ACHIEVING
BUSINESS
EXCELLENCE
ONLINE
BusinessExcellence Weekly ISSUE No. 30 | www.bus-ex.com
flinders port:
Overcoming adversity with diversity How Flinders Ports has adapted to evolve
Walter Energy
Intercape
SCOP
How would you like to see your company on the front cover of our weekly magazine?
Seen Put your company in the spotlight!
in touch EDITORIAL
Martin Ashcroft Editor In Chief mashcroft@bus-ex.com Will Daynes editor wdaynes@bus-ex.com
DESIGN
Matt Johnson Art Director mjohnson@bus-ex.com Louise Culling Production Designer lculling@bus-ex.com
BUSINESS
Richard Turner Director of sales rturner@bus-ex.com Vince Kielty Director of Editorial Research vkielty@bus-ex.com Sharon Rooke Administration & Operations srooke@bus-ex.com Matt Day Head of technology mday@bus-ex.com Andy Turner Chief Executive aturner@bus-ex.com
Subscriptions
info@bus-ex.com
Infinity Business Media Ltd
Suite 22, St Francis House, Queens Road, Norwich, NR1 3PN Tel: +44 (0) 203 137 7100 | Fax: +44 (0) 1603 666466
www.bus-ex.com
www.bus-ex.com
The content of this magazine is copyright of Infinity Business Media Ltd. Redistribution or reproduction of any content is prohibited. Š Copyright 2012 Infinity Business Media Ltd.
2 | BE Weekly
contents
14 6 Comment: Technology
Ageing legacy systems hold back European business Many businesses have been focusing on new technology for the front office while failing to integrate it with the back office.
8 Leadership
8
A counterintuitive approach
26
Instead of battening down the hatches when the going gets tough, smart leaders inspire their employees to find better ways of achieving their objectives.
14 Flinders Ports
Overcoming adversity with diversity
Andrew Pellizarri of Flinders Logistics and Peter Cheers of Flinders Adelaide Container Terminal, on adapting to evolve.
26 Walter Energy Irreplaceable
Dan Cartwright, president of Canadian operations, talks about developing reserves of a material that society can neither do without, nor replace.
BE Weekly | 3
Mobile You can now read our latest magazines on your mobile devices
iPhone
iPad
iPhone
iPad
Most popular devices supported (no app download necessary)
contents 36 Intercape
Growing new routes
Chief commercial officer Danie du Toit talks about a program of expansion at the South African coach services company.
36
46 Kenya Vehicle Manufacturers (KVM) On the road to growth
Joseph Otieno describes how KVM is attracting the interest of some of the major OEMs in the automotive industry.
54 Sasini
Anyone for coffee?
54
A Kenyan tea and coffee producer growing by diversification into retail, and cutting costs by generating its own electricity.
64 State Company for Oil Products (Iraq) All about oil
SCOP shows how complex engineering projects can be delivered in a challenging environment.
76 PROGETTI EUROPA & GLOBAL (PEG) STRAIGHT AND TRUE
64
An engineering company that has made a name for itself in the Middle Eastern oil business by playing it straight.
BE Weekly | 5
by: David Mills
Ageing legacy systems hold back European business
6 | be weekly
A
geing back office legacy systems are holding back 79 per cent of European businesses from fully streamlining their business critical document processes, according to new research published by Ricoh Europe. This is despite the majority of businesses recognising the transformational power of new technologies to help them be more agile in a fast-changing market, and highlights the disconnected approach to business technology and businesscritical document processes across Europe today. The research, part two of the Ricoh Document Governance Index 2012, reveals that while European businesses say that new devices such as smartphones and tablets are helping them manage their business critical document processes, the majority are unable to maximise such technologies because their back-end systems can’t fully support them. The study highlights how tempting new technologies can be, with 78
comment: Technology per cent of business leaders admitting they invest in new technology before fully realising the functionality of their existing systems. It also uncovered a clear divide between front and back office technology investments, with many focusing on new technology for the front office while failing to integrate it with the back office. This disjointed approach to process management could mean document processes are exposed to bottle necks, duplication of effort, and security risk. “Whether businesses believe tablets and smartphones are the business tools of the future, or will be superseded by the next wave of innovation, it’s clear is that technology driven change will continue and with it bring new ways of working and communicating,” says David Mills, COO, Ricoh Europe. “For business, the challenge is to plan for the long term and bring everyone in the organisation on the same journey at the same time. That means fully integrating the front and back office, connecting people with information,
70% European businesses using the cloud
and enabling collaboration and knowledge sharing seamlessly throughout the organisation.” The research also indicated confusion about how to use the cloud for business advantage. While 70 per cent of European businesses are using the cloud to enable mobile access to document processes, only 50 per cent believe that it is making their document process management easier. This highlights the lack of planning by business leaders who are investing in the cloud without having the structures in place to ensure it will deliver the desired improvements. It also means
that many businesses will fail to benefit from their share of the predicted annual boost of €160 billion that the European Commission predicts cloud computing will add to the European Union’s GDP by 2020. “European organisations must take action now to review their business critical process and technology in tandem to ensure their businesses are working to maximum efficiency,” concludes Mills. “A deep understanding of how document processes work – including how information flows through a company and how technology can help that information flow more smoothly – is crucial to truly understand the challenges and identify solutions. Technolog y innovation is set to continue at an unprecedented rate, so businesses need to act now if they are to keep ahead of the competition.”
The report was conducted on behalf of Ricoh by Coleman Parkes Research and has been compiled using 1,075 interviews amongst C-level executives, directors and other employees in Europe. www.thoughtleadership.ricoh-europe.com
BE weekly | 7
A counter approa
When the going gets tough, employees to find better ways
written by: K
8 | BE Weekly
Leadership
rintuitive roach
, smart leaders inspire their s of achieving their objectives
Kate Tojeiro
BE Weekly | 9
I
heard the unmistakable sound of a Harley Davidson motorcycle in the car park of a business that I’m currently working with. It reminded me of the incredible transformation story of this company. It is easy to understand in times of economic uncertainty why businesses often retrench; stop spending, stop investing in product and people and seem infinitely more risk averse, hiding from the world at large. Marketing and PR is slashed, innovation compromised and, as a consequence, so too is quality. A reduction in sales causes organizations to feel that they have a burden of staff and resources and this is when the culling starts; sometimes smart culling, often rather less so. I don’t know any manager who enjoys letting people go, but the smart ones recognize that it is often a requirement for success and progress.
Change management programs often go hand in hand with business challenges, often at the expense of addressing true company culture, and therefore these programs are unlikely to address longterm sustainable shifts in behavior, never mind growth and success. If employees, particularly when they have lost colleagues, are involved and have responsibility and accountability in the change, it is more likely to succeed. In any economic downturn companies have two basic choices: they either change their strategies to thrive, or batten down the hatches to survive. Irrespective of which approach is taken, there are costs involved in adopting either choice. Success depends on how those costs are managed and the strategic approach taken by management. An equally important consideration
“companies either change their strategies to thrive, or batten down the hatches to survive” 10 | BE Weekly
is that strategies based on thriving tend to engender a positive attitude in the company, while battening down the hatches and reducing costs tends to have the opposite effect. C omp a n ie s that concentrate on meeting short-term targets will often pay a price for their frugality when the economy turns around, since it is not clear what the long-term impact of their cost cutting will be. There have been plenty of examples where staff are let go, only for management to find that they are unable to recruit the necessary skills when required in the future. It can be counterintuitive for companies to adopt the ‘thrive’ approach, but this is exactly what I am seeing with some organizations today, even though the immediate costs are usually greater. So back to the shiny ‘Hog’ (Harley Davidson) in the car park. The company’s sales were down, and it was virtually on its knees. It had begun to earn a reputation for unreliability, poor build quality and an inferior product to the competition. The approach which marked
Leadership
Change programs are more likely to succeed when employees are engaged
a major turnaround in the organization’s fortunes started with a quality retune. Some would say a counterintuitive act; a focus on utterly shifting that reputation to one of reliability, great build quality, design and, ultimately an outstanding product. The impact of having a positive and forward looking sense of collaboration and shared purpose made a huge difference. The encouragement of freedom, innovation and creativity
to find new opportunities and ways forward started Harley Davidson on that phenomenal journey to great success and renewed market share. Risky, inspirational, courageous—yes—but the results were astonishing. Not so long ago I was invited by the CEO of a plc to sit in on a critical strategic management meeting. The executive team and department heads were discussing the losses the company had experienced over the preceding three quarters—something that
A sense of collaboration and purpose makes a huge difference
12 | BE Weekly
had never happened in the company’s 15 year history. In a lively and sometimes heated debate, the decisions they were rapidly coming to were that there would have to be an immediate 10 percent reduction in costs across all departments –which would include a drastic cut in staff numbers; marketing and PR budgets would have to be slashed, anything but essential travel was to be banned, and the traditional company Christmas party cancelled.
