Breakbulk Africa 2016 Preview

PREVIEW A special publication from Breakbulk Events & Media

MARKET INTELLIGENCE FOR THE PROJECT CARGO INDUSTRY

IN ADVANCE of AFRICA’S

LEADING EVENT

FOR TRANSPORT AND LOGISTICS SPECIALISTS

BREAKBULK AFRICA 2016

6-7 APRIL, EMPERORS PALACE (Centre Court), JOHANNESBURG, SOUTH AFRICA

intro

/ contents

TWO DAYS TO A BETTER WAY TO BUILD BUSINESS

I

NDUSTRY KNOWLEDGE, rela-

tionships and timing can determine business success. Attending Breakbulk Africa can help with all three.

Spend two days at Breakbulk Africa, the continent’s leading exhibition and conference for the project cargo and breakbulk industry, and gain critical insight on project development across Africa, meet decision makers who award transport and logistics contracts and network with other companies to forge the links needed for a reliable supply chain. It all happens 6-7 April at the Emperors Palace in Johannesburg.

You will meet an unprecedented number of cargo owners – manufacturers, EPCs, EPCMs and project owners, thanks to the longstanding and expanding network of VIP shippers BREAKBULK AFRICA Breakbulk has established over its

BY THE NUMBERS 26-year-long presence. This year we have undertaken a big effort to increase the presence of African shippers in both attendance at the event and with planning the conference program. In January, Breakbulk Events & Media hosted FULL DAYS OF CONFERENCE SESSIONS, a gathering for cargo owners to EDUCATION introduce them to Breakbulk Africa AND NETWORKING and learn their views on issues affecting energy, infrastructure and mining development in Africa. (See photos and video from the event on page 6.) Expect the opportunity to meet more than 150 cargo owners at the event.

CARGO OWNERS You will hear news and analysis from conference speakers and instructors of the on-the-floor micro-seminars and exhibitor-led sessions. Professor Lyal White, director of the Centre for Dynamic EXPERT SPEAKERS Markets at the Gordon Institute of AND INSTRUCTORS Business Science in Johannesburg will deliver the opening keynote and offer a realistic assessment of project opportunities. Attend the Africa Energy panel for a comprehensive look at Africa’s energy COUNTRIES REPRESENTED prospects from Sarens, South

BY ATTENDEES Africa Power Producers, Siemens and ABB. Africa’s ultra-important mining sector will be covered by

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150+ 30+ 35+

2 BREAKBULK AFRICA PREVIEW www.breakbulk.com/africa

executives from ERG Africa, FL Smidth, Hatch Goba and WorleyParsons. Looking for business in Francophone Africa? We have back-to-back sessions for you. On Day 2, the discussions will turn to tackling Africa’s rail infrastructure, its shipping challenges and port development.

Our focus on Africa extends all year round with in-depth editorial in Breakbulk Magazine (published bi-monthly) and everyday on our website breakbulk.com.

We’ve included several articles from the current issue, as well as important material from 2015 and a sampling of news posts.

Join us at Breakbulk Africa 2016 where our coverage comes alive. You will have the opportunity to connect with fellow suppliers on the exhibition floor as well as during scheduled networking activities. The Breakbulk Africa Gold Networking pass gives you entrance to the exclusive coffee breaks, luncheon and evening reception.

Register today for the event because building business is all about being at the right place at the right time.

Best regards, Mark Rimmer Event Director – EMEA Breakbulk Events & Media mrimmer@breakbulk.com +44 (0)20 7596 5260 +44 (0) 7717 848 953

ABOUT THE COVER: Bertling Region: Sub-Saharan Africa Client: Sandvik Material Handling Africa Project Site: Assmang Iron Ore, Katu, Northern Cape Bertling South Africa was appointed by Sandvik Material Handling Africa for the movement of 2 x ROM Stackers & 1 x Reclaimer from Masan, Korea to Kathu in the Northern Cape. This consignment consisted of 261 pieces at a total weight of 799 668kgs/8 675cbm. BBC Idaho departed from Masan on 17 August 2011 arriving in Richards Bay on 8 September 2011. The vessel discharge in Richards Bay was closely supervised by our experienced project team.

Photo Courtesy of F.H. Bertling Logistics (Pty) Ltd Credit: Hansie Myburgh Photograph www.hmphoto.co.za

MARCH 2016

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4B REAKBULK AFRICA

AGENDA-AT-A-GLANCE

6V IP SHIPPER CLUB RECEPTION

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PROJECT DEVELOPMENT

2016 OUTLOOK

SUB-SAHARAN AFRICA IN 2016 – A PROJECTS PERSPECTIVE

15 INVESTMENT

TRADING PLACES

STARTING FROM SCRATCH African Projects Test Limits of Infrastructure

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18 KEYNOTE PREVIEW

ECONOMIC OUTLOOK: A NEW NORMAL FOR AFRICA

19 KEYNOTE PREVIEW

WHAT WILL IT TAKE TO DEVELOP RELIABLE RAIL IN AFRICA?

Carriers Ride China’s Wave of Africa Projects

CURRENT ISSUE TAKING THE FAST TRACK ■ TRADING PLACES ■ RIDERS ON THE STORM ■ SHORE SOLUTIONS

ISSUE 1 / 2016

MANAGING DIRECTOR Alli McEntyre / +353 87 381 4021 amcentyre@breakbulk.com EDITORIAL DIRECTOR Gary G. Burrows / +1 904 535 5460 gburrows@breakbulk.com NEWS EDITOR Carly Fields carly@breakbulk.com DESIGNER Catherine Dorrough

ACCOUNT MANAGERS Advertising Kathleen Pinson / +1 423 598 2264 kpinson@breakbulk.com Manager for West, East & North Africa Kingsley Ekweariri / +1 353 89 952 4754 kekweariri@breakbulk.com Manager for Southern Africa Jodi Haigh / +27 83 710 9788 jodi@breakbulk.com

SUBSCRIPTIONS To subscribe, please visit www.breakbulk. com/breakbulk-subscriptions-2016.

after dark

SPECIAL

2016

SUPPLEM

ENT INSID

E!

