MARCH 2011

Businessexcellence ACHIEVING

MARCH 2011

O N L I N E

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Learning

bendwith to

wind

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Changing the culture of BAT South Africa

Editor’s letter

EDITORIAL

Managing Editor Becky Done bdone@bus-ex.com Editor In Chief Martin Ashcroft mashcroft@bus-ex.com

DESIGN

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synergy Perfect If recent reports in the media are anything to go by, M&A activity could well rise to pre-economic crisis levels this year, as markets stabilise and businesses shake off the nerves of the last two years.

Words like ‘boom’, ‘surge’ and ‘rocket’ are cropping up frequently, with some analysts predicting growth in global M&A activity of more than 30 per cent in 2011.

Ricoh Europe’s executive vice president Ian Winham is no stranger to mergers and acquisitions, and is familiar with the benefits a well-considered strategic move can bring. “Have a clear reason for the acquisition and how it will add business value,” he advises. “Factors like geographic expansion, supply chain efficiencies, access to raw materials and energy conservation are as important today as ever.”

In 2008, two of the world’s leading players in the healthcare industry—Invitrogen and Applied Biosystems—joined forces to become Life Technologies. The combined company is now emerging from a period of integration and is already looking forward to a healthy

40 per cent growth this year. The benefits of the acquisition are clear, as Invitrogen’s South Asia MD Devashish Ohri explains. “Our competitors can typically provide either instruments or certain consumables, but we have the capability of supplying from under one roof a wider spectrum of instruments, nearly 65,000 consumables, and software relevant to biotechnology research and bioinformatics.”

Last summer, four leaders in the logistics sector combined to become Imperial Logistics Refrigerated Services (ILRS), part of South Africa-based Imperial Group. One of these was perishables transport provider Fast ‘n Fresh, who we spoke to before the merger and caught up with again this month. “Our aim in coming together is to achieve economies of scale and to provide a better offering across the marketplace,” comments managing director Gavin Wilson. And that certainly looks to be the case— the company is now working towards its ambitious vision for the future, underpinned by a unified, streamlined and newly focused way of working.

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STRATEGY: Driving M&A success An insight into what works during a merger or acquisition—and a novel idea on what’s next, from Ian Winham.

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OPERATIONS: The journey to compliance How can companies adapt to changing compliance requirements and standards in order to retain their competitive edge?

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SUPPLY CHAIN: How to win the game Implementing a single supply chain planning process is a crucial move in the race for competitive advantage.

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SUSTAINABILITY: The top 100 This year’s Global 100 Most Sustainable Corporations in the World report contains some interesting entries.

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BAT South Africa Learning to bend with the wind BAT Group’s Heidelberg factory in South Africa has undergone a remarkable transformation over the last three years.

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Casinos Austria International: Viage Everything under one roof Targeted marketing and a sophisticated choice of entertainment options is helping to change perceptions of casinos in Brussels.

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Electricidade de Moçambique Powering aspirations After civil war, Mozambique’s growth is hugely dependent on electricity, putting pressure on the state-run national supplier.

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Asenjo Energy Coal is the goal As demand for power continues to escalate, Botswana is seeking to utilise its vast quantities of coal.

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Hidroeléctrica de Cahora Bassa Energy for the future Mozambique’s Cahora Bassa Dam has delivered energy across Southern Africa for 30 turbulent years.

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EnviroGold Alchemy in action A unique technical process, mining expertise and a sound resource development strategy have combined to create the promise of profit.

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Manitou South Africa When the going gets rough This rough terrain handling equipment is destined for the most demanding applications that industry has to offer.

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Balfos Ltd Big fix A diverse product and sales offering can translate into a single supply source for leading mining and industrial operations.

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Gibraltar Port Authority Maritime motorways One of the most famous nautical names in the world offers its customers a surprising mix of services.

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Imperial Logistics Refrigerated Services A strong springboard for growth Formed eight months ago, this company is preparing a paradigm shift in refrigerated logistics services in South Africa.

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Fire Control Systems Fuelling growth Migrating from a commercial organisation to a corporate entity has created big changes in this company’s strategy and structure.

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Mhlathuze Water A source of inspiration Not only a full spectrum water company but also a provider of inspiration and support for the people of KwaZulu Natal.

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Petronet LNG Fuelling the changes One of the most important energy suppliers in the Indian sub-continent is contributing to India’s drive towards modernisation.

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AAT Composites The sky’s the limit This aircraft seating specialist is well placed to take advantage of the global effort to reduce the weight of airliners.

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Vodafone Ghana Superior services This household brand is working to deliver the best network with the best products and services, with the best people.

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DH Engineering Consultants The missing link Enlisting the help of local engineers can be invaluable in countries such as Zambia, where skills levels are low.

Taggart South Africa Moving mountains An emerging one-stop-shop for bulk materials handling projects in southern Africa’s mining sector.

Life Technologies: Invitrogen Mechanisms of life Given the right tools, India’s scientists, doctors and pharmacology researchers can make swift progress in their research.

Fortis Healthcare Healthy processes A provider of world-class medical care using economies of scale and improving efficiency to bring costs down.

Al Suwaidi Equipment and Transport Set for the big lift A major league player in petrochemical and hydrocarbon engineering in Saudi Arabia and the Middle East.

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BAPCO Refining the master plan Bahrain’s state-owned oil company is positioning itself to help drive oil and gas exploration in the region over the next decade.

Newmont Ghana Gold Limited Going for gold Delivering shareholder value and a farreaching CSR strategy are integral to success for this mining company in Ghana.

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Driving M&A

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Ricoh executive vice president Ian Winham makes frequent trips down the acquisition road. Here, he offe insights on what works, and a novel idea on what’s ne

aybe it’s time for Google to purchase a carmaker.

As autos morph into entertaining route finders surrounded by metal and rubber, why shouldn’t the pre-eminent maker of search engines step behind the wheel? Google is amassing the ultimate database of the people, places and things that are the raw material for digitally boosted locomotion. It demonstrated the potential itself when its technology piloted seven driverless vehicles around California recently.

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Strategy

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Add the timely diagnostic under-the-bonnet information that onboard computing can deliver, and it’s a case of move over Batmobile, hello to the Searchmobile.

This futuristic view of Google might be a fanciful notion but it illustrates that now, more than ever, companies should focus their merger and acquisition strategy on long-term synergies. The infusion of information technology into all facets of commerce and production is causing previously separate industries to butt into one another like never before. IT and transport will converge.

So will IT and the power industry, as internet companies like Cisco and industrial stalwarts like ABB chase the smart grid business. My company, Ricoh, knows convergence well and facilitates it. Our customers personify it—they continually produce, access, display and store all sorts of

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‘documents’, be they word, picture or sound.

IT’s importance will continue to trigger acquisitions across industries, much as it has done in the media business where screens of all shapes and sizes, including the iconic television and the ubiquitous mobile phone, now display the internet. Thus Google picked up YouTube in 2006.

Cisco has over the years made myriad smart acquisitions to help it expand into a multimedia company. Its purchase of Tandberg and of flip phone company Pure Digital, for instance, helped broaden its reach in video communications.

Convergence has even banished the old taboo against software companies selling hardware and vice versa. Oracle bought Sun Microsystems, Intel purchased computer security firm McAfee, Microsoft sells games consoles, and Google itself sells mobile phones.

Strategy

Many acquisitions will centre on the shift to a services-based business model, as with Dell’s November purchase of software-as-a-service firm Boomi. Ricoh, traditionally an office equipment company, has also been focusing on accelerating its shift towards a service orientated business model, an important step to support CIOs with managing information across the business.

A cautionary note however: meshing two companies might make absolute business sense, but beware of culture clashes. Different cultures clearly represent different sensitivities, and understanding the benefits of different cultures is not about changing them, but about knowing where they fit and how they will work in your business. As part of the $21 billion Tokyo-based Ricoh Company, Ricoh Europe is inherently aware of this. Our cross-border acquisitions of US and Swedish distributors IKON Office Solutions and Carl Lamm have worked because we devoted considerable attention to the integration of people.

The mere combination of digital endeavours alone is not magic. The eBay-Skype hook-up

and support services.

Acquisition can also serve as a defensive manoeuvre to box out new competition when necessary, but generally, defensive acquisitions do not yield great returns, so practice them judiciously. One other caution for any acquisition: don’t underestimate the effort you’ll put into due diligence, especially sorting details with pension funds. Airlines BA and Iberia only recently cleared pension hurdles in their protracted effort to merge.

Even when the ‘golden rules’ are followed throughout the process, the benefits of an acquisition need to be tracked and measured. It is a ‘given’ that determining the strategic rationale before an acquisition is a key focus, but at Ricoh we also devote significant resources to analysing the realisation of benefits during and after a deal has been put in place. This enables us to ensure that key objectives are being achieved every step of the way.

With all this in mind, next time an automaker is up for grabs, maybe Google’s Eric Schmidt and Sergey Brin should consider it. They missed a chance in 2007 when Chrysler sold for $7.4 billion,

“Now, more than ever, companies should focus their merger and acquisition strategy on long-term synergies” unravelled as eBay eventually acknowledged “limited synergies” before selling most of Skype in 2009 for less than what it paid for it in 2005.

AOL and Time Warner split late last year as their market value plunged to about 10 per cent of what it once was during the10-year marriage. And if merging companies don’t link customer value into their long-term vision, their union won’t last.

These failures help reaffirm a platitude of sound M&A: have a clear reason for the acquisition and how it will add business value. Factors like geographic expansion, supply chain efficiencies, access to raw materials and energy conservation are as important today as ever. By bringing IKON and Carl Lamm into our fold we’ve strengthened the downstream side of our supply chain by supplanting competitors’ office equipment with the Ricoh brand and adding new skills such as production printing and IT network

not much more than the nearly $5 billion Google had just spent acquiring YouTube and ad company DoubleClick. With an automobile acquisition, Google could take the Ricoh approach to M&A, focusing on companies that add customer benefit and business value. Google could sell ‘cars-as-aservice’. A-la mobile phones, it could provide the car free for two years in exchange for a contract covering electric battery charging, unlimited miles, maintenance reminders, and all the travelling entertainment and mapping a user desires. With such a move, the phrase ‘information superhighway’ would acquire a whole new meaning.

Ian Winham is executive vice president and chief financial officer of Ricoh Europe. Ricoh works with organisations around the world to modernise work environments and optimise document efficiency. http://www.ricoh.com

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The to journey

comp

The long road to compliance is a daunting journey for m in today’s business environment—largely because the quite ends. Once compliance is achieved, companie changing standards in order to help retain their co Jamie Stewart, UK managing director of Exact, explor of enterprise solutions to tackle th 12

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Operations

o

pliance

many companies e journey never s must adapt to ompetitive edge. res the potential hese challenges

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ompliance requirements are never static: industry standards evolve, and government rules and laws change. But with budgetary constraints hampering most organisations, companies are looking for ways to undertake a compliance effort without adding additional layers of bureaucracy and cost. Even where businesses face a mandatory compliance requirement, they have to maximise efficiency to avoid passing on extra costs to their customers. While the fundamental tenet of any compliance effort is to continually improve quality, companies must also take into account their company’s brand equity and reputation, working to bolster these intangible—yet valuable—assets.

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In essence, compliance requirements dictate that companies need to document what they do, do what they document and then assess its effectiveness. In theory, if the workflow and employee functions are created and documented effectively, the company should be able to provide an exemplary product or service. If that’s not happening, the compliance framework gives companies a methodical way to track down exactly where the issue is and change either the policy, the course of action or the procedure in order to rectify the situation.

When it comes to compliance, companies that decide to go it alone are in for a long, hard journey. There are tools that can make the journey easier and provide benefits to the company along the way. A good compliance support solution will allow your company to adapt quickly, and affordably, to changing compliance needs without paying for additional, customised solutions.

The right solution will also encourage your entire value chain to participate in the process, creating a 360-degree view of your company, its performance and its products or services.

This information is invaluable in identifying the strengths and weaknesses of your organisation and the compliance framework will help you to pinpoint and address their causes.

Compliance with industry or government regulations means that mistakes and quality issues will theoretically become the exception, rather than the rule, when it comes to the way

the way they present information to stakeholders.

Ideally you should be able to generate a ‘single source of truth’ across the company, no matter who edits, updates or views it, and easily identify how work moves through an organisation.

It is also important that information related to compliance is available to anyone to whom it applies whenever they need it, whether during the course of their work day or after hours, allowing them to reflect on their contributions and suggest ways to continuously improve. If policies or procedures can be updated by different stakeholders, then there must be one central place where the most up-to-date version is not only stored, but available to anyone who needs access to it.

