac is also developing specialisms in sectors, recruiting experts and training to instil expertise in industries other than pure construction. Why? Mr Robinson can tell you: “One thing that is inherent in our business is that we are never satisfied…There is so much more we can do.” ■
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CONSTRUCTION
Infrastructure
The changing face of construction in Africa Urbanisation, economic growth, affluence and integration have created an environment for investment in bigger and more sophisticated infrastructure projects in the continent
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he face of the African construction industry is changing. Construction projects on the continent are getting bigger and more complex. According to Deloitte’s 2013 African Construction Trends Report, this is due to rapid urbanisation, strong economic growth, a rising middle class and regional integration in many of Africa’s 54 nations. All make for the ever increasing demand in Africa’s construction industry, as big infrastructure projects get
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underway in the region. This development leaves industry stakeholders with a lot of questions: How to best secure funding for a project? What is needed for successful project management? What projects have priority? How to access the African market place? Good advice and expertise is needed. Key challenges Infrastructure finance is one of the first things that come to mind when thinking about
African Review of Business and Technology - May 2014
obstacles a project has to overcome before eventually becoming reality. Funding from sources such as development finance institutes has become increasingly competitive. Project owners are, therefore, looking at alternative opportunities such as project bonds. At the same time, projects have become increasingly complex which makes the project management a lot more demanding. It is more difficult to deliver a project on time and on budget and cross-
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Infrastructure
CONSTRUCTION
Good advice and expertise is needed for better building techniques
Funding from traditional sources such as development finance institutes has become increasingly competitive border collaboration often adds to the complexity. Also, the question of project priority arises. A large chunk of infrastructure investment currently goes into power, energy and transport. Different regions, however, have different priorities. In addition to this, companies are struggling to access the African market in terms of project information, how to tender and complying with different rules and regulations to skills availability. Collaboration needed To address these issues, collaboration between all stakeholders is inevitable and the market has expressed a need for a neutral platform that encourages networking and the exchange of knowledge. The African Construction Expo and Conference provides
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such a platform to the industry. Over three days, the event brings together 5,000 construction experts from across the continent — architects, contractors, designers, engineering firms, investors, property developers, project owners, quantity surveyors and specifiers — to facilitate an interactive exchange of knowledge and to
advance collaboration. The conference covers issues around project finance, project management and property development and covers interesting case studies around the construction of energy and transport infrastructure. An access briefing with representatives from various African countries completes the programme. ■
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CONSTRUCTION
Cranes
Cranes: The basics Maintenance and checking of appropriate and proper safety levels throughout the crane’s occupation of the site is essential
Serious accidents with cranes are all too common. The European equipment federation offers guidelines on how to avoid them
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ITE MANAGERS IN Europe have enough difficulty finding qualified crane riggers and drivers (cab-housed operators). Here in Africa the problem is greater. The result has been a succession of accidents, immensely damaging in terms of cost to both contractors
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African Review of Business and Technology - May 2014
and clients. Often multiple deaths and serious injuries occur as well. The difficulties are most acute in the case of tower cranes. But serious incidents can take place with road-mobile plant including telescopic/hydraulic equipment, and with crawler and other types of all-terrain cranes too. To resolve the issue the European construction equipment federation CECE, in association with its material handling equivalent (FEM), issued a short useful guide to harmonisation of national training standards two years ago. Called ‘What is a ‘safe’ tower crane?’, this can be viewed online at www.cece.eu (follow links at ‘Brochures’). Many of the points made relate to other types of heavy lifting equipment. The guidelines point out that the key requirement is that a manufacturer’s installation and operating manuals are always both available on the site, and regularly consulted too. After this (and checking any appropriate local legislation or permit requirements), many potential hazards can be avoided by simply inspecting critical components at the right time. This usually means before the specific site use is commissioned, and/or before any kind of modification is implemented. The document makes a clear distinction between the obligations of equipment manufacturers and suppliers, and those of operating companies. It will be the second group that concern readers of African Review. Summarising these, the crane operating company is required to: ● Operate the equipment according to the appropriate instructions ● Always use original spare parts and components ● Train employees in correct handling techniques ● Maintain the equipment in good condition ● Test its proper installation and readiness for operation after every erection ● Conduct routine inspections regularly The guidelines point out that costly tower cranes have to be erected and disassembled frequently; this is how proprietors make a profit. It is essential that these complex tasks are only carried out by fully qualified and trained personnel, according to the recommendations contained within the supplier’s manual. www.africanreview.com
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Cranes Detailed instructions are given on how to identify such individuals, people who can ensure the crane has been properly installed in respect of setting its load-carrying capacity, installation of ballast and so on. Maintenance and checking of appropriate and proper safety levels throughout the crane’s occupation of the site is essential. So, on a daily basis items such as the mechanism itself, the brakes, all indication devices and ropes should be looked at. “Frequently” (not defined) components such as the lifting hooks, hydraulic and lubrication systems, brake components and connections should be inspected. “Periodic” inspections should include functional tests such as the steel lattice structure itself and all guard/safety rails. Beyond these checks an occasional thorough inspection should involve dismantling of the crane, corrosion inspection, noise measurement and so on. Many of these items, including all erection, dismantling and movement operations, need to be entered in a log book that should be kept by the operating company itself. Crane suppliers in Africa advise users to keep all the relevant documents including the manual (with updates) with the machine at all times, including any inspection certificates that have been awarded locally. Further, they recommend that all site users, erectors, crane drivers and service technicians are properly trained. Some provide suitable courses that are internationally accredited in such matters as planning and understanding load diagrams, equipment erection, climbing and dismantling, use of original-equipment spares, and general application-engineering services. Key components – most found in both fixed (top- and bottom-slewing) and mobile equipment – that need constant monitoring and maintenance according to the timetable above include: ● All ballast and counterweights ● All wire ropes ● How the structure is both placed and levelled ● Proximity to buildings and power lines ● All safety devices fitted such as limiters, electronic warning systems and weather vanes ● Site stability conditions ● Ability of key workers to make, understand and react to conventional hand signals.