A publication of ITE Group plc Transport & Logistics business 105 Salisbury Road London NW6 6RG, UK.

UP FOR THE

CHALLENGE? PROSPECTING FOR OPPORTUNITIES IN 2016

www.breakbulk.com/africa BREAKBULK AFRICA PREVIEW 3

agenda

BREAKBULK AFRICA AGENDA AT-A-GLANCE

14:15–15:00 Super Session, Part I: Negotiating Francophone Africa’s Customs and Trade Barriers

This panel will be presented in French with simultaneous translation into English.

Bolloré, Cameroun (GICAM), Aberdare Cables, Intermarine, LCA Africa Logistics

WEDNESDAY, 06 APRIL 2016 08:00–17:00 Registration Hours 08:00–09:00 Networking Welcome Coffee 09:00–09:10 Conference Sessions Welcoming Remarks

15:00–15:30 Networking Coffee

15:30–16:00 Super Session, Part II: Business Opportunities in Francophone Africa

Africa Project Access

16:00–16:20 Welcome to Ekurhuleni Executive Mayor Cllr Mondli Gungubele

Gordon Institute of Business Science

10:00–10:50 Lighten Up: Africa Renewed

Africa’s Power Sector Outlook Whitehouse & Associates, Sarens Cranes, South Africa Independent Power Producers Association, Siemens RSA, ABB

11:00–11:30 Networking Coffee

SPONSORED BY

11:30–12:30 African Mining and Project Logistics: EPCMs, Owners & Shippers Round Table Greiner Mendi & Associates, ERG Africa, FL Smidth, Hatch Goba, WorleyParsons

12:30–14:00 Networking Luncheon 14:00–14:15 Francophone Super Session Welcoming Remarks

This panel will be presented in French with simultaneous translation into English.

09:10–09:50 Opening Keynote – Africa’s Near Future: The Good, the Bad, the Hype and the Hope

SPONSORED BY

16:20–16:30 Closing Remarks 16:30 – 18:00 Networking Cocktail Reception

SPONSORED BY

MICRO-SEMINARS & EXHIBITOR-LED SESSIONS

10:30–11:20 Exhibitor-led Session 1: The Talk about Cargo Insurance

11:30–12:20 Micro-Seminar 1: Watch Out! Does Your Contract of Affreightment Correctly Cover Your Cargo Movement?

14:00–14:50 Micro-Seminar 2: Update on Implementation of the Weigh Station Law

15:00–15:50 Micro-Seminar 3: Supply Chain – The Links and the Kinks

To register for Breakbulk Africa, please visit http://www.breakbulk.com/register-bbaf2016

4 BREAKBULK AFRICA PREVIEW www.breakbulk.com/africa

MARCH 2016

VIDEO: VIP Shippers Respond: Why Should You Attend Breakbulk Africa 2016?

VIDEO: Introducing Breakbulk Africa 2016

11:30–12:20 Special Presentation: Oil and Gas Outlook

THURSDAY, 07 APRIL 2016 08:00–15:30 Registration Hours 08:00–09:00 Networking Coffee

African Ports Double Down Namport, Richards Bay Coal Terminal

14:50–15:00 Closing Remarks

09:00–09:10 Welcoming Remarks 09:10–09:50 Day Two Keynote – African Rail Outlook NEPAD Business Foundation

10:00–10:50 You Can’t Get There From Here: Africa’s Shipping Challenges PROM (Projects, Oil & Gas, Marine Logistics) Southern Africa, Edodo, Thorpe & Associates, Mendi Maritime, Safmarine, Meihuizen International

11:00–11:30 Networking Coffee

14:00–14:50 Calling All Project Cargo:

SPONSORED BY

12:30–14:00 Networking Luncheon

SPONSORED BY

15:00–15:30 Networking Coffee

SPONSORED BY

MICRO-SEMINARS & EXHIBITOR-LED SESSIONS

10:30–11:20 Exhibitor-led Session 2 11:30–12:20 Exhibitor-led Session 3 14:00–14:50 Exhibitor-led Session 4: Claims Procedures

15:00–15:50 Micro-Seminar 4: Lessons Learned: Medupi Power Station

Join us on Facebook: https://www.facebook.com/BreakbulkAfrica/ Connect with us on Twitter: https://twitter.com/Break_Bulk LinkedIn: https://www.linkedin.com/company/breakbulk-events-&-media Instagram: https://www.instagram.com/break_bulk

www.breakbulk.com/africa BREAKBULK AFRICA PREVIEW 5

vip shipper club

THE BREAKBULK VIP SHIPPER CLUB

is an invitation-only membership program for executives of project owners, EPCs and manufacturers involved with project cargo.

Our speakers are often drawn from this group, providing unparalleled business networking opportunities for exhibitors and delegates. The Africa branch is particularly active with more than 80 members, both local and international.

On 27 January, Breakbulk Africa VIP Shipper Club members gathered at the Protea Hotel Fire and Ice! to prepare for Breakbulk Africa 2016, 6 – 7 April in Johannesburg. Hosted

by Breakbulk’s Lars and Gizelle Greiner and Jodi Haigh, the reception provided a great networking opportunity and included a preview of the event.

Several of these key decision makers shared their views on the importance of attending Breakbulk Africa, what type of companies they were looking to meet at the conference and where they see the opportunities and challenges for new project development in Africa. See all of the video interviews.

