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ISSUE No. 50 | www.bus-ex.com

Namibia Diamond Trading Company:

Bright shining light So much more than just another resource mineral

Les Gaz Industriels:

perseus mining:

toro Energy:

Included The BE Mining Directory showcases leading mining organisations from across the world, ranging from big corporations to junior mines and their supply chains.

Be seen throughout our portfolio of magazines: •BE Mining Directory •BE Mining •BE Weekly •BE Monthly •

Go to page 92 to see this week’s listing To find out how to get involved contact: vincent@bus-ex.com

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CONTRIBUTORS exact software

Exact Software develop industry-specific on-premises, hosted and cloud-based solutions in a wide variety of industries. Ranging from manufacturing, wholesale & distribution to professional services and accountancy.

George F. Brown, Jr.

George is the CEO and cofounder of Blue Canyon Partners, Inc., a consulting firm working with leading companies on growth strategy.

Tel: +44 (0) 203 137 7100 Fax: +44 (0) 1603 666466

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 2013 Infinity Business Media Ltd.

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issue No.50 6 strategy

Sales & Operations Planning: More than forecasting

6

S&OP is a hot topic for wholesale companies, here we discuss what it is, and how it can drive performance.

16 supplychain

You Don’t Know What You’ve Got Till It’s Gone When evaluating changing suppliers, often the grass may seem greener on the other side. But in long term supplier relationships it’s the hidden, and some less obvious, benefits which add value.

28 Namibia Diamond Trading Company Bright shining light

28 38 4 | be weekly

Diamonds have an undeniable attraction that has made them sought after by collectors, connoisseurs, and investors: a key part of the economies of southern Africa they are so much more than just another resource mineral.

38 Perseus Mining A PROMISE IS A PROMISE

West Africa still hosts mineral deposits that for one reason or another have remained underdeveloped: for certain Australian prospectors they became an obsession that is now paying off.

contents

56

56 Asian Mineral Resources A first for Vietnam

The Ban Phuc nickel mine represents a new industry for Vietnam, and is perhaps the first of a number of nickel projects to be developed by Asian Mineral Resources.

64 Toro Energy

Fuel for the future Toro Energy is emerging as the first company to commence uranium exports from Western Australia: it is ready to establish a new industry and cement Australia’s position as a reliable supplier to the growing nuclear economies of Asia.

64

74 Les Gaz Industriels Limited (LGI) The desire to diversify

Managing Director, Jérôme Commins discusses LGI’s diversification over the years and its plan to expand into Africa’s emerging markets.

84 Unique Dairy Products Ltd Keeping their cool

An award-winning manufacturer and supplier of hard and soft ice cream, frozen novelties, frozen yogurt and related ice cream products.

BE Directory

74

92 muchina engineering

supplying mines

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Sales & Operations Plann

More than fo S&OP is a hot topic for wholesale companies, here we discuss what it is, and how its sophistication can drive performance beyond that achievable with spreadsheet planning

written by: exact software

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strategy

ning:

orecasting

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S

ales and operations planning (S&OP) is an integrated b u s i n e s s management process that was developed in the 1980s

by Oliver Wight. In general terms, it refers to the decision-making processes involved in balancing supply and demand, creating profitable volume and mix propositions, and engaging in optimal asset management.

Its scope is business-wide, integrating financial and operational planning, and linking board-level strategy to on-the-ground day to day operations.

Broad scope S&OP involves a wide range of company activities, the plans drawn up with input from marketing, manufacturing, engineering, finance and procurement to drive the overall financial plan. As such, S&OP is in reality a broad reaching term for how senior management runs the company. It is about creating the optimal balance between goods in and out, and ensuring operations are managed to support profitable

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sales activities. With sales and operations managers not always automatically aligned, strong leadership and fact-based decisionmaking are essential to get everyone pulling in the same direction. It helps operational leaders need to understand that ‘sales’ is the core of the business, and to focus on ensuring transactions can occur as smoothly and as quickly as possible.

Ownership of S&OP The S&OP is top management’s tool for steering the company.

It helps ensure that day to day operations work towards the business plans agreed upon to deliver the company’s toplevel strategic objectives. This visibility into performance against planning allows senior management to effectively guide lower management, helping them successfully steer the day to day activities at ground level.

Ongoing S&OP is also a dynamic process that needs to be re-visited regularly to remain effective. At the end of each monthly cycle, top management needs to

“S&OP is in rea reaching ter senior manag the com

ality a broad rm for how gement runs mpany”

strategy review the balance of the supply chain and ensure the resources for meeting the agreed business objectives are available. The decisionmakers need to be committed to a continuing cycle of Plan, Do, Check, Act – creating one master outline that delivers customer satisfaction, required profit and, above all, is achievable. The plan should be ambitious, yet achievable.

If it asks for too much, it loses credibility.

S&OP Process As mentioned above, the S&OP process runs in cycles.

Input will come in a variety of shapes and forms, all of which need to be carefully transformed to fit an overall plan clear to all stakeholders.

At all points, it is essential that strategy and execution remain clearly connected.

The starting point is the business’ most up-to-date sales history and committed purchase orders. This input for the sales forecasting process is then considered in combination with current inventory and supply capacity, enabling leaders from sales, marketing, operations and finance to reach consensus on

demand and supply, and on what can be made available to promise.

The output of these discussions needs to be one consolidated plan, one set of numbers for the whole business to work from. A business may work with several scenarios and track actual performance against them. However, it is essential that every scenario is based in realism, with firm indicators that such a level of performance is achievable.

Managing expectations over time Expectations and ambitions then need to be clearly communicated. The vision, mission and goals must be understood by all stakeholders, enabling them to successfully cascade from the long term plans to everyday execution. It’s also important that leaders are able to confidently differentiate between trends and exceptions and adjust plans as necessary – an idea that isn’t flexible is likely to break under strain.

Planning horizons, period sizes and review frequencies should reflect the underlying

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“By definition, connecting top level strategy with organization-wide operations is a genuinely complex matter� dynamics of the business.

Business with long supply lead times need to look several months into the future, even for operational planning. The time it takes to make a substantial increase in capacity drives the planning horizon for the capital investment calendar. With the S&OP also linking product mix and product innovation plans to operations, most companies should look to plan at least the next 18 months on a rolling basis.

KPIs With a set of well supported plans in place, the business needs to establish the right set of objective criteria to measure progress.

Strategically aligned Key Performance Indicators (KPIs) are the tool for this job, representative of commercial

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priorities and suited to active monitoring of planning accuracy.

Keeping track of how effective financial and sales volume forecasting has been is a key area. Closely reviewing up-to-date sales volume and revenue data is essential, as are more operational performance indicators like inventory turns, total inventory, lead time adherence, return on promotional spend and new product introductions success.

In general, any business will get a good idea that forecasting was well considered when stock declines steadily to each re-order point, and service levels maintain consistency.

Careful monitoring against well-considered forecasting will also ensure that exceptional occurrences

are highly visible and easily considered for future planning.

The role of IT By definition, connecting top level strategy with organization-wide operations is a genuinely complex matter. Creating an accurate view that touches all relevant processes and stakeholders requires the handling of large volumes of data. To effectively interlink past performance with future expectations, the historical and current information needs to be complete, accurate and highly flexible in how it can be mined, reviewed and presented. In order to serve multiple perspectives, it must be possible to work with the data on a range of levels. This will allow upper managers to visualize the overall status of the business, whilst

strategy maintaining clear links to all operational activities.

Choosing the right tools As a result of these demands, S&OP success is largely dependent on the software employed to support it. Many companies use MS Excel as an S&OP tool, it being easy to configure, flexible, inexpensive and familiar to almost everyone. However, it will always fall short in comparison to a properly configured, integrated planning tool. Excel is not

real time, has poor version management and is not multi-user. As such, it’s a major challenge to use it for effective collaboration.

Spreadsheets have their limitations The information in a spread sheet is relatively static, not easily manipulated and not suited to easy viewing from different perspectives. Deep diving through a top level data set into the various processes that contributed to it is not realistic, while combining separate reports into a useful

top level summary is difficult and time consuming.

In short, Excel misses the manipulative power needed to properly analyze the vast, wide-reaching data streams that hold the information needed to create effective plans. And that’s only in terms of collecting historical data to support planning decisions. Running a set-up where current performance and real time figures can be compared to the plans and then used to effectively update and adjust them is near-on impossible.

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Dedicated solutions The right S&OP software needs to under pi n management by not only thoroughly analyzing the past, but providing easy access to the business’s ongoing progress against the planning as the cycle unfolds.

It must be collaboration friendly, bringing often highly dispersed, international operations together with any external parties involved in the processes (customers and suppliers).

The ability to create and then manage scenarios is also a key aspect of a good solution, effectively sharing them with a wide community of stakeholders throughout the business’ ecosystem.

Connecting operational pl a n n i ng, e xe c ut ion and financial planning capabilities — ideally at the data and process model level — will support a truly active planning environment

that can be followed closely, adapted as necessary and analyzed fully at each point in the review process.

Workf low management, controlling and cataloguing the passage of information through the involved people is an important part of this.