CONSTRUCTION
Many potential hazards can be avoided by simply inspecting critical components at the right time
In addition, skilled crane fitters should be able to safely both erect and dismantle the specific types of crane for which they are licensed, under adequate supervision. ■ www.africanreview.com
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CONSTRUCTION
Training The National Development Plan requires 30,000 new artisans per year in order to meet its objectives for the country’s infrastructure development
Perspectives on training for building How South Africa is celebrating the Decade of the Artisan by investing heavily in youth as part of ongoing professional development
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bout R1 trillion (US$9.37bn) has been allocated for the Strategic Infrastructure Projects (SIPs) in South Africa – which includes the building of roads, schools, universities, harbours, power stations and other key infrastructure projects. The lack of skills and adequate training in the building and construction industry, however, is going to hinder development of these ambitious infrastructure projects and will certainly increase implementation costs. South Africa has experienced a shortage of about 50,000 artisans in the past few years. At the same time, the construction of mega projects has made the challenges for the industry even more demanding and complex. One of the building and construction industry’s greatest battles is the development and production of professionals that have the necessary skills. So far, South Africa’s construction sector has been largely trying to close this gap through importing skills. Promoting the sector The importing of skills is hardly sustainable in the long-term; therefore, the government is trying to find an ‘in-house’ solution to closing
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the skills gap. Earlier this year, the Department of Higher Education and Training launched the Decade of the Artisan programme, a campaign that promotes artisanship as a career of choice to young South Africans. The National Development Plan requires 30,000 new artisans per year in order to meet its objectives for the country’s infrastructure development. The fact that South Africa currently produces less than half of this required number shows how ambitious this project is. Continuous and comprehensive development Building a solid foundation of young artisans is, without doubt, very important for South Africa’s long-term success. However, equally crucial is the professional development of existing construction professionals. In the age of mega projects and a rapidly changing environment, ongoing skills development is more important than ever. Moreover, the aspect of maintenance of existing and future infrastructure must not be neglected. With increasing regional and global integration in mind, South Africa needs to focus urgently on providing its currently active
African Review of Business and Technology - May 2014
professionals with a competitive edge. With South Africa being a leader in skills development for the construction industry on the continent, the market has demanded a platform that caters for both aspiring artisans and active professionals. The African Construction Expo and Conference, taking place from 26-28 May 2014 at the Sandton Convention Centre in Johannesburg, offers such a platform to the industry. Over three days, the event brings together 5,000 government representatives and construction experts from across the continent – architects, contractors, designers, engineering firms, investors, property developers, project owners, quantity surveyors and specifiers – to facilitate an interactive exchange of knowledge and to advance professional development. The African Construction Expo, together with the co-located Totally Concrete Expo, covers issues around strategic business management and the production and use of concrete and cement products; registered engineers, architects and quantity surveyors earn CPD points. An interactive exhibition floor with 40 free-to-attend training workshops over two days completes the educational programme. ■ www.africanreview.com
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CONSTRUCTION
Transport
BSP equipment aids Morocco railway construction UK-based company provides piling equipment for construction of North African country’s new high-speed rail line
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SP International Foundations has provided equipment for phase one of Morocco’s high-speed rail project, connecting Tangier with Casablanca. Due to be completed in 2015, phase one involves the construction of a 200km line between Tangier and Kenitra. For this section, the BSP CX110 hydraulic hammer was chosen for driving foundation piles for a rail viaduct, which has a span of 250 metres over the river Qued Sebou. The river lies parallel with the A1 Rabat to Tangier motorway on the outskirts of the city of Kenitra. The viaduct, construction of which was awarded to Casablanca-based SGTM Construction Group, is being completed with the help of the CX110 piling hammer, complete with the HP125 power pack from BSP. Supplied to SGTM during 2013, the CX110 was fitted with a nine-tonne
