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BusinessExcellence Weekly
ISSUE No. 55 | www.bus-ex.com
Endeavour Mining:
A gold producer delivering growth A growing portfolio of gold assets in West Africa
transnet port terminals:
South African Oil & Gas Alliance:
kengen:
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 70 to see this week’s listing To find out how to get involved contact: vincent@bus-ex.com
business excellence Design Matt Johnson Art Director mjohnson@bus-ex.com Louise Culling Production Designer lculling@bus-ex.com
business Richard Turner Director of sales rturner@bus-ex.com Vince Kielty Director of Editorial Research vkielty@bus-ex.com Sharon Rooke Administration & Operations srooke@bus-ex.com Matt Day Head of technology mday@bus-ex.com
editorial John O’Hanlon Editor
John has contributed to Business Excellence since its inception: he joined the in-house editorial team in February 2013. johanlon@bus-ex.com
Will Daynes Editor
Will has been a business writer for three years. He joined the Business Excellence team in September 2012. wdaynes@bus-ex.com
CONTRIBUTORS George F. Brown, Jr.
George consults with industrial firms on growth strategy and is the coauthor of CoDestiny: Overcome Your Growth Challenges by Helping Your Customers Overcome Theirs.
Andy Turner Chief Executive aturner@bus-ex.com
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issue No.55 6 top ten
The world’s top ten banks
Based on recent industry research it is clear that the global shift in banking power has spread to the Far East. Here we explore the ten biggest banks in the world based on Tier 1 capital (common stock and disclosed resources) in $m.
6
14 strategy
Do Not Prize the Word “Cheap”
Analyzing the market, then creating and capturing value is a more effective strategy than a price war any day.
20
14
20 Endeavour Mining A gold producer delivering growth
Endeavour Mining has a growing portfolio of gold assets in West Africa, with three producing mines, a fourth nearing completion and promising development projects.
30 Mwana Africa
Daring to discover the DRC Mwana Africa is a diversified, AIM-listed mining company with an exciting and diverse portfolio of exploration and production projects spread across a number of African countries: in the coming year it hopes to establish its major zinc assets onto the global map.
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contents 40 South African Oil & Gas Alliance Changing the South African energy game
These are exciting times for anyone involved in energy businesses in Africa’s largest economy: on the brink of world class oil and gas discoveries South Africa is ready to join the global top table, with a major role to be played by the South African Oil & Gas Alliance (SAOGA).
40
52 Transnet Port Terminals (TPT)
Supporting Southern Africa Transnet Port Terminals (TPT) is playing a leading role in making the South African government’s export-led growth strategy a success.
52 62
62 KenGen
Generating growth As Kenya’s energy demands continue to increase unabated, KenGen is taking its role as the country’s leading electricity supplier extremely seriously by developing new long-term power solutions.
BE Directory 70 spencer ogden
MINING recruiting
By providing end to end full life cycle services within the energy sector Spencer Ogden are able to offer a 360 degree service to its clients.
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Based on recent industry research it is clear that the global shift in banking power has spread to the Far East. Here we explore the ten biggest banks in the world based on Tier 1 capital (common stock and disclosed resources) in $m Written by: Will Daynes 6 | Be weekly
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Top Ten
10 Agricultural Bank of China $111,493 million
Founded in 1951 and headquartered in Beijing, Agricultural Bank of China Limited (ABC or AgBank as it is also often referred to) is another of China’s financial institutions to have spread its reach across the world. The bank’s 444,000-odd employees can be found operating in branches throughout mainland China, Hong Kong, London, Tokyo, New York, Frankfurt, Sydney, Seoul and Singapore. In 2010 the bank became the last of China’s ‘big four’ to go public, fetching what was then the world’s biggest ever initial public offering (IPO).
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9 Bank of China (BOC) $121,504 million
Bank of China (BOC) first took its name in 1912, replacing the Government Bank of Imperial China in the same year that the Republic of China was formally established. One of China’s four state-owned commercial banks, BOC is the oldest bank in the country still in existence. Initially functioning as the Chinese central bank it became a purely commercial enterprise in 1928. BOC is undoubtedly the most international of China’s banks, with branches established on every inhabited continent.
banks
8 Wells Fargo & Co $126,607 million
While the Wells Fargo name can be traced all the way back to when Henry Wells and William G. Fargo established the business to provide express and banking services to California, the Wells Fargo & Co that exists today came about as a result of a merger between the original company and Norwest Corporation in 1998. The fourth largest bank in the US by assets and the largest by market capitalisation, Wells Fargo’s operations in 2013 expand across the globe with its 270,000 employees providing services to more than 70 million customers.
7 Mitsubishi UFJ Financial Group £129,576 million
It was the merger of Tokyo-based Mitsubishi Tokyo Financial Group (MTFG), formally Japan’s second largest banking conglomerate, and Osaka-based UFJ Holdings on 1 October 2005 that marked the formation of Mitsubishi UFJ Financial Group (MUFG). Headquartered in Chiyoda, Tokyo, the company is today Japan’s largest financial group and the world’s second largest bank holding company holding around $1.7 trillion in deposits.
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Top Ten
5 China Construction Bank Corporation (CCB) £137,600 million
6 Citigroup
$136,532 million Headquartered in the financial heart of New York City, Citigroup was formed from one of the largest company mergers in history between the banking giant Citicorp and the financial conglomerate Travelers Group in 1998. With its largest shareholders including funds from the Middle East and Singapore, Citigroup operates the world’s largest financial services network, with around 16,000 offices in more than 140 countries. Today the corporation holds over 200 million customer accounts.
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Originally known as the People’s Construction Bank of China, China Construction Bank Corporation (CCB) was formed as a joint-stock commercial bank in September 2004. As of the end of 2011, CCB was the second largest bank in the world by market capitalisation and the thirteenth largest company on the planet. Its 13,639 branches and employee base of more than 329,000 have helped solidify CCB as one of the ‘big four’ banks operating in China. Further afield it maintains branches in Frankfurt, Hong Kong, Johannesburg, New York, Seoul, Singapore, Tokyo, Melbourne, and Sydney, and a wholly owned subsidiary in London.
banks
3 Bank of America $155,461 million
4 HSBC Holdings $151,048 million
Founded by Sir Thomas Sutherland in Hong Kong on 3 March 1865, The Hong Kong and Shanghai Banking Corporation (HSBC) founded HSBC Holdings in London in 1991. Today the organisation boasts around 7,200 offices in 85 countries and territories across Africa, Asia, Europe, North America and South America, and approximately 89 million customers. According to Forbes, as of the end of 2012 was the sixth largest public company.
The Bank of America Corporation is the fifthlargest company in the United States, and the third largest non-oil company, by total revenue. Figures taken in August 2009 show that Bank of America at the time held a total of 12.2 percent of all bank deposits in the United States. Today it retains a retail banking footprint that covers approximately 80 percent of the US population and serves approximately 57 million consumer and small business relationships at 5,600 banking centres and 16,200 automated teller machines (ATMs).