Dealing with complexity Stakeholders need easy access to detailed reporting on the established KPIs – both vertically within specific operational processes, and horizontally in relation to the end-to-end supply chain – helping management identify the root of issues and make the right decisions when trading off competing values.

In short, the right tool needs to be able to capture and manipulate all business critical information, from right across the company, in whatever form the decision makers require it to make choices with confidence. Base

planning data needs to be available in a range of views and formats specific to the various groups that will work with it, supporting them in releasing the patterns and insights they’re looking for.

Creating the right mix The best results will be achieved when system calculations can be combined effectively with human insight. Think about a system that can combine input from sales and marketing professionals with output from a forecasting engine.

The data tells a lot, but it’s also important to fine tune it with intelligence from the people working closest to the market.

Given the above, creating and then managing a realistic, trustworthy Sales & Operation Plan is obviously a complex process dependent on deep understanding of past and current performance.

“Today’s competition is no longer between individual companies but between networks of companies” 12 | Be weekly

strategy

As such, it’s too big and too important a job to be trusted to a tool not fit for purpose.

Why use S&OP? With supply chains becoming longer, wider and more complex, there has never been more “distance” between the raw materials and the consumer. At the same time, modern technology has made it possible to keep all stakeholders informed at every step of the way.

Today’s competition is no longer between individual companies but between networks of companies.

Accurate processes to

optimize a company’s role in these complex environments have never been more important. Without end to end planning covering the entire ecosystem of business relationships, achieving success promises to be a real challenge.

Understanding the customer In addition to the wider reach of company activities, it is essential that businesses respond promptly and effectively to fluctuations in customer demand. Changes in customer needs directly inf luence planning for

logistics, manufacturing and procurement. Companies need to be able to work with these changes effectively, ensuring they are stocked to meet needs without tying up capital unnecessarily.

As product life cycles get shorter, accurately matching supply and demand is certainly not getting any easier. Balancing them to maximize profit has become a key, complex discipline in its own right. Simple, unscientific forecasting, using underpowered IT support, will not give businesses the platform they need to realize their potential.

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“S&OP is the process to help companies go about making corporate strategy an operational reality” Solving existing issues Executed effectively, S&OP addresses a wide range of internal issues related to unacceptable lead times, excessive on hand inventories, customer service issues and ineffective utilization of resources. It helps companies move away from finger pointing between sales and operations. It ensures optimal use of resources in accordance with effective execution of the company strategy. And if things do go astray, clear ownership allows problems to be addressed quickly and effectively.

S&OP-driven businesses can provide clear answers to questions around which products will be sold, where and when they should be available, in what quantities and at what price.

The planning proposes a framework to deliver on the strategic objectives, providing a clear case for the proposed

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demand and the business’ ability to profit from it. It confirms that the proposed course is fully executable with the available resources, and marries the projected sales and operations numbers to the annual business plan and budget.

Increased accuracy boosts the margin Improved coordination, communication and team work will result from clearer starting points for processes, and clearer signposting of where activities should be leading. The details will make it clear who is responsible for what, leading to greater ownership and more careful management of day to day activities. More accurate supply plans can lead to leaner execution of manufacturing processes.

Logistics, Warehousing and Distribution benefit from fewer changes, while

strategy more precise inventory management (less working capital in the form of safety stock) results in fewer incomplete orders and better customer satisfaction.

Conclusion S&OP is an integrated set of business processes linking the company’s top level strategy to the day-to-day activities in place to realize it. Although external factors can never be controlled, having a thorough knowledge of the company’s current position and past performance can provide a reliable basis from which to make important decisions for the business’ future.

Having access to a broad and organized information collection, analysis and reporting tool, able to gather and manipulate wide ranges

of current, accurate data, is one of the prerequisites for success. With a clear picture of the business issues that need addressing, it can provide the insight needed to steer the business on a path to success and growth.

Provided strong leadership ensures buy-in from both sales and operational departments, the S&OP’s process has the power to touch the entire business. Detailed plans, based in sound business intelligence and responsive to actual progress, become the blueprint to which the whole company can look for guidance. While sales forecasting can give businesses an idea of where they are headed, S&OP is the process to help companies go about making corporate strategy an operational reality.

Exact Software develop industry-specific on-premises, hosted and cloud-based solutions in a wide variety of industries. Ranging from manufacturing, wholesale & distribution to professional services and accountancy. We support all major business processes such a production, logistics, finance & administration, HR, sales and marketing.

With these solutions we help you run your business more efficiently. And because we are there every step of the way, we provide high quality services to our customers. www.exact.com

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When evaluating changing suppliers, often the grass may seem greener on the other side. But in long term supplier relationships it’s the hidden, and some less obvious benefits which add value

written by: George F. Brown, Jr.

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supplychain

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M

ost of us have at least on one occasion recognized the truth in the lyrics to Joni Mitchell’s Big Yellow Taxi. A senior executive with a construction equipment company recent did so as he described his company’s retrospective assessment of a decision relating to a key supplier: “We had worked with [that key supplier] for many years, dating back to before I joined the company, and it was always a good relationship.

But a couple of years ago, we were approached by a Chinese supplier with a very attractive proposition.

They offered a product that seemed in all ways about identical to what we were buying from this supplier, at a most attractive price point.

“We did our due diligence.

The Chinese supplier was

a real company, not one of those outfits you hear about with no walls to the factory and interchangeable signs depending on who was visiting that day. Their product samples met all of our tests. Our only real issue was logistics, and for the price they were offering, we were easily able to come up with some workarounds. So we made the decision to switch.

“It’s taken us a few years, but we’ve now come to realize that we ‘didn’t know what we had till it was gone’.

The Chinese company has met our expectations with respect to their product and their pricing. That’s not the problem. It’s just that our former supplier was important to us in so many ways that really weren’t connected to the actual product itself. This supplier just can’t substitute in those other ways, and while it’s hard to do a dollars-and-cents

calculation, I suspect we lost more than we gained from the lower prices we’re paying for this product.”

This company’s lament is a familiar one, particularly in recent years with the combination of the pressure firms have felt during the recent recession to find ways to cut costs and with the increasingly frequent presence of Chinese Second Mouse firms offering almostas-good products at a great price point. More and more firms are seeing options to save money without compromising on product features or quality by switching away from longterm suppliers. And many are choosing to do so.

What is often missing in these supplier comparisons are the intangibles embedded in such long-term relationships, ones that aren’t captured by head-to-head comparisons

“our former supplier was important to us in so many ways that really weren’t connected to the actual product itself” 18 | Be weekly

supplychain

“it was probably the case that the insights about the contributions made by [the former supplier] were best known to people in our firm that weren’t directly involved in the evaluation” of physical products and prices. Almost every supplier with whom I’ve spoken can describe such contributions and the customers that have benefitted from them.

Even more significantly, almost every customer that I’ve ever interviewed can provide multiple examples of “supplier success stories”, many of which involve contributions that aren’t embedded in the products they buy from those suppliers.

Those truths motivate the question “Why all too often are such contributions ignored when firms consider options involving switching suppliers?”

The executive that provided the case study provided earlier offered his own thoughts on why it happened in his firm, citing factors that I’ve seen in many other circumstances:

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“First, it was probably the case that the insights about the contributions made by [the former supplier] were best known to people in our firm that weren’t directly involved in the evaluation.

You can say ‘shame on us’, and that’s true, but even after the fact, it took some time for us to begin to understand what we were missing. For example, that supplier’s contribution to our product development processes didn’t surface until we were into the next cycle, a full year after we had made the switch.

“Second, there is always the challenge of deciding who ‘talks the talk’ and who truly ‘walks the walk’. Every supplier is willing to say how valuable they are, how much they contribute. But it’s only a few that do so. It turned out that [the former supplier] was one of the ones that did

so. We just didn’t recognize that at the time.”

Intangible contributions that go beyond the physical product are in fact real and are important sources of value creation for the firms that get them from their suppliers, but they are elusive to spot. In the following section, some questions are suggested that can enable a firm to evaluate whether a supplier is in fact one of the ones that “walks the walk” in terms of bringing such contributions to the table.

Identifying Suppliers That Provide Intangible Contributions Over the years, I’ve had the opportunity to discuss supplier contributions with literally thousands of business firms spanning numerous vertical markets. In those

supplychain discussions, I’ve heard great supplier success stories told by these firms, spotlighting ways in which suppliers made a meaningful difference.

I’ve had long discussions about the good, the bad, and the ugly sides of supplier relationships. I’ve heard about supplier relationships that failed and about ones that steadily progressed to higher and higher levels, reaching strategic levels involving “win-win” collaboration.

A substantial number of those discussions involved intangible contributions, and, from analyzing the nature of those contributions, certain common characteristics emerge. Those common characteristics provide some tests that firms can use to determine if specific suppliers are in fact making important intangible contributions, ones that they don’t want to

recognize what they had only after they were gone. Three of the most important such tests are described in this section.

The first test involves the question “Does this supplier contribute to processes and activities that are adjacent to or otherwise linked to the products they supply?”