The BSP CX110 piling hammer
The viaduct is being constructed by Casablanca-based SGTM Construction Group
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CONSTRUCTION
Transport
dropweight, legs, inserts and cap suitable for driving a range of Arcelor AZ sheet piles. The piles, which range in length from 22 metres up to 36 metres, are being used to construct coffer dams to enable construction of the viaduct support columns. A total of six coffer dams were built, each constructed with 28 pile pairs which are being driven through a top layer of mud into sand and silt base. Each pile was driven at a rate of eight blows per 25mm to final depth, with piling completed in late autumn 2013. SGTM has also won the contracts to construct two other viaducts for the high-speed rail link. One of these, El Hachef, will have the largest span (3.5km) of any viaduct project ever undertaken in Africa. Technical features The CX110 is the largest hammer in BSP’s four-model medium-duty CX range, offering dropweights extending from 4,000kg up to 9,000kg. The range is designed for driving a wide variety of bearing sheet piles. All the models are available with legs and inserts or pile sleeves for use freely suspended, or with back guides for operating from a piling mast and are also suitable for driving raked piles. The hammers are capable of driving piles with an ultimate load bearing of up to 6,000kN.
A route map of the high-speed rail link
Technical features include total control of hammer stroke and blow rate as well as allowing precise matching of energy to suit the pile driving requirements, whilst the highly efficient hydraulic system gives low energy loss and low running costs. The short overall length of the hammer is due to a short cage and drop weight design. Access to the cylinder and drop weight connection is easily accessible for servicing and maintenance. Work on the 350km high-speed Tangier-Casablanca railway started in late 2011. An agreement was signed in early 2009 between Morocco’s rail company ONCF and the French rail company SNCF to co-operate on the 20bn-dirham (US$5.4bn) project. Phase two, which involves the construction of a further 150km of line between Kenitra and Casablanca, will commence in 2020. Double-decker trains will run on the line based on the French TVG duplex design. The trains can carry up to 533 passengers and are capable of speeds up to 320km/h. ■
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MINING
Angola
Angola’s diamonds shine bright Top mining companies are attracted to promising prospects in Southern Africa
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ngola is the world’s fourth-largest diamond producer by value and, with much of the diamond-rich land still yet to be explored, interest in the lucrative industry is ever-increasing. Resuming activity Most recently, UK-based De Beers made the decision to resume activity in the country, despite relinquishing its previous concession in 2012. De Beers, which is majority-owned by global mining company Anglo American (AAL.L), will renew its presence in Angola this year to explore for diamonds, according to the country’s geology and mines minister, Francisco Queiroz. “The company made that big investment in prospecting and unfortunately it didn't have great results, but it is making a new bid, and another investment will be approved,” Queiroz explained at the Reuters Africa Summit, which took place from 7-11 April. Philippe Mellier, chief executive of De Beers, claimed in March that the company hoped talks with Angola would be successful and added that the company had a view to start early stage work this year.
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“De Beers has been negotiating with (state-owned diamond firm) Endiama, and it is welcome in Angola as it has been in the country for a long time, even before independence from Portugal in 1975,” Queiroz said. The government of Angola, the world’s sixth-largest diamond producer by volume, is keen to boost a sector in which few companies are currently drilling, industry sources said. Russia-based Alrosa already operates the Catoca mine in Angola, the world’s fourthlargest, in a joint venture with Endiama. Queiroz said a new deal between Endiama and Alrosa, announced in February, to explore in eastern Angola could produce huge results, with the Russian firm set to spend US$15.5mn on rights and more than US$150mn if deposits are found, he claimed. “De Beers and Alrosa could help contribute to a boom in Angolan production in a short space of time,” Queiroz added. Even before those projects begin, Angola plans to boost production to 9.5mn carats this year – a one million carat increase compared to last year’s 8.5mn – due to the recent opening of three new mines.