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Top Ten
2
JPMorgan Chase & Co $160,002 million
With a history that dates back over 200 years, JPMorgan Chase is one of the oldest financial institutions in the United States and the second largest bank in the world in terms of assets, which stand at $2.4 trillion. Its 260,000 employees operate in more than 60 countries throughout the world serving millions of customers, small businesses and a number of the world’s foremost corporate, institutional and government clients.
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banks
1 Industrial and Commercial Bank of China (ICBC) $160,646 million
Founded in January 1984, Industrial and Commercial Bank of China Ltd. (ICBC) is the largest bank in the world by profit and market capitalisation. At the end of 2011 the bank had a total of 408,859 employees on its payroll providing financial services and products to 4.11 million corporate clients and 282 million individual customers through 16,648 outlets across China, 239 overseas subsidiaries and a global network of more than 1,669 correspondent banks. In 2013, it ranked number one on Forbes Global 2000 list of the world’s biggest public companies, and number one in The Banker’s Top 1000 World Banks ranking, the first time ever for a Chinese bank.
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Do Not Prize the Word Analyzing the market, then creating and capturing value is a more effective strategy than a price war any day
written by: George F. Brown, Jr.
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Strategy
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P
resident William McKinley once said “I do not prize the word ‘cheap’”. While far more people remember his successor’s advice about speaking softly and carrying a big stick, McKinley’s advice is appropriate in today’s challenging business environment. Everyone knows the benefits of being able to avoid price concessions, recognizing that a point gain in realized prices can yield a much larger proportional improvement in profits. But at the same time, most firms are feeling pricing pressures from customers, competitors, and even from their own sales forces. Responding to those pressures and earning the label “cheap” is not always a winning strategy. Several years ago, I worked with one firm that fell into the trap of trying to respond to each competitor challenge by cutting their own prices. As they saw their margins decline, they looked for ways to cut back on spending, reducing their sales force, making some trade-offs in terms of their product’s features and design, and
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eliminating some high-cost services. But as they lowered their prices, their competitors did so as well, and the firm saw their market share erode. Looking back on this unfortunate experience, an executive in this firm commented: “We were experiencing the worst of both worlds – lower margins and a smaller market share.” He went on to report the results of later discussions with one customer who had shifted to the lower priced competitor: “What we were told was that when they considered the options, we were no different from [the competitor] other than on price. We were told that when we cut back, we eliminated some of the reasons that they had gone with us in the first place. We basically handed the business to a competitor that we had already won against.” This firm’s experience underscores one of the first important lessons about pricing. Not every price challenge is a real threat. It is critical to understand the factors that drive purchase decisions for each key customer and for each market segment. There are elite
“If price is reason you giv to purchase fr expect anyt than price
s the only ve customers rom you, don’t thing other pressure”
Strategy segments in just about every market and for just about every product category, ones in which purchase decisions are driven by factors other than price. Many of your customers want to buy a product they see as superior or make choices reflecting their strong level of confidence in the brand or choose a supplier because they want their top-of-the-line service offerings. Remembering – and, more importantly, reinforcing – the non-price advantages that won your firm business in the first place can allow you to avoid unnecessary participation in the vicious cycle of pricebased competition, the trap into which the firm described above fell. If price is the only reason you give customers to purchase from you, don’t expect anything other than price pressure. A second lesson emerged from this firm’s experience. The same executive offered the following observations about his firm’s own decision process: “In retrospect, we did this to ourselves. When I think about the data on which we drew, it was all anecdotal. We heard from our sales
people that [the competitor] was making inroads and that all that mattered to customers was price. We heard that our customers had to make cutbacks during the recession, and that they weren’t willing to return to higher-priced products. We heard that our distributors were losing share to private label products and products coming in from China like those that [this competitor] was selling. Just about everything we heard told us we were in big trouble because of our pricing. What we were missing, we now know, was real data.” If there is ever a business decision where strong analytics makes a contribution, it is pricing. In market after market, we have found it possible to assess the pricing environment in terms of the locus of control over prices. The locus of control can vary widely across products and market segments, depending on such factors as the capacity balance in the industry, the degree of protection that exists for the supplier, the nature of the suppliercustomer relationship, and
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“Pricing challenges aren’t going to go away, but ‘cheap’ is not always the best response to such challenges” the health of the economy, the industry, and the customer organization itself. While it is certainly true that in some instances, control is in the hands of customers and competitors, it is surprising how frequently control is in the hands of the supplier. And control is rarely static. The freight logistics market, for example, shifted from a situation of significant excess capacity during the recession to one in which carriers enjoyed reasonable control over pricing in a very short time. Last year’s pricing environment may not be a great predictor of the current one. Careful segmentation is again a critical factor in analyzing the pricing environment. There are typically sharp differences in the pricing environment from one product-market segment to the next. Knowing where and when
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Strategy pricing pressures are likely to be intense can enable you to make the correct decisions on price increases and determine the right responses to competitive challenges. A “one size fits all” pricing strategy might be correct on average, but wrong in every application. And pricing decisions based upon anecdotes are almost certain to lead to a retrospective wish that there had been stronger foundations for the pricing decisions that were made. A third lesson about pricing is motivated by a final set of reflections from the executive quoted earlier: “Over the years, we spent a lot of time in management meetings talking about delivering value to our customers. We even had an off-site retreat on that topic. And then we totally forgot about it when we panicked about pricing.”
It is always important to remember to create value to capture value. And it is important to know what your customers see as the ways in which you create value (and, in parallel, the things you are doing that aren’t of particular importance to them and for which they don’t want to pay). The firm described here added to its problems by unknowingly cutting back in areas valued by customers. While the results of new strategies to create value will probably contribute more in future years than in the short term, the focus on customer value creation underlies all successful pricing strategies. If you are delivering value to your customers, you can be rewarded for it, through a price premium or otherwise. If you aren’t, any success you can achieve is likely to be short-lived, at best. Pricing challenges aren’t
George F. Brown, Jr. consults with industrial firms on growth strategy. He is the coauthor of CoDestiny: Overcome Your Growth Challenges by Helping Your Customers Overcome Theirs (Greenleaf Book Group Press of Austin, TX) and the cofounder of Blue Canyon Partners, Inc. George has
going to go away, but “cheap” is not always the best response to such challenges. Firms that take a proactive approach to pricing and that believe that it’s an element of strategy that can make a positive contribution are going to be rewarded. Remember that not all pricing challenges are real, and that there are often segments and customers whose decisions aren’t driven by price. Avoid making decisions based upon war stories and anecdotes, instead building a strong analytic foundation for pricing decisions. Pay constant attention to the criticality and complexity of value creation, and let messages from your customers provide the roadmap as to how you can deliver value and be rewarded for doing so. The bottom-line benefits from those actions can be tremendous.
published frequently on topics relating to strategy in business markets, including articles in Industry Week, Industrial Distribution, Chief Executive, Business Excellence, Employment Relations Today, iP Frontline, Industrial Engineer, Industry Today and many others.