The people that make up your organisation are the ones who make the policies, who establish the procedures that support the policies, and who take accountability for the successes and failures. A good compliance support mechanism will take into account the people that make up the organisation in addition to the continuous improvement of the end product, whether goods or services.

A compliance support framework will add significant value if it can integrate the front office activities with those of the back office. The human resources department must understand whether people have the appropriate training or certifications necessary to perform certain functions. If a single solution can further provide

“Compliance requirements dictate that companies need to docum what they do, do what they document and then assess its effectiven you run your business. This frees up management from managing the rules to spend more time working on strategic business processes.

To allow your company to compete on a global scale, it is important that the information you need is centrally stored and has 24/7, worldwide access regardless of time zone or language, giving multicultural organisations a way to standardise

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financial reporting, budgeting analysis, and product inventory management, it can become a powerful enabler for your organisation. An invaluable compliance support mechanism will also integrate with your external stakeholders, whether customers, investors, boards of directors or business partners. This allows your company to bring customers into the procedure, providing

Operations

feedback valuable to your compliance efforts.

A good system will allow your company to create a compliance ecosystem that can adapt, change and grow with the evolving compliance landscape. Since compliance itself isn’t a destination, but a way of working, the associated documentation should support that fluid environment.

A truly valuable compliance support framework will be affordable to obtain and intuitive to implement, otherwise the solution itself could turn into another layer of bureaucracy for management to deal with.

Faced with complex, dynamic business operations spread across multiple geographic territories, organisations are increasingly flocking to this structured approach to corporate compliance to manage their business environment.

As they struggle to balance tight budgets and stretched resources against more stringent regulatory requirements, a growing number of companies are recognising the benefits of having one central place where they can communicate. This helps them to manage their jobs more consistently and ultimately focus on fulfilling commitments to the customer, breaking down departmental barriers to create an accurate view of the personnel, finances, workflow, document and asset information.

ment ness�

Those organisations that can successfully leverage technology to meet the critical compliance requirements set out by new regulations will be well placed to integrate and consolidate all corporate data within a single platform.

Exact provides software solutions that support every business activity and give real-time insight into the entire business. www.exact.com

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How

to win the

game

Hugh Williams of Hughenden Consult explains why implementing a single sup chain planning process is a crucial move the race for competitive advant 16

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e

ting pply e in tage

Supply chain

I

attended a conference several months ago, for which all of the delegates had to answer a questionnaire on their areas of interest beforehand. Unusual? Not really. The part that I found most interesting, however, was that 50 per cent or so had ticked the box titled ‘supply chain planning’. I was intrigued because no one had explained what supply chain planning was, or what it covered. How did anyone know whether to be interested? I suppose the words are topical jargon, but what did the delegates think it meant? My discussions with many people over the three days illustrated to me that there is a whole range of different ideas.

I have since spent a great deal of time defining the term in such a way that any industry sector and any size of company can easily understand it. The place to start was to define a supply chain. Largely, everyone is in agreement with the theory. Take the food chain as an illustration. We, the consumer, order a meal in a restaurant. In truth this is demand for a variety of items, but let’s just take one. Our order puts demand on the kitchen, then the butcher. He orders his raw material from the abattoir, who is supplied by the farmer, who in turn is being supplied with animal feed. This is a supply chain.

So if we now ask who plans the supply chain, it is rare that anyone controls the whole chain (the extended chain). Each link in the chain controls its own area, and influences adjacent links, up- and downstream. One day there may be someone who plans the entire chain, for now we should look at supply chain planning as being the planning of as much of the chain as we can directly influence.

This is in itself an interesting notion. We can all probably think of examples of a complex supply chain.

Equally we can think of a simple one. A complex supply chain might be represented by a large multinational company, with several primary manufacturing sites throughout Europe, say. Two or three other factories

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of its own feed it with intermediates location and can be distributed to p send products to a larger network o A simple supply chain may be de receiving materials from a host of make-to-order basis—no warehou Does supply chain planning m of scope, but some of the base functions are demand manageme scheduling, and materials manag Perhaps we can use an analog game of chess, or any board gam In chess, we all know how the start opposite each other. At any p they all are. This is all information o There are two ways to play ches objective but we do not have a clea

“Winning the means cha

We respond to the other player’s moves, Grandmasters, on the other hand, also kno which they will use to get there. They ev forecasting their opponent’s move So how is this analogy us We know where the pi placed on us an how many about o suppli in ad set o Bu sh pr ch

en pl

Ty m m

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and some raw materials. Products can be made in more than one perhaps 15 or 20 national distribution centres. These in turn may of regional distribution centres. escribed as a small privately owned single site manufacturing unit, f suppliers. It may produce and ship directly to customers on a use, no distribution network. mean the same thing to both companies? Certainly not in terms functions of supply chain planning may apply to both. The base ent and forecasting, inventory planning and sourcing, planning and gement. gy to explain supply chain planning further. Take, for example, a me and compare it to the task of planning. pieces move, that there are two colours, black and white, which point in the game, we know where each piece can move and where on how to play the game; the question is, how do you win at chess? s. One way to play is like most of us amateurs. We have a clear ar plan on how we are going to achieve it, so we take small steps.

Supply chain

stock or make to order, and so it will have decided whether to respond in either ‘push’ or ‘pull’ mode.

It will also have decided on capacity implications.

One is always hearing about plant rationalisation stories. Whatever a company chooses to do, the strategies will determine which techniques and tools are relevant. Let us briefly mention some of those.

Almost every company with whom we work is about to start, or is in the middle of, some kind of project to improve what they are doing.

Sales forecasting and demand management is a common one, often explained by the sentence, “If we could just improve our forecast of what the customer wants...”. There is a great movement currently in projects on co-managed or vendor managed inventories, as there is with efficient

e game does not mean just putting a system, or systems, in place. It anging the way the process of supply chain planning is carried out”

we react and maybe we are thinking one or two moves ahead. ow the objective, but they have a bagful of strategies and tactics ven have special names for those. The Grandmasters are probably es several moves ahead and monitoring to spot patterns in play. seful? In our organisations, we too know how to play the game. ieces are and how they move. For example, we know the orders nd the delivery destination. We know where our warehouses are, y pallet spaces we have, how much stock is in them. We know our machines, people, production rates, and stock. We know our iers’ lead times and prices. We know a great deal of information ddition. This is information on how to play the game—this is the of instructions we read when we first open up a new board game. ut whenever we visit companies, we hear words like firefighting, hortages, stock-outs, expeditors, unplanned overtime, and robably similar words. This sounds like the way amateurs play hess, not the way the Grandmasters play.

So knowing how to play the game is important but it is not nough. We need to understand how to win the game. Supply chain lanning is a mechanism for deciding how to win the game.

Every company has strategies on how it will win the game. ypically these will cover which products it will make and sell, which markets it will sell to, and how it will distribute its products to those markets. A company will decide whether it is going to supply from

customer response (ECR). Many companies are looking at responsive, finite capacity based planning and scheduling. All of these, and many others, are tactics which companies are using to support their chosen strategies, and each company will require a different blend of these tactics in supply chain planning.

One of the most common tactics being chosen by companies revolves around computer systems, and a trawl around web sites will reveal the wealth of applications available. They range from forecasting to inventory optimisation and deployment, forecasting and planning systems, planning and scheduling systems, sales and operations planning systems, transport management tools and of course a whole variety of MRP/ERP systems (management/enterprise resources planning). The systems available today fall into two categories. There are those which are referred to as decision support systems, and those known as enterprise wide transaction systems. The demarcation lines, however, can get a bit blurred: it is possible to find, say,

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“The supply chain planning decision support systems that w business system, so that any movement of data between sy forecasting or perhaps scheduling modules in some of the transaction based systems. This is where our chess analogy comes in again, to help us understand the differences.

In our analogy, we concluded that what we need to do is to learn how to win the game. Knowing how all the pieces move any better will not help us in this. MRP/ERP systems are called transaction systems: they place major emphasis on the base of data that they hold. They cater for the order intake, the movement of inventories, shop floor data, where the products are, etc. This is information on how to play the game, not how to win the game.

Many companies today are reinvesting in their MRP/ERP systems. For the most part they are upgrading them or replacing them, and there are some sound reasons for doing so. Consolidated financial management is clearly a major one.

Achieving commonality of systems across a multi-site group of companies is another good reason. There is a growing belief, however, that

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those companies who are investing in these new systems believe that they are going to get a mechanism for winning the game. I think they are wrong. Let me give an example.

A company we visited recently had searched the market for MRP/ERP suppliers, produced a shortlist and then visited in excess of 10 different reference sites. What they saw were good references, but what they also came away with was a clear message that while each reference had implemented a new system, they were still working in the same way as they had before. In other words, they knew how to play the game better, with newer technology, but they had made no progress on how to win the game.

Decision support systems are specifically designed to be told how to play the game by other systems. They are not databases, nor transaction systems. Their whole purpose is to help organisations make better decisions, by applying rules, algorithms and linear programming along

Supply chain

with other mathematical techniques. They allow the user to evaluate different scenarios in order to decide how to win the game.

The scope of what they provide ranges from supplier to supplier. There are a handful of companies whose marketplace is the large multinational company, and for whom they will provide what might be described as ‘end-to-end’ supply chain planning. There are others, at the other extreme, whose product is defined as one of the disciplines within supply chain planning, perhaps forecasting, planning or scheduling, where they are looking to supply the smaller to medium sized company and maybe only within their own national frontiers. Each approach is valid and each has a definable marketplace.

Interestingly, there are also examples of decision support suppliers teaming up together to provide a wider range of the supply chain planning

the way the process of supply chain planning is carried out and addressing all of the issues that this will throw up.

What we find most interesting is that companies today carry out all of the supply chain planning functions in a departmental fashion. Forecasters forecast, planners plan, and so on. Very few companies have a department for carrying out ‘end-to-end’ supply chain planning. This is gradually changing with the knowledge and understanding of what is possible today; however, just putting in ‘best of breed’ systems to carry out each function is absolutely no guarantee of improving the process.

How often do we hear of companies who forecast monthly and release the forecast once a month to Planning, who then need several days to put the plan together before they in turn give it to the factory? Who schedules the factory? Is

we choose will need to be integrated into the host ystems is completely seamless” functions, together.

The confusion lies in whether the transactionbased MRP/ERP systems really do have decision support capabilities within them. Unfortunately the answer is not as clear-cut as ‘yes’ or ‘no’ as a small number of suppliers are taking steps towards this. The vast majority, however, do not, even the largest and most popular systems. The reason we know this is that MRP/ERP vendors are forging relationships of various sorts with the specialist decision support providers. There are examples of ERP vendors acquiring decision support vendors.

There are companies working on technology bridges. There are others who have standard interfaces to the larger systems. If both sets of companies were providing the same solution, this kind of activity would not be necessary.

Systems are important, but they are only one part of the tool set that a company will use.

Winning the game does not mean just putting a system, or systems, in place. It means changing

it a planner or someone on the shopfloor? What are the influences that lead them to their final decisions on what to do next? Is it Production, who want nice long runs with no changeovers, or is it Customer Service, who want it to be delivered when the customer wants, with scant regard for efficiency in the factory? How long does it take in your company for a change in the forecast to work down to the shopfloor? Minutes, days, weeks, or months even? Do any of the individual functions have any appreciation, understanding or even regard for the others?

To change the way we work will not be easy.

Companies will need to understand what measurement systems influence the way their people work. Giving an incentive to increase forecast accuracy may have a serious negative impact on projected inventory and consequent sales. In supply chain planning we are talking about the optimisation of the global supply chain, and therefore, potentially the sub-optimisation

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of some of the individual elements of the supply chain. Tell that to the factory manager who is measured on volume output. It is equally true that we do not have to change everything in one go, or systemise everything at once.

Using computer-based decision support systems will give us the ability to evaluate quickly decisions that are extremely difficult to evaluate in the current manual way. They do not in themselves take time out of the overall ‘end-to-end’ process of supply chain planning. Having a good forecasting system does not mean that the shopfloor will respond any quicker to changes. Therefore what we need to do is to design very carefully the way we want our planning process to work, in an integrated way. We

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shall need to understand how all of the individuals can work together in one single process and what currently exists to prevent that.

The supply chain planning decision support systems that we choose will need to be integrated into the host business system, so that any movement of data between systems is completely seamless. Now that we have a world of technology on our PCs and we can just move data and objects from one system to another with no problem, our expectations of ‘interfaces’ between systems have changed. It is no longer acceptable for the user to be involved other than by a few keystrokes.