African Review of Business and Technology - May 2014
Emphasis on minerals Angola is Africa’s second biggest oil producer and has grown rapidly after its 27year civil war ended in 2002. The government however plans to reduce the country’s reliance on crude oil output, which brings in more than 95 per cent of export revenues. The government plans to tap in to Angola’s mineral resources – which analysts say are extensive – but has been held back by a lack of data, industry sources said. The government has set up a US$405mn survey to find deposits of iron, copper, gold, manganese and other minerals. “The preparation work is done, and now one of the three companies hired to do the survey will start mapping this month, with the other two no later than June,” Queiroz said. The results, due in three to five years, will allow investors to make informed decisions, while a more competitive mining code approved in 2012 will help proceedings. Queiroz said that in the meantime, Angola is pushing ahead with projects to explore for iron ore, copper and phosphate. ■ www.africanreview.com
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MINING
South Africa
Facing challenges within the mining industry S
outh Africa’s gold and platinum mining industries have been struggling for some time. Despite the fact that the country has the biggest reserves of both on the planet, its share of world production has slipped. South Africa was the largest producer of gold up until 2007; between 2000 and 2012, output fell spectacularly from 428 tons to 167 tons. This poor performance in the sector is ultimately down to labour unrest and disputes over pay. The industry has been dramatically affected by strikes. Most recently this year, workers in the platinum mining sector staged a nine-week strike, which is estimated to have cost the country’s economy almost US$1bn. The miners are Anglo American Platinum (Amplats), Impala Platinum and Lonmin, who all want their wages doubled. Mechanised mining Some industry experts see mechanised mining as the solution. “The business case is simply that machines remove people from areas of high injury risk in deep level hard rock mines and secondly that the overall cost per ton mined for mechanised operations are now becoming less than those for conventional operations due to high wage expectations,” said Jim Porter, a professor at the Centre for Mechanised Mining Systems in Witwatersrand. A recent report by JPMorgan Cazenove analysts Steve Shepherd and Allan Cooke has also found that labour unrest and demands for higher wages could lead to a lasting structural shift in the platinum mining sector at least in South Africa. According to the report, “It’s possible that if the labour climate and productivity issues are not addressed soon, producers will be unwilling or unable to proceed with developing new, labour intensive mines on the eastern and western limbs of the Bushveld.” As a result, South Africa’s platinum mining industry would resemble the country’s coal mining industry rather than
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Smelting operations at an Impala Platinum mine
A report by JPMorgan has found that labour unrest and demands for higher wages could lead to a lasting structural shift in the platinum mining sector
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MINING
South Africa
the gold mining industry – in that the sector would employ fewer skilled people but with higher average wages and far less frequent pay disputes. It is anticipated that if mechanised mining does take route in South Africa then it will be in the Platreef part of the country’s Bushveld Complex, where leading mining company Amplats has set up an opencast mine, Mogalaskwena, and entrepreneur Robert Friedland intends to build a state-of-the-art underground mine. Experts point out that the area is ideal for mechanised mining, being thicker than other reefs which make it more suitable for both underground and open pit mechanised bulk mining methods. Although the grade of platinum in Platreef is lower than in other key platinum mining areas of South Africa such as the Merensky and UG2 reefs, the Platreef is extremely diverse, with high deposits of nickel and copper, offering potential for supplementary income streams. Furthermore, at the most recent Mining Indaba, Friedland claimed that money from mining copper and nickel in the area could potentially offset all of the costs of mining platinum in Platreef. “It bears repeating that the workers on mines such as Mogalakwena are relatively well-paid and therefore likely to be more ‘satisfied’ with their financial circumstances, in our view,” according to JPMorgan. “Furthermore, the emotive issue of housing is considerably less problematical (with numbers much smaller and pay much higher) than is the case on the labourintensive mines.” One of the most important sites for mechanised mining development in South Africa is the pioneering South Deep mine,
which is the seventh deepest in the world and owned by Gold Fields Ltd, a South African gold mining firm that also operates in Australia, Ghana and Peru. More than US$4bn has been pumped into developing South Deep, which has a 40mn ounce reserve that could last more than 60 years. Nonetheless, South Deep is struggling to meet its production goal of 700,000 ounces each year. Last year it managed just 302,000 ounces.