For almost every firm, the products that they buy from suppliers impact on numerous processes and activities. There are obvious connections – whether the product

simplifies manufacturing or complicates it, whether the supplier’s product is the source of warranty problems or not, whether the product is easily integrated with other ingredients in the final product, etc. And there are less obvious connections – whether this supplier contributes to new product development or complicates that process, whether this supplier helps to meet regulatory challenges or not, whether this supplier and its products facilitate the changes that are needed to move into new geographic markets, new vertical markets, or new points along the good-betterbest spectrum or not, etc.

Examples of such contributions are heard over and over in discussions with firms about their suppliers.

The executive who provided the case study in this article

“Every supplier is willing to say how valuable they are, how much they contribute. But it’s only a few that do so.

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talked about [the former supplier’s contributions to product development: “What we learned, after the fact, is that they were frequently herding us in the right directions in terms of our product development, a contribution that was valuable given the importance of their product to our own.”

In a discussion with another company, another similar example was provided: “When we heard from one of our customers about a problem, we often involved [a certain supplier] in the discussions about how to respond and solve the problem. When we replaced them, we lost that. And we miss those contributions.”

A third example involves today’s pressures to reach global markets:

“Our former supplier had engineers in all of our key markets. Our new supplier has a good manufacturing footprint, but for technical support, we have to go to their headquarters, which adds a lot of time and complexity to even getting answers to simple questions.”

For virtually every company, the adjacent processes and activities that are meaningfully linked to the products purchased from suppliers are many and often involve costs far greater than the price of the supplier’s product. Recognizing these connections is important, and identifying whether the supplier makes intangible contributions to these adjacent processes and activities can allow a firm to avoid short-sighted decisions that are only based upon the product per se and its price.

The second test involves the

question “What do we learn from this supplier?” Every supplier organization has its own intellectual capital, involving information and insights important to their line of business. In many instances, such information and insight can be of value to their customers, and some suppliers create value for their customers by proactively serving as a source of critical information to their customers.

In one extreme example, a firm described a decision to outsource a responsibility for a key technology to a supplier: “We recognized that they are the leaders in this technology, with customers around the globe and spanning multiple vertical markets. Their ability to invest dwarfs what we could do with respect to that technology, and they have far more resources to allow them

“we often involved [a certain supplier] in discussions about how to respond and solve problems. When we replaced them, we lost that” 22 | Be weekly

supplychain to stay ahead of the game. So we decided to tap into that, to rely on them as our source of information and leadership.

And so far that’s paid off – what we learned from them has been far beyond what we could have learned on our own.”

There are numerous examples that are more limited than the previous one. One executive described a supplier’s role with respect to the regulatory environment: “We know that they have to stay ahead of [a certain area of regulation] in order to stay in business. So we count on them as our window into that world. They tell us what we need to know and where we need to make changes, not only as it relates to the products we buy from them, but in general.”

Another executive in a different industry explained that a certain supplier: “Has pretty much provided safety training to all of our employees” and said that they were “Our go-to guys on safety issues”.

In still a third example, a supplier that was very active in doing end user market research was described as: “The firm that got us ahead of the curve with respect to advanced diagnostics, sharing their research with us as to what users considered to be unmet needs and helping us bring some solutions to the market earlier than our competitors”.

The latter category of success story, one that involves a contribution that makes a difference in a firm’s

competitive position, is at the top of the ladder in terms of the value of a contribution made by a supplier, but in fact all of the above examples are ones cherished by customers.

And all of them are examples that involve the effective sharing of information by a supplier with its customers.

The third test that provides insight as to intangible contributions involves asking the following question to employees in various departments and divisions across the customer’s firm: “When you think of [name of the supplier], what

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“A critical ingredient to our product, one that is valued by our customers.

They respect [that supplier’s] brand and it helps us make sales.” comes to mind?” I have had the privilege of asking that question frequently to individuals across many organizations about many of their suppliers.

The answers span the spectrum. At the negative end are responses like “sleepless nights” and “looking for a new job”. When those are the answers, it’s probably time to aggressively look for a new supplier. Somewhat less negative are answers like “pretty expensive, which is a problem” and “an OK supplier, but nothing special”, answers that also motivate the consideration of alternatives. At another point on the spectrum are positive answers like “solid products”, “on-time deliveries and no hassles”, and “good responsiveness”.

Such answers suggest that any decision to replace the supplier must ensure that there is no denigration along

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such important metrics.

But at another point on the spectrum are answers like the following: “They are problem solvers. I can’t tell you how many times we’ve faced a challenge with some new application, and turned to them for help and got what we needed.”

“A critical ingredient to our product, one that is valued by our customers. They respect [that supplier’s] brand and it helps us make sales.”

“A key team member. In many ways, part of our eyes and ears to our market.

They’ve helped us get ahead of challenges more times than I can count.”

When the top-of-mind descriptions of a supplier involve intang ible contributions – and especially when they

involve contributions seen as important to the firm’s own end customers – it is a strong signal that the supplier is probably in the strategic category, involving a relationship important in ways that go beyond product and price. As was the case with the firm involved in the case study in this article, the signals are usually there, but aren’t always processed by the decision makers considering alternative suppliers. That is all too often the case, and asking this third key question to people across the organization is a means of ensuring that key signals are not missed.

There are other themes that surface in terms of intangible contributions made by suppliers to their customers, but the three questions outlined in this section can help to uncover the most frequent types of such intangible contributions.

supplychain It takes work to ask these questions and to build a solid foundation from which to evaluate the answers that emerge, but the effort is well worth the cost when it allows a firm to avoid a decision that later forces them to acknowledge that they didn’t know what they had till it was gone.

A Supplier’s Perspective For suppliers serving business customers, the concepts presented here are also highly relevant. I have used the three questions in the previous section as part of an assessment process through which a supplier can evaluate whether it is making intangible contributions to its customers and whether it has the potential to do so in the future. For most suppliers to business markets, such contributions will become more and more important in the future, given the reality of increasinglyequivalent products and transparent prices. Intangible contributions involving services and solutions will grow in importance as a source of differentiation among suppliers.

In working with such suppliers, I’ve emphasized two important action items.

The first involves developing an inventory of the intangible contributions that the firm is able to make. Typically, that list varies by customer, with the relevance and the value creation potential differing from customer to customer, depending on their product line, the markets served by the customer, the customer’s own capabilities, the nature of the relationship, and other factors. But for at least most of the larger customer relationships, suppliers have been surprised as to the length and breadth of the list of potential contributions.

They have also been

surprised as to how many of those contributions are not being delivered to their customers. This can be due to any number of factors – day-to-day pressures, overstretched employees, the wrong touch points within the customer organization, a failure to communicate how important doing so is to the individuals capable of making the contributions, etc. Recognizing the gap between what is possible and what is being done can allow a supplier to take action and assign responsibilities to close the gap in the future. As noted above, doing so may make the difference between success and failure with that customer at some point in the future.

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“suppliers that deliver intangible contributions should ensure that discussions of these contributions are part of their customer relationship plan” The second action item involves proactively bringing such contributions to the attention of the customer.

It is too late to do so during a time of crisis or in the context of responding to a competitive threat. In those circumstances, the customer response is likely to be in the realm of “everyone talks the talk”, as suggested earlier. But when done as part of a strong and well managed relationship plan, communications about intangible contributions can be recognized by customers and at some point in the future can make a difference.

I cannot overemphasize the importance of embedding such discussions in the context of an overall relationship plan. Setting up a one-time visit with a customer to explain “how important we are and how much we are

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supplychain doing for your firm, so that you remember it the next time contract decisions come around” will fall flat with near certainty. But discussing intangible contributions as part of an ongoing dialogue with a customer, focusing on the future and focusing on that customer’s own challenges can work and will be remembered. Suppliers that want to be recognized as making such contributions and to be rewarded for them must incorporate the contributions that they can make as part of a long-term, ongoing relationship plan.

Summary Suppliers have traditionally been a source of value to their business customers, traditionally centered in their products and in their ability to reach an attractive price point. Increasingly, however, more and more competitors will achieve parity along those dimensions, and differentiation will depend more on whether a supplier can provide intangible services and solutions of importance to their customers.

Unlike products and pricing, however, customers will be

challenged to identify and quantify the benefits of such contributions, especially as they are often not easily translated into “per piece” metrics. Such contributions, nonetheless, will matter both to customers and to the suppliers differentiated by their ability to deliver them.

To avoid the disappointments that will occur when a customer displaces a supplier that was providing high-value intangible contributions, it is necessary to have a process through which it can be determined which suppliers are making a difference through such contributions.

Suppliers that are linked to a customer’s adjacent processes and activities, that bring high-value information and insight to the customer, and that are recognized positively for their services, solutions, and end customer

appreciation are ones likely to be important sources of intangible contributions.

Careful decision making is required when considering options to replace such suppliers, as a frequent lament after doing so is that “we didn’t know what we had till it was gone”.

Suppl ier s should themselves be attentive to those same sources of intangible contributions, both to identify where they have the potential to create and capture value and to identify gaps between such potential and what they are actually bringing to their customers.