VIDEO: Welcome to the Party

VIP SHIPPERS:

ABB

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Aberdare Cables

6 BREAKBULK AFRICA PREVIEW www.breakbulk.com/africa

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AEL Mining Services

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Africa Project Access

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African Mining MARCH 2016

ROW 1: (Left to right): Peter Dikhuba, Mendi Rail, Ensten Steyn, Voestalpine Gizelle Greiner, Breakbulk Events & Media, Felicia Nombulelo, Engen Limited, Napo Ramodipedi, Mendi Rail ROW 2: Helena McCabe, Basil Read Paul Runge, Africa Project Access Douglas Chauke, Mendi Rail, Hlubi Shivlanda, Samsung Electronics Jaco Snyman, University of Pretoria, Hugo Derksen, BASF Holdings, Kabelo Serutle, University of Pretoria ROW 3: Archie Barnwell, Hatch Goba; Gizelle Greiner, Breakbulk Events & Media, Francois duToit, Hatch Goba Hlubi Shivlanda, Samsung Electronics

VIDEO: What VIP Shippers Expect at Breakbulk Africa

Network

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Air Liquide Southern Africa

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Alstom

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Anglo American

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Aurecon

www.breakbulk.com/africa BREAKBULK AFRICA PREVIEW 7

project development

STARTING FROM SCRATCH

This story originally ran in the July/August 2015 issue of Breakbulk Magazine.

AFRICAN PROJECTS TEST LIMITS OF INFRASTRUCTURE

P

alma in Mozambique is a small unassuming fishing village in the north of the country. Situated in dense jungle there are few roads, the locals live in scattered mud huts and hardly, if at all, speak English.

Those locals vary from friendly fishermen to gun-toting rebels. There are snakes

VIP SHIPPERS:

– the poisonous kind – and hordes of mosquitoes, the malaria kind. The current port is nothing but a stretch of beach and the airport a dirt strip. Drinking water and electricity is as hard to find as the shops.

This unassuming place is where Anardarko Petroleum Corp. plans to build a gas-export project, one of the biggest of

Aveng Trident Steel

8 BREAKBULK AFRICA PREVIEW www.breakbulk.com/africa

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Babcock

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its kind, to recover gas reserves of 250 trillion cubic feet in the region.

It’s a project of enormous proportions, not least because of the lack of even basic infrastructure to support the development.

But ask any project manager in Africa what the minimum infrastructure

Baker Hughes

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BASF Construction Chemicals SA MARCH 2016

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The site of the new airport on the island of St Helena. / Credit: Basil Read

requirements are for a project of this nature and you get the same answer every time: nothing. At most they will say some kind of access is necessary, but even that is desirable, rather than essential.

“Our organization has never walked away from a project due to the lack of infrastructure,” said Ferose Majam, commercial, international and tenders manager for Basil Read. “No infrastructure is the norm on most projects in Africa. Our approach is simply to find solu-

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Basil Read

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Bell Equipment

tions and create that which is not there.

We have developed a skill set that puts us in a position where we can tackle and find means to complete any project.”

Ernst Kunfermann, a projects specialist who has worked across Africa, agrees, saying that he has yet to find a project that is not doable.

“The bigger question is more about whether there is budget to create the infrastructure for the infrastructure. It can be extremely costly and run into huge figures before you have even started construction of the actual project,” he said.

In Mozambique it is estimated that the exploration company’s costs are already around the billion-dollar mark and there is little to show for it all in terms of minimum infrastructure input thus far. In fact, Anardarko is still at the pre-project planning stage and feasibility studies have not yet been completed.

The magnitude of what the company has to establish is difficult to comprehend.

Before any gas plant goes up, the company is going to have to find a way of housing and feeding more than a thousand project workers. Anardarko has already had to truck in tons of soil to create a temporary campsite for the small handful of people on site.

Lars Greiner, managing director for materials management and logistics of consultancy Greiner, Mendi & Associates, said the viability of projects is not measured in terms of what is already on the ground.

“Mozambique is a prime example of our willingness to take on just about anything regardless of what it costs or how difficult it is,” he said. “Innovative logistics that speak to the delivery of cost-effective projects is being required more and more. Logistics experts have to just perform the extraordinary, and one then begins to question if there should not be a minimum requirement of infrastructure in Africa.”

Francois du Toit, global discipline director: logistics for Hatch Goba, said there is no standard in Africa, as it varies for every project and for every company operating on the continent.

“Some people will say roads, ports, railways must be in place before they

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Columbus Stainless

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CONFERENCE PREVIEW

See PAGE 18 for an exclusive interview!

OPENING KEYNOTE – AFRICAN PROJECT MARKET OVERVIEW AND FORECAST Professor Lyal White, Director: Centre for Dynamic Markets, Gordon Institute of Business Science The world remains focused on Africa as a growth area, but with the slowdown in commodity and oil prices, questions hang over its growth.

AFRICAN RAIL OUTLOOK Kudzanayi Bangure, Project Manager (Rail), Africa Infrastructure Desk, NEPAD Business Foundation Massive rail developments are already underway around the continent, and even larger developments are well into planning. How can the entire continent benefit from this?

continued on next page

Concor Opencast Mining

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DCD

www.breakbulk.com/africa BREAKBULK AFRICA PREVIEW 9

project development

MODERATOR: Lars Greiner

AFRICAN MINING AND PROJECT LOGISTICS: EPCMS, OWNERS & SHIPPERS ROUND TABLE

CONFERENCE PREVIEW

Managing Partner, Greiner Mendi & Associates

Africa’s mining houses and the EPCMs that serve them are caught in the crosshairs of the commodity slump. What strategies do these experts bring to bear in the face of labor unrest, low prices, and shrinking investment? Our panel of experts discuss the industry and its impact on Africa’s project cargo market. What can we expect?