In summary, therefore, we can see that our business systems are the guardians of real-time

changes, for production a the game an support syst and try out d the way we a However, s The construc process is the speed o advantage. I Hugh Willia Consulting, a processes o hughendenco

Supply chain

r example in inventories, orders, or activities. They tell us how to play nd where all the pieces are. Decision tems allow us to take that knowledge different scenarios, to help us arrive at are going to win the game. systems are only part of the solution. ction of a single supply chain planning what will give our organisations of response and a real competitive It must be a continuous evolution. ams is managing director of Hughenden a specialist consultancy focused on the of supply chain planning. http://www. onsulting.com

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to

The

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op

Sustainability

e

100 Martin Ashcroft reports on a study of the world’s top 100 sustainable companies, which ranks their performance in terms of how they manage environmental, social and governance (ESG) issues

W

hen I first wrote about sustainability as a business concept (not that long ago, either) I used my opening paragraphs to define the term and its relevance to the bottom line. So much has been said on the subject in the intervening years, however, that we all know what it means now.

Sustainability is so well embedded in the corporate psyche now that an international top 100 list of sustainable companies has recently released its SEVENTH annual report. Launched in 2005, and compiled by the Canadian magazine Corporate Knights, the Global 100 Most Sustainable Corporations in the World judges the companies it believes have best managed environmental, social and governance issues. The list is announced each year at the World Economic Forum in Davos, Switzerland.

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“Sustainability is so well embedded in the corp list of sustainable companies has recent Unlikely as it may seem at first sight, Norwegian energy company Statoil tops the list this year, with US-owned pharmaceutical and consumer packaged goods manufacturer Johnson & Johnson in second place, Danish bioindustrial products manufacturer Novozymes third, and Finnish mobile phone company Nokia in fourth. The top ten is completed by Belgian global materials technology group Umicore, US technology giant Intel, UK-based pharmaceutical group Astrazeneca, French banking group Credit Agricole, Norwegian financial services company Storebrand and Danske Bank of Denmark.

Many of the world’s best known companies are recognised in this year’s top 100, which is an indication of their early adoption of the concept of sustainability. The list is a global mix, and it crosses many industry sectors.

Last year’s top-ranked company, General Electric, fell to the number 11 spot this year. It “dropped less because of anything that changed at GE and more because its peers made more progress improving their carbon and energy productivity,” said Toby Heaps, editor of Corporate

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Knights. GE also scaled back its R&D budget, he adds, losing points for that.

India’s Tata Steel placed at 27, while Johnson Controls, a US company with fingers in all kinds of industrial pies, is on the list at number 29, with Japanese electronics company Sony immediately behind. US consumer goods manufacturer Procter & Gamble makes the top 100, as does its food and beverage compatriot Kraft Foods, but so does Japan’s Tokyo Gas Company, and Finland’s pulp and paper manufacturer Stora Enso.

The top 100 list of sustainable companies represents an encouraging mix of companies across manufacturing, resources and services, including Canada’s Sun Life Financial, the world’s largest cosmetics and beauty company, L’Oréal, from France, Philips Electronics from the Netherlands, UK telecommunications company Vodafone, and Swiss-based engineering group ABB. US technology company Hewlett Packard makes number 75, with British healthcare company GlaxoSmithKline next.

Coca-Cola is in there at number 78 (but I don’t see Pepsi), while Japanese automakers Nissan and Toyota occupy positions 81 and 82.

Sustainability

Consumer products giant Unilever also makes the top 100, along with the somewhat smaller Canadian energy company Suncor Energy. The Spanish oil and gas company Repsol is in there, as is South Korea’s Samsung Electronics. Reliance Industries of India, Royal Bank of Canada, and Singapore’s real estate company City Developments just creep into the top 100, too.

It’s no surprise that BP failed to make the top 100, but there’s no place either for Shell, Exxon, Microsoft, Google, Ford or General Motors. I guess they had other things on their minds last year. Despite all its problems with recalls in 2010, however, Toyota still managed to make the list.

It’s interesting that eight of the top ten companies are European-owned. This may

financial analysis from Global Currents Investment Management. This produced a list of 300 companies for further analysis by Corporate Knights Research Group and Inflection Point Capital Management.

Ten equally-weighted environment, social, and governance key performance indicators are then applied: energy productivity, water productivity, carbon productivity, waste productivity, safety productivity, leadership diversity, CEO to average worker pay, taxes paid, sustainability pay link, and innovation capacity. The productivity scores are calculated as a ratio of sales to the units of energy/ water, etc consumed or waste produced. Leadership diversity looks at the proportion of female directors, the sustainability-pay link at whether or not at least one senior officer has his/her pay linked to

orate psyche now that an international top 100 tly released its SEVENTH annual report” be more than coincidence, as corporations in Europe are more heavily regulated than those in North America and Asia. Having said that, however, out of 22 countries represented in the top 100 companies, Japan has the highest number with a total of 19 entries, up from five last year. The United States follows with 13 (up one from 2010). The UK’s Global 100 company numbers, meanwhile, fell from 21 in 2010 to 11 this year.

In compiling the list, Corporate Knights collaborates with three strategic partners, Inflection Point Capital Management (a sustainabilityfocused asset management venture founded

by Dr. Matthew Kiernan), Legg Mason’s Global Currents Investment Management, and Phoenix Global Advisors LLC (a consulting and technology platform focused on sustainability).

The first step in the ranking process is to identify the top ten per cent of sustainability and financial performers from over 3,500 developed and emerging market stocks, using research from the Global Sustainability Research Alliance (GSRA), and the Asia Sustainability Research Alliance (ASRA) with

sustainability, and innovation capacity is calculated as a ratio of sales to R&D spend.

The sustainability performance rating relies on companies providing accurate data. An eleventh metric—transparency—is also used as an indication of how cooperative they were in disclosure.

It might seem odd that an oil and gas company should emerge as the leading sustainable business in the world, but a look at the scores shows that Statoil performed well in the social and governance categories, ranking second overall in percentage of female board members, for instance, with 40 per cent. But it did well in environmental performance, too, in terms of resources consumed or waste expelled per $ of output, and has also invested heavily in renewable energy initiatives.

Corporate Knights hopes that its list will help prove that sustainability is good business. For the seventh consecutive year, says Heaps, companies on the Global 100 list have outperformed those on the MSCI ACWI index. “The Global 100 has posted a total return of 54.95 percent,” he says, “outperforming the MSCI by more than 16 points.” www.global100.org

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Lea

Now on in South years. B talks to

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B AT S o u t h A f r i c a

earning

bendwith to

wind

the

ne of BAT Group’s most modern and strategic plants, the Heidelberg factory h Africa has undergone a remarkable transformation over the last three Bernd Meyer, demand chain general manager for the Southern Africa area, o Gay Sutton about how he approached changing an entire company culture

M

ost successful change initiatives spring from sheer necessity, or from what the consultancy community colourfully calls a ‘burning platform’. For BAT South Africa (SA), the stimulus for change began with a new group-wide strategy. The vision

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B AT S o u t h A f r i c a

SWM SWM is a diversified producer of premium specialty papers for the tobacco industry. It also manufactures specialty

papers

for

other

applications.

SWM

and its subsidiaries conduct business in over 90 countries and employ 2,800 people worldwide, with operations in the United States, France, Brazil, the Philippines, Indonesia, Canada, Poland and a joint venture in China. For further information, please visit www.swmintl.com.

was to move away from many small factories each located close to their local marketplace, and to centralise manufacturing operations to strategically placed, larger and more efficient factories.

“At that time we had five factories in the Southern Africa area, one in each of Zimbabwe, Mozambique and Angola, and two here in South

Africa. Our Heidelberg factory, near Johannesburg, was by far the biggest,” explains Bernd Meyer, demand chain general manager for the Southern Africa area. “Heidelberg was the factory chosen to take the volume resulting from the closure of the factories in Angola and Paarl here in South Africa.”

The factories in Zimbabwe and Mozambique— with the capacity to produce 1.5 billion to three billion cigarettes a year—were retained to cater largely for their domestic markets. The Heidelberg factory, on the other hand, was to become a state-of-the-art facility. Today, with the transformation largely complete, Heidelberg produces around 26 billion cigarettes a year and has the capacity to ramp up to an output of 35 billion a year. In addition, more than 10,000 tons a year of processed tobacco gets exported to other BAT factories or third parties within Africa and the Middle East. Not only does Heidelberg supply to the South African market, but it exports to more than 25 countries throughout Africa and the

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B AT S o u t h A f r i c a

Datacentrix Datacentrix

is

a

leading

black

empowered

company that provides high performance and secure information and communication technology solutions to South Africa’s corporate and public services

sectors.

Its

comprehensive

offering

ranges from the core areas of IT infrastructure and integrated business solutions, to selective outsourcing, managed print services, resource provisioning

and

other

related

IT

services.

Datacentrix is well positioned as a strategic longterm partner of choice to its clients. The company listed on the JSE Securities Exchange in 1998 and operates from regional offices in Samrand, Cape Town, Durban, Port Elizabeth and East London, with service centres around the country.

Middle East, and the strategy going forward is to focus on growing those export markets’ volume.

In 2006, however, the decision to centralise much of the manufacturing at Heidelberg signalled the beginning of a journey of change for BAT SA, one that presented considerable challenges as well as opportunities. “The first challenge facing us was that, as a result of underinvestment and old technology, the Heidelberg factory was non-competitive with regard to technology and processes,” Meyer says. A 10 year masterplan was put together, detailing the investment that would be needed to bring the factory up to the standard and capacity required for its new role in

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B AT S o u t h A f r i c a

Donnees Engineering Donnees Engineering was established in 2008 in the industrial area of Paarl, when the BAT precision manufacturing workshop was privatized due to the closure of the Paarl factory. The company recruited most of the skilled CNC artisans who worked for BAT and continued to deliver complex precision parts of high quality to the same standards achieved in BAT. Our motivated and experienced workforce enabled us to grow and become one of the biggest engineering workshops in the Western Cape. Our clients are major players in the wine, cigarette and canning industries, as well as other sectors.

the region, listing exactly where the investment would go, the outcomes that could be expected with regard to capacity, productivity and the future shape of the business in 10 years. Once approved at a group level, the massive investment programme got underway.

“In all, we have invested more than £70 million bringing in the latest technology, the best-inclass processes and systems, and aligning our operations with the best in the group,” Meyer

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B AT S o u t h A f r i c a

says. “At the same time, we undertook a 30 per cent expansion to increase the potential capacity of the factory.”

When expansion and refurbishment were well advanced at Heidelberg, the Angola factory was closed in 2007 and Paarl at the beginning of 2008, and some of the machines moved to Heidelberg.

“The greatest surprise of the exercise came when we closed the Paarl factory near Cape Town and moved production to Heidelberg near Johannesburg. We found we had completely overestimated the mobility and flexibility of our workforce at Paarl, and far more people than we expected preferred to leave the company rather than relocate.”

In the end, fewer than 40 people out of a workforce of more than 500 at Paarl chose to

stay with the company, and this left BAT SA with a considerable shortfall in staff, a difficulty compounded by the challenges in the South African labour market. To tackle the short-term skills shortage, Meyer drafted in a number of experienced and well trained staff from other BAT factories. He was, for example, able to fly in people from the Ukraine to work with his own personnel on the installation and commissioning of the new machines.

In parallel with this he went on a massive recruitment drive, and put the new employees through an extensive training schedule which included placements to other BAT factories around the world, where they were able to learn and practice the skills and knowledge needed to function at the

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B AT S o u t h A f r i c a

Megafreight Megafreight is an international freight forwarder ranking among the top ten leading forwarders in South Africa and is arguably the second largest wholly South African owned forwarder in the country. The company, which specialises in air and ocean freight, customs clearing, project shipments, warehousing and complementary ground-based logistics has a strong heritage having operated under the same leadership for more than 30 years since its inception in 1981. Our dedicated team ensures that shipments are managed in a professional yet personal manner, based on our ‘Service you can Touch’ philosophy.

highest level in Heidelberg. “This was really quite a success story,” Meyer says. “Over the years 2007 and 2008 they picked up the knowledge very quickly. So much so that since 2009 we have been completely self sufficient and nowadays we are even supporting other BAT factories around the world with know-how and resources, such as Mexico, Nigeria, Kenya and Egypt.”

Today, Heidelberg is an impressive plant.

Productivity, on a like-for-like basis, has increased by 25 per cent over the past three years. Customer satisfaction too, which is measured regularly by mood tracker surveys, is reflecting significant approval and now tops 85 per cent. “But these improvements have not been driven just by relocating and replacing machines,” Meyer says.