Those suppliers that are in fact delivering important intangible contributions should take actions to ensure that discussions of these contributions are an important and ongoing part of their customer relationship plan.

George F. Brown, Jr. is the CEO and cofounder of Blue Canyon Partners, Inc., a management consulting firm working with leading business suppliers on growth strategy.

Along with Atlee Valentine Pope, he is also the author of CoDestiny: Overcome Your Growth Challenges by Helping Your Customers Overcome Theirs. www.bluecanyonpartners.com

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Namibia Diamond Trading Company

Bright shining light Diamonds have an undeniable attraction that has made them sought after by collectors, connoisseurs, investors, and lovers: a key part of the economies of southern Africa they are so much more than just another resource mineral

written by: John O’Hanlon research by: Will Kirby be weekly | 29

N

amibia Diamond Trading Company (NDTC) was established in 2007, to sort, value and sell diamonds produced by Namdeb (the joint venture responsible for mining activities in Namibia) and more specifically to establish a viable downstream diamond cutting, polishing and jewellery design industry in Namibia. In 2008 the man appointed as the new organisation’s chairman, then permanent secretary in the Ministry of Work, Transport and Communications, stepped into the leadership position of Chief Executive Officer at NDTC: in the subsequent six years Shihaleni Ndjaba has presided over the steady realisation of that goal.

NDTC is an equal partnership, or joint venture between the Government of Namibia and De Beers, the world’s leading diamond company with unrivalled expertise in the exploration, mining and marketing of diamonds, employing more than 23,000 people round the world. Its primary goal is to drive the growth of domestic diamond manufacturing industry and the creation of a sustainable downstream diamond industry in the country. The aim is to ensure the maximum, long term value from Namibian diamonds through world class sorting, valuing and sales practices in Namibia.

This strategy supports the development of new employment opportunities and a broadening of the skills base of Namibian citizens and will, it is hoped, encourage inward investment generally.

It has not been an easy time, he admits. The volatility in the international

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Namibia Diamond Trading Company

1,250 People employed by NDTC Sightholders

diamond market has affected the demand for jewellery, and as a consequence the demand for the rough diamonds traded by NDTC. You might have thought that wealthy people might think diamonds were a good investment at such a time, but the bulk of business activity is driven by consumption, not speculation, he believes.

But while waiting for green shoots to appear in the depressed global economy, things have gone really well for the diamond trade in Namibia itself. “One of our clearest objectives is to build up a vibrant and creative domestic beneficiation industry and here we have seen very satisfactory expansion,” says Ndjaba.

NDTC’s customers are called Sightholders – these are the suppliers of choice, selected in a rigorous process to determine their financial viability, technical capability and integrity.

They are appointed for three-year periods during which they have the right to buy diamonds offered to them by NDTC. Historically the centres of excellence in diamond polishing and cutting activities have been Belgium, Israel, India and New York. Now Namibia has its own group of Sightholders, incorporated in Namibia and employing an overwhelming majority of Namibians in their workshops. During the contract period that ended in 2012 there

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Namibia Diamond Trading Company

were twelve such companies in the portfolio, but in the three year period from 2013 to 2016 this has grown to 13. “Right now we have about 1,250 people employed by these 13 Sightholders,” he says, adding that out of a total population of around two million in Namibia and with 27 percent unemployment, that is quite an achievement.

There’s more. Though it is a highly skilled and creative industry, requiring a high level of craftsmanship as well as a great deal of creative and artistic flair, it is suitable for disadvantaged people who are keen

to learn new skills. Just to take one local Sightholder, Schachter & Namdar employs 160 people at its Windhoek factory, a third of them disabled, deaf or mute, modifying its polishing benches, installing handicapped restrooms and purchasing a modified minibus that accommodates wheelchairs.

So successful has this programme been that it has probably already reached its critical capacity. The number of diamonds being extracted in Namibia is not likely to increase. There have been no new discoveries on the land-based diamond

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fields, which are approaching the end of their life. And while Namibia has become the world leader in marine diamond mining since it started exploiting the beaches and undersea resources that won’t last forever, Ndjaba warns. “Our task is to make sure the Sightholders we do have work hard, maintain those jobs, and transfer their skills

to local people so that one day, even if we are not able to supply them with diamonds, they will be able to source diamonds from elsewhere.” The industry will then be self-sustaining, with all the skills and equipment that it needs in place, and able to supply any shortfall in local materials from international sources.

“Our task is to make sure the Sightholders we do have work hard, maintain those jobs, and transfer their skills to local people”

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Namibia Diamond Trading Company

Turning NDTC into a fully for training in cutting and localised operation has been polishing but they need also largely thanks to the success to understand how to assess of its training academy. rough stones. “They learn Originally the company something of the geology Cut diamonds shown at relied on expatriates from and chemistry relating to Shining Light, Windhoek De Beers to evaluate and rough diamonds and that helps them understand the sort the rough diamonds it receives from Namdeb but now their assortment that we supply to them.”

As time goes on, he continues, the number has reduced as Namibians have acquired their skills. Now the academy Sightholder community is becoming fully offers courses to staff from the Ministry indigenised. No longer seen as a local branch of Mines and Energy, the office of the of an international entity, these companies Diamond Commissioner and to diamond are able to take part in the monthly ‘sights’ or inspectors to equip them with knowledge sales weeks that are held locally and where about the appearance and quality of rough they negotiate for all or part of the diamonds diamonds. It is also open to Sightholders they are offered. Namibia is after all a stable – they have their own specialist facilities and secure location to base an operation, and

14,000

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there is no reason the companies that set up here should be limited to Namibian diamonds for their raw material.

One of the most successful and high profile ways that NDTC has found to promote the industry and take ownership of its African roots is the bi-annual Shining Light Awards. At the launch of the third such event in Windhoek on 21 February 2013 the theme was the Women of Africa, Your Light Shines. More than 14,000 expertly cut diamonds were shown, set into locally designed jewellery pieces, including some from neighbouring Botswana. The overall winner was Erkki Hifindwako, a visual arts student at the Namibia College of the Arts, whose 18-carat white and yellow gold ring set with 575 brilliant cut diamonds took its inspiration from a traditional Namibian basket weave. He was sponsored by Sightholder Julius Klein Diamonds.

“Our African women need to be celebrated,” says Shihaleni Ndjaba. “It is a commonly known fact that a house without a mother is just a house, but a house with a woman is a home full of love and comfort!” The awards are a great showcase for the Namibian diamond industry, the Sightholders and the talented young designers like Hifindwako who are emerging. “Even at the height of the recession we saw no collapse of the industry, so I think we are in good shape to face the future,” he concludes.

For more information about Namibia Diamond Trading Company visit: www.debeersgroup.com

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Namibia Diamond Trading Company

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Perseus Mining

A PROMISE IS A PROMISE West Africa still hosts mineral deposits that for one reason or another have remained underdeveloped: for certain Australian prospectors they became an obsession that is now paying off

written by: John O’Hanlon research by: Robbie Hodgson

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A bar of gold being weighed

Perseus Mining

P

erseus Mining is very much a team effort: an overnight success that was 25 years in the making, as one of its founders Mark Calderwood has described it. Calderwood, the current chairman Reg Gillard and exec director Colin Carson have been taking an active interest in the under-explored mineral deposits of West Africa for that long, but it was not until 2004 that, having secured a couple of gold bearing deposits in Ghana, Côte d’Ivoire and the Kyrgyz Republic that they formed a company and floated it on the ASX. Since then things have moved forward quite quickly despite a couple of years of quiescence while world markets were depressed and trying to sort themselves out. In 2006 it acquired the tenements that today host its Edikan Gold Mine, though exploration and feasibility work could not really get under way till 2009. By 2010 though the company had successfully recapitalised, obtained a positive full feasibility study and started to build its flagship project, the Edikan mine in Ghana’s rich Ashanti gold belt.

It was just before the start of project development that Jeff Quartermaine joined the team as CFO. Up till then, he says, the company had been brought forward by a team whose main expertise lay in exploration and business development – and they were good at it, having grown the resource from about 130,000 ounces of gold at the time of acquisition to almost eight million ounces today. But they were not blind to the fact that along the development curve different skills are needed. In 2011, shortly before

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beBEweekly WEEKLY| |432

Tel: +27 12 345 3335 Fax: + 27 86 6609354 Email: muchinaeng@telkomsa.net or info@muchinaengineering.co.za www.muchinaengineering.co.za

Muchina Engineering started out

as a supplier to two mines in Zambia mainly supplying pumps mechanical seals and gaskets.

Over the years we have learnt how the mines work and understand all their special needs.

This has allowed us to branch out in to various projects. We now supply 8 mines across Africa including Perseus mining in Ghana.

Our products: • Pumps • Pumps Spares/Repairs • Mechanical Seals • Gland Packing • Gaskets • General Supplies

Perseus Mining months of this year were a record quarter, continuing As a subsidiary of Associated Pump Engineers UK Ltd, remediation work on the Muchina Engineering are suppliers of mechanical seals, plant notwithstanding, and pumps, gland packing and gaskets. Muchina Engineering the first year’s production are the sole distributors of Gusher pumps in South Africa, a great success. “We are and as from 2010 we are now the sole distributors for on track and the future is Beresford pumps throughout Africa.