The majority of industry stakeholders now accept that mechanisation is the only way to preserve mining jobs Although it was originally anticipated that the South Deep mine would meet its production goal by 2014, the target has been repeatedly moved back, first to 2016 and then to the end of 2017. The target has also been lowered to between 650,000 and 700,000 ounces. Meanwhile, Friedland is setting up a platinum mine north of the historical mining city Johannesburg with “highly trained” platinum workers and which is “going to be as clean as a hospital”. Nonetheless, electricity costs will be high for mechanised mines in a country where electricity prices are among the most expensive on the planet, and where the cost of power increased by more than 12 per cent in 2013. “Because of the Platreef’s mineralogy, it yields a much higher tonnage of flotation concentrate per ton of ore mined than a UG2
or Merensky Reef mine,” said JPMorgan. “And, until proven otherwise, the processing of this concentrate will require much higher smelting capacity per ounce of platinum produced. This means higher specific electricity consumption – electricity that South Africa doesn’t have today but hopefully will have in the longer term.” Some experts have also raised questions about whether a lot of South Africa’s platinum mining areas are suited to mechanised mines; a lot of existing mines are simply too deep for mechanised operations. “Essentially, the bulk of the gold industry is not mechanised because the geometry of the ore body makes it exceedingly difficult to use rubber wheeled or even tracked vehicles,” said Porter from the Centre for Mechanised Mining Systems. “Also, other inhibitors are claimed to be the capital costs, poor maintenance, poor utilization and objections from employee organisations,” he added. Others have questioned whether South Africa can supply the specialised, skilled workers needed to operate mechanised mines. The prospect of South African mining workers losing their jobs due to mechanisation is also potentially economical and political dynamite in a country where barely two-fifths of people of a working age have a job. The sector currently employs around 100,000 people in South Africa. Porter stressed the need to look at the long-term, however. “I believe that 2013 saw this threshold being crossed for the first time. By this I mean that the majority of industry stakeholders now accept that mechanisation is the only way to preserve mining jobs – it is no longer a discussion about ‘job losses’,” he said. ■ Some experts have also raised questions about whether a lot of South Africa’s platinum mining areas are suited to mechanised mines
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MINING
Sierra Leone
China looks to Sierra Leone O
ne’s of China’s largest energy companies, China Kingho Energy Group, is looking to form partnerships as part of its US$6bn investment in infrastructure, energy and iron ore mining in Sierra Leone. The group said it could spend US$6-10bn to mine an estimated 30mn tonnes a year of iron ore in the West African nation, but explained at the recent West Africa Mining Investment Summit in London, UK it would not go it alone on the project. James Chang, director of external affairs for the China Kingho chairman’s office, said, “We haven’t signed any official agreements yet but more than ten companies are interested, including miners, steelmakers, infrastructure companies and EPCs (engineering, procurement and construction companies).” Chang added the companies were from China and abroad, and that the investment spend – which started with exploration works in 2011 – would take the project beyond 2017, when mining is scheduled to start. China Kingho, which is carrying out infrastructure and mining feasibility studies in Sierra Leone, signed a memorandum of understanding (MoU) with the country’s Ministry of Mines and Mineral Resources in May 2013. Under the agreement, the company plans to construct a 250km railway from the northern Tonkolili district to the coastal town of Sulima, and to build a deepwater port in Sulima as well as a smelting facility and an industrial park. The smelter would be powered by a 350MW hydroelectric station to be built on the Sewa River and there would also be a thermoelectric power generation plant, China Kingho said. “In 2017 maybe we’re in production on the mining side, but not all the US$6bn would have been spent by then. That figure includes building infrastructure. We have 14 iron ore exploration licenses in Sierra Leone and four mining licenses,” Chang said. According to data from the International Monetary Fund (IMF), the rapid expansion of the nascent iron ore mining industry fuelled economic growth of 20 per cent last year. Economic growth excluding iron ore was 5.5 per cent, it added. However, prices of iron ore, the world’s second-largest traded commodity after oil, have fallen some 11 per cent this year, putting potential growth from mining revenues in Sierra Leone at risk, IMF data suggested. British miners African Minerals and London Mining are the only ore exporters in Sierra Leone at present. ■
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Environment
MINING
Service delivery and professional integrity drive success Service delivery and professional integrity are the two primary drivers behind the success consultants Greenmined Environmental
G
reenmined Environmental was founded in early 2012 by Sonette Smit, whose environmental management experience draws from her tenure at private environmental consultancies and at the Department of Water Affairs (DWA). This invaluable experience has equipped her with a depth of understanding of government departmental mechanisms and the functions that support the success of departmental application processes. The business is further strengthened by the complementary skills of Christine Fouché, who holds a diploma in nature conservation and brings strong leadership and project management skills to the mix. Also a former employee of the Department of Enviromental Affairs (DEA), Fouché has maintained good relationships with Departmental officials and has an in-depth knowledge of the Department’s systems. “Although we’re a small business, we’ve rapidly become known for the high level of service we offer every client, regardless of the size of their company,” Smit says. “Our excellent relationships with the relevant government departments are of great value to clients, enabling us to obtain the necessary authorisations in the shortest possible time. “However, what also sets us apart in the industry is our determination to influence the corporate world’s outlook on being ‘green’. Thinking green shouldn’t be associated with encountering setbacks or delays, but rather as a means to ensure that companies achieve their
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Greenmined Environmental is committed to ensuring that best practice principles are maintained on all client projects
objectives sooner rather than later. Our aim is to encourage economic development in a way that safeguards the earth and its resources by teaching people how to become more aware of the impact of their day-to-day activities. This helps to ensure that decisions are made with a ‘planet protection’ mindset.” To date, the biggest project Greenmined Environmental has been involved in is the establishment of the Sere Wind Farm in the Western Cape Province, set to be one of the largest wind farms in southern Africa. Greenmined Environmental was appointed as a sub-contractor for Environmental Control work on an Eskom/Siemens/Raubex project to build wind turbines outside Koekenaap. The company has established a large footprint throughout the country in response to requests for environmental control services from both government departments and the private sector producing industries. ■
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MINING
Liberia
Iron Ore Mining Back in Full Swing Iron ore has always played a dominant role in the Liberian mining sector since the late 1950s. In the 1970s, Liberia was the 3rd largest producer of iron ore and the first in Africa Liberia has a rail link from Yekepa in Nimba county neighbouring Guinea to Buchanan port in Grand Bassa.