“I think the main change came in 2007, when we

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B AT S o u t h A f r i c a

Limpopo Tobacco Processors Based in Rustenburg, Limpopo Tobacco Processors (LTP) is the only operational green leaf threshing (glt) plant in South Africa, responsible for the production and processing of the total South African flue cured Virginia (FCV) tobacco crop. LTP is equipped with the latest tobacco processing equipment, capable of a throughput in excess of 30 million kilograms per annum. Green storage capacity is 2,000,000 kg and dry storage capacity 12,000,000 kg.

LTP supplies British American Tobacco on average 60 per cent of its annual domestic requirements.

The LTP factory has been an approved supplier to BAT for many years with a very proud record of quality and consistency. LTP has three shareholders, Afgri (45 per cent), the tobacco producers (45 per cent) and a BEE consortium (10 per cent). LTP contracts 90 commercial farmers to produce 12,000 Mt of high quality FCV tobacco. LTP employs 70 permanent staff and 350 seasonal workers.

“Since 2009 we have been completely self sufficient and nowadays we are even supporting other BAT factories around the world with know-how and resources, such as Mexico, Nigeria, Kenya and Egypt” embarked on a complete culture change agenda.”

Prior to this, there had been little need for change at the factory. Production had largely been for the domestic market where demand was stable, and old habits and practices had become entrenched and unchallenged. Several factors were changing, though. With the expansion of output to incorporate the production volumes from the two closed factories, manufacturing had become much more complex. “Before expansion we had around 150 stock keeping units (SKUs). Now, we have doubled that amount and produce around 300 SKUs.” In addition, the Heidelberg factory has been increasingly supplying products for export across Africa and to the Middle East. This has not only

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B AT S o u t h A f r i c a

Reitech SA As

a

tobacco

equipment

manufacturer

based

in Africa, Reitech SA has worked closely with the factories of British American Tobacco. The relationship with the Heidelberg factory dates back to its first construction phase in 1975. Projects carried out with BAT in Africa in recent years include carton filling plants for export cut rag and burley; installing and commissioning a large automatic palletiser plant; developing a tobacco expansion unit with BAT; and inner liner sealing units that preserve the integrity of export tobacco, as well as the supply of many handling and feeding machines. Reitech SA represents Hauni, Decoufle, Focke and Sodim in the region.

increased the demand for output but has added to the complexity within the manufacturing plant and the supply chain, and sharpened the focus on quality and customer satisfaction.

“The interesting thing about the change management agenda we initiated is that it was a multi-faceted exercise,” Meyer explains. “The starting point had been the installation of the new technology. Alongside that it was absolutely essential that we change the whole culture and attitude of the people. The management style needed to change radically and our workforce had

“In all, we have invested more than £70 million bringing in the latest technology, the best-in-class processes and systems, and aligning our operations with the best in the group” to receive the skills and the training they needed in order to improve.”

The change process began by adjusting the management structure, starting at Meyer’s level at the top of the ladder right down to the shop floor.

Where previously there had been nine reporting levels, with a great deal of inefficiency in between, these were reduced to just five. “As a result, communications are now cascading downwards

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B AT S o u t h A f r i c a

“Heidelberg was the factory chosen to take the volume resulting from the closure of the factories in Angola and Paarl here in South Africa” very efficiently, and our speed of decision has increased markedly.”

Several initiatives were introduced to provide an efficient route for communications within the factory. The first was the launch of a factory magazine, purely for the staff at the Heidelberg plant. Plasma screens were installed at strategic points around the site, and these are updated regularly with information on a wide range of topics that relate to the staff and operations. And

finally, Meyer now holds regular staff business briefings and breakfast sessions.

Through a bottom-up approach with the implementation of an ‘open door policy’, any employee was encouraged to get in touch with management at any time. Reward and recognition schemes were also used to support the cultural change in the factory, such as the introduction of a non-management bonus system, weekly heroes awards and free lunch for all staff on safety

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B AT S o u t h A f r i c a

Nampak Corrugated Nampak

Corrugated

is

a

leading

supplier

of

corrugated trays, containers, sheetboard, and specialist products for some of South Africa’s most prominent branded products across all market sectors

and

industries.

Nampak

Corrugated

offers unrivalled service through the supply of specialised

equipment,

packaging

design,

and

technical support. To be the most reliable supplier of corrugated solutions to all customers, Nampak Corrugated focuses on the various market sectors’ very specific needs, establishing close working relationships and developing packaging solutions that work best where they are needed most in any given supply chain.

records which also played their part in achieving a better EHS awareness across the factory. External recognition was also given through a local quality award in South Africa; and internationally, through receiving two global BAT EHS awards in one year.

Changing the culture within the organisation, however, has not been easy. Everybody in the organisation was put through change management training, suitably entitled ‘future fit training’.

“At the workshops they were able to voice their concerns, but they were also told that change is something that is part of life, and it was up to them whether they saw it as positive or negative.

Essentially we were preparing them for the future.”

From 2008 onwards, Meyer introduced a completely new leadership team who brought with them a new set of attitudes and plenty of experience. By also utilising managers from other BAT countries, the increased diversity in the factory had a positive impact. “This helped expand the horizons of local management, showing them that things can be done differently, and that it is crucial to change.” Meyer then began to introduce a new style of management that would enable the company to function at a flexible world class level.

The key to achieving the necessary changes successfully, Meyer believes, comes down to ensuring that all managers follow the same agenda and buy in to it. They were being expected to change their management style, to communicate reasons and expectations with staff rather than

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B AT S o u t h A f r i c a

“Before expansion we had around 150 stock keeping units (SKUs). Now, we have doubled that amount and produce around 300 SKUs” simply issue orders, and to give full and fair feedback on performance across the entire spectrum of behaviours, from recognising people for good achievement through to disciplining employees if they did something seriously wrong.

“The workforce, on the whole, found the changes very positive,” Meyer comments. “They were receiving the information they needed, they received feedback on performance, and saw that the disciplinary measures were not only executed on the lowest job grades but were also applied to management staff. And this made the system a lot fairer across all departments. Our biggest challenge was with the middle management.

Some managers were just unable to cope with the new leadership style. And we have had to make some really tough calls,” he says.

A major element in bringing about improvements in performance has been the design and

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B AT S o u t h A f r i c a

Argha Argha is the pioneer in BOPP film manufacturing in Indonesia. Established in 1980, the company has expanded its production capacity and product range to keep pace with market growth and product technology development in the flexible packaging industry.

We have a long history of successful innovations, quality products, technical services and reliability, an accomplishment resulting from technical knowhow and a dedicated tobacco team embodying professionalism at its finest.

Our strong local and international presence in cigarette industries has enabled Argha to fulfill increasing demand from major business partners. The most prominent of these markets is BAT Group worldwide, which has been supplied for almost two decades.

Todwil The Todwil Group was formed in South Africa in 1947 and has had a proud association with BAT and its predecessors since becoming involved in the launch of Peter Stuyvesant in 1952. The much-evolved business is now one of the largest approved suppliers of retail marketing, POP & promotional items to BAT South Africa whilst also providing services to BAT end markets across the African continent.

implementation of a comprehensive training regime, not only to provide the knowledge and skills to perform to world class level but to maintain performance at that standard. “And this is very much a long term exercise. We’re currently investing heavily in developing our people across all areas of the business,” Meyer says. “We are, for example, sending staff abroad to the machinery suppliers for training. We’re also regularly sending staff to other BAT factories such as Singapore, Brazil and Mexico for training and experience.

But most importantly we’re migrating from the old paradigm where operators would receive initial training and nothing more, to receiving refresher training on an ongoing basis.”

Recognising the importance of morale, Meyer

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B AT S o u t h A f r i c a

has also focused on instilling a sense of pride and belonging among the staff. “I firmly believe that if people have a personal connection to their workplace and their job, they will give their best performance,” he says.

He has therefore been investing a considerable amount in refurbishing the factory’s social rooms, upgrading and redesigning the canteen, and changing the look and feel of the factory by, for example, installing pictures of the staff on the walls. And he had a lot of ground to make up: staff morale had been dire.

In 2006 the Heidelberg staff had taken part in the Your Voice survey, a regular

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B AT S o u t h A f r i c a

group-wide survey analysing the climate of opinion and morale among the staff at each of its sites. “We recorded one of the worst results ever, within the group,” Meyer says. “Today, our staff score us higher than many other fast moving consumer goods international companies here in South Africa, which marks us as an employer of choice in the country. And that has been a massive culture change in just three years.”

Meyer is keen to avoid any sense of complacency, though, and is working to ensure the improvements continue. “We are well ahead of our original 10 year masterplan, but I believe we’re only about 50 per cent of the way to our final destination. We’ve made tremendous progress, which is fantastic. Also by introducing IT systems like the MES (manufacturing execution system), scheduling tools and the warehouse management system, the processes and controls improved significantly in the factory and were a key enabler to deal with the increased complexity and at the same time improve product quality. Now it’s a matter

of fine tuning the processes, the performance, product quality and customer service, and making it sustainable. And we’re still not as competitive as the top class factories in Latin America and Eastern Europe,” he warns, “so we still have room for improvement.”

For BAT SA, improvement and change are likely to remain an essential element of working life. The current group trend is to centralise many supply chain processes and management at a regional level. For the Heidelberg plant, that means reporting lines and processes such as procurement, production planning and logistics are being transferred to the regional supply chain in the UK. But with a flexible working culture and staff accustomed to taking change in their stride, Heidelberg is well prepared to implement the changes, adapt and flourish. www.batsa.co.za

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Everyth

underroof one

In 2010, Brussels saw the launch of the Viage Entertainment Center.

Managing director Andrew Webb tells Andrew Pelis how the casino and entertainment venue has quickly established itself as a successful venture and benefactor to the local community

B 56

russels has long been held up as a doyen for international business. While that remains the case, a recent splash of glamour has seen entertainment become en vogue with the arrival last year of the Viage Entertainment Center.

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Casinos Austria International: Viage

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Casinos Austria International: Viage

ADT Fire & Security Viage, the most important entertainment facility in Europe, has chosen ADT Fire & Security as security partner. ADT is responsible for the installation and maintenance of the intruder alarm, access control, audio and CCTV system in the Viage facility of the CAI group. ADT is a reliable partner for today’s and tomorrow’s security of your business!

ADT. Always There.

Viage offers the complete one-stop-shop for those seeking a sophisticated choice of entertainment options in Belgium’s capital, providing the full casino experience, food, drink and live entertainment. Part of Casinos Austria International (CAI), it launched in Brussels last year amid the despondency of the global economic downturn.

The casino, which has relocated from CAI’s Grand Casino Brussels, was the cornerstone of an ongoing urban regeneration programme. It has quickly become established as an integral part of the area’s economy, contributing the largest amount of tax for any business in the greater Brussels region and employing 370 full-time staff, with many sub-contractors and local suppliers also involved in operations.

Twelve months on and its managing director Andrew Webb oversees a spectacular empire offering clients a variety of gaming and entertainment options, including Latin music clubs, classic theatre, several casual dining options and bars, a concert venue that plays host to artists such as Prince and Kool & the Gang, and a gastronomic restaurant—all spread across 14,000 square metres on nine levels in the heart of downtown Brussels. Viage also caters for the city’s thousands of business visitors by offering state-of-the-art multimedia and conferencing facilities for functions.

“In our first year we played host to roughly 350,000 people, which worked out at about 1,000 people a day,” states Webb. “We are now up to 1,100 visitors each day, not including the 300 to 500 customers coming to see a show or to dine.”

Webb says that the €43 million development

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Casinos Austria International: Viage

TCSJOHNHUXLEY TCSJOHNHUXLEY are proud to support Casinos Austria International. Working closely to meet the needs of our customers, we combine manufacturing excellence and innovation to deliver everything for the casino of the future.

Operating from strategic locations in all major worldwide gaming jurisdictions, TCSJOHNHUXLEY delivers profitable solutions to international casino operators through the most comprehensive and complete portfolio of products.

Whether it’s traditional handcrafted or cutting edge largest

technical

products,

international

as

casino

the

supply

world’s company,

TCSJOHNHUXLEY can truly claim to provide casinos with a complete turnkey solution.