Leadership
“The company is surviving because management was able to get past the common practice of thinking as we’ve always thought” The CEO remained quiet for much of the time, mostly listening to the discussions between his managers and jotting down a few notes. After almost five hours, he brought the discussions to a halt, rose and quietly walked around the room, contemplating his notes. The silence was deafening. Then he addressed all those present. “We’re not going to lose anyone from this company; we’re certainly not going to stop promoting our business; we will continue with the current product development and team training programs, and we will most certainly have our Christmas party.” He tasked everyone to think about this and to come up with some innovative ways of achieving the company’s long-term objectives. These would then be discussed the following day. That evening, he quoted
me a proverb. “If we know a storm is coming, we make sure that we have ample firewood and we feed the fire with as much wood as we need.” What he was not prepared to do was seal all the doors and huddle around the fire using as little wood as necessary just to stay warm. The following day, the result of the CEO’s demand for innovative thinking was almost palpable and it served to visibly inspire every single member of that management team. It was galvanizing, doable and, most interestingly, completely counterintuitive, not only for the team but also the business. That meeting was almost
three years ago and since then the company has captured market share, they are more profitable than they have ever been and have also acquired two companies. They have created value, nurtured their culture and developed an amazing spirit. The company is surviving because management was able to get past the common practice of thinking as we’ve always thought. It takes courage to face facts and it takes imagination to come up with ways of circu m nav igat ing challenges, but both traits pay off in the long run, especially when failure is simply not an option.
Kate Tojeiro is founder of Xfusion, a progressive leadership consultancy. She has worked as an executive coach and facilitator with some of the world’s largest organisations and some of the most cutting edge start-ups. www.the-x-fusion.co.uk
BE Weekly | 13
Overcoming adversity with diversity
14 | BE Weekly
Flinders Ports
Andrew Pellizarri, general manager of Flinders Logistics and Peter Cheers, general manager of Flinders Adelaide Container Terminal, discuss how Flinders Ports has adapted to evolve
written by: Will Daynes research by: James Boyle
BE Weekly | 15
Flinders Ports
M
Flinders logistics loading copper concentrates using the rotating tippler system to discharge concentrates into bulk vessels
any companies around the world have felt the effects of the global financial crisis since it first began to take hold in 2008. Harsh lessons have been learned in the time since, yet some businesses have managed to weather the economic storm and, in some cases, come through stronger than before. Often what we find is that one characteristic these businesses share is diversity. “By moving away from being purely a port owner,” explains Andrew Pellizzari, general manager of Flinders Logistics, “we have diversified as a business and this has sheltered us in some ways from the financial crisis and allowed us to go from strength to strength.” The diversification he mentions relates to the steps taken by Flinders Ports, over the last 18 months, to establish a logistics business, take full ownership of the Adelaide Container Terminal and expand its reach across Southern Australia. As the mining sector within South Australia has grown, the company has been increasingly looking to develop its ports to offer a competitive supply chain solution to the industry. It is South Australia’s growing importance within the commodities and raw materials markets that first spawned the concept of Flinders Logistics. What was originally positioned as a bolt-on to the main business has rapidly evolved into its own entity, providing infrastructure and specialised services in niche markets. Despite its short history, Flinders Logistics has already made its presence felt, introducing its rotating tippler solution to
BE Weekly | 17
Are drugs/alcohol affecting your workplace? • Assist in the drafting/development of Drug & Alcohol Policy and Procedure • Provide alcohol screening in the workplace by means of random testing using a breath analysis instrument • Conduct workplace drug screening by means of urine or saliva screening • Personal consultation with both management and employees in regard to alcohol and drug related matters • Provision of Drug & Alcohol awareness seminars • Sale of Australian Standard compliant onsite saliva and urine screening devices • Sale/Maintenance/Calibration of company/individually owned Lion Breath Analysis Instruments
HUMAN COSTS ARE TRAGIC, FINANCIAL IMPACT ON BUSINESS IS STAGGERING. Phone +61(0) 8 82743756 Mobile +61 (0) 412225019 Fax +61 (0) 8 82743799
Email tonyh@worksafesa.com.au Web www.worksafesa.com.au
Flinders Ports the marketplace. “What Worksafe SA we have done,” Pellizarri Worksafe SA provides a range of drug and alcohol continues, “is develop a screening and education services and has been appointed technique that is changing by Flinders Ports Holdings to conduct testing at all sites the way concentrates are including Flinders Adelaide Container Terminal and other handled and that is now Port Adelaide and regional sites. being embraced across Worksafe SA offers assistance in the development of policy and procedures; alcohol and drug screening by breath, Australia, and soon the urine or saliva analysis; consultation with both management world over.” In recent and employees in regard to alcohol and drug related matters months, CEOs and directors and conducts drug and alcohol awareness sessions. from companies near and Employers who have used Worksafe services report many far have visited Adelaide benefits including decreases in absenteeism, accidents, to examine the company’s downtime, turnover and theft as well as increases in solutions and they all agree productivity and overall improved morale. www.worksafesa.com.au that Flinders Logistics is the market leader when it comes to this technology. Integral to the technology is the company’s DF misting system. Designed to eliminate air contamination from the dust generated from the movement of container loads, the system has been a revelation for both Flinders Logistics and the sector. “Naturally,” Pellizzari states, “different products and loads create different types of dust particle. Additionally we have to adjust the misting system to varying degrees of pressure, wind and humidity in order to supress the dust. The DF misting system is flexible enough to do all of that.” In July 2012, Flinders Ports confirmed that it had acquired 100 percent ownership of the Adelaide Container Terminal following its buyout from previous co-owner DP World. The deal valued the business, which handles approximately 300,000 containers a year, at more than $223 million. With the success of the terminal being integrally linked to The rotating tippler system
BE Weekly | 19
The Intermodal Solutions Group of Companies Containers for Road, Rail & Sea Intermodal Solutions:
Design, manufacture & supply of specialised containers
Intermodal Solutions Group: Design, manufacture & supply of bulk mining & grain containers Kookaburra Containers:
New & Second hand storage containers
Pack & Secure:
Load restraint, container parts & DG cages
Visit our Website www.intermodalsolutionsgroup.com.au Or call our Perth office: 0421 563 046 or Melbourne office: (03) 9689 1999 or Sydney office: (02) 9791 5566
Flinders Ports the success of Flinders Ports not only to the company’s as a whole, the company has employees, but also its clients taken the view that major that Flinders Ports is ready investment is needed to take to invest to provide a more the business further. efficient, effective service. Presently the company is “When we went into the assessing the market for terminal,” Peter Cheers, general manager of additional quay cranes. Flinders Adelaide Container The port side of the company is constantly Terminal explains, “we knew we had to spend capital looking at ways in which it in order to buy equipment Operations at the Flinders can grow, be it through the such as additional cranes, Adelaide Container Terminal expansion of its existing and implement a planned assets or through the maintenance programme. These are the acquisition of mature or new opportunities. sort of things that, once in place, allow you One on-going development for Flinders Ports to more effectively manage your resources.” involves the Port of Bonython, 20 kilometres Such actions also send out a strong message east-northeast of Whyalla, South Australia.