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A gold producer
delivering gro
A growing portfolio of gold assets in West Africa, with th mines, a fourth nearing completion and promising devel
written by: John O’Hanlon | research by: Adam Kalynu
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Endeavour Mining
owth
hree producing lopment projects
uk
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Underground mining at Endeavour’s Tabakoto Gold Mine
Endeavour Mining
E
very person involved in gold open pit operation that employs contractor mining or trading must have mining and is located 280 kilometres to been shaken when the gold price the south east of Ouagadougou in Burkina slumped in mid April, so it’s Faso. It is 90 percent owned by Endeavour, reassuring to hear that one well- with the remaining 10 percent held by respected investor, the Canadian financier, the Burkina Faso government. Grid power Frank Giustra, said recently that he has is delivered to site from Ghana via a 21 complete faith in the continuation of the bull kilometre transmission line. Earlier this run. When it comes to investment Giustra has year Endeavour completed a preliminary been so right for so long that it’s encouraging economic assessment on the Ouaré deposit to know he is on Endeavour Mining’s Strategic 40 kilometres to the north east to explore Advisory Board. the economics of trucking the Ouaré Endeavour Mining was founded in 2008 material to the Youga plant, in the process by Neil Woodyer, who until then had adding three years to the current six year been a partner with Frank projected life of the mine. In late 2011, following Giustra in the merchant a merger with Perth bank Endeavour Financial. When cold winds started to based Adamus Resources, blow through the financial Endeavour added the Nzema mine, an open pit project markets and the world’s great currency blocs all went located in south western into meltdown gold started Ghana, just a couple of Endeavour’s 2013 to look even more attractive hundred kilometres from capital programme to investors. Why not the capital Accra, which is actually build a gold mining where Endeavour has chosen company, Woodyer asked himself – so he to establish its operational headquarters. did just that, acquiring a series of highly The Accra office is the base for the productive or prospective assets in West company’s COO Attie Roux and all HR, Africa, all of them in financial difficulty. finance, exploration, purchasing and other The initial acquisition search in 2009 key management functions. The company brought in the Youga gold mine when holds a 90 percent interest at Nzema, with Endeavour took control of a financially the remainder being in the hands of the struggling Canadian company, Etruscan Ghana government. In 2012 Nzema yielded Resources, buying the remaining shares the nearly 110,000 ounces of gold from ore following year. By the end of 2011 Youga processed through a conventional gravity was producing over 87,000 ounces of gold a carbon-in-leach (CIL) gold plant with a year. In 2012 that figure rose to over 91,000 semi-autogenous grinding (SAG) mill, a ounces. Youga is a hard rock, drill and blast gravity circuit, and two counter current
$180
million
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decant thickeners for water and cyanide recovery. The mill has a design capacity of 2.1 million tonnes per annum. In October 2012, Woodyer spotted another opportunity, this time in Mali, and acquired the assets of another distressed gold mining company, Avion Gold, for $389 million. An observer might think it risky to engage in a country which has so recently been in the news for all the wrong reasons. It’s true that Avion had been hurt by the political uncertainty, in particular the contractor building an expansion of the Tabakoto mill withdrawing following a Canadian government advisory notice. However Tabakoto is only 18 kilometres from the border with Senegal and some 1,000 kilometres away from the problem area in Northern Mali, and thus the mine’s production was not affected by the coup or its aftermath. Tabakoto is 80 percent owned by Endeavour, 20 percent by the government of Mali, and its current open pit and single underground mine produced over 110,000 ounces of gold in 2012. A doubling of the mill capacity at Tabakoto from 2,000 tonnes per day (tpd) to 4,000 has just been achieved, in anticipation of the completion of a second underground mine at Segala, just five kilometres away. This part of Mali could
be very important for Endeavour over the coming decade – another nearby 470 square kilometre property at Kofi 40 kilometres to the north of Tabakoto contains resources estimated at 1.2 million ounces. So Endeavour is definitely a company
“Agbaou should, together with the recently completed Tabakoto mill expansion, raise our annual gold production to 450,000 in 2014” 24 | be weekly
Endeavour Mining
Tabakoto Gold Mine mill expansion is ramping up
that has moved fast thus far. It has three producing mines in three different countries. “We are going though a phase of considerable growth,” says Woodyer. “We put together our three mines over the last three or four years by acquisition. We had to digest those acquisitions, sort them out financially because they were all troubled companies that we took over and then address some of their associated management problems.” As an example, he says Tabakoto was producing its gold alright, but at an unsustainably high cost – around $1,250 an ounce. It was
over-staffed with around 1,900 people. In six months headcount has come down by 450, and in the last quarter its cost of production was cut to $932 an ounce. The mill expansion has already been completed and production is being ramped up to around 150,000 ounces a year. And Endeavour’s impetus is far from spent. Next year will see the start of production at its most advanced development project, a fourth mine in a fourth West African country – Côte d’Ivoire. Agbaou is one of the largest undeveloped gold resources in that country and has significant upside
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potential that was targeted through a $6 million exploration programme in 2012. Construction of the mine started in 2012, using the same team that developed Nzema, including the Australian EPCM company Lycopodium. “Agbaou should produce just below 100,000 ounces next year at relatively low cost, so it should bring our average cost base down and at the same time, together with the recently completed Tabakoto mill expansion, raise our annual gold production from around 330,000 ounces currently to 450,000 in 2014, with very positive cash generation as well,” says Woodyer.
The distribution of the projects makes a lot of sense. If there are problems at one mine, the others are there to fall back on and thus Endeavour is protected from the troubles that affected the single-mine companies it took over. Neil Woodyer’s long and extensive involvement in the market means that financial risk is minimised. Endeavour’s experienced mine operators and mine builders ensure that operational risk is well-managed. As former CEO of Lloyds International Trading before running his own merchant bank he is uniquely qualified to steer a gold production company
Youga Gold Mine: primary crusher and crushed ore stockpile
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Endeavour Mining
“We are in a good position now to meet our target of 330,000 ounces this year and 450,000 next!” at a time when gold futures are anyone’s guess. “We have a $200 million credit facility that we have to start paying back in about 18 months. I am in the process of trying to increase that facility and extend it to give us more flexibility,” he explains.