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oday, Liberia’s mining sector is one of the growing sources of export earnings and government revenue in the economy, with contribution from iron ore growing rapidly. Five mineral concessions totalling US$6mn are ongoing. Such an investment is unprecedented in Liberia. The economy has made a steady growth rate of seven per cent since 2003. “Mineral royalties from iron ore surged from about US$0.65mn in 2011 to more than US$6mn as at December 2012.” China Union shipped 15,000 tonnes of iron ore out of Bong Mines for the first time after 20 years from Liberia to China in February. The company is expected to ship 800,000 tonnes of iron ore in 2014. China Union signed a US$2.6bn Mineral Development Agreement in 2010 to extract ore from the Bong Range in Fuamah district, lower Bong for a period of 25 years. The company employs 300 workers to date and expects to increase employment of Liberians to 459 within a period of one year, according to finance minister, Amara Konneh. More jobs are set to be created at the beginning of 2015 when Arcelor Mittal ships 15mn mt of ore annually and this is expected to generate more than US$60mn per year in royalty revenue for the government. Arcelor Mittal at full capacity will employ an additional 3,000 people,
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many of them to be hired locally. Employment opportunities are guaranteed mainly through the private sector and service industries. Another positive sign is that Arcelor Mittal will share its Liberian iron ore rail link with Sable Mining and other miners in Guinea, according to finance minister, Amara Konneh. Liberia has a rail link from Yekepa in Nimba county neighboring Guinea to Buchanan port in Grand Bassa. It is a shorter route from mines in Simandou and Mount Nimba in Guinea which is vital for the mines to be profitable at current prices. Taking advantage of the opportunity, the Liberian government says it wants to use its rail link as widely as possible to promote regional economic integration. Arcelor Mittal and Sable are yet to seal the deal but the Guinean government has granted Sable permission to export through Liberia. Sable Mining will start production in 2015 and expects to hit five million tonnes annually. Sable signed an MoU with the Liberian government in November 2013. The two companies will now have to agree on costs. Export through Liberia is also crucial for investors BHP Billiton and gold miner Newmont. However, there is a struggle between Legislators and an iron ore miner Western Cluster who are seeking to transport ore by road to the Monrovia
African Review of Business and Technology - May 2014
Freeport. Defending Western Cluster’s proposal, Konneh believes that if the proposed means of transporting ore over its concession time period, the company projected capital investment will increase by US$560mn in two to three years for a single mine alone and more than US$2bn in 10 years for all its three allotted mines. “WCL’s contribution to government revenue is estimated to increase to US$50mn per year for the Bomi mine and to US$400mn per year when all three mines are operational. WCL’s mining activities will create 1,000 jobs during the Bomi project construction phase, 675 jobs during operation phase and 600-1,000 jobs during the construction of the railway,” Konneh said. “In the gold and diamond mining sector, exploratory works are in progress with the likelihood of a new mine named the New Liberty Gold Mine to be opened soon,” said Dr Eugene H. Shannon, a geologist and former minister of lands and mines. However, concerns are being raised that the economy depends too much on the mining sector, which is a non-renewable source. A former minister of finance and professional geological economist, Jonathan Mason, advised that renewable alternatives should be identified, prioritised and developed. “We have to concentrate our energies on renewable resources like agriculture which is guaranteed,” Mason said. ■ www.africanreview.com
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MINING
Profile
Innovative solutions for heavy industry and mining applications agni Telescopic Handlers has created the HTH range of machines and attachments for the heavy industry and mining sectors. One of the main advantages of the telehandlers is their cab design, features of which include a movable steering column, allowing the operator to get in and out easily and achieve a comfortable driving position; two Sauer Danfoss multifunction joysticks connected via CAN BUS for all the movements of the turret, boom and accessory; a fully enclosed and airtight environment pressurised by a powerful ventilation system (240 cubic metres per hour) in accordance with ISO 10263 standards; 100 per cent inlet air filtration; hot and cold air conditioning as standard, with air recycling if required; FOPS/ROPS type-approval; and controls grouped on a glass touchscreen display – as an alternative to the touchscreen, the display pages can also be controlled with a joystick. The new quick-fit system meanwhile improves capacity performance thanks to less weight at the end of the boom and increases safety when particularly sensitive attachments like long jibs or baskets are fitted. The telehandlers are also equipped with a radio-frequency identification (RFID) system