INTERMODAL SOLUTIONS GROUP (ISG) Oz Minerals supplied with 1,400 specialised copper concentrate containers Oz Minerals went to tender in 2011 for the supply of 1,000 specialised copper concentrate containers for its Prominent Hill operation, choosing containers specially designed by the Intermodal Solutions Group (ISG) engineering team. The containers were the first in the global market to be certified to BK2 and ADG7 dangerous goods code. The shipping containers are designed for minimum product hang up which includes curved gussets in all corners, and tapered side and end walls. The containers are designed to be suitable with all tipplers in the global market, and include a pioneering lid which is automatically
locked and unlocked by the tipplers. After the successful on time delivery of the first 1,000 copper concentrate containers a further 400 more were ordered. “The new containers allow OZ Minerals to export its copper concentrate to a high environmental standard,” said OZ Minerals Project Manager Andrew Fitzgerald. OZ Minerals exported its first shipment of copper concentrate from Prominent Hill using the specialised containers in January this year from Flinders Port in Adelaide.” Intermodal Solutions Group (ISG) is the largest bulk container design company in Australia. Please visit www.intermodalsolutionsgroup.com.au or phone Garry Pinder on +61 400 035 548
BE Weekly | 21
The personal way to do business • Bobcat Loaders & Excavators • Doosan Loaders & Excavators • Omega Reach Stackers • Omega Container Handlers • Terberg Terminal Tractors • Clark Forklifts Phone: 08 8243 0788 Fax: 08 8347 1466 Email: admin@saliftandloader.com.au
www.saliftandloader.com.au
Taking Care of Operator Comfort
MooreAir is a key supply partner to Flinders Port Holdings, maintaining the airconditioning of their Container Handling Equipment. Over 35 years experience
We understand the importance of operator comfort
We have an extensive accumulated knowledge of design, manufacture and maintenance aspects of refrigeration and airconditioning for the shipping and transport industries.
We provide first class service support to ensure operator cabs for the straddles, loading cranes and forklifts are at a comfortable working temperature all year round.
Call 08 8294 2299 or visit www.mooreair.com.au
Flinders Ports A large greenfield site, it is SA Lift and Loader intended to become a deep SA Lift and Loader Pty Ltd supplies and maintains Flinders water port tailored for the Ports’ materials handling-equipment. This includes two sixtybulk commodities sector. As five tonne Omega reach stackers, a Fantuzzi reach stacker, the leader of the consortium and five Omega empty container handlers. that won the tender for this The ten-year relationship between the two companies has development, Flinders Ports resulted in an efficient method to move and store shipping containers from the ship to the customer. is currently undertaking an The guys at SA Lift and Loader are dedicated and make sure environmental impact study the equipment is available and ready when the drivers need on the project. The Port of it to move containers. Above all, managing director David Bonython is expected to Mudge and his team are good people to do business with. take around three years to www.saliftandloader.co.au build, at a cost of between $600 and $750 million. The successful growth of Flinders Ports and its various businesses is clear to see, yet evidently there is much still to come. “From a logistics perspective,” Pellizzari says, “our natural progression involves replicating what we have achieved locally on a grander scale. Through word-ofmouth alone, we are now working on several interstate projects and this will be the way forward. While we want to avoid overstretching or overcapitalising the business, what we are able to do is pick Operations at the Flinders Adelaide strategic points in the region where we ContainerTerminal can set ourselves up and invest in capital with plant, MooreAir equipment and operations.” MooreAir has been an airconditioning and refrigeration provider to the shipping industry for the past 18 years. When it comes to The company specialises in design, installation and its Adelaide Container maintenance for a broad range of industries including rail, Terminal, the company shipping, earthmoving, public transport and airport ground has a clear mission in support. MooreAir has a strong commitment to providing its front of it and that involves customers with service excellence, ensuring a comfortable tackling the issue that, at working environment at all times. current rates, the terminal www.mooreair.com.au will have reached its full
BE Weekly | 23
“We have developed a technique that is changing the way concentrates are handled and that is now being embraced across Australia, and soon the world over” capacity within 12 to 18 months. “Unlike other terminal operators,” Cheers says, “we are in a position where we have significant land holdings adjacent to and
24 | BE Weekly
around the terminal itself.” Ownership of this land will allow any future redesign of the terminal to be undertaken in the most effective way. Additionally, it provides
Flinders Ports
Flinders Adelaide Container Terminal has benefited from recent capital investment
Flinders Ports with the opportunity to establish and run empty container depots and other businesses that are ancillary to its main container operations. “In addition to having good management and a professional, dedicated workforce,” Cheers concludes, “one of the core strengths of Flinders Ports is that it has always retained a very strong ethical position. The transparency we have with our employees and clients allows them to
see the good work that we are doing and having the sort of demonstrated business record that we have, particularly in the maritime and stevedoring industry, is a very strong selling point for the growth of our business in the future.” For more information about Flinders Ports visit: www.flindersports.com.au
BE Weekly | 25
26 | BE Weekly
Walter Energy
Irreplaceable Dan Cartwright, president of Walter Energy’s Canadian operations, talks about developing reserves of a material that society can neither do without, nor replace written by: Alan Swaby research by: Dan Finn
BE Weekly | 27
Walter Energy
P
Truck being loaded at Brule
rospecting for natural resources is such a hit and miss affair that finding anything must come as a great relief. When new deposits of coal are found to consist of metallurgical rather than thermal grades, however, the champagne really starts to flow. “At the moment, iron and steel can only be made with the coke that comes from metallurgical and pulverized coal injection (PCI) coal, which makes it a very valuable, long term asset,” says Dan Cartwright, president of Walter Energy’s Canadian operations. The three mines in northeast British Columbia, operating under the Walter Energy banner, are located between the towns of Chetwynd and Tumbler Ridge, some 425 miles north of Vancouver. Walter Energy completed the $3.3 billion purchase of Western Coal in 2011 and set about optimizing the mines’ performance. When the sale was made, Western had proven and probable reserves of 140 million tonnes and output in 2010 measured 2.1 million tonnes. In the first year of Walter Energy’s regime, Western’s production doubled to 4.2 million tonnes and since the appointment of Cartwright earlier this year, the mine has even more ambitious production targets. “It’s been something of a roller coaster ride,” he says, “with demand driven largely by China – and also prices.” The talk now, though, is that inflation in China is once again under control and the brakes that had been applied to slow the economy down
BE Weekly | 29
Walter Energy are being released. “This year we will probably see a SMS Equipment is one of Canada’s leading providers of total output of 4.6 million equipment solutions and services for the construction, tonnes which will gradually forestry, mining, and utility industries. To help increase to 6 million over customers meet their needs, SMS has established the coming few years, and alliances with suppliers around the world. SMS we plan to be producing 10 Equipment is a full-line distributor of heavy industrial equipment and offers a variety of services at their million tonnes by 2020.” branches located throughout Canada. The Canadian operations www.smsequip.com are welcomed by customers as a reliable alternative to the world’s major coal supply areas and Walter’s Canadian output has been adopted as a key blend in half of the world’s ten largest steel mills. As well as hard coking coal, Walter also mines ultra-low volatile pulverized injection coal. Pulverized coal injection has been known since the 19th century but only entered commercial production less than 50 years ago when demand caused the cost of coke to jump. It is a technique that allows for cheaper coal to be used and in turn, reduces costs. The three projects in Canada are all relatively new and at various stages of development. The most advanced is the Wolverine mine, which has been in production for five years. Brule is a couple of years behind and Willow Creek is in the latter stages of development.