“We may want to spend some capital on our existing operations and fine tune them to get better economic value out of them. I am making sure we have the financial flexibility to optimise the return without having to dilute the shareholding.” Until things get a bit more predictable, Endeavour has throttled back its exploration drilling while keeping the core drilling going that will extend existing operations. Operationally, synergies have been pursued and a raft of best practices, from common purchasing to pooling of resources introduced. For example excess inventory of chemicals like cyanide at Nzema will be sent to Côte d’Ivoire so that Agbaou will have less to buy when it starts up. Agbaou is a $160 million project and is progressing remarkably well, he says, though cautiously. The mine is already 75 percent complete, and long lead-time items are on their way in plenty of time for the projected start of gold production in the first quarter of 2014 thanks to Lycopodium as the EPCM contractor and the in-house team: “It is really impressive the speed and skill that this team has delivered – we are in a good position now to meet our target of 330,000 ounces this year and 450,000 next!” It was an inspiration to run the operations
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Tabakoto Gold Mine: Segala portal for second underground mine (under development)
Endeavour Mining
4,000 tpd Upgraded capacity of Tabakoto mill from Accra. Ghana is the most stable and settled mining country in West Africa, but that means that an individual incoming investor can’t have that much influence on government policy. Côte d’Ivoire is at the other extreme, he thinks, a country hungry for mining development and in which Endeavour is seen as a major investor whereas Burkina Faso is the ideal West Africa economy for a new mining project, with well developed mining laws and an economic framework that encourages foreign investment. There’s no denying these are anxious times for gold producers, unlike a year ago. Endeavour is committed to a large capital programme this year – something like $180 million – but he is convinced the entire gold sector is undervalued, and with it the market value of gold producers. If Neil Woodyer and Frank Giustra are right then Endeavour stands to reap great rewards. Meanwhile it can only do the next right thing: “If we can optimise our three mines and build and commission the Agbaou mine we can end the year with the financial stability we need - and I have a great team to help me do that.” For more information about Endeavour Mining visit: www.endeavourmining.com
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Mwana Africa
Daring to discover the DRC Mwana Africa is a diversified, AIM-listed mining company with an exciting and diverse portfolio of exploration and production projects spread across a number of African countries: in the coming year it hopes to establish its major zinc assets onto the global map
written by: John O’Hanlon research by: Jeff Abbott
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M
wana Africa was founded by Kalaa Mpinga, a citizen of the DRC, a former senior executive of Bechtel, and a director of Anglo American before launching Mwana Africa Holdings in 2003. Two years later he and a group of partners across Africa were in a position to float Mwana Africa PLC on the prestigious AIM market of the London Stock Exchange. The company brought together three major acquisitions that positioned it from the start as a diverse player on the African mining scene. These were the Bindura Nickel Corporation (BNC) in Zimbabwe, the Anmercosa base metal exploration project in DRC and the Freda Rebecca gold mine, again in Zimbabwe. Today its portfolio includes assets in Angola, Botswana and South Africa as well as the DRC and Zimbabwe It’s a very sound collection of assets, with massive potential in a number of key minerals over the coming decade. However the years that intervened between its establishment and the present have presented their fair share of challenges, Zimbabwe in particular has not been an easy place to work in, and the Bindura nickel complex had to be placed on ‘care and maintenance’ in 2009, thanks to a slump in world nickel prices, added to that country’s fiscal problems and hyperinflation. Having operated continuously for more than 17 years the Freda Rebecca Gold Mine (FRGM) went through a similar process in March 2007 and for similar reasons, though in this case it provided more of a planned opportunity to refurbish the mine and re-provide it with a better fleet of trucks and
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Mwana Africa
other equipment. Operations were restarted before the end of that year, in the wake of the ‘dollarisation’ of the economy, providing much needed cash flow to enable Mwana Africa to pursue its other plans: its first gold was poured on October 13 that year, and production ramped up to the Phase 1 output target of 30,000 ounces of gold per year. So during the financial year that ended on 31 March 2011 the mine produced
27,240 ounces of gold, with 3,574 ounces produced in March alone. The second phase included refurbishment of the second mill and expansion of the leach circuit. In June 2011, Mwana Africa announced that the Phase 2 construction programme was completed with Mill 2 being successfully commissioned on time and within budget. Production for the financial year to 31 March 2012 was 47,770 ounces of gold, within a
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NEW PRECIOUS RESOURCE DISCOVERED
Click here to visit our dedicated homepage for the mining community www.bus-ex.com/mining BEST PRACTICE IN MINING
Mwana Africa whisper of the extended target of 50,000 ounces. Acol Chemical Holdings (Pvt) Ltd supplies liquid sodium The gold mine and the cyanide to the Gold Mines of Zimbabwe on behalf of Sasol nickel project are both located Polymers a division of Sasol Chemical Industries Limited. in the same part of Zimbabwe, Acol Chemical embarked on a project with Mwana Africa’s around 90 kilometres to the Freda Rebecca Mine in November 2010 to convert the mine north-east of Harare towards from using solid sodium cyanide 99% briquettes to liquid sodium cyanide. the Mozambique border. The Freda Rebecca’s first 30 000 liters of liquid sodium cyanide exploration, development was delivered on 6th April 2011. and production history for The mine experienced immediate operational benefits as a gold in the Bindura area goes direct result from changing to liquid sodium cyanide. back to 1912. The Freda and Acol Chemical now supplies liquid sodium cyanide to the Rebecca gold deposits were majority of the larger gold mines in the country who are all however not discovered until reporting general improvements in operations as a direct result of using liquid. 1987 by the legendary Algy acolhre@acolchem.co.zw Cluff, whose company Cluff Resources established two open pits, removing oxides at Freda and sulphides at Rebecca. The first gold pour took place in 1988. Ashanti Goldfields Zimbabwe acquired the mine in 1996 and underground operations commenced at the Rebecca section in the same year: by 1998, the Freda pit had been depleted and the Freda Rebecca Mine became a fully underground operation. Today Freda Rebecca is providing Mwana Africa with solid cash flow to cover its overheads as well as helping it develop new projects. “We remain confident that Freda Rebecca will continue to be a robust provider of cash flow and revenue,” Mpinga says, “and we are now focussed on expanding production further and introducing operating efficiencies. These will have the effect of further increasing production levels beyond 50,000 ounces per annum while simultaneously reducing operating costs.” However the biggest mining opportunities
Acol Chemical Holdings (Pvt) Ltd
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cannot be realised without the support of all stakeholders, including shareholders, government, the local community and offtakers. Just as Freda Rebecca is the largest gold mine in Zimbabwe and an important contributor to the country’s economy, so the Bindura nickel complex could put that country on the map as a nickel producer of. Mwana Africa’s majority owned subsidiary BNC owns and operates the Shangani and Trojan
nickel mines, which each has a hoisting and treatment capacity of around a million tonnes a year. “Bindura Nickel is a very unique asset in that it is the only fully integrated nickel complex in Africa,” says Kalaa Mpinga. It comprises a series of mines, a smelter and a refinery, holding among other assets the Bindura Smelter and Refinery complex which produces high quality nickel cathodes, copper sulphide and cobalt hydroxide.