M
on the boom head, which automatically recognises the attachment in use when it is connected to the machine. The electric circuit of Magni telehandlers offer IP67 protection against penetration by external agents such as water or dust. The circuit rating is 24 V and the machine is also controlled by a CAN BUS circuit, which transmits all data about the electronic components installed, allowing all the information about the engine, transmission and load monitoring system to be displayed on the touchscreen. The HTH range is equipped with Euro 3B Daimler Mercedes Benz engines from 129KW (176 hp) to 240KW (320 hp), while electronically-controlled BOSCH REXROTH transmission ensures fast driving on the roads (25km/h). Fuel consumption has also been reduced by 10 to 15 per cent. The range includes the HTH 45.14, which is the biggest of the models (and the biggest rough terrain machine in the world), with a capacity of 45 tons and a 240KW engine; the HTH 35.11, which has a load capacity of up to 43 tons and a 240KW engine; the HTH 30.12, which has a load capacity of 30 tons and a 240KW six-cylinder engine; the HTH 25.11, which has a load capacity of 25 tons and a 150KW four-cylinder engine; and the HTH 15.10, which has a capacity of 15 tons and a 129KW four-cylinder engine. The transmission of the HTH 45.14, 35.11 and 30.12 models is constituted by a hydrostatic, electronically-controlled BOSCH REXROTH pump and two hydrostatic motors with variable displacement. The machines have each also got a hydrostatic power shift
The conveyor belt handler offers a capacity of up to 25 tons
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type transmission with three speeds (a fully automatic shifting gearbox with three speeds forward/reverse). The axles are of heavy duty type and the steering is assisted by two cylinders. Attachments for the telehandlers include three different fork carriages, including an extensible version with a positioner, available in either 25- or 30-ton capacity, which allows the operator to vary the total width of the fork carriage from 2,100 mm up to 2,500 mm in order to put the load at the centre of a 20feet container and then to extend the fork carriage to carry the container itself; a side shift and positioner version with 25-, 30-, 35or 40-ton capacity; and a positioner device version with a 15-ton capacity. Hooks with automatic attachment identification tag and lengths of 760 mm are available in 15-, 25-, 30- or 45-ton capacity. Special attachments include tire clamps which can handle tires from 24 inches up to 63 inches, namely the 16.63 tire clamp, which has a load capacity of 16 tons and the 8.63 tire clamp, which has a load capacity of eight tons. The Multi Tool Manipulator is able to fit three different attachments, including the Wheel Hub Handler, which offers a capacity of 22 tons; the Cylinders Clamp, which has a capacity of 11 tons, opening measurements of 240 to 620 mm, clamp rotation of 344°, cylinder rotation of +/- 30°, a tilting angle of 90° and longitudinal safety clamps measuring from 2,760 mm to 5,800 mm; and the Hub with Suspension Cylinder Handler, which has a nine-ton capacity for hub and suspension cylinders and a seven-ton capacity for just cylinders, and can achieve a tool rotation of 340°, hub rotation of 0/90/180/270° and a clamp rotation of +/- 30°. Additionally, Magni Telescopic Handlers has developed an attachment to handle conveyor belts, features of which include the ability to handle up to 25 tons in weight and a 360° rotation – particularly useful when handling large pulleys to create a conveyor system. ■
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SOLUTIONS
Machinery Terex Washing systems unveiled at CONEXPO-CON/AGG 2014 Terex Washing Systems (TWS) made its debut at North America’s largest tradeshow held from 48 March 2014. This year’s CONEXPO-CON/AGG was hailed as a huge success for the amount of interest it drew in its products being showcased, which resulted in the company making a number of sales at the show. “The enthusiasm, reaction and interest to the FM120BW sand plant we displayed as well as our other products was overwhelming. The flow of traffic onto the stand was incredible and we had the opportunity to meet with existing satisfied customers as well as potential new customers. We were delighted to record great sales throughout the show, which is testament to our commitment to providing enhanced and unique solutions to meet customers’ needs and demands,” said TWS director, Sean Loughran. “It really was an exciting time for TWS and we have more exciting news to announce for the US market in the coming weeks,” Loughran added. TWS’ products exhibited included the Terex® FM120 BW sand plant which combines traditional dewatering buckets and hydrocyclone technology on to one chassis. The unit targets high wearing abrasive sands as the buckets prevent the amount of wear on the rubber lined centrifugal pump and cyclones.