SMS Equipment
$3.3 Billion Purchase of Western Coal in 2011 Warren McDonald at Willow Creek
BE Weekly | 31
Delivering More. For You · Propane · Bulk fuel delivery · Lubricants · Commercial cardlock locations · Tanks & dispensing equipment · Local customer service · 24/7 on-site delivery “Bluewave Energy is a proud fuel supplier to Walter Energy – Western Coal and congratulates them on their success!”
Call – 1.866.814.6111
www.bluewaveenergy.ca
MINING INFRASTRUCTURE VOLUME EARTHWORKS ROAD & BRIDGE CONSTRUCTION AGGREGATE PRODUC TION Serving Western Canada and International locations
www.bpdltd.ca
Belvedere Place Contracting Ltd. Belvedere Aggregates Ltd. 2322 Dominion Road, Kelowna, BC V1Z 2W8 t.250.769.3811 | f.250.769.5477 | info@bpdltd.ca
32 | BE Weekly
The geology is complex and produces another kind of roller coaster ride. In certain places, the coal seam breaks through the surface of the ground only to dive away again to depths of 100 metres in other spots. All along the seam there are faults to be contended with. This part of British Columbia is deep in the Rocky Mountains and of outstanding natural beauty, providing a paradise for the fishing and hunting community. As such there is even more onus on Walter to carry out operations with the utmost environmental sensitivity, making careful mine planning key to both increasing productivity and taking care of the surrounding countryside. “It’s a surface mining operation,” explains Cartwright, “but that doesn’t mean it’s as
Walter Energy
Willow Creek south view
simple as just following the seam. The quality characteristics of the coal vary from point to point and it’s necessary to blend different grades to meet customers’ requirements. It becomes a complex juggling act to keep trucking distances short while making sure that reclamation takes place as swiftly as possible.” Walter Energy is a US company based in and around Birmingham, Alabama. Its other
mining interests tend to be in the tail end of the Appalachian Mountains. As such, Walter had had no dealing with representatives of Canada’s First Nation population, yet seems to have developed good relationships. “We work very closely with the First Nation peoples,” says Cartwright. “Their requests are reasonable and straightforward. They want us to put the land back to what it was before mining began, to provide them
“This year we will probably see a total output of 4.6 million tonnes and we plan to be producing 10 million tonnes by 2020” BE Weekly | 33
job opportunities and to give as many opportunities as possible to develop First Nation owned businesses that can be sustained beyond the life of the mines.� The local people have been caught before by sharp practices when restoration of the land resulted in grass mountains rather than slopes covered by trees and other native vegetation. So part of the deal at Walter is the development of a greenhouse
business as a joint venture with the First Nation bands where seedlings of native plants are being grown and nurtured ready for replanting. The location of the mines is fortunate in that they are within 20 miles of two established communities. In total, Walter employs around 1400 staff, more or less equally divided between the three sites and of these, about 20 percent are First
“We have introduced new working practices that make the sites safer and new technology to keep a real time eye on how equipment is functioning�
Laura Avery at Willow Creek
34 | BE Weekly
Walter Energy
Truck carrying coal at Brule
Nation people. It’s always difficult on capital intensive projects like mines to be able to purchase very much from local suppliers, but Walter does what it can in this respect to bolster local businesses. With known reserves, the mines have a maximum life of 12 years so Walter is spending heavily to find new reserves. As well as prospecting in its own territory, Walter is in a 50/50 joint venture with Anglo in an adjacent block which could produce five million tonnes a year (Walter’s share) for the next 20 years. In the meantime, the emphasis is on making the current mines more efficient. “This really means working smarter,” says
Cartwright. “We have introduced new working practices that make the sites safer and new technology to keep a real time eye on how equipment is functioning. It’s about taking out unpredictability from the way we work, which in turn means a lower cost structure that will allow us to benefit from the lower portions of the market cycle. This will provide better job security for our employees and work for the benefit of all our stakeholders.” For more information about Walter Energy visit: www.walterenergy.com
BE Weekly | 35
Growing new routes
36 | BE Weekly
Intercape Chief commercial officer Danie du Toit talks about a phase of expansion at South African coach services company Intercape, and the latest luxurious addition to the Sleepliner fleet written by: Gay Sutton research by: Paul Bradley
BE Weekly | 37
In house brake testing
Intercape
J
ust two years ago, travelling from Lilongwe in Malawi to Cape Town in South Africa, a distance of over 4,000 kilometres, would have entailed either an arduous and very lengthy car journey, or an expensive and often unreliable flight that might have included changes in Johannesburg and Harare, Lusaka or even Nairobi. Such journeys notoriously included long delays and interminable airport waiting times with, of course, the always present fear that your baggage will not arrive at your destination with you. Today, that spectacular and epic journey is possible in comfort. One simple ticket transaction can procure the entire trip on one of the world’s most luxurious coach networks, cared for by staff trained and equipped to the highest standards of safety and service. All this has been made possible by the rapid international expansion over the past two years of South African coach operator Intercape. “There has been a tremendous increase in demand for our services,” explained chief commercial officer Danie du Toit. “After two years of expansion, we can connect all major cities within seven countries; South Africa, Namibia, Botswana, Zimbabwe, Zambia, Malawi and Mozambique. And the service we provide is of the same high standard throughout, so our passengers know exactly what they will get. This has been a great differentiator for us.” It’s a tough business to be in, particularly in Africa where the road infrastructure and public driving standards pose significant
BE Weekly | 39
AS THE PREFERRED LUXURY COACH SUPPLIER IN SOUTHERN AFRICA, IRIZAR SA IS PROUD TO BE ASSOCIATED WITH INTERCAPE
For all your luxury coach requirements please do not hesitate to contact us on tel + 27 12 6611927 or e-mail us on reception@irizar.co.za
Intercape
“We introduced the Sleepliner coach in 2005 and it has set the trend in the market” challenges. Many operators have tried it and failed, but Intercape has developed a highly effective operational model over some 30 years. “It’s not easy to get right,” du Toit warned, “but we have maintained a culture of improvement throughout this time, and have improved our service year on year. Ultimately, success is a combination of the type of vehicle you put on the roads, the infrastructure you put in place to ensure the service is always reliable, comfortable and safe, and it’s down to developing business processes to deliver the same standard of service regardless of location.” Intercape’s model is based on a blueprint of best practice that is rolled out throughout the enterprise. “One element of this is that we have a set of policies and procedures that cover everything from fleet maintenance and ticket sales through to driving standards, HR and finance. Alongside this, we have an integrated IT system which is the backbone by which we run the company.” Developed in-house and continuously improved and updated, the IT system can be accessed from anywhere in the extended enterprise. That might be staff looking for real-time data and reports,
drivers and mechanics managing the coach fleet, booking staff and external agents using the integrated ticketing processes or the passenger looking for booking information online. Running a successful transport network the size of Intercape’s requires a very extensive sales and fleet support infrastructure. There are currently 30 Intercape sales offices and hundreds of authorised sales agents selling tickets across southern Africa. Meanwhile, to keep the coaches running reliably and safely, Intercape has a network of six technical depots in South Africa. Significant
Wash bay
BE Weekly | 41
Intercape
G7 Interior
investment has already gone into creating done in South Africa.” a similar support network for the crossThe vision is to continue expansion border service. There are currently depots through southern Africa, and to explore in Windhoek, Namibia, and Beira in other transport-related revenue streams. Mozambique, and the company is exploring “We are already hauling large trailers the feasibility of opening further depots in capable of carrying seven tons of luggage Zimbabwe and Zambia. and freight behind each of our cross-border The expansion programme has coaches,” he explained. “And we are looking undoubtedly been a financial and operational at ways of increasing freight transportation. success. In just two years Intercape has We also believe there is a big market for moved from being a purely South African fixed-term people transport contracts operation, to generating some 30 percent of with, for example, the mining companies. its business through crossWe are looking to enter that border services. But this, market.” du Toit believes, is only the Intercape’s enviable beginning. “Our next step is reputation for comfort, to create connecting services reliability and safety is due within the borders of our to its willingness to invest Intercape business neighbouring countries, not only in processes and now generated through creating internal transport infrastructure but also cross-border services networks just as we have in the very latest vehicle