“Bindura Nickel is a very unique asset in that it is the only fully integrated nickel complex in Africa”
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Mwana Africa
Alongside material from the Trojan and Shangani mines, the plant has in the past toll treated nickel concentrates and nickel matte from third parties to utilise spare capacity, however following promising results from drilling programmes completed last year it may have less spare capacity once the mines are reopened. In February Mwana Africa announced a massive 152 percent increase in the JORC compliant nickel resource at the Trojan mine. The total nickel resource within this deposit is now 114,952 tonnes compared to the 45,600 tonnes previously known about. There could be much more: drilling confirmed that the ore body is open at depth. Operating conditions have improved, and now that the Zimbabwe economy is starting to grow towards its true potential Mpinga
is very keen to restart the BNC assets in a phased manner. The first phase would be to restart the Trojan mine and to sell nickel in the form of concentrate. BNC announced in February 2011 that it had signed an offtake agreement with Glencore International who will purchase the concentrate produced, and when in September 2012 the company formed a strategic partnership with China International Mining Group Corporation (CIMGC), the principal goal was to restart operations at Bindura, using part of the $35 million raised. “We believe this will allow us to open up the rest of the assets,” says Mpinga, “in particular the Hunters Road project which is one of the biggest open cast nickel deposits today, with access to infrastructure.” He is equally excited about the prospects
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“Zani-Kodo is a large and highly prospective project situated in what is fast becoming a gold province of major world significance” for Mwana Africa in developing the group’s major exploration focus, the Zani-Kodo gold project in the Democratic Republic of Congo “Zani-Kodo is a large and highly prospective project situated in what is fast becoming a gold province of major world significance,” he says. A major drilling campaign last year totalling more than 18 kilometres increased the resource by 41 percent to 2.01 million ounces. “With a comprehensive ongoing
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work programme being progressed, we are confident that the project’s JORC resource can be further increased, thereby demonstrating its enormous potential.” Mwana Africa holds 80 percent in the Kilo Moto Joint Venture with Office des Mines d’Or de Kilomoto (Okimo), under the terms of an agreement signed in June 2005, and Mpinga is understandably upbeat about the potential of his native country. “Until last
Mwana Africa
year the DRC did not figure on the list of gold producers,” says Mpinga. “I think the Ituri district is going to be the next frontier.” Ituri, in the north east of DRC, has attracted the attentions of major companies such as AngloGold Ashanti and in the coming three years he expects to see around 800,000 ounces of gold coming from its mines. The infrastructure that will follow will make it less expensive and less risky to develop a mine there, and he would like to see Mwana Africa coming in with gold production in 2015, in the wake of two large projects hoping to start producing in the near future, namely AngloGold and Randgold’s Kibali project and the Mongbwalu mine, under construction by AngloGold on its own. With more promising base metals projects in
the DRC, Mwana Africa promises to soon reach an enviable position as a highly diversified producer underpinned by substantial gold assets. Diversified geographically as well as in terms of the minerals it sells. The DRC may well be considered a high risk area, racked by conflict but nobody knows it better than Kalaa Mpinga, who points out that mining in the Ituri region has gone ahead without incident since 1999 and the Zani-Kodo project is 400 kilometres from current trouble spots. “In that terrain, you may as well be in another continent!” he declares. For more information about Mwana Africa visit: www.mwanaafrica.com
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South African Oil & Gas Alliance
Changing the
South African energy game On the brink of world class oil and gas discoveries South Africa is ready to join the global top table, with a major role to be played by the South African Oil & Gas Alliance (SAOGA)
written by: John O’Hanlon research by: James Boyle
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SAOGA
I
t’s not all about cubic feet and billions of dollars for Mthozami Xiphu, Executive Director of SAOGA since he took over leadership of the organisation from Warwick Blyth in February this year. Xiphu is a man who feels passionately that developing the oil and gas resources, onshore and offshore could radically change the dynamics of South African society. The country has achieved massive growth since the cancer of apartheid was excised some 20 years ago: but it pains him to admit that many citizens have yet to feel the full benefits of that growth and of the democracy they now enjoy. They expected better. A big part of the solution, he believes, lies in tackling unemployment, inequality and deprivation, between them the main causes of the petty crime and other social ills that plague the poorest parts of the country. “The resources we are sitting on are located in some of the most economically depressed parts of the country. By developing them and growing businesses to support, supply and provide services to the large investors we can look to create a lot of employment, grow skills and lift people out of the cycle of deprivation. That is what excites me!” Before moving to SAOGA Xiphu had racked up seven years as CEO of the Petroleum Agency of South Africa (PASA), which is the licensing authority under the Department of Mineral Resources. SAOGA has a similar goal in the development of national assets to the benefit of the people, and is also governed by the Mineral and Petroleum Resources Development Act of 2002, however as a representative body for the upstream industry
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SAOGA
Oil rig in the bay of Cape Town
one of SAOGA’s main aims is to smooth the PASA, he explains, because as well as receiving path for participants seeking to come into funding from the Department of Trade and South Africa. One of the principal changes we Industry, the Western Cape government and may expect to see following the appointment the City of Cape Town where it is based, it is of the new CEO is closer co-operation substantially funded by its members. “We are between these two key bodies in the twin a true public-private partnership!” tasks of winning greater energy security for The reason for its location in this part of South Africa is partly historic, partly because the country and growing the economy. Having played a major role in developing the this is where a cluster of upstream supplier sector over the last decade, he is very excited companies had developed in the province about the potential for SAOGA in response to upstream at this particular time. “Our growth in West Africa and member companies tend to the establishment of domestic be in rig repairs, fabrication, production in Mossel Bay in pipelines and all the supply the late 1980s. It is also home to the port of Saldanha, where and support services of the Estimated gas it is proposed to establish an upstream industry in South recoverable from industrial development zone Africa.” The organisation is Ibhubesi field not a parastatal in the mould of (IDZ). Today SAOGA has a
540 bCF
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national footprint and focus although the Western Cape remains the de facto centre of upstream supplier activity in South Africa. SAOGA has never been more relevant, he says. “Over the last twelve months we have seen immense growth in exploration activity in South Africa. We have had no fewer than seven seismic surveys right round our coast. Those surveys will naturally lead to exploration, depending on the outcomes of the analysis, and of course the more exploration the more the chances of discoveries leading to production. We are excited about that.” The mission of PASA was to get companies to pick up licences off South African shores: now that majors like ExxonMobil, Total, Shell and Chevron together with a number of smaller players are joining indigenous players like
Aerial view of Cape Town’s waterfront
46 | be weekly
PetroSA and Sasol, the field is beginning to get busy at last, he says. Though the results of the seismic surveys he referred to are not yet available, there are encouraging results from surveys along the west coast, notably the Orange Basin, where a proven reserve of 201 billion cubic feet (bcf) of gas has just been confirmed by Sunbird in the Ibhubesi gas field, with a probable 540 bcf recoverable in Phase 2. “Ibhubesi could contain anything from 800 billion to a trillion cubic feet, and they should be producing within the next two years.” When it is considered that the Mossel Bay gas field, which feeds the Mossgas gas-toliquids project that has been producing for 20 years and supplies South Africa with five percent of its gas requirements, was floated
SAOGA
“Ibhubesi could contain anything from 800 billion to a trillion cubic feet, and they should be producing within the next two years” on a reserve of one tcf, the current offshore reserves are significant. However there are far more significant gas reserves onshore, in the form of coal bed methane, mainly in Mpumalanga and Limpopo Provinces. These are located in existing coal mining areas, and the PASA had reported that there could be anything form ten to 20 bcf to be extracted here. If that sounds exciting, well it is. But it is