Shane Smit Category Manager: Procurement, ERG Africa Elmarie van der Merwe Manager: Supply Chain, FL Smidth Craig Johnston Hatch Goba Murray McNab Global Head of Mining, WorleyParsons

undertake a big project, while others will say understanding of the customs regulations and compliance to it is just as important. After all if you don’t have the necessary understanding and ability to manage the import and export of your materials and equipment in and out of a country you might as well not even be in it, and you will not be constructing your project, let alone achieve schedule and cost,” he said.

In fact, it’s far more complex than that. “Electricity, water, sewage, accom-

“You have to plan, plan and then plan some more. In Africa there are no shortcuts and you have to as far as possible eliminate all elements of surprise.”

– Ferose Majam Commercial, International and Tenders Manager for Basil Read

modation for employees, food, security, storage – all of these would be considered minimum requirements in most countries before a project could kick off. In Africa none of these things have to be in place for a project. Remote logistics addresses it all.”

It all starts with pre-feasibility – in African terms that means establishing how much of those essentials need to be taken to the site for the project to begin.

Taking this into account, risk then plays a major role in the African project landscape. “The importance of knowing

The wharf on the island of St Helena – one of the most remote places in the world with minimum to zero infrastructure. / Credit: Basil Read

VIP SHIPPERS:

De Beers

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DRA Metals

10 BREAKBULK AFRICA PREVIEW www.breakbulk.com/africa

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Driver Group

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Emerson

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Engen Ltd.

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ENRC

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Eskom

MARCH 2016

LIGHTEN UP: AFRICA RENEWED AFRICA’S POWER SECTOR OUTLOOK

MODERATOR: Duncan Bonnet

Despite the downturn, fourteen coal-fired power stations are being built in sub-Saharan Africa, along with a slew of wind- and gasdriven plants, and more are on the books.

What power projects are planned, and how many more will make it off paper and into reality?This panel of experts will take a look at trends and boots-on-the-ground action in southern Africa’s power scene.

Henry Viljoen Tanzania & Wind Projects lead, Sarens Cranes

what you are going up against cannot be underestimated,” Majam said. “You have to plan, plan and then plan some more. In Africa there are no shortcuts and you have to as far as possible eliminate all elements of surprise.”

A near impossible task as there are virtually always surprises; expecting the unexpected is part and parcel of project planning in the continent.

“The trick,” said Majam, “is to plan for those unexpected elements and to understand the landscape you are operating in – an environment with very little or no infrastructure.” Once you know what you are dealing with, it is simply a matter of constructing an access point. “We start with the road. All we need is a starting point and from there one can just about do anything,” he said.

The St Helena island airport construction is a prime example. Situated 2,000 kilometers from the nearest point of land on the African continent, initial infrastructure was limited.

“There was no harbor, no construction plant and no material available for construction apart from rock and water,” Majam said. “In order to get our equipment and material to the island we sourced a ship which is a landing craft type vessel to which we had to make modifications to allow it to carry fuel and cargo. A crane was also installed to allow us to offload.”

A forwarding facility was created in a bonded yard in Walvis Bay in Namibia to consolidate all cargo before shipment to St Helena. On the island itself Basil Read constructed offices, storages and workshops. “We constructed an accommodation camp that could accommodate about 100 people. The vessel that we sourced – the NP Glory 4 – was the first vessel to voluntarily touch ground on the island. We built a temporary jetty to allow for this.” The company also built a haul

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Exxaro Resources

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Exxon Mobil

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Partner, Whitehouse & Associates

Listen to a full interview here.

Sisa Njikelana Chair & Acting Secretary General, South Africa Independent Power Producers Association Sanette Venter Head of Pooled Categories, Siemens RSA Albert Bossart Regional Sales Manager – Power Generation, PP-PPVA-Sub-Sahara-Region, ABB

road that climbed about 350 meters in the first few kilometers to get to the site.

To date, the company has shipped in excess of 22 million tons of fuels, 5,000 tons of explosives, 27,000 tons of cement, more than 200 pieces of heavy construction equipment, brickmaking machinery, VIDEO: VIP Shippers Respond: Where are the crushing equipment, Opportunities in your Sector? batching plants for concrete, and tons of sand. The list goes on: “Then there are the hundreds and hunroad to the site is completed – will be to dreds of kilograms of fresh meat and food create a settlement of sorts. produce that had to go,” Greiner said.

“These camps are quite primitive and In Nacala, Mozambique, where a railprovide only for the bare necessities. Even so way line was constructed a few years ago, it is expensive. Putting this minimum infrapeople lived in tents on site for at least six structure in place plays a big role in why months while living accommodations were logistics in Africa is so expensive,” he said. constructed. Camping in the middle of Paul Runge, an African projects expert nowhere means trucking or flying in fresh and managing director of the Johannesfood, fuel to generate power and water for burg headquartered Africa Project Access, drinking and washing. noted that the high cost of logistics has not “Once there is access anything and deterred project flow in Africa, which is everything is brought to the site, water riding the crest of a wave. and food being the most obvious. ElecMonitoring projects across a broad tricity is created with generators and range of sectors in Sub-Saharan Africa, containers are turned into storage faciliexcluding South Africa, Runge said he is ties,” Greiner said. not surprised to see the private sector payIn Palma these necessities will have ing close attention. to be trucked in over hundreds of kilome“The continent has an abundance of ters, as was the case for the Ascaf iron ore natural resources and minerals, oil and gas project in Mauritania. “Literally a desert and it is politically stable in many regions,” site in the middle of nowhere, one of the he said. However, he noted that funding is a biggest questions initially was how do we problem and it is affecting projects as logisget the first containers off a truck. Once tics costs are “sky rocketing.” that was solved everything was delivered In its latest Africa infrastructure report, to the site,” Greiner said.