30%
BE Weekly | 43
“We have a set of policies and procedures that cover everything from fleet maintenance and ticket sales through to driving standards, HR and finance” technology. “We introduced the Sleepliner coach in 2005 and it has set the trend in the market, bringing us great success,” du Toit said. Sleepliner is a concept unique to Intercape, and is a blend of style, technology and intelligent design. The chassis and engine come from Volvo in Sweden and the latest models comply with the rigorous Euro 3 Emissions Standards while the double deck coach body is imported from
44 | BE Weekly
the coach manufacturer Marco Polo in Brazil. Alongside the double deck coaches, Intercape runs a fleet of single deck coaches that combine a coach body from Irizar of Brazil with a Volvo chassis. “We are now in the process of updating the Sleepliner with the latest G7 model,” he continued. The first new G7 model Sleepliners are now in service, and are easy to recognise with their modern, sleek and
Intercape
Customers can be assured of a pleasant experience
aesthetically pleasing lines. Yet the real improvements in customer comfort and safety can be found inside. There is ambient LED lighting activated by motion sensors, and memory foam seats that recline to 150 degrees and are positioned to provide more leg room, making long distance journeys a much more comfortable experience. The new coaches also cater for business travellers and those with an active mind. Power sockets are provided for laptops and cell phones, transforming the travel time into a fruitful working opportunity or leisure experience. There are broader entrance doors, and these are the first coaches in southern Africa to come equipped with a wheelchair to transfer passengers with disabilities
from the entrance to their seats. From the technology perspective, the cab is equipped with the latest in situational awareness for the driver while the engine compartment has been updated to include the most advanced fire detection and suppression systems. So, as Intercape expands its routes and support network across southern Africa, and equips it with the latest invehicle technology, customers can be assured of a pleasant experience on those long scenic journeys. For more information about Intercape visit: www.intercape.co.za
BE Weekly | 45
ON the road to growth 46 | BE Weekly
Kenya Vehicle Manufacturers (KVM)
Joseph Otieno, acting managing director, discusses how KVM, and Kenya as a whole, is attracting the interest of some of the planet’s most recognisable players in the automotive industry written by: Will Daynes research by: Abi Abagun BE Weekly | 47
Kenya Vehicle Manufacturers (KVM)
W
hat the average behalf of its customers. “As a direct result individual knows about of our investment in infrastructure,” acting present day Kenya most managing director, Joseph Otieno explains, likely extends only to its “we currently have the capacity to produce natural wonders, from approximately 6600 vehicles per annum Lake Victoria, the world’s second largest working single shifts.” fresh-water lake, to the open plains of the Operating in the five key sectors of Maasai Mara. What will be less well-known vehicle assembly, bus body building, special is that, in and around its largest cities, Kenya vehicle operations, fabrication and surface is fast becoming an area of great interest branding, KVM also actively engages in the for some of the world’s biggest vehicle sale of mega tents. The primary markets manufacturers. for the vehicles that depart the company’s Incorporated in July 1974, at first under factory are located across East Africa the name Leyland Kenya Limited, the and include countries such as Tanzania, Burundi, Uganda, Zambia company adopted its current moniker in 1989. Production and of course Kenya itself. By abiding by its guiding for the company began in 1976, with the first vehicle principles of quality through rolling off its assembly sta nda rds, customer and supplier intimacy, line in August of that year. Per annum vehicle teamwork and individual Originally designed to production capacity employee participation, produce light and heavy working single shifts commercia l vehicles environmental management including Land Rovers, a nd uncompromised Range Rovers, Volkswagen Microbuses and integrity, KVM is constantly striving to Leyland trucks and buses, the model range be the benchmark vehicle build and mass produced by KVM now numbers 11 and fabricator in the region. includes Nissan Series, Land Rover, Foton “Ever since it became the first vehicle and Hyundai models. assembly plant to be incorporated in Kenya,” KVM is today owned by three major Otieno continues, “KVM has always made stakeholders, those being the Kenyan it a priority of the highest order to invest Government, which owns 35 percent, in itself through the updating of its factory CMC Holdings Limited and D.T. Dobie with world-class equipment, through the and Company, which own 32.5 percent employment and retention of technically respectively. From its plant in Thika, which gifted staff and by obtaining all of the covers an area of 40 acres, 18 of which has necessary operational quality certificates, been earmarked for further development, including ISO:9001-2008.” KVM undertakes contract assembly on In recent years KVM has also become
6,600
BE Weekly | 49
Kenya Vehicle Manufacturers (KVM) one of East Africa’s preferred producers of high quality buses. From its bus body building facility the company constructs minibuses, and medium and large buses with on board capacity ranging from 29 to 67 seats. Building according to specifications that conform to individual customer requirements, the company has successfully standardised its body frame works by building them off jig. Bus production facilities at the company’s plant are laid out in a flow line, with the actual body building being carried out on a
trolley. This layout allows the bodies to be built in advance and temporarily stored away before being attached to the vehicles’ chassis. Additionally, KVM has introduced a number of key features to its production line including the adding of fibre gas windscreens to the front and rear of its 62 to 67 seat buses. Alongside its bus body building capabilities, KVM has also built a reputation for its ability to construct tough, long lasting truck bodies, designed to suit the intended purpose of individual vehicle types. The company is able to provide its customers in this field
Apex Steel Limited Apex Steel Limited is one of Kenya’s largest integrated manufacturers and traders of building and engineering materials. From our headquarters in Nairobi, we conduct business throughout East and central Africa. Our primary focus is and has always been to deliver the best solutions to meet the needs of our clients who range from engineers, plumbers, fabricators and construction companies to hardware shops and home builders. With branches across the country, we are able to support our clients and serve them better and effectively. We have also acquired several agencies to distribute some of the world’s unique and number one product brands eg, Graco, Zinga and Bosch just to mention but a few.
2004 marked the birth of our rolling mill division, which manufactures reinforcement bars to BS4449:2005 grade 500. We are also proud to say we are the first steel manufacturer to earn the diamond mark of quality from KEBS, keeping in line with our vision. In October 2010, our light structural mill was commissioned producing angles, flats and window sections to support our engineering clients with quality products. 2012 marks the commissioning of three more lines related to tube manufacturing. Our story has just begun. E. info@apex-steel.com www.apex-steel.com
BE Weekly | 51
with trucks that possess completely covered exterior bodies, back bodies with open spaces or with side doors. One of the more exciting on-going developments involving KVM, and other vehicle manufacturers throughout the region, is the growing interest from Chinese vehicle manufacturers. At present, KVM collaborates with the Chinese company Foton Motors, assembling its Foton Sup V Double Cab and Foton Sup V Single Cab pick-up models. Although its operations in Kenya are little
more than a year old, the success Foton has already had through its partnership with KVM means that it already targeting sales of more than 5000 of its trucks across the regional market over the next two years. It is announcements like this that have further drawn the attention of other large players in the sector. “Following in the footsteps of our work with Foton,” Otieno states, “we have received a number of enquiries from other Chinese motor vehicle firms that are interested in the possibility of having their models assembled
“In recent years KVM has become one of East Africa’s preferred producers of high quality buses”
KVM undertakes contract assembly on behalf of major auto manufacturers
52 | BE Weekly
Kenya Vehicle Manufacturers (KVM)
KVM constructs buses with on board capacity ranging from 29 to 67 seats
here in Thika. We are seeing such interest building as more Chinese businesses are now looking to acquire manufacturing capabilities in Africa.” Kenya in particular is a very strategically beneficial place for these businesses to be as it is able to provide the means to penetrate the East Africa market, which many view as a strong area of future growth. KVM’s presence within a country that is rapidly growing into a regional hub for automobile manufacturing is enough in itself to give it optimism for the future. Otieno, however, knows there is a lot more the company can do to capitalise on this.