nothing like as exciting as the prospect of shale gas discoveries, and it is these that Mthozami Xiphu thinks have the potential to be a game changer for the South African energy industry. At the moment, there is only a preliminary assessment, albeit an authoritative one. The United States Energy Information Administration made a first pass estimate of a technically recoverable resource of 485 tcf of gas in the Karoo Basin. PASA evaluated this assessment and concluded that, owing to the limited amount of available data in the area, it is impossible to quantify the resource accurately, other than to say that it is potentially very large. It wisely said that additional, modern subsurface information should be obtained through drilling or a geophysical survey. However as Xiphu points out if Mossgas is so important at one tcf, even if the Karoo reserves amount to no more than 20 or 30 tcf their significance would be massive. “If we get a hundred or multiples of a hundred tcf we are looking at a game changer for energy in South Africa over the next ten years!” Shale gas is certainly present in large amounts, enough to elevate South Africa to fifth in the world’s gas producing nations after Mexico, Argentina, the USA and China. And drilling has not even taken place yet though technical cooperation permits (TCPs) for
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exploration have been obtained by a number of companies such as Falcon Oil & Gas, Sunset Energy, Shell, Anglo Coal and a joint venture between Sasol, Chesapeake and Statoil. He explains why. “The one method for extracting shale gas at the moment is hydraulic fracturing (fracking), and that method is controversial all around the world. Our government has been very cautions. Originally we at SAOGA imposed a moratorium on exploration pending the completion of the licensing round across the Karoo, however the government then followed it up and said everything should be put on hold pending a study to advise on a reasonably safe method of extraction that would be environmentally robust.” The southern Karoo where the shale gas is lodged is a water stressed area, he adds, and the farming community is worried over the water issue given that fracking requires a lot of water. And all stakeholders worry about the potential for contamination of the water supply either by escaping methane or by fracking chemicals. “These are not insurmountable problems if you have the proper regulatory and monitoring systems, and this is what the government is putting together at this time before it allows companies to start drilling in the Karoo.” The United States has achieved energy self sufficiency through its shale gas, and South
Africa could do the same. Xiphu chaired the working group that presented the report on shale gas exploitation to the Department of Mineral Resources in 2012. As part of this he and his team visited Pennsylvania and Texas, then recommended that further specific studies should be carried out. But he’d like to see this done as soon as possible, and exploration to commence. Not only would it be a massive boost to the economy, it could transform the lives of some of its poorest communities as it
“If we get a hundred tcf of shale gas we are looking at a game changer for energy in South Africa over the next ten years!” 48 | be weekly
SAOGA
Established road, rail, sea and air routes make South Africa an ideal logistics base
brings in investment and jobs, stimulating the growth of mid-stream and down-stream industries. And these would be skilled jobs, with opportunities for much needed training and development. Xiphu’s vision for SAOGA is to make it a truly national organisation. Though it already has members from Gauteng to the Eastern Cape and KwaZulu Natal, he would like to see more participation from other provincial governments. That may take a little time. In the short term, he is throwing all his energies into achieving the declaration of the Saldanha IDZ and has been having meetings with key organisations such as the Department of Trade & Industry, Transnet and the National Ports Authority to ensure that the declaration happens before the end of July. Saldanha will do for the oil and gas sector what Coega does for the automotive industry in South Africa or
Richards Bay for coal, he says, and he can’t wait for it to happen. Another priority for SAOGA is skills development, he continues. “We cannot advertise South Africa as a hub for upstream production industry in the continent if we don’t have the relevant skills. We must encourage skills development, interactive development, intentional institutions and universities. And we must work with the industry to ensure that the people we train are able to get jobs, even at the apprenticeship level if not at permanent employment level, so that they immediately get the experience. Then as exploration takes off, discoveries are made around South Africa and the industry grows and grows in South Africa with discoveries around South Africa we can poise ourselves to be a real hub for the whole of southern Africa!” After all, South Africa has the deep water
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SAOGA
“We cannot advertise South Africa as a hub for upstream production industry in the continent if we don’t have the relevant skills” ports, the ship repair and fabrication facilities and the infrastructure that the industry needs. It makes sense for a company operating off Tanzania or Mozambique to repair its vessels and FPSOs in nearby South Africa rather than in Singapore or Aberdeen, he points out. It is all there on their doorstep – the only thing that needs building is the skills base specifically related to the oil and gas industries. SAOGA pulls together the training institutions across South Africa and matches them up with its member companies: “For example we are running a programme right now for 20 students to be trained on our west coast and we got Chevron to give financial support to that venture. And we place the trainees with our members so that they get the hands-on experience to improve their learning and output. Take welding. In our industry that is a highly specialised skill – run of the mill welders won’t do. We see it as part of our remit to ensure that these high level engineering skills are provided as well as just the basic trade qualifications.” South Africa is not really known yet for its oil and gas industry but its advantages are beginning to be realised. “We are not a Nigeria at this stage but even before the shale gas came on the scene we were already attracting interest.” His enthusiasm is based on realism, he insists. The industry has a
great future and SAOGA is one of the main driving forces. What might slow things down? Well he is lobbying for greater certainty and transparency in legislation – this would really leverage the advantage of the IDZs. “If you are having even minor repairs done to high value equipment you still have to put down large sums in security even if you can claim it back later.” And some proposed changes to the Minerals and Petroleum Development Act worry him: it is important for companies considering doing business in South Africa to know precisely what the government’s percentage carried interest in exploration and production rights will amount to. While Mthozami Xiphu is entirely behind the principle that the country needs to retain a fair share of the proceeds of its resources, especially for the benefit of its previously disadvantaged citizens, his members and potential members have the right to know in advance exactly what that share will be before they commit to invest. This legal and fiscal certainty will ensure South Africa’s attractiveness as an investment destination. For more information about South African Oil and Gas Alliance visit: www.saoga.org.za
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Supporting So
Transnet Port Terminals (TPT) is the South African government’s ex
written by: Will Daynes | r
52 | be weekly
Transnet Port Terminals ( TPT)
outhern Africa
playing a leading role in making xport-led growth strategy a success
research by: Paul Bradley
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Aerial view of Durban harbour, South Africa
TPT
I
t was in 2000 that Transnet’s then single port division, Portnet, was divided into separate operations and landlord businesses. It was this decision that led to the creation of Transnet Port Terminals (TPT). Since its formation the business has played a fundamental role in supporting the export-led strategy of the South African government. Most Southern African import and export commodities are handled through South Africa’s seven logistics ports, Richards Bay, Durban, Saldanha, Cape Town, Port Elizabeth, East London and Port of Ngqura. The Port of Ngqura is the newest of the above ports. It is here, seven kilometres outside of Port Elizabeth, where a great degree of investment has been made in order to purchase a total of six new cranes and accumulate a large amount of borrowed equipment with the objective of getting the facility up and running quickly so as to meet the expanding demand for imports and exports in the region. It is at these locations that TPT handles container, mineral bulk, agricultural bulk and RoRo operations. In addition the business also implements logistics management solutions for its container, bulk, break-bulk and car terminal operations. Its major customers meanwhile represent a broad spectrum of the economy and include the shipping industry, vehicle manufacturers, agriculture, timber and forest products, the mining industry and exporters of minerals, metals and granite. TPT operates container terminals at Ngqura, Port Elizabeth, Cape Town and Africa’s busiest port, Durban, which possesses the southern hemisphere’s largest and best-equipped
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TRANSNET PORT TERMINALS TPT container terminal. Over the course of the last decade TPT has invested large sums of capital in upgrading this specific sector. In 2007 the redeveloped Durban Container Terminal Pier 1 facility, South Africa’s first rubber tyred gantry operation, was launched. Following this was the launch of Ngqura Container Terminal, the state of the art transhipment hub, servicing traffic from the East, South America and West African markets.