ÀRTER The ÀRTER Design Studio has built a reputation in highly complex projects in the entertainment field, such as casinos, theatres, hotels and restaurants. A multi-disciplinary team of 115 designers, graphics, architects

and

engineers,

acousticians,

theatre

experts and project managers has delivered over the last 20 years designs and turn-key projects all over Europe and Northern Africa. With its 14 in-house languages, the ÀRTER Studio can operate globally.

is likely to change in appearance over the next few months, as Viage reviews the feedback it has received from visitors. In the meantime, he already has his sights set on new challenges. “We had our ‘soft’ opening in March 2010 when the gaming zones were operational, ahead of our grand launch in April. Our gaming zones (we have six different zones, including 39 gaming tables, 365 slot machines, live bingo and sports betting) take up about a third of our floorspace and accounted for about 90 per cent of our revenue for our opening year; but we are looking to reduce that as we grow our revenues across the business.”

That includes changing the perception of casinos held by some sceptics used to reading negative headlines. Webb says that a concerted advertising and public relations effort, strategically targeting the Flemish- and French-speaking audiences with different messages, is beginning to pay off. “We eventually want to see gaming having a reduced impact on total revenues as people’s perceptions change and they realise they can visit us in the centre

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Casinos Austria International: Viage

of Brussels just to eat or attend a show,” he explains.

“We are always looking to target ‘Middle Belgium’—the recreational gambler who will arrive at our venue, eat, take in a show and perhaps gamble. We think there is an untapped market here and we are striving to overcome the traditional taboos and negative impressions. We want to break down those psychological barriers with a high-quality offering that gives people a choice. We like the fact that people can spend money across the various facilities and that they

are aware that they are under no obligation to play in the casino environment.”

Webb says that Viage’s efforts to change perception are beginning to bear fruit. “We were given permission to drop the Casinos Austria International badge and use Viage; and we have appeared in over 454 press cuttings in Belgium alone in the last 12 months,” he states. “Right now we are going through a total impact assessment and should have the results by March; but I can say that in 2010 there was national brand awareness reaching 27 per cent of the population.

“We are now developing refreshed communication messages and need to go back and see what the market understands about us and what it thinks of us. After nine months of operations, we understand that some of our components have worked well while others haven’t; and these will be reconfigured this year, resulting in some physical changes to the property.”

Of equal importance will be the new Belgian Gaming Act laws, which will determine the parameters for

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online gaming. It is an arena that Webb is keen to tap into and a major marketing campaign is currently on hold pending the announcement of what online gaming hosts will be expected to provide.

“We are already a significant player in Brussels,” Webb indicates, “but it is widely acknowledged that casinos across Europe have been in decline in recent years as customers have never had so much choice with their income—in addition, laws in Belgium were made to protect vulnerable players. This, for example, has an impact on how many slot machines we are allowed and limits turnover, so the introduction of online gaming will provide exciting new opportunities.

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“We eventuall revenues as peo us

Casinos Austria International: Viage

ly want to see gaming having a reduced impact on total ople’s perceptions change and they realise they can visit s in the centre of Brussels just to eat or attend a show�

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Casinos Austria International: Viage

“Once the operating protocols [for online gaming] are in place we will be ready to launch; we are more or less there but we need to see the legislation before we make any major investments in hardware or software programs,” Webb continues. “For the time being we are looking with the Gaming Commission at how that market will shape up, before we start our major advertising campaign.”

Viage, derived from the Italian word viaggio, meaning journey, has certainly been a rollercoaster ride for the past 12 months. The facilities have already played host to international pop star Prince on two occasions and Webb is currently in the process of lining up other major acts for 2011. “In Belgium, there is a significant leisure market, but it can be quite splintered and boutique-focused,” he says. “With a wide range of international quality entertainment choices under one roof, we are a unique destination in the heart of Europe.” www.casinosaustriainternational.com

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Powering

a

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g

Electricidade de Moçambique

aspirations Mozambique has emerged from the hardships of civil war to become a fast-developing economic nation. That growth is hugely dependent on electricity; and this has put pressure on national supplier Electricidade de Moçambique to expand, as Carlos Yum, director of the Corporate Performance unit and Business Development, explains to Andrew Pelis

A

fter years of civil war, Mozambique is a country on a mission to develop into a 21st century economic powerhouse. Power supplies play an important role in building a sustainable future and central to that drive is Electricidade de Moçambique (EDM), the state-run electricity supplier.

EDM’s past, present and future are intrinsically linked to politics in the southern African country. The company was established in 1977, just two years after Mozambique gained its independence from Portugal, and was transformed into a public company in 1995, following economic restructuring.

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Electricidade de Moçambique

At the time of its launch, EDM faced a mountain of operational challenges to deliver a trio of objectives aimed at generating, transmitting and distributing electricity to a growing nation. While that may have seemed a straightforward plan, achieving these goals was anything but easy in one of Africa’s largest countries, which spans an area of 800,000 square kilometres.

Throughout the 1970s and 1980s, EDM embarked on an extensive programme to rebuild and expand transmission lines across Mozambique, many of which had been destroyed, simply did not exist, or did not link the regions prior to independence.

lines to enable the electrification programme to be implemented.”

One of EDM’s main projects was the creation of the Central Northern transmission system that connected all the central and northern provinces with more than 1,000 kilometres of transmission lines. The company also developed a 500 MW interconnection power line between Mozambique and Zimbabwe, as well as an interconnection to South Africa and Swaziland through the Motraco System.

A shortage in qualified technical staff in the early days presented a further problem for EDM, resulting in the creation of an in-house training department

“One of our first jobs was to merge all of the generation centres across the country and create a centralised system as industry and household consumption increased,” explains Carlos Yum, director of the Corporate Performance unit and Business Development at EDM. “Before and during the war, the south of the country used a lot of coal power and the transmission grid was still very limited with lots of diesel isolated generation schemes. We therefore had to extend transmission

based in Maputo and Chimoio, which to this day provides training in areas such as management, customer service and commerce, as well as technical skills. “The planning of courses is usually carried out by each business unit, according to present and future needs,” says Yum. The establishment of a national electricity transmission network has laid the foundations for hydroelectric power in Mozambique; and financial support from overseas investment has helped

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to bankroll a number of key projects to aid the growth of power supply. The investment is timely, as Mozambique has an abundance of natural energy resources, including approximately 10,000 MW in the Zambezi valley alone (hydroelectric); and there is also coal potential beyond 4,000 MW. EDM itself is facing ever-increasing power demand every year as the country’s economy grows, which puts added pressure on its operations. “A national effort has been made to expand and intensify new household connections; and by the end of 2011 we expect to have over one million customers,” says Yum. “At the same time, over the last three to

“A national effort has been made to expand and intensify new household connections; and by the end of 2011 we expect to have over one million customers” four years we have seen the arrival of a number of industrial customers who require medium and high voltage supply which has needed us to deliver on reliability and quality of supply as well.

“Overall demand is growing on average by 15 per cent each year and we expect this to continue for at least the next five years. That puts pressure on how we deal with customers commercially as well as our approach to infrastructure improvements and medium and long term development plans.”

In order to develop resources, mainly for export, the government of Mozambique has launched several major initiatives, including the development of generation projects and an extra-high voltage transmission system for the evacuation of power to neighbouring countries within the Southern African Power Pool.

In this environment and tasked with raising capital, EDM recently received a commitment from the World Bank of US$100 million, and the European Investment Bank of up to €100 million.

Part of the funding is currently being used to finance the project’s development activities, including a strategic regional environmental and social assessment; a strategic regional environmental and social framework; an environmental and social impact assessment; a technical and economic feasibility study; and an institutional capacity assessment and capacity building programme.

Meanwhile, to meet current demand, EDM operates two isolated power systems—the Central Northern system and Southern system—with a total installed generating capacity of 233 MW nominally; plus a 2,075 MW hydroelectric power station at Cahora Bassa, which sells electric power mainly to EDM and Eskom.

Operations at Cahora Bassa are working at higher capacities following the restoration of the transmission link to South Africa, while other large hydroelectric plants in Mozambique have continued to operate at less than full capacity including Mavuzi, Chicamba and Corumana. The challenge is to increase that capacity, which Yum says is where so much of the current planning and investment is concentrated.

“There is pressure on both infrastructure and operations,” he says, “and we will have to look at greater automation in the future as our customer base becomes bigger and more mature. The challenge will be our institutional development and infrastructure; and we have to attach financing issues to this when making long term decisions. It is a good problem to have, mind you.”

Over the next five years EDM is looking at an investment programme that will extend beyond US$500 million in both a domestic and regional context. “This will not only be spent on new infrastructure but will also reinforce existing

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DataServ DataServ, Sistemas Informáticos is one of the biggest IT companies operating in Mozambique, both in Maputo and Beira, the two largest cities in Mozambique. We proudly belong to the top 100 Mozambican companies. We provide all kind of IT equipment, services, consulting, technical support and maintenance contracts. We are HP Preferred Partners, a Cisco Selected Seller and a Microsoft Gold Partner.

systems (like our Maputo and other main important load centres and distribution network) to help improve reliability and quality of supply,” says Yum. “In fact those issues will be very much the focus of our day-to-day activities and our management and financial decisions. We will also look to connect new distribution points to the

network including a second line that connects the Centre to the North system—that is now undergoing a feasibility study.”

With so much infrastructure improvement already underway, Yum is conscious that EDM does not lose sight of the importance of renewable energy, which he feels will play an important role in the future.

“The renewable segment is one we have started to look at and is a relatively new issue to consider. We foresee that the need to generate renewable power is inevitable; and we are currently reviewing our options and opportunities. We will need to look at this issue from an economic perspective and also the impact this will have on supply. We also need to focus on developing more hydro.

“At EDM we have a saying: ‘With energy we build the future’. With considered investment we will continue to help support and develop Mozambique’s economic future,” he concludes. www.edm.co.mz

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C

Across Southern Africa the economic downturn has hampere crucial infrastructure, resulting in power shortages across the when demand for power continues to escalate. Being no stranger Botswana is now turning to companies like Asenjo Energy quantities of coal. Chief operating officer Malcolm Campbell talks 76

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Coalthe is

d efforts to build region at a time to this scenario, to utilise its vast s to Andrew Pelis

P

goalÂ

rospecting can be a frustrating activity, particularly when having found resources, the only obstacles standing between a full return on investment are time and more capital. Such is the challenge facing Asenjo Energy and the Southern African country of Botswana.

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Botswana is a country under pressure to sate a growing power demand that is increasing at an annual rate of 5.5 per cent. At present it operates one 120 MW power station at Morupule and imports power from South Africa.

That agreement ends in 2012, and will leave the country with a huge power deficit should the planned 600MW Morupule expansion project be delayed for any reason.

“The answer is to better utilise Botswana’s large coal reserves,” asserts Malcolm Campbell, chief operating officer at Asenjo Energy. “The present situation is expensive for the country at a time when diamond reserves (one of its main natural resources) are starting to run low, so

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“The Government is very transparent and helpful when it comes to prospecting for coal—which is precisely what we have been doing”

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Analytika Holdings Analytika Holdings is a Botswana-based company that has undertaken a wide range of coal and other exploration projects such as base metals, gold, diamonds, uranium and industrial minerals for clients in Botswana and the SADC region.

We are recognised experts on the coal deposits of Botswana and our extensive experience has been instrumental in the discovery of several new coalfields in the country. Our involvement has included project management, provision of field geologists for drilling supervision, core and geotechnical logging and soil sampling programmes.

Our experience includes not only coal but coal bed methane and underground coal gasification.

we are looking at what other natural resources we can use to bolster the economy. The Government is therefore very transparent and helpful when it comes to prospecting for coal—which is precisely what we have been doing.”

To date, Asenjo Energy, a joint venture equally owned by Jonah Coal Botswana and Aquila Energy Holdings (Mauritius), has invested in the region of US$10 million on exploration and technical studies in five areas of the country, with the primary objective of finding coal and defining the resource. The projects incorporate Dukwe in the north-east of Botswana, Lechana and Tshimoyapula in the east and two projects in the south known as Eastern and Western Mmamabula.

“We began work in November 2007 having obtained five prospecting permits from the Government,” Campbell explains. “We started with a three year permit covering over 2,200 square kilometres of terrain, with the express goal of identifying the best of the sites to develop a local mine and power station.

“We have drilled at all of the sites and were fortunate that we were operating in US dollars at the time that the South African rand and local currency capitulated—this allowed us to drill more than we had originally planned.” Of the five projects, Asenjo has identified Dukwe as the most suitable location for the first coal mine, and is now starting to look at full feasibility of the project.

Campbell says that part of the agreement

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in place with Botswana’s government is that Asenjo is allowed to renew its permits twice, for extended two-year periods, but that the company has to relinquish 50 per cent of the land each time. The company therefore now has rights to approximately 1,336 square kilometres of land and estimated coal reserves of 10 billion tonnes.