“The sheer number of opportunities, as it relates to vehicle assembly, that are arising in this part of the world means that we foresee our assembly operations increasing quite dramatically. What we need to do meanwhile is continue to invest in our equipment, our processes and our people. By doing so we will be able to maintain and even improve on the quality levels that we have spent nearly 40 years being known for.” For more information about Kenya Vehicle Manufacturers visit: www.kvm.co.ke
BE Weekly | 53
Anyone for coffee? This Kenyan tea and coffee producer has paved the way to growth with diversification into retail and is cutting costs by generating its own electricity written by: Alan Swaby research by: Paul Bradley
54 | BE Weekly
Sasini
BE Weekly | 55
Sasini is one of Kenya’s leading producers of coffee and tea
Sasini
J
ust look at the international growth of chains such as Starbucks and it seems that coffee has entered a truly golden era. In the 12 months to September 2011, world coffee exports increased by 9.4 percent to a historical record of 103 million bags – or over 6 million tonnes! Two thirds of this comes from South America, which means that the contribution from Africa in general and Kenya in particular is in the minority. Nevertheless, it must be a worry for the Kenyan economy that while demand is booming, Kenya’s coffee industry is not capitalising to the full extent. For some years now, the trend in production has been heading south. In the period in question, output fell a massive 30 percent to just 19,600 tonnes. At the root of the matter are depressed prices. Last year saw something of an improvement with average prices of US$6.61/kg compared to $3.91/kg for the year before, but add low prices to erratic climatic conditions and the end result is that small growers are abandoning the crop at an alarming rate. Compared to an all-time high of 170,000 hectares under cultivation, the figure now stands at 150,000 ha. Within this overall gloomy picture, though, there is at least one bright spot. Sasini is one of Kenya’s leading producers of coffee and tea. In fact, through a network of subsidiary companies, Sasini has also developed markets in dairy livestock, horticulture and tourism, generating revenues of over KSh2.6 billion. From its headquarters in Nairobi, it controls
BE Weekly | 57
Sasini
Coffee harvest
“Through a network of subsidiary companies, Sasini has also developed markets in dairy livestock, horticulture and tourism” operations in all parts of the country and is an important contributor to the economy through the 5000 direct and indirect employees it engages. In fact, Sasini is one of the elder ‘statesmen’ of the Kenyan economy and is certainly one of the longest standing companies on the Nairobi stock exchange. The business started in 1952 while Kenya was still a British colony. Queen Elizabeth was actually in Kenya when she learnt she had become queen on the death of her father. From the original one farm, the operation
grew rapidly and by 1960, it had gone public. Currently Sasini is focused on adding value to the various divisions of the business, implementing systems that improve the quality, quantity and value of products for the future. For example, once the coffee beans are harvested they pass through Sasini’s own mill – generally considered to be one of the most modern and productive in the country. In order to create a sustainable business and cut down on energy consumption, Sasini is taking electricity generation into
BE Weekly | 59
Show the world what your company has to offer with our tailored packages
Seen www.bus-ex.com
Sasini its own hands. Last year, the company successfully Barclays is a major global financial services provider applied for funding from the engaged in retail banking, credit cards, corporate Energy and Environment banking, investment banking and wealth management Partnership Programme with an extensive international presence in Europe, the for the development of Americas, Africa and Asia. With over 300 years of history a micro-hydro power and expertise in banking, Barclays operates in over 50 countries and employs 147,500 people. generation project. It also With a clear focus on quality relationships, Barclays plans to convert the coffee provides integrated banking solutions to businesses, large husks into briquettes that local companies, financial institutions and multinationals. can then be burnt to feed We facilitate the success and growth of our clients by thermal generation. The providing lending, risk management, cash and liquidity programme is funded by management, trade finance and asset and sales financing. the governments of Finland www.barclays.com and Austria through the Development Bank of South Africa and has the primary aim of helping to eradicate poverty through ecologically sustainable development projects. While the West is in love with coffee, the drink of choice in the East is tea. Demand has pushed prices up through the past five economically depressed years and there has been a steady rise in global production that has so far failed to outstrip demand to the point where last year an estimated four billion kilogrammes of tea were produced. The prospects for farmers seem bright. The steady urbanisation of China (in particular) is reducing the amount of land
Barclays
5,000 Direct and indirect employees of Sasini Sacks of coffee beans
BE Weekly | 61
under cultivation in Asia and opening more opportunities for other countries to take up the slack. Having said that, erratic weather patterns are not helping and overall tea production in Kenya is expected to be down thanks to the lack of rain in the early part of the year. Sasini’s tea operations are conducted through the Kipkebe subsidiary which controls two large tea factories with a combined capacity of 8.5 million kgs of CTC tea annually. Two thirds of this comes
from Sasini’s own farms while the balance is bought from independent growers. Sasini’s tea is grown in estates located west of the Rift Valley, in the Nyanza Province where climatic conditions are at their best. The estates are at an average altitude of 6000m above sea level and fall between the equator and 10° S latitude. Average annual rainfall is in the region of 1600mm, ideally spread over virtually the whole year. Having established the right conditions and infrastructure needed for its agricultural
“Sasini has created a retail division to manage the marketing of its tea and coffee on the local scene”
Two-thirds of Sasini’s tea comes from its own farms
62 | BE Weekly
Sasini
Coffee beans are processed in Sasini’s own mill
endeavours, Sasini has turned its attention to growth through finished products. Rather than simply providing a commodity product subject to the whims of an international market, it has created a retail division to manage the marketing of its tea and coffee on the local scene. Sasini has made an initial investment of KSh100 million to be spent on value addition. It has developed a range of tea and coffee brands with varying prices with the aim of having something to suit all tastes and budgets. Periodically, new brands are launched to keep the range fresh and in line with market demands. Sasini has even entered the service end of the retail spectrum. It’s no stranger to the hospitality industry as it has an interest in
some of Kenya’s leading tourist destinations. Now it has added and expanded the Savannah Lifestyle coffee lounges to its portfolio with seven outlets strategically located to serve both visitors to some of Nairobi’s attractions and members of the indigenous managerial classes working in some of the city’s most illustrious buildings. Activities such as these are seen by the directors of Sasini as the way for all developing countries to go, to create wealth within their own borders rather than simply exporting raw commodities. For more information about Sasini visit: www.sasini.co.ke
BE Weekly | 63
All about oil SCOP shows how complex engineering projects can be delivered in a challenging environment through innovative contracting and creative partnership models written by: John O’Hanlon research by: Jon Bradley
64 | BE Weekly
State Company for Oil Projects (Iraq)
BE Weekly | 65
Iraq is planning to double its refinery capacity by 2017
State Company for Oil Projects (Iraq)
W
hatever the truth about and export targets. According to the World the conflict in Iraq Bank an additional $1 billion per year would being driven by the need to be invested just to maintain current US’ desire to secure its production. Long-term reconstruction costs interest in the country’s in Iraq could reach $100 billion or higher, of oil reserves, in the era following the which more than a third will go to the oil, overthrow of Saddam Hussein in 2003 its gas and electricity sectors. Another challenge story without doubt has been ‘all about oil’. to Iraq’s development of the oil sector is Though the data are still unreliable (official that resources are not evenly divided across statistics have not been revised since 2001 sectarian lines. Most known resources are in and are largely based on two dimensional the Shia areas of the south and the Kurdish seismic data dating back to the 1970s), north, with few resources in control of the the current government thinks that Iraq’s Sunni population in the centre. oil reserves are the largest in the world, International investment is therefore amounting to upward of crucial to boost the Iraqi economy. At present there 350 billion barrels. Even the are three major Iraqi oil independently confirmed refineries, the Baijia and levels of 143 billion barrels put Iraq at third place in the Doura refineries in Baghdad world league. and one at Basra in the south. This is a country that The total capacity of these has maintained itself on oil refineries is approximately Barrels of oil reserves 720,000 barrels per day throughout its unfortunate estimated by Iraqi (bpd); however, at present recent history. Through government two Gulf wars and its illthey are all working at below advised invasion of Kuwait their capacity, producing and a long period of sanctions that led up something in the region of 500,000 bpd. Iraq is now planning to double its refinery to the invasion of 2003, oil has accounted for something in the region of 95 percent capacity by 2017 and a vast number of oilfield of its foreign exchange earnings. Even now service, development and extraction projects nobody seems certain how much oil and gas need to be put out to tender. This is the job of remains to be discovered. the State Company for Oil Projects (SCOP), Following its virtual destruction, Iraq’s which as an entity within the Ministry of Oil oil infrastructure needs to be modernised, implements petroleum and gas projects. The and that will take a great deal of investment. company employs international methods A large reconstruction programme and standards in preparing basic and notwithstanding, the Iraqi oil industry has detailed designs, materials and machinery not been able to meet oil and gas production supply, site project execution, testing and
350
Billion
BE Weekly | 67
“Our Customers Power Partner to Success”
NKA are specialist suppliers of engineering equipment to the Oil and Gas industry.