In 2008 Muchina Engineering, in conjunction with looking very promising,” says Associated Pump Engineers UK, invested one million dollars Quartermaine. changing from traditional sand castings to investment Ghana, and West Africa castings for our impellers and casings. generally, is not such a risky The vision of our company represents us with an incredible place to do mining business foundation, an underpinning which gives us confidence, in as you might imagine. strength and insight as we continue to be a leader in the “We have worked hard to growing premium pump and seals industry. www.muchinaengineering.co.za forge good relations with the government and our host communities, but I think it is interesting when people talk about the political risk of mining in Africa: I don’t think the risks are that much higher than in many other regions.” The MRRT or super profits tax introduced in Australia from July 2012, he suggests, makes Perseus’s base country as challenging a business environment as any, and Ghana in particular has a very forwardlooking regime when it comes to co-operation with the mining companies.

muchina Engineering

250,000 ounces

Annual gold production projected at Edikan Water quality monitoring at Edikan Mine

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THEODORA ASUBONTENG ENTERPRISE, is a multi-faceted business that has a reputable history of excellent services to big-scale corporations such as the mining industry and our strong dedication to perfection and quality makes us a very viable enterprise to do business with.

THEODORA ASUBONTENG

We supply Household items such as: • Bedsheets • Duvert and duvert covers • Towels • Blankets • Towels • Shower curtains • Door mats • Bed mats • Cutlery sets • Glasses • Blenders • Irons • Microwaves • Rice cookers • Kitchen knives • Kitchen napkins • Mosquito nets • Refrigerators • Television sets We also supply Mining gear such as: • Workers’ Overalls • Reflector Vests • Raincoats • Safety Goggles • Ear plugs • Protective Gloves • Nose guards We also provide Interior Decoration services like: • Curtains • Window blinds • Venetian blinds • Carpet layering • Room furnishing (furniture) We are also Event Organisers for occasions like: • Weddings • Parties • Official Ceremonies Beauty in Virginity: • We also support orphans and vulnerable children

ADDRESS: P.O. Box 2136, Sunyani, Ghana.

LOCATION: Ground Floor of Cocoa House, Sunyani, Ghana.

TELEPHONE: 233208120256/ 233243109618/ 233352023646/ 233208149554 E-MAIL: bevin2004gh@yahoo.com

PERSEUS Mining MINING Perseus Perseus Mining Perseus feature Lorem ipsum dolor sit amet, In reciprocation text to go here....Lorem consectetur adipisicing elit, has been assiduous in ipsum doing dolorright sit amet, consectetur sed do eiusmod tempor the thing by the host incididunt ut labore et dolore adipisicing elit,Ghana sed has do country.

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Excepteur sint occaecat non proident, sunt in of experienced professionals back home, and occaecat into seniorcupidatat jobs. cupidatatis non proident, sunt inby culpa qui culpa qui officia deserunt mollit anim id Perseus trying to redress this actively Of course it would be unrealistic to seek officia deserunt mollit anim id est laborum. est laborum. Lorem ipsum dolor sit amet,

THEODORA ASUBONTENG ENTERPRISE THEODORA ASUBONTENG ENTERPRISE has an N.G.O. called “BEAUTY IN VIRGINITY� which seeks to promote Moral values and discipline among the youth in Ghana.

A chief aim of our N.G.O. is to mobilize, educate and assist virgins to maintain their virginity till marriage.

We also serve as an active voice towards HIV/AIDS sensitization and awareness among the youth in various communities in Ghana.

Some of our achievements in this regard include: A joint collaboration with Perseus Mining Ghana on World AIDS Day in 2012 where we visited schools in the Ayamfuri community to educate and sensitize the youth about HIV/ AIDS and its deadly effects and how they can protect themselves.

A two day HIV/AIDS Sensitization Workshop

for sixty (60) Queens and Opinion Leaders, Long Distance Drivers, Traders and Teachers sponsored by the UN System Gender Program. A Workshop/Quiz was organized for in and out school youth on behavioural modification strategy on HIV/AIDS sponsored by the Ghana AIDS Commission.

At THEODORA ASUBONTENG ENTERPRISE, we are contracted to PERSEUS MINING GHANA LIMITED as a supplier of general goods and interior decoration.

At THEODORA ASUBONTENG ENTERPRISE, we have also been a supplier and Interior decorator for NEWMONT GHANA GOLD LIMITED for about seven (7) years.

E. bevin2004gh@yahoo.com

WEEKLY | | 472 beBEweekly

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Perseus Mining IGS Italia

IGS Italia is the European engineering and manufacturing subsidiary of Innovative Gas Systems (IGS) with HQ in Houston TX. IGS is worldwide one of the major suppliers of non-cryogenic air and gas separation plants and instrument air packages. The patented proprietary hollow-fiber membrane technology from IGS sets market standards in terms of performance and efficiency for nitrogen production, gas separation or air dehydration. IGS Italia not only designs and manufactures standard systems, like its patented NITROSWING® and OXYSWING® modular PSA nitrogen and oxygen

experienced personnel in the surrounding community, so it is remarkable to learn that approximately 50 per cent of the workforce at Edikan is drawn from the five villages nearest the mine. “We could have drawn staff from mining operations elsewhere in Ghana,” says Quartermaine, “but we decided that while recruiting locally meant we’d have to spend more on training, it would put money into the local community and increase their engagement with the operation.”

Training local people from scratch has the added advantage that they understand how Perseus operates, he adds. “We went out and

generators, but also offers finely engineered and custom-built packages for nitrogen and oxygen generation, gas separation or instrument air supply. IGS’ scope of supply for standard systems can also be extended with complete turn-key installations on either a single skid or inside an ISO freight container, including feed air system and all necessary receivers. IGS Italia distributes its products and services to the market also through IGS’ Global Sales & Service organization with offices in Germany, Russia, UAE and South Korea. www.igs-italia.com

Geologist Emmanuel Djorjee reviewing cores

“while recruiting locally meant spending more on training, it put money into the local community and increased their engagement with the operation” be weekly | 49

Reach for Aducolly Eng. Ltd. for your first-rate engineering services in maintenance welding & steel fabrication, pump installation, tank building, pipe welding & installation, cladding, conveyor servicing and steel structure erection.

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Perseus Mining did aptitude tests to identify Aducolly Eng. Ltd who would be best suited to Aducolly Eng. Ltd. also deliver to your specification in areas the challenge of working in such as belt splicing hot & cold, poly pipe welding, sand our operation. I was fortunate blasting & painting, agitator shaft/crush mantle building as to be on site the day the first well as apron feeder installation among others. We stand trainees arrived and had the distinguished by our level of commitment to duty and how honour of welcoming them to well we delight our clients with excellent customer service beyond their imagination. the site.� There were around educolly@yahoo.com a hundred young men and women, he says, all mightily enthused at the opportunity to become a part of a serious operation within their own community and at having the chance to learn new skills.

Quartermaine believes the best way to generate sustainability is through education because it equips people make their own choices.

Over the last two years Perseus has sponsored 90 students at Kumasi Technical Institute (KTI), instituted a scholarship scheme for students in the Edikan communities to further their education in second and in the future, tertiary institutions in the country and announced a sixmonth apprenticeship programme to train 120 young people in masonry, carpentry, electrical installation and plumbing.

Meanwhile his objectives for this year remain firmly to deliver on what has been promised, or at least planned. The process plant will be upgraded to increase throughput from its A view of the Edikan plant

“the best way to generate sustainability is through education because it equips people to make their own choices� be weekly | 51

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present level of 5.5 million tonnes per annum to eight million tonnes per annum by July 2013.

From that point he expects gold production to go forward at a rate of some 250,000 ounces a year, with costs kept low so that the company can generate a substantial cash margin. Gold prices may be past their peak, but following this policy will keep Perseus in business where high cost producers crash out, benefiting proportionally when prices rally.

With the world class Edikan mine at full throttle, the subsidiary property in the Ashanti belt, Grumesa 20 kilometres to the east, is taking a back seat though drilling continues

50% Gold Room Operator cleans slag residue from a bar of gold

Of workforce from just five local villages

be weekly | 53

there. Any spare energy is being diverted to the Sissingué Gold Project in north-east Côte d’Ivoire. Only perhaps 300 miles distant, they are very different. If Ghana is switched on to its resources, its neighbour has less of a mining tradition though Quartermaine thinks it could vastly benefit from development. Following a very difficult and unsettled era, the country is now working very hard to upgrade its mining code so it presents a more attractive investment than its neighbours. But late last year, when the Perseus board was preparing to give the green light to construction of the fully permitted and funded Sissingué project, the Ivorian government started to talk about a super profits tax.

While not denying their need to benefit from their resources, developing governments sometimes overlook the need of overseas investors to see a fair return. So Perseus along with the rest of the world’s mining community is waiting to see what the awaited mining code will contain. “We would be delighted to be able to get into mine development in the second half of this year, with first production in the second quarter of 2014. But,” says Quartermaine, ever the prudent professional accountant, “we won’t commit if we are not certain we can achieve the kind of returns we need.”