Capital Projects & Infrastructure in East Africa, Kunfermann added that in the case of Southern Africa and West Africa, PricewaterMozambique the first priority – once the houseCoopers (PwC) found that the top

FL Smidth

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Formscaff

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General Electric South Africa Technologies www.breakbulk.com/africa BREAKBULK AFRICA PREVIEW 11

Credit: Basil Read

project development

three challenges in delivering capital projects across Sub-Saharan Africa were: • The availability of skills.

• A lack of internal capacity among state organizations to plan, procure, manage and implement capital infrastructure projects.

• The impact of political risk and government interference during project lifecycles.

But, failure is simply not an option, said Du Toit. “In Madagascar we built a mine with hardly any infrastructure available, not even a port. At least 160,000 tons of cargo was moved on to the island via barge onto a temporarily established quayside. A port was constructed at the same time as the

VIDEO: Remote Project Logistics

VIP SHIPPERS:

Genrec Engineering

mine was going up. Accommodation, water, food, power, supplies … everything else was imported for the duration of the project and the permanent infrastructure requirements were constructed as we went along.”

According to Runge, developers also need to consider emergency preparedness.

“Not only planning and creating of living facilities and getting food, water and electricity to people, but you also have to have a plan in place as to what you are going to do if someone becomes ill or if an accident happens. How are you going to evacuate them and how quickly you can do it?”

Community involvement is another minimal requirement – albeit not infrastructure related, Runge said. “Without the buy-in of the local community you are not going to go very far. It is essential for a project to have the village chiefs and tribal leaders on board.”

In the case of Anardarko in Mozambique some 3,000 locals from a handful of villages will have to be relocated.

However, successful projects are able to mitigate risks, Runge said.

“The problem is that these large international companies just don’t

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Grindrod Limited

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understand the risks. Yes, there are those that have paid their dues and have come to appreciate what it means to do a project in Africa, but many have learned the hard way.

“You might run a big multinational in a very developed country, be very good at projects and have a string of successful projects that attests to that, but a project in Africa is a different kettle of fish. Understanding the risk and then mitigating it is what makes the difference.”

In Tete, Mozambique mining companies faced very real problems in the relocation of local communities out of the coalfields. “That is but one of many examples,” Runge said. “Another minimum requirement for any African project is that there has to be an off taker for the product.

Unless someone really wants that mineral the money being put in to make it happen is going to be wasted.”

Explained Greiner: “It’s not about what can be delivered but rather at what cost. It has to be cost effective for it to make sense in the long run.”

Du Toit agreed saying the development of a project has to be sustainable especially in remote areas. “It’s about implementing durable solutions over a long period of time which ensures sustainability and that remain cost effective.

If the solution is just too expensive it’s not durable or sustainable.” BB

Group Five

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Halliburton

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Hatch Goba MARCH 2016

2016 outlook / investment

BUSINESS OPPORTUNITIES IN FRANCOPHONE AFRICA

CONFERENCE PREVIEW

Where can the logistics and transport industry find business opportunity in Francophone Africa during these difficult times?

Where are the interesting projects, how do business people from outside the region participate, and what does it take to succeed in this challenging region? A well-known expert shares his knowledge.

Presented in French with simultaneous translation into English.

Listen to a full interview here.

Credit: COSCO Shipping

Paul Runge, Managing Partner, Africa Project Access

SUB-SAHARAN AFRICA IN 2016 – A PROJECT PERSPECTIVE construction, and information and communications technology/communications (notably the growing demand for data). nternational financial organizations Agricultural industries continue to receive attention from a wide array of funders from such as the African Development donor agencies to specialized equity funds.

Bank forecast Africa’s economic growth at between 3.5 percent and 5 Given the subcontinent’s urgent power supply requirements and strong donor percent for 2016. This is despite uncertain support, there will be much emphasis global conditions and the strong downon renewables from geothermal to solar turn in both hard and soft commodities, to wind to biofuels. However, the really which has led to the freezing of numerous strong theme will be gas-to-power. Vast resource-based projects in the region. liquefied natural gas deposits have been Against the backdrop of this gloomy uncovered in Mozambique and Tanzania, scenario, many sub-Saharan African counand “old” established oil countries such as tries continue to register strong project activity in sectors such as power (especially Nigeria are giving increasing attention to the utilization of their previously flared renewables), commercial property and gas resources.

A key market for 2016 This story originally ran in will be Ethiopia. Its huge Issue 1 / 2016 of Breakbulk Magazine. hydropower potential is being

BY PAUL RUNGE

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VIP SHIPPERS:

Ibex

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Kenzam

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Komatsu

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KPMC

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realized to such an extent that the country will become a major power exporter to eastern and southern African regions.

The 6,000-megawatt Grand Renaissance Hydro Dam Project is being completed.

Strong efforts have been made to improve the supporting infrastructure in the form of road and rail network extensions.

Major commercial projects including new industrial zones abound in Addis Ababa.

Ethiopia could register a 2016 growth rate of close to double digits.

Despite the current political problems in Burundi, East Africa is proving to be a particularly vibrant region with important rail and port infrastructure projects in addition to the strong interconnector power transmission initiatives of the Eastern African Power Pool. The central rail corridor and new ports such as Bagamoyo in Tanzania are attracting attention.

On the west coast, there has been considerable port activity from Saldanha and Walvis in the south through to Douala in the central area and Abidjan and Dakar further north. Saldanha in South Africa, Takoradi in Ghana, and San Pedro in Côte d’Ivoire are examples of new port developments based on the development of oil and gas hubs. Private concession holders such as the Bolloré group are implementing port improvements. The capital-intensive nature of rail is delaying projects in this sector, but there are concrete developments such as those relating to the West Africa Loop Rail Initiative.