“At Dukwe we have identified that the quality of coal is acceptable for a thermal power station and capable of producing a high grade, although there is no metallurgical or coking coal there. It is in fact very similar to the coal used in thermal power stations in South Africa.”

While there is the option of open-cast mining at the other four sites, Campbell says Dukwe would be mined entirely underground, from a seam identified 60 metres down in the eastern fringe and reaching a depth of 200 metres below the surface further west. “With appropriate funding, we could have Dukwe fully operational as a coal mine (next to a 300 to 600 MW thermal power station) in as little as three to four years’ time. We have already conducted a pre-feasibility study and the mine is designed to produce three million tonnes of coal per year for the next 40 years,” he states.

“Our four other sites also offer enormous potential and we have advised our shareholders that these should not be disregarded in the future. We have in fact put a proposal to the Government for the development of two power plants, the one at Dukwe and a second 20 to 50 MW station at Lechana. The sites down south have huge resources and could support 10 mines producing up to five million tonnes of coal per year for 50 years.”

Campbell says that the core challenge for the development of the Mmamabula areas, which offer enormous export potential, is the creation of a reliable and efficient transport infrastructure.

That will require significant investment from the Government and possibly from overseas funding; but progress is now being made on that front.

“The Botswanan and Namibian governments have started procedures by requesting expressions of interest for the development of the Trans-Kalahari Railway and a related port,” he explains. “There were 35 bids originally and any such link would be significant for our southern development, as the export market is potentially very lucrative. However,

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Asenjo Energy

that is still eight to 10 years away from becoming a reality as things stand. There is also a proposed rail link between Zimbabwe and Mozambique which would enable access to further export facilities in Mozambique and it is expected that the first rail operations will begin in 2015.”

Funding for Asenjo’s plans is equally essential to safeguard the progress it has already made, and now occupies increasing amounts of Campbell’s time. “We are funded through to where were are now and the original idea was to do an IPO to fund our final feasibility studies, before the [global] economic problems ensued.

“Instead we are now pursuing potential investors from countries like China and India and there seems to be a huge amount of interest,” he states.

“The amount we have spent so far is perhaps a twentieth of what we will need to become fully operational; and we are then looking at five to six years of activity before we realise a return.”

Nonetheless, Botswana represents an attractive opportunity for mining investors, with a stable investment environment, low corporate taxes, robust mining legislation and substantial and largely untapped quality coal resources. “It is a pleasure doing business here,” says Campbell.

“The Chinese and Indian investors are always on the hunt for resources for themselves and realise that to achieve this they need to invest in infrastructure, particularly in Africa,” he continues.

“I’m spending more of my time travelling to meet potential investors although many of them prefer to visit us here and travel to our corporate office in Gaborone. We are very hopeful for the future.” www.asenjoenergy.com

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Energy for the

future As African economies develop, many nations have learnt the value of maintaining links to their former colonial pasts. In Mozambique, the Cahora Bassa Dam has delivered energy across Southern Africa for over 30 years. Andrew Pelis explores how HidroelĂŠctrica de Cahora Bassa has managed to maintain supplies through a turbulent 30 years, with a little help from Portugal

A

cross Africa the legacy of a colonial past can be seen in everyday life. While many aspects of former regimes undoubtedly led to hardship and misery for millions, one enduring feature has been the infrastructure left behind.

A prime example of this is the Cahora Bassa Dam in Mozambique, built during the Portuguese occupancy in the late 1960s and early 1970s. Despite its relatively short lifespan, this icon of colonialism has survived a civil war, sabotage attempts, financial disputes and international political unrest.

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Hidroeléctrica de Cahora Bassa

“The Cahora Bassa Lake, at 250 kilometres long and 38 kilometres wide, and covering a flooded area of 2,700 square kilometres, is the fourth largest artificial lake on the continent” In November 2007, a sale agreement saw the Mozambique government take control of the company which built and subsequently maintained the dam, Hidroeléctrica de Cahora Bassa (HCB), from Portugal. Mozambique paid $700 million for a 67 per cent shareholding in HCB, which later increased to 85 per cent, while Portugal retained a 15 per cent stake. The deal brought closure to a decades-old dispute between the two countries over the rights to the company.

The dam itself represents the largest hydroelectric power scheme in southern Africa and the Cahora Bassa Lake, at 250 kilometres long and 38 kilometres wide, and covering a flooded area of 2,700 square kilometres, is the fourth largest artificial lake on the continent.

The project to build the Cahora Bassa system

began in 1969 and took 10 years to complete, with HCB focusing on generating, transmitting and selling clean electricity. The Mozambican Civil War raged for 15 years from 1977, and during this period the dam’s transmission lines were regularly sabotaged to the extent that 1,895 towers needed to be replaced and 2,311 refurbished over a distance of 893 kilometres on the Mozambican side of the line.

The dam’s original construction plan had involved South Africa in an agreement that decreed Portugal would build and operate a hydroelectric generating station at Cahora Bassa as well as a high-voltage direct current (HVDC) transmission system delivering electricity to the border of South Africa.

As the civil war came to an end, HCB selected South African organisation Trans-Africa Projects (TAP) to carry out construction management,

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quality assurance and design support service for the rehabilitation of the project. Restoration work began in August 1995 but was hampered by the combination of difficult terrain and areas populated with live land mines, while heavy rainfalls also impacted the programme to restore power lines.

Today, the dam system that HCB operates on the Zambezi river system contains five 415 megawatt turbines, with most of the electricity generated at Cahora Bassa being sold to the South African power companies.

Last March, the Portuguese prime minister José Sócrates announced that Portugal intended to sell its remaining shares in HCB. His speech was made during a visit to the dam town of Songo, where he stated: “We are thinking of selling our share in HCB, in a partnership between Mozambican and Portuguese companies.”

Sócrates explained that the move, far from severing links with HCB, would help to develop operations through corporate links that would transfer technology to Africa. “It is important that Portuguese companies remain associated with

HCB, because we shall develop HCB together with the Mozambicans.”

The decision came at a time when HCB had reached record levels of hydroelectric production.

In 2009 the company produced 16,574 gigawatt hours, an increase of over 12 per cent on the previous year and a level that raised 8.3 billion meticais in revenue. The improved output was very much the result of having access to more generator sets and better transmission and conversion systems—a legacy of the refurbishment work carried out at the power production station in the previous three years. HCB has also benefited from South Africa’s focus on infrastructure development which included refurbishments at its Apollo power station, to where almost 80 per cent of the Cahora Bassa power is delivered.

Commercially, the company is well positioned to help resolve southern Africa’s energy shortage crisis. Mozambique has the second largest capacity to produce clean energy in the region, making companies like HCB potentially attractive investment partners for Portuguese businesses,

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Hidroeléctrica de Cahora Bassa

Efacec Efacec is the biggest industrial Portuguese group specialized in areas such as energy, transport, engineering, environment, services and renewable energy. With over 4,800 employees and €1 billion in turnover, the company is present in over 65 countries in all five continents. Efacec’s experience allows it to provide services with high-quality standards and its team of experts offers vertical service integration to a vast customer base.

Efacec has had close cooperation with Hydroelectric Cahora Bassa since this company requested Efacec to repair two damaged large power transformers, which were preventing HCB from exploiting its maximum power supply capacity. The effectiveness of both the diagnosis and proposed solution allowed HCB to promptly put these indispensable machines back into service. Efacec continues to have several maintenance, refurbishment and repair contracts for over 50 power transformers located in the facilities of HCB, in Songo-Mozambique.

although there is room for increased production.

One area that HCB is looking for partnership in is the funding of a new project to build a North Bank Power Station. At present the maximum production capacity at Cahora Bassa, through South Bank Power House, is approximately 17,000 gigawatt hours, but the addition of another station would increase revenues for shareholders and importantly help to alleviate some of the power shortage.

Commenting on the idea, Paulo Muxanga, chairperson of the board of directors at HCB said: “The North Station project constitutes the only way for us to increase the power production capacity within our firm. The indicative figures that exist at this time show that close to 800 million dollars are needed for execution of this project, such that it is natural that we speak about it in Portugal, to the end of interesting potential partners—banks and other Portuguese firms working in the energy sector. In fact this is one of our objectives, to make known what the North Station is and in what stage we find ourselves, in order for us to see how to undertake this project.”

Initial work on the project has already begun, with two technical studies assessing the hydrological and geotechnical impact of building

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“Mozambique has the second largest capacity to produce clean energy in the region, making companies like HCB potentially attractive investment partners for Portuguese businesses” the North Station, which would add approximately 1,200 megawatts of capacity for HCB. In the meantime, Muxanga said the company is working on other areas of infrastructure improvement: “Another project is the refurbishment of the dam spillways, (for which we have funding in place) which will continue up till 2013/14. We also have a sub-station project, which is budgeted at 100 million euros and which aims to improve the reliability, availability and maintainability of the sub-station which is responsible for conversion of the generated power and thereafter transmits it in HVDC (high voltage direct current).

“It is also necessary to determine the state of the lines. We have around 1,400 kilometres of

line—from Songo down to Apollo Inverter Station in South Africa. The state of the lines isn’t the best, because they were vandalised during the civil war in the country over their 800 kilometre length, per line (the transmission system up to South Africa is made up from two lines).”

The final word on HCB goes to Portugese prime minister Sócrates and reaffirms those colonial links. Having set aside $124 million from the purchase price of the company to establish an investment support fund, Portugal will now use the money to develop alternative, renewable energy sources. “With money from the past, we are going to build the future,” Sócrates commented. www.hcb.co.mz/eng/

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EnviroGold has blended a unique technical process, Australian business and mining expertise and an effective resource development strategy to create the promise of profit, as John O’Hanlon discovers

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nviroGold was originally listed on the Australian Stock Exchange in 2006 to exploit serious commercial opportunities in gold, and has a market cap today of around A$58 million. Its founder and executive chairman Brian Johnson has a track record in construction and mining industries, and has been on the board of two listed gold producers. He is also a major shareholder in EnviroGold Limited. His aim: “To build a company that is producing over two hundred thousand ounces of gold a year. The objective is to get to over $100 million profit after tax within the next three to four years.”

Quite a goal, but one that can be achieved from the company’s three current active projects. Gold may be doing well on the metal markets and attracting investors but as Johnson points out, there is plenty of competition for the high-risk dollars needed for development of an emerging producer: you need a credible strategy, a capable team and something extra to engender confidence in these nervy markets.

EnviroGold has all of these.

EnviroGold’s espousal of the Albion process for oxidising refractory ores could be its USP. Refractory in this context means something like ‘refractory schoolchild’— one that it is difficult to get anything out of by normal means. The Albion process developed by Australia’s MIM Holdings before it was acquired by Xstrata is not the only way to release gold from the clutches of the rock that surrounds it; but it is the best for medium scale operations, Johnson believes. “MIM developed ultra fine grinding of ores using IsaMill technology, and the Albion process is an extension of that. It is quite straightforward: a series of stainless steel tanks that are agitated and injected with large volumes of oxygen. Toxic materials are removed from the solution; it then goes into a standard leach extraction process.”

Johnson likes the process for two reasons: firstly, the availability of Xstrata’s highly sophisticated pilot plant in Australia, which can be used to determine how applicable the process is for a particular ore; secondly, because it allows EnviroGold to pin down the probable yield from difficult or complex ore bodies.

Accuracy of this sort is more than a convenience—a robust estimating system convinces shareholders that their money is in the right place. EnviroGold doesn’t have an exclusive right to the Albion process but it is the first company, Johnson believes, to licence it and apply it commercially.

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in

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Zincobre Zincobre is determined to become the unique worldwide

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in

the

non-

ferrous field. It has been a pleasure to have the opportunity to collaborate for Las Lagunas Project where Zincobre has designed and supplied one cooling

tower,

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(Patent

ES2010/070781). Discover our know-how and proprietary equipments and allow us to share our added value with you. www.zincobre.com

can be fed from other mines in the area.

Las Lagunas is small as gold mining operations go, but it is sweet. With no mining risk, EnviroGold has already sold 30 per cent of its forward production at $1,358 per ounce: at an operational cost of just $334 an ounce, this represents what Johnson modestly calls a robust business—even if the price of gold weakens in coming years.

A chance like this comes along very rarely and the company’s business model definitely doesn’t depend on cleaning up other people’s tailings.

The next project is in Ecuador where EnviroGold has acquired a 65 per cent interest in two small

“The objective is to get to over $100 million profit after tax within the next three to four years” EnviroGold’s initial venture has to be uniquely attractive to investors. In 2004 it won the right to process the high grade tailings from the Pueblo Viejo gold mine in the Dominican Republic, for many years the most productive in Latin America.