However Sissingué is projected to 170,000 ounces of gold a year, at low cost.

Adding this project to Edikan would firmly establish Perseus among the leading West African gold producers.

For more information about Perseus Mining visit: www.perseusmining.com

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Molten gold in crucibles following a gold pour at Perseus Mining’s Edikan Gold Mine

Perseus Mining

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Asian Mineral Resources

A first for Vietnam The Ban Phuc nickel mine represents a new industry for Vietnam, and is perhaps the first of a number of nickel projects to be developed by Asian Mineral Resources

written by: John O’Hanlon research by: Richard Halfhide

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Asian Mineral Resources

A

nalysts talk of Vietnam production in June 2013. “We are flat out becoming the fastest growing finalising construction of the process plant Asian economy, reaching a ten and the infrastructure to support that,” says percent growth rate within AMR’s CEO Simon Booth, who has moved to the next twelve years with Hanoi to oversee progress of the company’s one of the main drivers being its natural 90 percent owned subsidiary Ban Phuc Nickel resources. The country has significant known Mines (BPNM). “Our activities are very much deposits of many bulk and niche minerals, focused on getting the plant operational, including bauxite, rare earths, tungsten, and restarting the underground operations titanium, phosphate, coal and iron ore but next month, leading to the opening of the with the exception of its coal most current processing plant at the end of June,” he says. mining operations are on a small scale. There The mine represents nothing less than the is a huge opportunity there for large-scale start of a new industry, and while there is a development, since the mining industry limited amount of expertise in the country, the Vietnamese are hungry currently contributes only for additional skills. “The two percent of Vietnam’s GDP, if oil, gas and coal are mining industry is not a well developed industry here,” excluded.

Nevertheless, with China he explains, “but that said on its northern border Vietnam every mine presents its own Jobs at the mine once has to be in the best place to challenges of drawing on the it’s in production supply the mineral needs of national expertise and talent its powerful neighbour. For and developing that. We these reasons there was bound to be a lot are bringing in a number of trainers from of interest in the country’s first nickel mine. overseas to train up the local workforce, Asian Mineral Resources (AMR) listed on the though the general level of education here is Toronto Stock Exchange’s Venture Exchange high, and there’s a strong will to acquire new in 2004, focusing all its efforts on developing skills.” If specialised mining is something of the massive sulphide nickel resource located a new area, a strong engineering base exists on what is now identified as the Ban Phuc in the country. It is just a question of taking Project Area located160 km west of Hanoi in those skills and moulding them to what is Son La Province, in north-western Vietnam. required on a mine site, he says.

There’s no need to dwell on the period Currently the progress of the mine sounds from October 2008, when metal prices frenetic. As the finishing touches are made fell and work was suspended until market to the process plant, the infrastructure to conditions improved in 2012 and the project support it – the power connection to the could be restarted. Since the end of last year national grid for example – is being installed all systems have been go, aiming for first and tested. The tailings storage facility is being

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prepared, and at the same time preparations are going ahead for the recommencement of underground operations in May, so that there will be some ore ready for processing when the mill opens at the end of June. Once built the ore processing plant is expected to process 1,000 tonnes of run-of-mine ore per day to improve its nickel concentration from 2.2 percent to 9.5 percent. The process plant consists of a crusher, ball mill, classifiers, flotation cells, thickeners and filter press.

Before the mine was put into maintenance mode nearly a kilometre of underground development and shafts had already been prepared, Booth points out, so this is not like starting a mine from scratch. “We have already intersected the ore body on two different levels, so much of the hard part

Asian Mineral Resources

Overview of the plant site

is already done.” Concentrate from the mill will be packed in two tonne bags for ease of handling and transportation, but also to reduce dust. Then it will be taken by truck from the mine site to the port of Haiphong and sold to the international market through a Hong Kong based commodities trading group.

In the immediate vicinity of the mine the majority of the people available are either

unskilled or semi skilled. For technicians it is usually necessary to spread the net wider, throughout Son La Province or beyond. If they can’t be found in Vietnam, then they are brought in from abroad. There’s a core of people who were working with AMR back in 2008, and who are very keen to get back into the saddle. For the rest, an intense training programme started at the end of 2012. “They are doing very well under our expat training

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team, which includes one trainer that we recruited from a mine in Laos. It has been very much easier for him to understand the culture here and the key tasks that are needed to build a successful training programme.�

The programme uses recognised training modules that have been translated into Vietnamese. They are learning to operate some very sophisticated machinery controlled

by PLC (programmable logic controller) systems accessed by HMI (human-machine

interface) with output that is largely numerical and graphic so language is less important than the ability to read figures. Having been involved pre-2008, another contractor Aurecon is returning to provide electrical, and control and instrumentation design as well as engineering, procurement and construction management (EPCM) services for the process plant, slurry line to the tailings dam, and potentially the underground mine.

At the time of writing there are around

“We have already intersected the ore body on two different levels, so much of the hard part is already done�

Plant worker carrying out maintenance

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Asian Mineral Resources

The next phase of construction being discussed

250 people working on the site, but once the mine is in full production numbers will rise to around 400, perhaps 10 percent expatriate.

The actual mining operation will be carried out by a specialist contractor from Australia.

Mancala was appointed in December 2012 under a three-year contract to supply the underground mine with development and pre-production personnel, mine equipment and management services to develop and mine some 350,000 tonnes of ore annually.

The company is bringing in its own expert trainers, however it aims to have a largely Vietnamese workforce within six months.

“The best thing in underground mining,” says Booth, “is to keep it simple. This is an operation that will be raising standards in safety, health, environmental performance and in the way it looks after its community

and it will be a proud place.”

Though the resource as defined at present will support commercial mining for around six years with more than 200,000 tonnes of nickel and copper concentrate, its extent could be considerably greater – with a consequently longer mine life. “It has very good exploration potential, and geologically this is a very attractive area for new nickel resources to be located,” says Simon Booth.

“We will recommence drilling after we commission the process plant, and I can see AMR operating in Vietnam for a great deal longer than just six years.”

For more information about Asian Mineral Resources visit: www.asianminres.com

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Fuel for the fu

Toro Energy is emerging as the first company to commenc uranium exports from Western Australia: it is ready to establish a new industry and cement Australia’s position a a reliable supplier to the growing nuclear economies of As

written by: John O’Hanlon research by: Jeff Abbott

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Toro Energy

uture

ce

as sia

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I

t has happened. Vanessa Guthrie told hopes – and expects - that on-going drilling us she was not anxious about the twice will extend the size of the resource and the delayed approval by Australia’s Federal lifetime of the project considerably.

Minister for Sustainability, Environment, She has invested a lot of her personal Water, Population and Communities energy in developing the project to this Tony Burke to go ahead with Toro Energy’s point, culminating in her appointment as A$269 million Wiluna uranium mine, but Toro’s Managing Director in December the uncertainty must have cast a bit of a 2012. A noted advocate of sustainability cloud over the Easter break. In the event and environmental best practice, and with the decision came through on April 2, in the an impressive track record with several wake of last October’s Western Australian mining majors, it was no great surprise Government environmental approval for when she was named as 2013 Outstanding Wiluna and completing environmental Professional Woman by the Chamber of assessment processes that have lasted almost Minerals and Energy of Western Australia. three and a half years.

But for now most of So Dr Guthrie, Toro’s her attention is focused on Wiluna. It is a calcrete hosted Managing Director, was deposit, close to the surface. delighted to realise she “The pits only go down 15 would be leading Western metres, so it will be a surface Australia’s first uranium Reactors planned by sales in 2015. “Wiluna is one strip mine,” she explains.

India and China alone of the few projects in the “The tailings are returned world capable of bringing to the pit progressively, so new uranium production to the market in the at the end of the project the landscape will medium term, when a shortfall is predicted look just as it did before.” There speaks the environmentalist, who puts a lot of effort into from 2015 onwards,” she says.

Wiluna is bang in the centre of Western listening to and working with the Traditional Australia and a thousand kilometres from Owners of the land. “There are two native Toro Energy’s head office in Perth. Toro’s title claimant groups involved, and I think flagship and wholly-owned Wiluna Uranium we have been very respectful of their cultural Project, which has a regional resource base heritage in the region. A good example is of 54 million lbs, is situated 30 kilometres where we are building a thirty-kilometre to the south of the township of Wiluna. The haul road between our two mining sites, project is the most advanced of the new Centipede and Lake Way. In determining both generation of uranium mines in Australia. the mining footprint and haul road alignment It’s expected to yield 1.8 million lbs of we negotiated with the Traditional Owners uranium oxide concentrate per year over a about areas they did not want us to disturb.”