Our capabilities include: • Trucks and Machinery • Power Generators • Pumps • Vales • Drilling
NKA Engineering Cyprus Ltd.
11 Ag.Georgiou ST. Engomi, 2411 Nicosia, Cyprus T: 00357-22875790 E: awadalla@cytanet.com.cy
State Company for Oil Projects (Iraq)
nka engineering cyprus ltd. NKA Engineering Cyprus Ltd specialises in supplying engineering equipment for the oil and gas industry such as heavy machinery, earth moving vehicles, pumps, valves, and pipes. NKA was one of the first companies to cooperate with and contract for the Iraqi Oil Ministry companies (the State Company for Oil Projects; the Oil Exploration Company; the Oil Pipelines Company; and the South Oil Company). NKA assures the highest technical specifications of its products, competitive prices, on-time delivery, installation and training for engineering staff, genuine spare parts from original manufacturers. This is to ensure our customers’ satisfaction and to achieve our goal of being ‘Our Customers’ Power Partner to Success’. NKA has successfully introduced and marketed products of leading European and American companies in the world, working with them to provide the best service for our clients. These companies include: Michael Byrne Manufacturing; URACA; SPM Weir; FFG Flensburg; MKGExport; Reed Hycalog Middle East; FG Wilson; Cummins; and ITP Group. We supply pumps (filling pumps, hydrostatic pumps and high pressure test pumps); valves (relief valves, check valves, plug valves, swivel joints, steel hose loops and pipe, hummer unions, manifolds
and butterfly valves); drilling machines (horizontal drilling boring machines and horizontal directional drilling machines); trucks and machinery (lorries with cranes, low loaders, dumpers, vacuum and jetting vehicles, service vehicles and mobile workshops); generators; other oil and gas equipment (wellhead control systems, gas dehydration packages, oil and gas filtration and separation systems, and heaters and exchangers). Our projects in the Republic of Iraq have included with SCOP: lorry with crane, FG Wilson generators, URACA triplex test pumps, agriculture tractors, and MKG tippers; with OPC/SCOP: FFG slit emptying tanker, and MKG lorry with crane; with SOC: Cummins generators, mobile workshop, SPM flang and Ckisan pipe, Reed Hycalog drilling bits, FFG vacuum vehicle (VACHAVL), and ITP well head test separators. E. awadalla@cytanet.com.cy
BE Weekly | 69
We have your solution on land and sea
Drilling, Production and Construction Equipment Exporter Phone: +1-281-821-3737 | Fax: +1-281-821-3758 | www.tradequipsm.com
Weekly Because a month is a long time to wait... Your weekly digest of business news and views www.bus-ex.com
State Company for Oil Projects (Iraq) engineering inspection Tradequip Services and Marine, Inc for pipelines and tanks Tradequip Services and Marine, Inc. is a worldwide exporter and welding works, to of drilling, production, and construction equipment ensure performa nce supporting our clients’ oil and gas activity. TSM works of projects during closely with clients to help specify, procure, and deliver commissioning and test-run. the highest quality equipment and components quickly to Each project has its prevent operational downtime. Our worldwide locations allow us to work closely with own budget and SCOP OEMs stationed around the globe to inspect, package, and works with its approved coordinate delivery. contractors to specify a www.tradequipsm.com schedule for completion. It also prepares basic designs for each project, inviting tenders whether for the whole job or in parts. Once proposals have been approved, SCOP moves on to detailed design, including preparation of bills of materials, equipment requirements, tender documents, contracts, and moves on to oversee the execution of the project right up to the hand-over point. One of the biggest projects coming up is the new refinery to be built at Kirkuk, in Kurdish northeast Iraq. The Kirkuk oilfield discovered in the 1920s is the hub of northern Iraqi oil production. SCOP will be offering the construction of the Kirkuk oil refinery to international companies on a build, operate and own (BOO) basis in December 2012. Under a BOO contract, a private company is granted the right to develop, finance, design, build, own, operate, and maintain a project. The Iraqi oil industry has not been able to meet oil The private sector partner owns the project and gas production and export targets
“One of the biggest projects coming up is the new refinery to be built at Kirkuk, in Kurdish northeast Iraq” BE Weekly | 71
ENGINEERS & CONTRACTORS FOR THE IRAQI OIL & GAS DEVELOPMENT SINCE 1980 Progetti Europa & Global is an Engineering & Contracting Company, that operates on behalf of Private and Public Companies in the design and implementation of Oil & Gas Plants and Infra‐ structures since 1970, both in Italy and abroad. PEG is active in the field of Oil & Gas facilities, petrochemical and energy production plants, for EPC contracts. The experience acquired during more than thirty years working for the Ministry of Oil (MOO) in Iraq , has allowed PEG to participate, supporting IOC in the ongoing Rehabilitation and Develop‐ ment Programs for the Oil Fields in South Iraq . MAIN AREAS OF SPECIALIZATION ● Process Units for upstream plants ● Utilities & Offsite Facilities ● Liquid metering and filtering stations ● Oil & Gas Transportation Facilities (pumping, metering and valves stations, etc.) ● Pre‐assembled modularized units (skid mounted) SKILLS ● EP & EPC contracts ● Pre – investments studies ● Basic design and Front End Engineering design (FEED) ● Detailed Engineering design ● Procurement services ● Project management ● Construction ● Commissioning & Start ‐ up Phone + 3 9 0 6 . 8 8 . 1 7 . 4 1 global@progettieuropa.it www.progettieuropa.it
State Company for Oil Projects (Iraq)
Iraq plans to build four refineries across the country to meet increasing domestic demand
outright and retains the operating revenue more than 150,000 barrels per day of oil.” risk and all of the surplus operating revenue Companies from the US, China, Korea, in perpetuity – this is an increasingly Saudi Arabia and the UAE have expressed popular way for governments to fast track their interest in bidding for the project and major infrastructure projects since it shifts construction is expected to be completed by the risk to the contractor, in exchange for the end of 2016, he said. The Kirkuk refinery project is part of the very considerable upside potential. As Salar Ameen, deputy chairman of oil ministry’s plan to build four refineries Iraq’s National Investment across the country to meet Commission (NIC) has increasing domestic demand. commented: “Feasibility These refineries, located studies are ongoing with in Maissan, Karbala, and two Italian and American Nassiriyah as well as Kirkuk advisers. The Iraqi oil will have a total capacity ministry will make public of 740,000 bpd of oil at an the specifications before the estimated cost of $20 billion end of the year. The refinery and are being planned purely Value of refineries will cost approximately $6 to satisfy domestic demand. planned across Iraq billion with a capacity of However as Dr Ali Hussain,
$20
Billion
BE Weekly | 73
one of the Middle East’s most respected independent oil consultants has commented: “There is a need to build a further refinery with the sole purpose of exporting oil products. This would need to be a large facility with a capacity of at least 500 million barrels, and if located in Basra near the Gulf, the refinery would be in a prime location to export its products.” The opportunities for overseas engineering firms and O&G equipment suppliers used to working within large EPC projects are manifold, and among the international firms which have already secured contracts or expressed interest are Foster Wheeler, the Shaw Group, Technip, Saipem, KBR and Penspen. As an example, in August 2012 the UK oil and gas engineering group Penspen signed an agreement with Siemens to provide engineering and procurement services for a new simple cycle power plant in Southern Iraq. Siemens had agreed a base scope with SCOP to work on the engineering and supply of the power plant and had in turn contracted Penspen to provide engineering and procurement services for the balance of plant. Under the terms of the agreement, Siemens is to provide the engineering and supply of the power island on the Al Fao peninsula, and Penspen will provide the remaining engineering and supply of the balance of plant (BOP) equipment/materials.