Tailings are generally the rubbish dump of the mine, says Johnson, but Las Lagunas (as the project is named) was different. “In 1992 Rosario, the Dominican state controlled mining company, exhausted the oxide ore [weathered ore near the surface]. It then encountered underlying refractory ore. At that stage it should have added an oxidation methodology of some sort but government investment was not forthcoming so the recovery rate dropped from 90 per cent to around 30 per cent!”

This meant that an inordinate amount of gold was going into the tailings. Realising this, the company built a special dam to retain the material with the idea of coming back in the future and retrieving it. But in 1999 Rosario folded. “We know there is about 621,000 ounces of gold in the tailings dam and 6.4 million ounces of silver.

We will be producing 65,000 ounces and 600,000 ounces respectively each year over the six-and-ahalf year life of Las Lagunas, starting from the end of this year,” says Johnson. After that, he hopes the Albion plant, which has a 20 year design life,

adjacent mines that will be expanded to yield 100,000 ounces of gold annually if test drilling currently being undertaken confirms consultants’ expectations. The Azuay gold project, as it is called, is more complex, Johnson explains: “Half the gold is free milling and fairly cheap to extract, but the remainder is in refractory ore and will require us to apply the Albion process.”

In November 2010 EnviroGold signed a three year option on a 2,200 hectare mining lease near the village of San Gerardo, adjacent to the Azuay project. It is hoped this will add an additional 100,000 ounces to the annual production at Azuay, and drilling is scheduled to start in the third quarter of 2011. This year EnviroGold expects to pay out $1.5 million on exploration at San Gerardo and $4.5 million on the Azuay project.

The experience gained by operating the Albion process at Las Lagunas will stand EnviroGold in good stead when it is applied at the Ecuador properties and over the border in Peru, where it proposes to establish a centralised Albion plant to process ore brought from a number of existing mines in the foothills of the Andes, in a safer and more environmentally friendly way than would be possible in the mountains.

When operating in Latin America it obviously helps to speak Spanish, and Johnson regrets

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he never had a chance to learn. That is not the only reason for the appointment in February of a regional director based in Santo Domingo; but it helps that Oscar Alvarado has dual Canadian and Peruvian nationality. Alvarado will oversee the start up of production at Las Lagunas, take technical and administrative control of the Ecuador operations and continue to locate old mine workings with depleted oxide reserves but with residual refractory ore where the Albion process may be applicable. “And now he’s there I can look forward to a slightly less punishing travel schedule between Australia and South America!” anticipates Johnson, who has just returned from a month in the Dominican Republic and Ecuador. www.envirogold.com/site

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Manitou South Africa

going

When the

gets

rough Lindsay Shankland, MD of Manitou, the market leader in rough terrain handling solutions, talks to Jayne Alverca about getting a handle on the heaviest loads in the most awkward places

I

t sounds like a young boy’s dream come true: a single Manitou telescopic handler can lift, dig, load, clean, scoop, tow and carry. But these are not toys for boys. Manitou’s name may be synonymous with versatility, but its range of rough terrain handling equipment is destined for the most demanding applications that industry has to offer.

Manitou is headquartered in France, but has had a presence in southern Africa for almost 40 years and has operated a fully incorporated subsidiary, based in Johannesburg, for over a decade. “Here in South Africa, rough terrain forklifts and telescopic handlers are our main focus,” explains MD Lindsay Shankland. “When we first incorporated we were working principally with the construction and mining sectors, but now Manitou has a much broader reach and we have made inroads into many other sectors.”

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“We are known for selling a superior product with superior afterma backup, 24/7. Manitou is recognised worldwide as the market lead

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Today, Manitou can be found within timber operations, civil engineering, warehousing, timber, mining, construction, steel, agriculture, defence forces, ports etc—in fact anywhere that has a requirement to lift and move heavy items, particularly within the context of a harsh and demanding environment. A typical Manitou Telescopic destined for the construction industry can effortlessly elevate materials weighing from 2.3 to 22 tonnes to 5/25 metres, but it can also perform a host of other tasks. A standard machine is sold with 38 different attachments which can be changed in exactly one minute. Its makers declare that a single Manitou can carry out the work of two to four other machines in a fraction of the time and at a fraction of the cost.

Shankland is unequivocal about the key factor that underpins Manitou’s success in the southern Africa region. “We are known for selling a superior product with superior aftermarket support and backup, 24/7. Manitou is recognised worldwide as the market leader in this field,” he states.

However, it is not enough to sell an excellent product:

productivity is key to profitability in all industries and this depends upon downtime being kept to an absolute minimum. “Our entire focus is on keeping our customers happy from the point of sale throughout the lifetime of their equipment.

Aftersales care is critical and we offer 95 per cent availability of parts on a 24/7 basis for 365 days a year. This is how we sell second, third and then fourth machines,” he says.

As MD, Shankland has strived to create a workplace culture which places the customer at its core. “Our people must be committed to offering the service that we promise the client. If we can get that right, then we cannot fail,” he states.

Shankland also points to the fact that Manitou benefits from a distribution and dealership network that far exceeds those of its competitors.

This means that service is always close at hand, whenever it may be needed.

The company currently operates across the southern Africa region, with dealerships in Botswana, Namibia, Mozambique, Zimbabwe and Zambia. “It is very important to be properly established in the markets we serve and that is why we have extended our dealership network. If a customer is not within reach of a dealer then we will put our own people on site if necessary,” he says.

Uniquely, Manitou has its own fabrication workshop in South Africa. If a customer has a special or unusual requirement, it can be accommodated by customising any standard Manitou machine. Says Jannie Smith, project engineer for Manitou: “We are very innovative in coming up with creative solutions to the challenges

arket support and der in this field”

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faced by our customers. Safety is paramount and always the key factor to any modification we undertake. All our modification work is undertaken in collaboration with the South African Engineering Council to make sure we meet the highest possible standards. Once safety is assured, we are also always on the lookout for ways to make our machines more economical to operate.”

Two machines—a utility vehicle for hard rock mining and a flameproof utility vehicle for soft rock environments—have been specifically adapted for the mining industry in an initiative that began as a local response to a regional challenge, says Smith. Such was the success of the venture that in future these machines will be distributed on a worldwide basis through Manitou.

Each year, Shankland sets a target of penetrating two new markets. This year, he has his eye cast

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towards South Africa’s agricultural businesses, where mechanisation is enabling great leaps in productivity; and also towards the potential for a new addition to the product portfolio.

Manitou France recently purchased Gehl, a highly regarded American manufacturer of the Gehl skid steer loader. This is a small machine renowned for its manoeuvrability in tight spaces; and the Gehl format is at the forefront of performance.

Thorneycroft Dairy Farm is cited as an example of Manitou’s potential contribution to the agricultural sector. The farm has seen reduced maintenance costs and increased efficiency since replacing three tractors with a single Manitou MLT 735 120 LSU, rough terrain telescopic handler. Previously, the tractors were used as loaders but were restricted in reach, slow and costly in fuel. Even worse, they were regularly out of service as their clutches quickly burnt out.

Says Thorneycroft’s Richard Newcombe: “With the Manitou, we can stack more bales of hay or silage higher and faster than we ever could with tractors. It is such an efficient machine that it has reduced the amount of movements needed to load the feeder from up to 30 to four. We are also using much less storage space as a result of being able to stack bales six-high in the warehouse or yard, sealing the inside bales from the elements and so maintaining feed quality.

“On top of all these benefits comes the machine’s versatility,” he enthuses.

“You can hook it up to a trailer and perform tasks normally left to the tractors. The Manitou has improved our overall productivity and reduced operating costs—we offload trucks quicker, and there is no more undue downtime on our tractors, which are now used just for groundwork, harvesting and maintaining pastures.” www.manitou.co.za/default.htm

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Big fix

John Adom, managing director of Balfos Ltd, talks to Jayne Al the company’s diverse product and sales offering as a single s source to some of West Africa’s leading mining and industrial

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lverca about supply operations

Balfos Ltd

S

ince 1995, when the company was incorporated in Ghana, Balfos Ltd has developed and enhanced its sales and service operations to become a single supply point for three of West Africa’s largest mining, industrial and construction countries (Ghana, Guinea and Côte D’Ivoire).

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“Once we have made a sale we want that cus relationship and hope they will want to conti

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Balfos Ltd

stomer to feel they are getting real value from the inue working with us for years to come” The mining industry is the company’s most important market segment, but diversity is seen as a fundamental strength. In addition to the core mining business, Balfos also has customers drawn from wood processing and treatment plants, haulage and transport companies, fabricators, engineering companies and cement plants; and it is now laying the foundation to expand to the offshore oil & gas industries and breweries.

Whatever the application, Balfos is dedicated to helping its customers identify the most appropriate engineering solutions and support packages at the lowest possible cost, but never at the expense of compromising quality or deadlines.

Balfos represents some of the world’s leading manufacturers of heavy equipment destined for the toughest and most demanding environments.

World renowned brands the company supplies include Powerscreen, Telestack, PC Pump and UK Steel; and Balfos is now offering the products of the Polaris range of transport solutions, as well as Oro Industries and Terex Construction.

“What sets our approach apart is our determination to see projects through to the end,” states managing director John Adom, who has worked with the company for 13 years and is based at the main office in Obuasi, Ghana. “Our approach is very, very thorough, from identifying and really understanding

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our customers’ requirements to ensuring that we provide them with the best possible solution at the most competitive price.”

Adom wants long term working relationships: the aim is for partnerships that will produce a ‘win-win’ scenario for both parties. “We try to be as flexible as possible on price. Obviously we have to retain a certain margin, but we recognise that customers want the best deal possible. On our part, once we have made a sale we want that customer to feel they are getting real value from the relationship and hope they will want to continue working with us for years to come.”

He explains that after-sales support is a critical element of the company’s service offering. Productivity is key to profitability—if a vital piece of machinery is not functioning properly, then it can quickly

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“We try to be as flexible as possible on price. Obviously we have to retain a certain margin, but we recognise that customers want the best deal possible” lead to significant losses. Hence, the approach that Balfos has adopted is one that embraces the complete product lifecycle.

After-sales care is centered on a fully equipped workshop in Obuasi which is stocked with a range of spares; support from the equipment manufacturers; and a workshop, equipment and tools designed specifically to maintain in optimum condition the machines and products that Balfos sells. “Our target, which we take very seriously, is that the equipment we sell is fully operational for 95 per cent of the time,” Adom continues. “Once we have sold an item of machinery, it means we have already made an estimate of the parts and spares it will require over a given time period and we make sure that these are always available.” To complete the circle, Balfos now plans to re-purchase and refurbish used plant and equipment that will either be re-sold or hired out on a contract basis.

Powerscreen, based in Northern Ireland, supplies many of the bestselling product lines in the Balfos portfolio. The company has decades of experience as a specialist in the design and manufacture of mobile crushing, screening and washing equipment destined for the aggregate, mining, recycling and contract industries. All of its

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products are designed to operate in the toughest environments and feature minimum set-up times and excellent reliability to give the market’s best recorded productivity rates. “Powerscreen is one of our most important suppliers. We work with companies like this for a simple reason,” states Adom. “Our customers tell us that they supply the best equipment on the market and they are very happy with the performance they get from the machinery they purchase. That is what we aim for above all else—complete customer satisfaction.”

However, while the mining industry in West Africa is generally buoyant, it is inevitably capitalintensive, requiring a heavy initial capital outlay.

Moreover, some mines have very short term specific projects and equipment may only be needed for a period of a few months, and therefore contracting out has obvious cost benefits over ownership.

Balfos intends to address this issue by expanding its role as a contractor. It can already point to a track record of successfully completed projects with customers like AngloGold Ashanti.

“They needed their ore crushed to a precise and exact grade and we were able to provide this very successfully on their behalf. Now we want to expand this capability,” Adom says.

Balfos Ltd

Developing a contracting arm is one of several strategic approaches to building on the existing business. Steel is fundamental to most heavy industrial applications and in the past, Balfos had a strong relationship with Macsteel to supply steel plate for many different types of fabrications. “It is an aspect of the business that lapsed in the last three years to be replaced by UK Steel, but now we are very keen to revive them both,” he asserts.

Balfos has also entered the market to supply solar equipment to meet both government and industry’s rapidly growing energy needs in West Africa. Solar powered road and street light lighting, for example, is a major growth area throughout the African continent and has enormous untapped potential. It is a move that Balfos believes will help support the environmental objectives of customers, as well as slashing their energy bills.