This included an area of the Lake Way lifespan of at least 14 years, though Guthrie

48

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Toro Energy

Dr Vanessa Guthrie, Managing Director

Toro Energy

Resource evaluation pit - Wiluna

deposit which is very sealed and numbered, placed important to the local people, on pallets and loaded into so they were pleased that containers. “Our production Toro was prepared to avoid volume is just four sea these culturally significant containers – or two trucks – Overall cost of areas and respect their per month. We will take it to Wiluna mine wishes. Wiluna will use an Port Adelaide by road: it’s a alkaline leach process rather 40-hour trip but as the first than the acid more commonly used in mineral producer in WA it makes economic sense to processing plants. The process of grinding, co-ship with other producers and through leaching and extracting uranium from the the currently permitted ports based in either ore to produce a concentrate is a standard South Australia or the Northern Territory.” hydrometallurgical circuit, which will be For Toro to ship through a Western built on site, next to the Centipede deposit.

Australia port would delay the cash flow, so However uranium oxide concentrate is a that would never make sense at this stage, high value, low volume product, so rather than she explains. Port Adelaide is a certified and being transported in bulk it is transported permitted secure port that has been handling by truck in sealed, lined drums, security radioactive material safely for over 30 years,

A$269m

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Toro Energy

The Wiluna site at dusk

so is the quickest and most secure way to get infrastructure but Vanessa Guthrie is very excited by its potential. If you were looking the product to market.

Despite its remoteness, Wiluna has good for a precedent, you’d have to think of Tanami infrastructure thanks to the long history of Gold’s operations in the Tanami Desert, now mining in the region. The project is reached the centre of a thriving community, she says. via the Goldfields Highway and lies close to “Operations like these require an airstrip the Goldfields Gas Pipeline. Wiluna also has and investment in local infrastructure, but a sealed airstrip, which can be used for fly-in- on the positive side they give those remote fly-out arrangements, similar communities their best to a large number of mining opportunity for economic companies throughout the participation.” Theseus is outback. virgin territory, with the Toro Energy’s next potential to become an uranium project further to important new uranium the northeast on the border province for Australia, and with the Northern Territory is it could generate a lot of Depth of the uranium another matter. The Theseus employment and training deposit at Wiluna opportunities for traditional project is less well served by

120 metres

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communities in the area, one of her and Toro’s key objectives.

Whereas Wiluna is near the surface, the uranium at Theseus is found in sandstone horizons around 120 metres deep. But that does not make it harder to win. It will, Guthrie believes, lend itself to in situ recovery, or ISR mining. The method is commonly used in other uranium provinces in the world, where a well field is constructed to extract the uranium by establishing a circulating solution flow that becomes laden with uranium. The surface impact and consequent rehabilitation is minimal. The only impact is potentially on localised groundwater flows, and these would be carefully monitored and protected, Vanessa Guthrie assures.

Toro has declared a maiden resource at Theseus, with an exploration target range still to be tested to determine the size of the potential resource. The next stage? She would like to find more Theseus-type projects: “We are looking to build a portfolio of projects that will move us up the list of global producers. In the current environment, that leads you more to the ISR type deposits as the next generation of uranium deposits world-wide are likely to be lower grade and will therefore demand greater capital and operating cost efficiency.”

The opportunities for finding uranium

in Australia seem almost limitless. It holds 30 percent of the world’s economically recoverable uranium, she says. “Toro Energy aspires to be a mid-tier global uranium producer over the second half of this decade.

Currently ten major mines produce 80 percent of the global supply to world markets. The opportunity for Australia to become a more significant player lies in developing new projects like Wiluna.”

“We are looking to build a portfolio of projects that will move us up the list of global producers” 72 | be weekly

Toro Energy

Vanessa Guthrie at the Toro offices

India and China plan aggressive nuclear power production growth in the next five to seven years. Around 28 reactors are currently under construction in China, 20 in India, and both countries plan exponential growth in their nuclear base load, she says. “The primary uranium mining projects available to fill that gap in 2016/17 are quite few. Major projects currently in production are at capacity.

Emerging projects coming into production have been significantly delayed over the last couple of years in particular.” Australia is blessed with political and economic stability unlike some of the other territories that hold uranium resources. It may take a long time to get uranium projects up and running, as evidenced by Toro’s experience with environmental permitting, but it will be

looked on favourably by offtake partners.

With the hard work of permitting now complete, all efforts will be on financing the project, probably through an equity and offtake agreement with a partner with a healthy nuclear programme in China, India, Korea or Japan. Talks are already under way: there’s no lack of interest, she hints, and her goal is to be in a position to make a final investment decision by the end of this year.

Meanwhile the company is financially secure, sitting on sufficient cash to be able to fund its planned exploration and running costs.

For more information about Toro Energy visit: www.toroenergy.com.au

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74 | be weekly

Les Gaz Industriels Limited (LGI)

The desire to diversify Managing Director, Jérôme Commins discusses LGI’s diversification over the years and its plan to expand into Africa’s emerging markets

written by: Will Daynes research by: Vince Kielty

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L

es Gaz Industriels Limited (LGI) was originally incorporated as a private company in 1952, with 100 percent Mauritian equity and the core aim of producing oxygen and acetylene for metal cutting and welding purposes. Eleven years later a majority stake in the business was acquired by leading South African gas company African Oxygen Ltd (Afrox).

This significant development helped shape the future of LGI, transforming it into a business that has diversified hugely throughout the years into a wide range of products, specifically the manufacture, sales and delivery of medical and industrial gases in bulk and in cylinders, the manufacture, sales and delivery of welding electrodes, installation of gas reticulation, project management, maintenance contracts as well as water treatment, with a growing market share in the Mauritian market and abroad.

It was on 5 April 2008 that Jérôme Commins was employed by LGI, taking on the role of Finance and Administrative Manager. In December 2009 he took on the position of acting Managing Director, before taking full lead of the business in February 2010.

“In the time since,” Jérôme states, “we have undergone massive developments as a business and today find ourselves in the midst of a huge investment programme where we are putting significant capital into new technologies for the production of liquid oxygen, liquid nitrogen, liquid carbon dioxide, liquid argon and all types of gases that we produce locally,”

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Les Gaz Industriels Limited

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1952 The year that LGI was incorporated as a private company

One of Jérôme’s most personal, and challenging, undertakings since he took on the role of Managing Director was to convince the board of LGI to invest massively in the acquisition of a new state-of-theart production plant at the company’s site in Mauritius. Having put his case forward successfully the company is now looking forward to taking delivery of the plant no later than September of this year.

“This new plant will open up a whole new world of possibility for us,” Jérôme enthuses. “While our existing facilities have served us well it has been obvious for some time that we needed to modernise, upgrade our capabilities and increase our stock and storage capacities in order to grow not just on a local level, but also in terms of regional and international expansion, while remaining competitive.”

“One of LGI’s proudest achievements” Jérôme states “is the fact that we have among our Partners, the largest fleet of IMO Type 7 ISO Tankers in the region.”

Jérôme is also confident and more than happy that the tanks the company supplies are well-maintained, marine certified and regularly recertified in accordance to class requirements, making LGI a preferred lessor

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Les Gaz Industriels Limited

If we placed all our industrial gas cylinders in a line, they would cover the surface, and even more, of a football ground

to its customers. One most important aspect that Jérôme highlights is that the tanks can be refilled on LGI’s site in Mauritius and re-forwarded throughout the world.

Having been established in Mauritius for well over 60 years, LGI finds itself in as good a position as anybody to offer its support to international and multi-national companies

looking to set up operations in the Indian Ocean or on the African continent. This is particularly true when it comes to the company’s welding operations, for which it is perhaps best known for its production of the well-known Vitemax brand.

“One of the things I am working on at the moment,” Jérôme explains, “is

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“Jérôme knows that despite LGI’s success to date, the company must continue to improve, and this all starts with the company’s most valued asset, its people”

There are no higher priorities than the health and safety of our employees, customers, suppliers and the community, and the protection of the environment

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Les Gaz Industriels Limited attracting investors from the welding sector to come and make things happen in Mauritius by importing the components and equipment needed to produce locally, before expor ting t he finished items back into core regional and African markets. In many ways I would like to see Mauritius become something of a hub for this sort of activity and we are already in discussion w it h severa l I ndia n a nd S out h A f r ic a n companies that share our long-term vision.”

While Mauritius itself is currently experiencing strong organic growth, the company is well aware that Whenever anyone buys anything from LGI we always put 100 percent of enthusiasm behind it further opportunities await it in a host of surrounding markets, especially those in Africa. “Our and abroad in the very near future. strategy for expansion,” Jérôme says, “is Although LGI is a company based in a to first target other small markets before small country it still harbours a strong desire moving deeper into Africa. This is a goal to be involved in large projects in some of that we believe we are in a strong position the busiest markets in the world. Today it finds itself in a good position to achieve to accomplish.”

In addition to its aforementioned aims, this thanks in part to its involvement with LGI is also looking to move into the supply the Ambatovy mining project, one of the of carbon dioxide to a number of large most ambitious industrial undertakings in multi-national players, including Coca-Cola the history of Madagascar. and PespiCo. Furthermore, the company “Our involvement in this project is has designs on expanding further into fascinating, not only because of the size and the healthcare and homecare markets, importance of the project but also in terms providing its services to clients both locally of the volumes of our products that we are

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Les Gaz Industriels Limited supplying to what is a logistically challenging island location,” Jérôme enthuses. “Indeed we have faced some minor obstacles in getting our products delivered on time and to specification to Madagascar, but we have succeeded in doing so and therefore have proven ourselves capable of taking on the most challenging of tasks and exceeding our customer’s requirements.”