SCOP will offer contracts
Work began in August and is expected to go on until 5 October 2013. There is also potential for a further additional scope of works to be agreed. Senior project manager Eduard Ilie said that this would be an important project as it would provide a solid basis for the further development of the company’s presence in Iraq and throughout the Gulf Region. While SCOP and its energetic directorgeneral Ms Nihad Ahmad Moosa will be fully stretched to deliver such ambitious refinery
“There is a need to build a further refinery with the sole purpose of exporting oil products” 74 | BE Weekly
State Company for Oil Projects (Iraq)
s for the Kirkuk oil refinery to international companies on a build, operate and own (BOO) basis in December 2012
targets, SCOP has the advantage of having formed excellent working relationships with its multinational partners. The global engineering and construction company and power equipment supplier Foster Wheeler has worked closely with SCOP to develop strategically important projects like its ongoing FEED (front end engineering and design) contract for the new 300,000 barrels per stream day (bpsd) grassroots refinery at Nassiriya. The proposed world-scale refinery is being designed to be capable of processing 300,000 bpsd of indigenous crude oil to produce LPG, regular, premium and super grade gasoline, aviation turbine kerosene, kerosene, light gas oil, heavy diesel oil, fuel oil and asphalt, all meeting international product quality specifications.
SCOP has another key objective beyond simply getting the infrastructure built – it wants to acquire world class designs and practices. Accordingly Foster Wheeler is helping to train 35 Iraqi nationals in stateof-the-art study and FEED projects. In February this year the contractor provided in-depth training in successful feasibility studies to a group of five chemical engineers from SCOP, South Refineries Company and the Iraqi Ministry of Oil – merely a first step in a much larger technology transfer programme, claims the company. For more information about State Company for Oil Projects (Iraq) visit: www.scop.gov.iq
BE Weekly | 75
76 | BE Weekly
Progetti Europa & Global (PEG)
Founder and president Paolo Trocca talks about how Progetti made a name for itself in the Middle Eastern oil business by playing it straight written by: Alan Swaby research by: Jon Bradley
BE Weekly | 77
T
here is an oil and gas industry in days, almost all the work done for the oil and Italy – but not much of one. In gas sectors involves the engineering, supply 2008, the BP Statistical Energy and commissioning of specific modules and Survey estimated oil production in some cases their installation as well. there at an average of 121,000 “When units such as sulphur recovery barrels of crude oil per day or 0.15 percent units, ammine plants, etc, are included in the of the world’s total. scope of work we do not create something On the other hand, though, Italian new,” says Trocca. “In these cases we can engineering companies do have a real buy the basic design from the holders of the presence in the oil and gas world, where the technological intellectual property and build six legged dog logo of ENI is particularly the equipment according to the plans we well known throughout Northern Africa receive. Having said that, on our metering and even as far afield as the systems, although we do use US and China. On a more proprietary components, modest level is Progetti we have developed our Europa & Global (PEG), a own exclusive software which controls how these Rome based, family owned engineering company components work.” that has been doing R ather tha n new business in the Middle technology, what PEG does East and Northern Africa like to offer is old fashioned Contract to build a new for 40 years. professiona lism. “We pumping station at Al like to remain absolutely “There are two distinct Habaneya straight and always work sides to our company,” says founder and president Paolo to the highest standards,” Trocca. “We do a lot of front end engineering says Trocca, “doing our best to meet the design and PMC (project management agreed delivery dates.” consultancy) for infrastructure projects Another official pat on the back occurred but the majority of the time we are involved at the start of the year when PEG was with engineering and supply of GOSP (gas awarded the first EPC project issued by oil separation plants) for the upstream oil SCOP (State Company for Oil Projects) in and gas process.” Iraq, since the 2003 war. The €72 million PEG’s first contribution to the oil business contract to build a new pumping station at was concerned with providing engineering Al Habaneya, not far to the west of Baghdad services, but when many years ago it was is also at the upper end of projects ever asked to design and build a complete oil tackled by PEG and due to be completed by metering package, the company took the the end of February 2014. opportunity and never looked back. These Interestingly, PEG has opted to take on
€72
Million
78 | BE Weekly
Progetti Europa & Global (PEG)
Site survey during construction works
180 km Super-highway between the Tunisia/ Libya border and Egypt
Crude oil stripping column
80 | BE Weekly
work involving fabrication without its own manufacturing facilities. In Trocca’s eyes, this gives the company the maximum operational flexibility possible while at the same time removing the need to made heavy investments in plant and equipment and the responsibility of keeping a factory fully occupied. “We do like to subcontract fabrication to Italian companies,” he says, “but we don’t have any regular arrangements with particular businesses and in any case, fabrication in Italy is not always possible or practical. Sometimes, clients want to increase the local content of a contract and then we find suitable fabricators closer to the project site. At other times, the cost of transporting especially large modules outweighs the value of the equipment, so again it makes sense to manufacture near the site. This business model gives us great agility but it does place considerable responsibility on our inspection teams to make sure that things are done as they should be.” Coming back to the different types of activities PEG runs, it’s not easy to compare the contribution to the company from the two sides of the business. Certainly, the oil and gas sector brings in the majority of revenue earned as it contains a considerable
Progetti Europa & Global (PEG)
Dehydration and desalting unit
element of materials and capital equipment, while the management and engineering services purely reflect manpower used. The latter is useful, however, as it provides Italian based income, but as expenditure on infrastructure has been hit by austerity measures there, looking outward is much more rewarding. Trocca is anticipating the time when three members of his family who are in their forties, will take over full control of how the business is run. “We know,” he says, “that to lift our company from the €40 million bracket, where we are at the moment, to an €80 million level, we shall have to broaden our horizons both geographically and in the scope of work we handle.” No doubt PEG will be hoping for more contracts like the recently announced super-highway between the Tunisia/Libya border and Egypt – an 1800km three lane road across the top of North Africa for which
Progetti as part of an Italian consortium has won the PMC contract. The company has already identified gas treatment as a growth sector as nuclear energy is scaled back and replaced by gas powered power plants. Trocca envisages that the same professionalism that built PEG’s reputation with state and private oil companies will serve it well in taking on tier 2 projects for key modules of the plant involved with gas production. “Thirty years ago, it was the relatively modest work we were doing on oil metering systems that got the business recognised and opened the door to bigger things and we will be working towards the same scenario again in the coming decades.” For more information about Progetti Europa & Global (PEG) visit: www.progettieuropa.it
BE Weekly | 81
Mobile You can now read our latest magazines on your mobile devices
iPhone
iPad
iPhone
iPad
Most popular devices supported (no app download necessary)