Each of TPT’s container terminals utilises the NAVIS system which provides integrated real time shipping information. These terminals are also supported by a call centre
STEFANUTTI STOCKS MARINE Across the African continent and beyond, into the Middle East, one cannot fail to have noticed the activity to build and further develop ports. The economic and social impacts of these often mammoth projects have a positive impact on thousands of lives, creating jobs and infrastructure where none previously existed. Perhaps less noticeable, is the effort and expertise that go into developing these ports – and in South Africa and increasingly across the whole region, one name has become a byword for quality - Stefanutti Stocks Marine. Stefanutti Stocks Marine is a division of the Stefanutti Stocks Structures Business Unit, itself a part of Stefanutti Stocks (Pty) Ltd. The holding company, Stefanutti Stocks Holdings Limited is listed on the Johannesburg Stock Exchange. The Marine Division is responsible for procuring and executing marine construction work for the Structures Business Unit. “We provide work in all aspects of marine business, including the
deepening and widening of docks, rehabilitation of slipways, quay wall construction, jetty construction, ship lifts, breakwaters and pre-cast solutions including EPC work.” says Simon Allen, Managing Director of the Marine Division. “Within South Africa, probably 90 percent of our projects are for Transnet, the state-run entity which controls the nation’s ports.” Whilst Transnet projects are open to international bids, Allen says that Stefanutti Stocks has an edge when it comes to selection, because of its reputation for expertise and experience, but also because of its unique standing within South Africa’s civil engineering sector. Stefanutti Stocks Marine prides itself on partnering and being a solutions provider to South African port construction, hand-in-hand with Transnet. www.stefanuttistocks.com
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KwaZulu-Natal Road Markers KwaZulu-Natal Road Markers is a 100% Broad Based Black Economic Empowerment company, empowered by the Dept. of Transport KwaZuluNatal under the Vukuzakhe Programme, a programme introduced by the KZN former Minister of Transport and the then Premier of KZN, the Honourable S’bu Ndebele. Our company is also affirmed by the Presidency’s poverty alleviation initiative, the Expanded Public Works Programme and we are a BBEEE Level 3. The company was registered in 1999, prior to the registration its proprietor has a long experience which is over 20 years of specialist experience
in Road Marking and general road maintenance. We have highly trained and skilled road markers that use the best technology available to work accurately and quickly. All our crews have undergone hazard and safety training, to ensure that work sites remain safe for both our workers and other road users. We also take on road-marking maintenance contracts, delivering a total package of services from start to finish. E. kznroadmarkers@vodamail.co.za www.roadmarkers.co.za
SPECIALISTS IN ROAD MARKING, THERMO PLASTIC ROADMARKING, MAINTENANCE, SAND BLASTING AND MANUFACTURES / SUPPLIERS OF ROAD MARKING MACHINES Our products: • Road Marking • Painting roads and parking areas • Installation of road studs, guard rails and signs • Sandblasting • Manufacturers and suppliers of road marking machines Our dedicated workmanship helps lead the diverse majority to their destinations. We ensure the best quality and safety on our roads. We are growing as the traffic flows in all directions; slow, fast; either way we are delianators in a human form. Road marking is our passion and innovation with inspiration are key traits that define us. No matter the weather, our people remain safe day and night. Thank you to KwaZulu Roadmarkers: Where everyone finds direction every time. It is right there on the road surfaces. FIND YOUR DIRECTION!
General Manager, Ms Charmaine Nxumalo
Tel: (+27) 721915314 | Fax: (+27) 865403191 Email: kznroadmarkers@vodamail.co.za www.roadmarkers.co.za
TPT which provides a single point of contact and consolidated information to facilitate communication and customer service. TPT’s mineral bulk operations at Richards Bay, Port Elizabeth and Saldanha are integral parts of logistics corridors for key cargo. Richards Bay is something of a hub for as many as 13 core commodities, including coal and woodchips, while Port Elizabeth handles the region’s manganese products, and Saldanha its iron ore and steel products. The work that takes place as part of these operations is characterised by long runs on a network of conveyor belts, large dry bulk parcels and neo-bulk parcels using skip loading solutions. Agricultural exports however are just as vital to the South African economy. This makes it all the more important that TPT is able to provide state-of-the-art agricultural bulk operations that offer customers storage and other facilities that cater to international market requirements. Commodities handled across ports such as Cape Town and East London include wheat, maize, soya bean meal, animal feed and various fresh produce. Different break-bulk commodities meanwhile are handled at various different ports. At its port in Durban TPT handles steel commodities, project cargo and abnormal
“Most Southern African import and export commodities are handled through South Africa’s seven logistics ports” be weekly | 59
cargo, as well as carrying out niche container business, while in Cape Town the predominant products include timber, steel and cement. Meanwhile at its East London facility TPT handles containerised cargo that includes motor vehicle components, chemicals, textiles, fruits, sugar and scrap items. Vital as all of these areas of TPT’s business may be, and believe me they are absolutely fundamental to South Africa’s economic
prosperity, arguably the most exciting aspect of its operations is its car terminal operations. Over the course of the last decade South Africa has experienced exponential growth in its automotive industry and today the Durban car terminal is responsible for handling approximately two-thirds of all vehicles either entering or leaving the country. The growth of this sector played a strong role in ushering in a new era for the Durban car
“South Africa’s ports are seen as key engines for the economic growth that the government hopes to achieve” 60 | be weekly
TPT
Container ship unloading
terminal in early 2003. It was then that work commenced on Durban’s much-needed port expansion project. One element of this project involved the construction of a three-storey structure that boasts 3,800 additional parking bays and an over-pass linking the car terminal with the quayside. Today the terminal is in the process of increasing its parking capacity up 10,000 parking bays to 14,000, resulting in an increased throughput from 400,000 units to 570,000 units per annum. The South African government today finds itself embarking upon a huge infrastructure drive with the core aims being to boost the economy and alleviate poverty. The country’s ports are seen as key engines for the economic growth that the government hopes to achieve and it is for that reason that,
under the Transnet Market Demand Strategy, TPT will receive R33 billion aimed at creating new capacity for terminals to meet projected future demand. With this in mind plans are already afoot to expand various aspects of the business including increasing bulk handling capabilities at Saldanha and expanding the business’s coal skip container capacity by purchasing 1,500 new units. These are without doubt promising times for South Africa’s commercial ports, the regions they are located, TPF as an organisation and most importantly its customers. For more information about Transnet Port Terminals (TPT) visit: www.transnet.net
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Generating g
As Kenya’s energy demands continue to increase unabat is taking its role as the country’s leading electricity supp extremely seriously by developing new long-term power
written by: Will Daynes research by: Richard Halfhide
62 | be weekly
Kengen
growth
ted, KenGen plier r solutions
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Wind turbine generator
Kengen
T