For TWS the CONEXPO-CON/AGG show has also been an opportunity to announce the launch of a new larger model within the Aggresand™ range, the Aggresand™ 206 wash plant, designed for all industrial, construction, recycling and mining applications. the company said. This larger Aggresand™ model shares all the unique modular features of the Aggresand™ 165 model, launched in 2013, including ease of transportation, rapid set-up time, pre-wired and pre-plumbed components and an HMI control system, which have been delivering efficient, productive performance for current owners. The official launch and unveiling of the Terex Aggresand™ 206 wash plant will take place at the Hillhead Show, Buxton, England in June 2014, when TWS will also launch another new product, the next generation logwasher, the Aggrescrub™ 150. Full details on the official launch of these two innovative solutions will be available in the coming weeks. The TWS team looks forward to returning to CONEXPO-CON/AGG in 2017 to showcase more innovative solutions that will meet customers’ aggregate washing needs and demands.
CONEXPOCON/AGG 2014 saw a record number of sales for Terex Washing Systems.
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SOLUTIONS
Concrete New type discharge hose tested and proven The Hawiflex ® Truckflex discharge hoses, developed and produced by Habermann, were used in 2009 at the Heidelberger Beton concrete production facilities operated by Heiko Bohm, for use in ready-mix concrete production. The hose material features the following characteristics needed in the course of their service life: cut resistance to protect from damage when truck mixers with varying heights dock under the mixing tower, protection against splitting and/or being torn down if the hose from the transfer hopper is crooked, reduction in the risk of blockage if the discharge hose is kinked, no risk of damage by UV irradiation, resistant to formwork oil and release agent and good resistance against sharp-edged Tested and proven – these discharge hoses can concrete with crushed withstand the extreme stresses of daily work particles. These points, which could potentially lead to rapid damage when using older discharge hoses made from conventional standard PU or rubber, have been significantly minimised with the latest generation of Hawiflex Truckflex discharge hoses. The rubber hoses formerly employed had, for the most part, a service life of only a few months. Constantly having to change hoses prompted Heiko Bohm, the manager, to try out this new type of discharge hose. After the initial successful outcome at Heidelberger Beton, the hoses were gradually exchanged in all their production facilities in the Berlin-Brandenburg area of Germany. Since then, Heiko Bohm no longer has to worry about obtaining hoses and, in a time when all employees are expected to accomplish ever more tasks, can save himself at least a small amount of additional work. The reason why users are thoroughly satisfied with the Hawiflex Truckflex concrete hose is to be found in its patented manufacturing process – a two layer system. The inner wear-resistant layer is made from white Hawiflex with 65 Shore A hardness, which gives the hose good maneuverability. This maneuverability makes it possible for truck mixers to drive under the mixing tower. The outer layer consists of a special red Hawiflex 83 Shore A material, which provides the hose with good shape retention plus outstanding resistance to tearing. In this way, no cut damage occurs with the hose when mixer trucks with a high superstructure drive under the hopper. The two-layer hose system is also indissolubly bonded together by means of a patented production method. The mixer foreman can check each hose‘s wear very easily and order a new one in good time, should the case arise that a discharge hose need be exchanged.
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EQUIPMENT/ CLASSIFIED
Ansaldo provides expertise for Egypt power plant Ansaldo Energia’s so-called ‘6th October - Extension Simple Cycle Plant’ in Cairo, Egypt is set to be complete by August. The project, which was awarded to Ansaldo by Cairo Electricity Production Company (a subsidiary of Egyptian Electricity Holding Company) in June 2013, follows the company’s ‘6th October Power Project’, under which it supplied four 150MW gas turbines for the original power plant commissioned by Cairo Electricity Production Company in March 2011. The 600MW extension contract is worth €240mn (US$331.7mn) and will comprise of the provision of four gas turbine generating
The 600MW extension contract is worth €240mn (US$331.7mn)
units with all necessary turbine auxiliaries and will deliver 600MW at the generator terminals; the necessary auxiliary equipment including a natural gas reducing and handling facility; and 220KV GIS Switchyard facilities. Natural gas will be used as a primary fuel and
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African Review of Business and Technology - May 2014
solar oil as a secondary fuel. Ansaldo has been present in Egypt since 1983, and more recently has supplied steam turbines and condensers for El Atf and Sidi Krir combined cycle power plants with a total capacity of 1,100MW.
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