Finance and logistics are permeating the current debate on African economic progress during these difficult times. There is a strong need at this important juncture for greater collaboration and an integrated practical approach between the logistics operators, the project implementers and the wide range of funding agencies with the pragmatic support of governments to achieve an adequately enabled environment. BB

Kuta-Manzi

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Kwikspace Modular Bui MARCH 2016

This story originally ran in Issue 1 / 2016 of Breakbulk Magazine.

CARRIERS RIDE CHINA’S WAVE OF AFRICA PROJECTS

TRADING PLACES

ildings

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egendary Chinese navigator Zheng He sailed fleets of wooden ships across the Indian Ocean in the 15th century, blazing intercontinental sea trails for modern vessels now hauling breakbulk of all sorts between China and Africa.

But today’s breakbulk-carrying liners and tramps, many serving Chinese engineering, procurement and construction comBY panies, or EPCs, with ERIC JOHNSON projects in Africa and working closely with Chinese logistics partners, are traveling farther and accomplishing far more than Admiral Zheng ever imagined.

Breakbulk is at the heart of a boom for China-Africa trade relations as well as major, Chinese-led infrastructure construction projects that are having an enormous impact on emerging economies from Angola to Zimbabwe.

The boom began in 2013 when the Chinese government directed its diplomats, state-owned companies and policy banks to start building stronger economic ties with African countries through a campaign that’s undergone several title changes and is now called “Belt and Road.” The government’s initiative got fresh impetus in December when Chinese President Xi Jinping promised a staggering US$60 billion in future loans, export credits and grants to countries across the continent.

Currently keeping breakbulk carriers busy are Belt and Road-supporting contractors building a railroad in Kenya,

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Macsteel Group SA

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a port in Tanzania and hydropower plants Sudan. Africa-bound ships are also hauling China-made cargo for highway construction, mines, power transmission lines and factories, as well as wind farm equipment, locomotives for newly built railroads, and cement plants for various urban projects.

Natural resources from whole logs to stone granite are key goods riding the carriers’ return voyages to China.

China’s latest financing plan, which Xi announced at a South African summit

Mendi Rail and Engineering

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People work at the construction site of the now-completed electric railway in Dire Dawa, Ethiopia. The railway, a coordinated effort between China Railway Construction Co. and Ethiopia Railway Corp, stretches 770 kilometers and links Ethiopian capital Addis Ababa with the port of Djibouti.

Credit: Liu Yu Xinhua News Agency/ Newscom

Mott McDonald

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Pama Holdings

www.breakbulk.com/africa BREAKBULK AFRICA PREVIEW 15

trade notes

There are a fair amount of Chinese-funded projects in Africa, but there’s still a lot of scope for Chinese companies to get more involved in Africa. The one way to be aware of where the projects are is to attend the Breakbulk conference.

If you’re looking for a way in, it’s better to be at the Breakbulk conference in Africa and meet with companies face-to-face than having telephone discussions to find one project at a time.”

– NAPO RAMODIPEDI, CEO, MENDI GROUP

he co-chaired with South African President Jacob Zuma, suggests Belt and Road activities will accelerate, at least in the near term, and should lay a foundation for China-Africa project cargo shipments for years to come. China’s state-run media said Xi’s address marked “a new era of win-win cooperation and common development.”

ENTHUSIASM ABOUNDS No wonder breakbulk carriers, logistics firms and Chinese EPCs are more enthusiastic than ever about following Admiral Zheng’s trail.

“Implementing these plans will lead to a huge amount of logistics business, since large quantities of Chinese engineering machinery and equipment will be transported to Africa,” explained Hu Yi Yang, deputy general manager of COSCO Shipping’s Joint African Line and Logs Carrier Department.

Xi’s announcement “will stimulate and strengthen China-Africa economic cooperation and development,” said Ma Shumei, regional director of the Africa Overseas Business Department at SEPCOIII Electric Power Construction Corp., a Qingdao-based EPC.

“These are long-term targets to promote trade between China and Africa,” said Brandy Bee, managing director of Ming Qi Yuan International Freight Forwarding in Tianjin. “President Xi has now put a huge amount money into Africa for construction. So I expect a lot more opportunities for project cargo businesses.”

And while Chinese companies are poised to benefit the most from the Belt and Road initiative – through which the government is also promoting commercial ties to emerging markets in Asia, the Middle East and East Europe – non-Chinese carriers and logistics firms are also benefiting from breakbulk demand tied to African projects.

For example, last year, tramp project cargo specialist BBC Chartering saw “a significant increase for direct bookings between China and Africa compared to 2014,” said David Lloreda Calero, the German carrier’s Shanghai-based commercial manager. He added that Xi’s announcement of future investment bodes well for the project shipping sector as a whole.

“Africa is huge,” he said. “And if realized, this might trigger good demand for specialized carriers calling at remote areas with shallow-draft ports and limited-tono-infrastructure ports.”

CARGO DIVERSITY The variety of cargo is staggering.

In addition to construction machinery, cement plants and steel for railway construction and other building projects, Hu said COSCO’s multipurpose vessels have proved ideal for shipping railcars and locomotives.

Lloreda Calero noted that Chinese companies’ projects in power generation and infrastructure, including ongoing port expansions in places such as Mombasa, Douala and Walvis Bay “most certainly require project carriers and heavy-lift capabilities.”

Last year, China Railway Construction Co. and Ethiopia Railway Corp. finished work on 770 kilometers of new track connecting landlocked Addis Ababa and the port of Djibouti. China was expected to

South Africa President Jacob Zuma and President of China Xi Jinping have strengthened project ties between the two countries.