Not one to rest on his laurels, Jérôme knows that despite LGI’s success to date, there is more to be achieved and in order to do so the company must continue to improve, and this all starts with the company’s most valued asset, its people.

“Our human capital is of vital importance to us and that is why we will continue to focus on their continuous development, providing them with the training needed.”

To this end the company has a number of exciting training programmes that will continue throughout the course of 2013.

Meanwhile it will continue to provide its employees with the opportunity to travel abroad to train in specific fields, with various Partners currently based in Italy, France, South Africa, Canada, Singapore and India.

“As our people grow,” Jérôme concludes, “so too will our business as we work to rapidly develop our overall offering, while at all times retaining the efficiency, competitive prices and product quality that LGI has become synonymous for.”

For more information about Les Gaz Industriels Limited (LGI) visit: www.gaz-industriels.com

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Keeping their cool Unique Dairy Products Ltd (UDP) is an award-winning manufacturer and supplier of hard and soft ice cream, frozen novelties, frozen yogurt and related ice cream products: its newly found independence following a recent MBO will enable it better to reach its target market

written by: John O’Hanlon research by: Paul Bradley

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Unique Dairy Products Ltd

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Unique Dairy Products Ltd

I

t was in 1986 that Stephan Roux, an successfully right through to December 2012 experienced restaurant manager before when Stephan Roux and General Manager becoming a serial entrepreneur, decided to Stefan van der Berg took control of the go into the business of making ice cream. company in a R25.6 million management buyIn fact within the space of five years he out that nevertheless retained an unchanged had founded two companies - the first was operations and management team.

Cream Star based at Ga-Rankuwa to the west “Those early contracts drove us towards of Pretoria, the second Avondale with its HQ putting in place the best food industry and manufacturing facility at Silverton on the standards, something you need if you want to east side of the city. work with blue chip companies,” says van der Why two companies? Well Cream Star Berg. “In those days HACCP was a very new was a low-cost high-volume brand geared concept. Not many people were even aware towards the ‘informal’ market. At one time it of it or had fully woken up to food safety.” was selling 40 million ice cream sticks a year, Today of course these standards are a given. most of them distributed by And when Avondale started ‘hawkers’ who would stock working with McDonalds up in the morning at the in 2000, it already had a well established food safety factory, pack the product in dry ice and take it out to system, which has been the townships surrounding continuously upgraded.

Foundation year of Pretoria. That’s a very vibrant Avondale has been Unique Dairies Ltd and important retail stream supply ing McDonalds’ in South Africa. Avondale on outlets in South Africa with the other hand is a brand geared towards their ice creams (the well known McFlurry), the high end of the market, contracting with milk shakes and other milk products for ten well-known brands as well as selling its own years. McDonalds is UDP’s biggest customer, accounting to something like 40 percent luxury products.

In 2004 the two companies merged and as of its turnover. Pretoria is an excellent hub Milkworx floated on the Johannesburg’s AltX for distribution to the most populous areas stock exchange market. The two companies but since the product has to be fresh, never continued to operate independently however, reconstituted or frozen, the coastal areas and Avondale picked up some important of the Cape Province are contracted out to partnerships contracting with Unilever’s Ola a satellite facility in the Western Cape. In brand, and Milky Lane among others. In 2009 this way the end product is guaranteed to be Milkworx changed its name to Unique Dairy consistent wherever it is purchased.

Products and became a part of the South The relationship with McDonalds and other African food and agricultural products group major names has been a constant benefit to Ububele Holdings, growing the business the business, says van der Berg. The facilities

1986

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Seen

Contact us today and put your company in the spotlight!

vincent@bus-ex.com 88 | be weekly

are subject to a thorough annual audit to make sure they are keeping up the high standards expected. Separate checks are made on social accountability, environment and people management. “Global players have to protect their brand, and we understand that, but we really welcome these checks,” he says. “We use them as a catalyst to improve, to assess where we are today and where we want to be five years from now. Ten years ago we were good, and perhaps we were satisfied – today we are much better and we are not satisfied!”

The biggest change in that period was the amalgamation of the production facilities in 2009 onto a single site. It was a gradual process. First the original Cream Star facility moved to the new address in Hermanstad, then when the company was acquired by

Unique Dairy Products Ltd

Ububele, the Avondale factory moved to the same location. “It made sense because it cut down on overheads but there were other advantages too. The move was a fantastic opportunity to initiate a big drive on all our systems – the food health and safety systems and also all our business process systems.” As an example, the ammonia cooling plant was brought up to standard, along with the key refrigeration and boiler units.

Any milk processing facility needs to have impeccable temperature control, let alone an ice cream factory in the torrid climate of Gauteng. This year targeted investment on the production floor will see ageing equipment replaced and nine in-line freezers replaced with three more modern ones that will produce hard ice cream much more quickly.

Following the MBO the priority will continue to be the product, as opposed

“Ten years ago we were good, and perhaps we were satisfied – today we are much better and we are not satisfied!” be weekly | 89

“We are looking to expanding our network so that it will reach smaller customers we can’t now serve” to expansion, he promises. “We want to make sure we do things faster, better, and produce a higher quality of product. We will continue to invest in our facility, not forgetting our formulations, to make sure we are supplying our market with just the product they want.”

It is necessary to understand where the product stands in the market, he

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continues. Ice cream is not a static product – technology advances, with improved stabilisers and flavourings available. The three strands to UDP’s business consist of the contract product, produced to a customer’s specification, the luxury branded products of Avondale and the high volume product. Each of these, but especially the last two, he says, demands an equal level of

Unique Dairy Products Ltd

Workers in the factory

research to keep it ahead of the competition, and meet price constraints without compromising taste or texture.

Though UDP has never wanted to get into the retail business it does have a couple of directly owned shops, one in Nelspruit and one in Silverton. These he would like to see grow to perhaps ten. Going forward, says van der Berg, the policy will be to guard UDP’s niche position in the mid market by appointing agents in areas not too far from Hermanstad such as Nelspruit, Polokwane, Bloemfontein and Rustenburg. “We are looking to expanding our network so that it will reach smaller customers we can’t now serve. We have the big trucks so we can supply the agent. We will support him, and he will do the marketing

because he knows his area better than we do.”

In each of its three channels UDP faces different competitors, and keeping ahead of them is a challenge. However as an independent company it will be easier to stay ahead, he sums up. Decision making will be faster, and group concerns with upstream agricultural supplies will no longer be around to dilute the understanding that Stephan and Stefan both bring to the business of making and selling the best dairy products in South Africa.

For more information about Unique Dairy Products Ltd visit: www.uniquedairy.co.za

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supplying mines

Muchina Engineering started out as a supplier to two mines in Zambia mainly supplying pumps mechanical seals and gaskets

O

ver the years we have learnt how the mines work and understand all their special needs.

This has allowed us to branch out in to various projects. And we now supply 8 mines across Africa including Perseus mining in Ghana We are the official agents for Birmingham Pumps Supplies Limited UK, Beresford Pumps and Associated Pump Engineers UK.

“ In every aspect of our business, we are now able to respond even faster than ever before to changing client needs” 92 | be directory

Muchina Engineering (Pump manufactures and suppliers of Mechanical seals gaskets and gland packing) our ranges are as follows.

• End Suctions • Horizontal Split Case Pumps • Vertical Turbine Pumps • Self-Priming Pumps • Vertical Multistage Pumps • Horizontal Multistage Pumps We have developed unique skills which are manifested in the design and manufacture of pumps specifically engineered to suit all conditions. We have the internationally recognised ISO 9000 accreditation which includes a complete calibration and various test facilities to cover all aspects of our manufacturing processes.

In every aspect of our business, we are now able to respond even faster than ever before to changing client needs. This is true not only

Muchina Engineering

for our consulting expertise, orders processing and delivery levels, but also for after sales service including maintenance, repairs and spare parts supply. In addition, we have carved a niche for ourselves with customer orientated documentation and professional software.

By offering service levels that are unprecedented in the marketplace, we have made a total commitment to remaining a top company in all areas of our operation.

Muchina Engineering has the design technology, which was made available to us from certain

overseas suppliers. Engineering skills and capability, which has been developed over the years in design and manufacture of various pumps which, suit the local conditions.

Muchina Engineering CC 50 Tweed Crecent PRETORIA SOUTH AFRICA E sales@muchina.co.za PO BOX 10519, CENTURION, 0046 T +27 12 345 3335 www.muchinaengineering.co.za

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Included The BE Mining Directory showcases leading mining organisations from across the world, ranging from big corporations to junior mines and their supply chains.

Be seen throughout our portfolio of magazines: •BE Mining Directory •BE Mining •BE Weekly •BE Monthly •

To find out how to get involved contact: vincent@bus-ex.com