o say that Kenya Electricity Today KenGen possesses a workforce of Generating Company Limited, or approximately 1,829 staff distributed across KenGen as it is more commonly 20 different sites where its power plants are recognised, plays an important located. The company utilises various sources role in the economic development to generate electricity ranging from hydro, of the African nation is, to all intents and geothermal, thermal and wind. Of these purposes, a gross understatement. The reason hydro is the leading source, with an installed for this is that KenGen alone is responsible for capacity of 766.88MW, which is 65 percent of producing almost 80 percent of the electricity the company’s installed capacity. consumed in the country. Kenya is rightfully proud of having KenGen’s history dates back to 1954. It was a liberalised marketplace and it is here then that the Kenya Power Company (KPC) that KenGen competes directly with four was first registered and was commissioned independent power producers, who between to construct a transmission line between them produce the remaining 20 percent of the country’s electric power. the city of Nairobi and Tororo in Uganda, as well as It is with this competition to develop geothermal and in mind that KenGen strives to maintain its position as other generating facilities in the country. The Nairobi the market leader in the - Tororo line was to transmit provision of reliable, safe, Potential future power generated at the quality and competitively power capacity of the Owen Falls Dam. priced electric energy. “With Olkaria complex From its inception, KPC the wealth of experience we possess, our established sold its electricity in bulk at cost to the Kenya Power and Lighting corporate base and a clear vision, we Company (KPLC), which ran the company believe we are perfectly placed to retain our under a management contract. This remained leadership position with the sector,” explains the case until January 1997 when the Geoffrey Muchemi, KenGen Director of management of KPC was formally separated Geothermal Projects. from KPLC as a result of new reforms and “For the foreseeable future,” Muchemi legislation brought in to regulate Kenya’s continues, “we aim to efficiently generate energy sector. competitively priced electric energy using state Come October 1998 KPC had re-launched of the art technology, while also leveraging itself under the name and corporate skilled and motivated human resources to identity that we now know at KenGen. It ensure financial success. Meanwhile, we shall was this act that saw KenGen take charge achieve market leadership by undertaking of all publicly owned power generating least cost, environmentally friendly capacity plants in the country. expansion. Consistent with our corporate
560mw
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Hyundai Engineering Co., Ltd. to Create the Sustainable Value With almost 40 years of experience, Hyundai Engineering Co., Ltd. has grown into a comprehensive engineering company which has the diverse business portfolio covering a number of areas including chemical plants, power plants, industrial plants, infrastructure and the environment, with a well accumulated level of high-quality technology expertise in design, procurement, commissioning and maintenance. Today the company is actively expanding into the renewable energy sector and expects the striving pace for the lasting value creation for humanity to allow it to secure future growth.
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Howard Humphreys is one of Eastern Africa’s leading consulting engineering and project management company and has been carrying out project management, engineering design and construction supervision of buildings, roads and transportation, water supply and sewerage projects in Eastern Africa since 1931. To date Howard Humphreys has carried out several major projects in the Eastern Africa region. The Company’s main fields of activity in East Africa can be classified under the following Service Lines: • Building and Structures • M&E Building Services • Project Management • Water and Sanitation • Safety, Health and Environment • Transportation and Roads & Bridges Telephone: (+254 20) 2063254/2660374 Cell Phones: 0724253431/0733625483 Email: info@howardhumphreys.co.ke www.howardhumphreys.com
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Kengen culture, our core values Hyundai Engineering Co., Ltd will be adhered to in all our Hyundai Engineering Co., Ltd. is the only company to have operations.” a performance reference from the geothermal power plant Despite Kenya’s economic in the Republic of Korea, “Kenya Olkaria geothermal power advances in recent times it plant unit I & IV Project”. This was awarded in recognition is still a widely shared belief of its skills and competencies in the field of geothermal that the country’s power power plants, a field which has long been led by Japan, U.S. and European companies. sector remains in need of In addition, Hyundai Engineering Co., Ltd. is now standing major investment. This is in a competitive position within the market of combined evidenced by the fact that cycle power generation, coal-fired power plants, it is still many thousands cogeneration, diesel power generation, and transmission of MW short of being able and substation projects. to deliver total national eng.hec.co.kr coverage. Thankfully Kenya’s government and its energy sector are not oblivious to this need and are taking active steps to meet the said challenge. One answer is the major investment that is being made in geothermal energy projects. It is these such projects that KenGen anticipates will become its primary source of energy by 2020, and the basis for this growth will be its Olkaria power station projects. As of now there are three Olkaria plants active today, with Olkaria I and II producing a combined 115 MW of power, a figure that is set to be increased to 150 MW in the coming months. Olkaria III on the other hand produces 48 MW and its running is outsourced to Ormat Technologies. Water turbine generator
“KenGen alone is responsible for producing almost 80 percent of the electricity consumed in the country” be weekly | 67
“KenGen strives to maintain its position as the market leader in the provision of reliable, safe, quality and competitively priced electric energy” In 2012 the company hosted the groundbreaking ceremony for the Olkaria IV construction, a new 280 MW geothermal plant that KenGen expects to be ready for generation capacity by 2014. “Olkaria IV is an extension of the existing Olkaria I and
68 | be weekly
II plants, and is expected to cost around $1.3 billion to complete,” Muchemi states. “The development itself will be built across two physical plants, each of which will boast two 70 MW units.” The steam wells for the Olkaria IV project
Kengen
The Olkaria III power plant
have already been successfully drilled, while the well head generators are expected to be installed and begin generating power as the construction phase of the undertaking continues. The Olkaria IV project is co-financed by the Kenyan government through KenGen and by a series of development partners, including KfW, World Bank, JICA, the French development agency, and the European Investment Bank. With the addition of Olkaria IV, the complete Olkaria complex will further cement itself as being the largest geothermal power project in Africa, with output estimated to
register at 430 MW in total by 2014. The good news doesn’t end here however. Recent studies on the field on which Olkaria stands have raised hopes that the overall capacity of the project could in fact be increased to 560 MW in total in the years ahead. Should this be achieved it would make KenGen even more of a vital contributor to Kenya’s growing power requirements. For more information about KenGen visit: www.kengen.co.ke
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MINING Recruiting
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“ We strive to deliver the best quality service to both candidates and clients ” 70 | be directory
Generation, Nuclear, Renewable, Smart Energy, Finance and Trading. Energy recruiting is Spencer Ogden’s sole focus. We are able to provide a dedicated service, skills and expertise as one recruitment company we create opportunity for both clients and candidates. We strive to deliver the best quality service to both candidates and clients by having invested in the best people, infrastructure, services and training. Our mining solutions include: • Metallurgy and Processing • Mine Engineering (Production and Project) • Geosciences (Exploration, Production and Project) • Project Controls • HSEQ • HR
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Spencer ogden London Head Office 33 Charlotte Street London, W1T 1RR T +44 (0)207 2689 358 E mining@spencer-ogden.com www.somining.com
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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.
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To find out how to get involved contact: vincent@bus-ex.com