Credit: Government of South Africa

VIP SHIPPERS:

Railrunner South Africa •

16 BREAKBULK AFRICA PREVIEW www.breakbulk.com/africa

RDM South Africa

• RDL Engineering

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Rheinmetall Denel Muniti MARCH 2016

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supply more than 1,100 freight cars and locomotives for the railroad, which took three years to build.

Most Asia-to-Africa cargo transported via BBC’s apac, or “any port, any cargo,” service is tied to mining equipment, oil and gas pipes, and power plant or other energy projects, such as wind farms, Lloreda Calero said.

Bee said her company handles Africabound machinery, asphalt, prefabricated buildings and rolled steel. EPCs, such as power plant builder SEPCOIII and hydroelectric dam builder China International Water and Electric Corp. (CWE), are taking deliveries on a variety of energy modules and equipment for their projects.

SEPCOIII is focused on projects in Tanzania, South Africa, Mozambique and Botswana, while CWE finished work last year on a hydropower plant in the Republic of Guinea, and has two more under construction in Sudan. Mining conglomerate China Minmetals and state-owned oil majors Sinopec and PetroChina are also active in Africa.

Yet the perspectives of non-Chinese and Chinese companies are not entirely alike, especially in terms of forecasting future China-Africa business; it’s hard for a Chinese company to be anything but upbeat.

Despite the fact that falling oil prices have affected Africa’s economic development, COSCO’s Hu said that “more Chinese companies are ready to participate in Africa’s development. Thus for 2016 and 2017, we forecast more project implementation in Africa, and these projects will result in more cargo transportation.”

Last year, COSCO ships carried “large amounts of equipment for building projects,” Hu said, including cement plants made in China by Sinoma International Engineering and delivered to building sites in the Republic of the Congo. The carrier also supplied wind power projects in South Africa and delivered cargo for the 500-kilometer Mombasa-Nairobi railroad under construction since 2014 in Kenya.

Lloreda Calero, though, struck a more cautious tone. Strong demand for BBC services over the past two years “has much to do with the allocated capacity to the trade and does not imply a specific trend,” he said. “From what we can tell today, we do not expect any developments that forebode any short-term boost of project cargo activity in Africa, as we think we have

Samsung Electronics

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VIDEO: VIP Shippers Respond: Why Should Chinese Companies Come to Breakbulk Africa?

good knowledge of the projects and developments that are underway and those that are pending.

“We can appreciate the Chinese decision to boost investments in Africa,” Lloreda Calero said. “But we apply a realistic view with regards to the speed of implementation and expansion.”

Fueling much of this caution is the slowdown for oil exploration and related projects in countries such as Angola, where the Chinese have been actively pumping from offshore wells for years.

“The price of oil, as a lead indicator for future investments in the sector and a major commodity driver, is expected to stay at low levels for a while, which will also put much of the sector’s anticipated investments in Africa on hold during 2016 and 2017,” Lloreda Calero said.

And as BBC and similar companies with Africa business are well aware, Chinese projects are not the only game in town. Lloreda Calero noted that his company was the dedicated project carrier for wind power units selected by the German wind power concern Nordex. Some 56 turbines made in Europe, 168 wind blades made in Turkey and 50 tower segments manufactured in Indonesia were hauled aboard six of BBC’s heavy-lift vessels between March and August to the Amakhala Emoyeni wind farm in South Africa.

cultivate friendly relations with African governments as well as the communities where they’re building infrastructure or mining minerals. They hope to avoid the “colonialist” stigma that many European companies have had to bear, while at the same time strengthening commercial ties and turning profits.

SEPCOIII is working to strengthen the market development of the African region, said Ma, as stronger China-Africa relations will be “more conducive” to its market development in Africa, and help more African businesses understand its company.

Breakbulk shippers and carriers are equally interested in how closely Chinese and Africans will be able to follow the blueprint for “win-win” promoted by Xi and spelled out through the Belt and Road program. It’s a blueprint that Xi, when he first introduced the overseas commercial push in fall 2013, said reflects the cooperative and seafaring spirit of Zheng He. Ma said Chinese companies want to help African countries improve their infrastructure, expand local employment and train local workers, while at the same time promoting local economic development and building on Africa’s own abilities.

In Africa and China, Hu sees a perfect match for healthy business relations – especially the breakbulk sector.

“China has the technology, equipment, personnel and funds, while Africa is rich in natural and human resources,” Hu said.

“Both sides have the need and desire to strengthen cooperation.” BB

BUILDING RELATIONS Since Belt and Road got underway, Chinese companies have been careful to

Sandvik Mining & Construction

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Sasol

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Scientific Engineering •

Senet

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keynote previews

ECONOMIC OUTLOOK: A NEW NORMAL FOR AFRICA An interview with Professor Lyal White, Director of the Centre for Dynamic Markets, Gordon Institute of Business Science at the University of Pretoria in South Africa REALITY CHECK AND THE NEW NORMAL JANET NODAR: You say we’re in a bit of a reality check in terms of the Africa rising narrative. What do you mean by that?

PROF. LYAL WHITE: What we were hoping for was this linear trajectory of Africa rising and the Africa rising narrative failed to see some of the realities of this growth. We have also failed to understand there would be hiccoughs along the way, both political and economic, which is the reality in any political economy. What we see now is a reality check — a slight dip in growth rates.

Janet Nodar

I refer to it as the “new normal” across the African continent where some countries, and unfortunately in this case, some of the bigger economies are facing lower growth rates, such as South Africa and Nigeria, which is Africa’s largest economy. South Africa and Nigeria together contribute more than 55 percent of the gross domestic product of the entire sub-Saharan region.

MEET

PROF. LYAL WHITE AT BREAKBULK AFRICA 2016, 6 APRIL AT 9:10 IN THE FUTURE DEVELOPMENT THEATER

Meanwhile, other economies are experiencing the high growth rates. Ethiopia will achieve a near double-digit growth in 2016 as it did in 2015, so it could be between 8 and 10 percent growth rates this year off the back of a very active agricultural sector. Smaller economies like the Ivory Coast, Mozambique and those less developed economies, will also have high growth rates. And then we have the very, very competitive players, such as Mauritius and Botswana who have put into place the right institutions to stimulate long term and sustainable economic growth.

Listen to the full interview here.

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Siemens

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SPD Consulting

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Steval Engineering

BRIGHT SPOTS JANET NODAR: Which countries offer the best opportunities for our project logistics people?

PROF. LYAL WHITE: I think it’s going to be a very exciting time. Even if you do see low growth rates in some of the bigger economies, there’s still going to be a huge demand for infrastructure developments, civil projects, power and massive port development projects, which are not really hampered by lower growth rates.

There are massive projects across East Africa -- rail, road transport and big port projects. Mauritius is now regarded as the most competitive economy in Africa.

It is evolving well beyond manufacturing to services — business services, financial services, etc. These will be multipliers for additional investments and bodes well for Africa.

We need to look at Africa in a more differentiated way: some countries are going to progress and grow a lot quicker than others. Mauritius could be the Singapore of Africa! Nigeria may take a little bit longer, but hopefully it will become the China of the region. BB

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Tenova

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ThyssenKrupp Industria MARCH 2016

WHAT WILL IT TAKE TO DEVELOP RELIABLE RAIL IN AFRICA? An interview with Kudzanayi Bangure, the project manager for rail for the Africa Infrastructure Desk of the NEPAD Business Foundation AFRICA HAS THE MOST number of landlocked countries in the world. NEPAD sees the improvement of rail infrastructure as a way to open up the African hinterland and accelerate development, while improving local economies.

JANET NODAR: You have some very interesting rail projects underway. Tell us about them.

JANET NODAR: How will these projects benefit the project cargo transport and logistics industry?

KUDZANAYI BANGURE: One of our flagship projects is the North-South Rail Corridor, a rail network that stretches from the Port of Durban in South Africa through Zimbabwe, Zambia and all the way to Mombasa in the DRC. Our goal is to facilitate the process of upgrading and rehabilitating that entire network.

We are targeting three areas:

KUDZANAYI BANGURE: First is the developmental impact. If we can achieve a seamless rail network, it will be a massive win for the rail sector. We are looking at getting the right modal balance between road and rail. For example, flammable substances and heavy-haul cargo should be moving on rail and it shouldn’t be on road. We have increased dilapidation of road infrastructure because it is carrying heavy haul cargo. On road, the axle limit is 8 to 10-ton axle load limits, while rail has 15 to 26-ton limits.

1. Safe passage of trains where much work has already been done and rate of derailments have significantly decreased 2. Rehabilitation of the railway line to bring it back to its designed capacity of 6 million to 8 million tons. Currently its handling 1 million tons of freight.

3. Upgrading the line for future growth.

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Transnet

KUDZANAYI BANGURE AT BREAKBULK AFRICA 2016, 7 APRIL AT 9:10 IN THE FUTURE DEVELOPMENT THEATER

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Another benefit of developing rail is the impact on local economies. Rail is a key link to heavy industrial sectors, such as mining. If rail is operating optimally, you have the domino effect of increased cargo movement, growth of industrialization and higher employment. By having a solid and efficient rail system, we are supporting wider growth across Southern African Development Community (SADAC).

At NEPAD we want the rail companies within South Africa, Zimbabwe, Zambia and the DRC to put their plans on the table. We define it as all the rail operators singing from the same hymn sheet.

A lot of progress has been made and we want to accelerate it.

al Solutions South Africa

MEET

Listen to the full interview here.

Currently the cost of transportation in Africa is one of the highest in the world.

Rail development will lower the cost of transport and logistics, which will make Africa more competitive with the likes of Brazil, Australia, Chile and other producers of a range of commodities. BB

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Voestalpine

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Vermont Sales

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WBHO

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WorleyParsons

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www.breakbulk.com/africa BREAKBULK AFRICA PREVIEW 19

MEET ERIC OPAH, GROUP CEO, FORTUNE GLOBAL SHIPPING AND LOGISTICS

In Nigeria, there is only one Company for fast, efficient shipping and logistics services

Fortune Global Shipping & Logistics Ltd. is a wholly owned Nigerian company that specializes in the movement of goods nationally with specialty in break bulk cargo movement. Our services include but not limited: Break Bulk General Cargo Project Logistics – Offshore/Onshore Customs Clearance Vessel Agency Services Customs Clearance Air/Sea Freight Temporary Import Permit Formalities Haulage & Trucking We are well positioned in the industry to handle power and telecom projects which is rapidly growing to meet the teledensity requirements estimated at 120 million people expanding to generating 20,000-40,000 mw from current 4,0005,000mw.These require shipment of transformers and other power industry machineries and equipment as breakbulk.

Our experience in breakbulk cargo includes: Chartering, surveying, planning and organizing large volume and heavy duty cargoes move by air or sea and across land borders depending on our client’s specific needs.

Head Office

15, Fatai Irawo Street, Ajao Estate, Isolo, Lagos. Tel: + 234 (1)7617260 08100814497

U.S.A Office

Suite 382, 16800, Imperial Valley Drive, Houston, Texas, U.S.A. Tel: +7135137177

Port-Harcourt Office

42B Trans Amadi Industrial Layout Port Harcourt Rivers State Tel: +234(0)8100814492 info@fortuneglobalshipping.com www.fortuneglobalshipping.com