In another shift towards the government

sector, the company is currently exploring the opportunity to work more closely with a Chinese supplier of minibuses, trucks and ambulances.

Balfos already supplies specialist equipment to the mining industry and the latest move would complement that offering, as well as reaching a new market. Here again, the company’s strong focus on after-sales support would be leveraged.

From a geographical perspective, Balfos currently operates through a network of agents in neighbouring countries. Plans are now in place to increase its presence beyond Ghana’s borders, by opening dedicated offices in Côte d’Ivoire, Burkina Faso and Togo. “We feel it is important to operate in as many areas as possible. We want to establish a footprint wherever we have the capability to deliver to the high standards that our customers expect of us,” he concludes. balfosob@4u.com.gh

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Maritim

na m

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me

motorways

It’s one of the most famous nautical ames in the world but offers a surprising mix of services, as Alan Swaby discovers

T

here can’t be many ports which have an ancestry going back 2,000 years or which, at least these days, handles so little actual freight as Gibraltar. In many ways, it is unique—not just in terms of its location at the crossroads of the north-south and east-west shipping routes, but also in terms of its business mix.

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Gibraltar Port Authority

Wilhelmsen Ships Service Wilhelmsen Ships Service is the world’s leading maritime service provider with an international network of 4,000 marine professionals servicing 2,200 ports around the world.

Wilhelmsen

Ships

environmental

Service

services,

supplies

Unitor

safety

marine

and

products,

maritime logistics and ships agency to the maritime industry. The company has the experience and expertise to handle the most difficult shipping challenges.

“Ports exist,” admits Captain Peter Hall, CEO of the Gibraltar Port Authority (GPA), “as the conduit for imports or exports. Gibraltar is more like a motorway service station—our role is to keep the ships of the world in motion.”

The port is managed by Hall and a core staff of less than 50 who create the conditions in which other service operators can work, providing employment for upwards of 3,000 skilled and semi-skilled workers.

Without exaggeration, Gibraltar is a bustling spot on the map. In a typical year there are some 110,000 vessels transiting the Strait of Gibraltar—

“The airport terminal here is no more than a 10 minute walk to the port, making it extremely convenient for shipping lines who want to change ships’ crews”

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in other words, around 250 per day—and 10 per cent of them call to use the facilities at Gibraltar.

In typical motorway fashion, the port can feed, water and refuel whoever calls; untypically, it can also repair ships and entertain visitors.

“Gibraltar has a special tax-free status,” says Hall, “and this is particularly attractive to cruise ships on their way back north. We are often the last port of call, allowing passengers a final opportunity to take advantage of purchasing tax-free goods before returning home. It’s a nice bonus for them and 300,000 plus visitors a year represent an important multiplier to Gibraltar’s economy.”

At the less glamorous end, ship repairs take place in facilities originally built by the British Royal Navy as part of the empire’s primary defences in the days of Lord Nelson—his flagship, ‘Victory’, was one of the first warships to be repaired at Gibraltar. Now, they represent some of the largest dry dock facilities in the Mediterranean which continued to be operated by the British government until 1985, when they became a private concern.

In fact the status of the entire port changed just

five years ago when it ceased to be administered by the local government and became a private authority with an executive board made up of local professionals and business people with marine connections. “This move has been invaluable,” he says. “It allows many advantages such as making a profit, which in turn leads to development.

Being responsible for your own future means that profits can be re-invested in new facilities and infrastructure. It also gives us the opportunity of making decisions faster so that we are better able to respond to customer needs.”

Considering its location, Gibraltar is not short of competitive ports. Just across the bay is Algeciras, gateway to Andalucía and the rest of southern Spain. No more than 60 kilometres away across the Strait, there is the North African port of Tangiers, offering lower operating costs than its European partners and less environmental restrictions.

Fortunately, Gibraltar can leave its two neighbours to fight it out for freight supremacy because both of those are geared towards containerisation, which isn’t the case for Gibraltar.

Instead, this outlying British territory has made

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an international reputation for itself as service provider to shipping lines. The most notable aspect of its service portfolio is that of a bunkering station—the largest refuelling operation in the western Mediterranean.

“In 2001,” says Hall, “the port provided 2.9 million tons of fuel oil—a figure which had grown to 4.7 million by 2009. Gibraltar’s bunkering companies can supply all grades of marine fuel, from 30 cSt to 380 cSt. We police these operations, conducting constant quality audits on each company to ensure that the service standards as set out in the Bunkering Code of Practice are met. The port has a very long-standing reputation for quality and that must be protected.”

Ships wanting fuel can be processed either tied up at berth in the harbour or, more commonly, while at anchor in the bay. This way, fuel is taken out on bunker barges—or mini tankers holding upwards of 8,000 tons of fuel. Considering that a super-tanker might need to take on 10,000 tons of fuel to get it around Africa and into Gulf waters, it often takes a couple of visits to fill a ship’s tanks.

It’s also possible that a ship might need a mix of different fuels. To travel in the English Channel, for example, ships must run on low-sulphur fuel to minimise environmental impact. At times, they might need to be bunkered with as many as four different grades of fuel to meet all their needs.

Instead of being rivals, the port and local airport

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are collaborators, working closely together to provide an attractive package of services. “The airport terminal here is no more than a 10 minute walk to the port,” says Hall, “making it extremely convenient for shipping lines who want to change ships’ crews. But a far more exciting prospect is using Gibraltar as the staging point for what are known as turnaround cruises. Instead of ploughing through winter Atlantic seas, northern holiday makers could fly to Gibraltar and instantly feel the sun on their backs.”

The single drawback to Gibraltar’s operations is its finite geographical limitations. Already business is missed by ships reluctant to wait for a berth, so extra capacity would be extremely welcome. An environmental impact assessment (EIA) is currently being conducted to see how waters to the east of the rock could be used as extra anchorage and more importantly increasing bunkering capacity. It’s an attractive plan as it needs little or no investment on the part of the GPA—just an assurance to the community as a whole that it doesn’t present any new problems.

If the study is favourable, it is hoped that this plan could begin in the early summer. Already there is a little slack in the bunkering provisions which could be used; but successfully attracting new customers would soon encourage local operators to expand. www.gibraltarport.com

Gibraltar Port Authority

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springb

A strong

Formed just eight months ago, Imperial Logistics Refrigerated Serv preparing a paradigm shift in refrigerated logistics services in South Managing director Gavin Wilson explains to Gay Sutton his vision for the 126

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Imperial Logistics Refrigerated Services

board

vices is Africa. e future

for growth

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t is a long held wisdom that any company that remains static is in fact in decline. And during times of global economic uncertainty, it’s even more important to be flexible, alive to opportunity—and above all, creative. “We believe that our marketplace is right for a step change,” explains Gavin Wilson, managing director of Imperial Logistics Refrigerated Services. “And not only a change in mindset: the global economic situation is forcing a lot of organisations to rethink their company focus and to reassess exactly what constitutes their core business.”

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Imperial Logistics Refrigerated Services (ILRS), part of the Imperial Logistics division of one of South Africa’s largest companies the Imperial Group, was formed in July 2010 through the merger of four companies within the group. Fast ‘n Fresh—originally headed up by Wilson—and Liebentrans were leaders in their field in the transport of refrigerated produce, one transporting perishable food predominantly for the retailer Woolworths, the other transporting fresh meat between abattoir, wholesaler and retailer.

The third company in the mix was a smaller family owned fruit transport business located in the north of the country, in which Imperial is now a majority

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shareholder. The three were obviously complementary to each other: “Our aim in coming together is to achieve economies of scale and to provide a better offering across the marketplace,” Wilson says.

The fourth element of the merger, however, heralds something of a change in strategy for the other three companies. “As companies, we have grown organically and by acquisition, and historically we have always acquired assets: trucks, trailers and bulk infrastructure,” Wilson explains. “The final element in the merger is a fourth party logistics provider, known as our 4PL division. It’s what we call asset-light,

Imperial Logistics Refrigerated Services

“The global economic situation is forcing a lot of organisations to rethink their company focus and to reassess exactly what constitutes their core business” and consists of an office that simply matches companies looking for transport with those that have transport and are looking for commodities to move,” he continues. “This will help us to improve our return on investment ratios, particularly for the perishable foods business. It will help us ensure our vehicles are filled for their return journeys and also, by building relationships with reliable smaller operators, it will enable us to use their services without the necessity of investing in assets.”

It is, however, by developing a new strategy for growth that ILRS hopes to revolutionise South Africa’s refrigerated logistics marketplace. Wilson

believes that with many global organisations operating in South Africa and benchmarking their performance against global best practice, the next big growth area in the logistics market will be complete outsourced logistics services. This model already operates extremely well in many parts of the world, and delivers significant efficiency and cost savings. And given the current economic conditions, companies are increasingly focusing on their core business, and outsourcing the rest.

“Each element of our company has a very good record of executing a transport service for customers, delivering from A to B. That’s where

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our strength lies,” Wilson says. “The plan is to build on that with end-to-end logistics services.”

The model that ILRS is developing will include providing an in-depth analysis of the existing customer’s logistics requirements, based on detailed information provided by the customer along with ILRS’s experience of their current operational processes. The company will also draw on the expertise of other divisions within the Imperial Group such as the Integration Services division, which has particular expertise in supply chain optimisation, and will amalgamate all the findings to devise a detailed total logistics offering.

“The challenge for us will be in changing old mindsets,” Wilson says. “Many organisations are happy in principle to outsource, but then tend to tell

us how we should do it rather than to provide us, as the logistics experts, with the information and allow us to have the freedom to suggest and recommend how best we can provide those services.”

An example of how this could pan out in the future is a plan being developed for Fast ‘n Fresh customer Woolworths. Until now, Woolworths has been paying a huge number of different suppliers to produce and deliver chilled goods to its distribution centres. “We have put together a proposal suggesting that if they purchase from the factory gate, we can optimise our transport fleet which has been doing outbound deliveries for them, and collect direct from the factory as well, delivering significant cost savings.”

As one of the first such proposals, it has been a

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huge undertaking, and the company has drawn on the theory and practice developed by world leading organisations such as Walmart, as well as the skills and knowledge of the Imperial Group. Going forward, the plan is to begin with well established customers where a relationship of trust has developed over a long period of time, and then ultimately to take the concept out into the wider marketplace.

As a new company, ILRS not only has an ambitious vision for the future, but it has also spent the first six months aligning the four original companies into a single entity, managed from a new head office in Cape Town. “Much of this work has involved the softer issues of bringing together the different cultures and approaches.” A considerable number of roadshows have been undertaken for staff and customers.

“Initially, there was individual tension and fear amongst the staff that this was purely a cost cutting exercise.

But that was never the intention. Everybody who was with the four companies is still part of the new entity, and those fears have now subsided.”

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Imperial Logistics Refrigerated Services

Serco Fast ‘n Fresh, part of Imperial Logistics Refrigerated Services, has taken delivery of three refrigerated trailers and a truck body, designed by Serco to accommodate

new

state-of-the-art

ecoFridges.

These are the first multi temp vehicles fitted with ecoFridges in South Africa. The system works by releasing vaporised nitrogen into the load area from an under-slung tank with a capacity of up to 1,000 litres. Nitrogen used by the system has zero carbon emissions. The vehicles will be used for the distribution of perishable products to Woolworths stores in the greater Cape Town area, as well as between Cape Town and Johannesburg.

Alongside this the company has tackled some of the basic structural integration issues by analysing the IT systems and operational requirements of the four original companies and drawing up a

plan that will allow them to completely harmonise their processes and cultures while continuing to provide a top quality service.

Beginning in January this year identical ERP, accounting and payroll systems are being implemented across each company. “At Fast ‘n Fresh we developed our own in-house Transport Management System which proved very successful, and we’re also in the process of rolling that out across the new companies.” The main benefit of this system is that it provides real time visibility of processes, of all of the different disciplines, across the business.

Work on the IT infrastructure and systems is scheduled to be completed by the end of this financial year, not only creating a single organisation with one way of doing things, but also a great springboard from which to market the new service offering. www.imperial.co.za/

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Fuelli

growt

2011 is a milestone year for Fire Control Systems. Not only is it the 2 anniversary of the company’s launch, but it also marks the maturatio significant changes in company strategy and structure. Managing dire Rodney Dodkins talks to Gay Sutton about migrating from a commerc organisation to a fully fledged corporate entity

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Fire Control Systems

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25-year n of ector cial

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“We’re promoting a performance based culture where w individuals to take ownership of their role in the business”

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we encourage ”

Fire Control Systems

I

n the 25 years since its inception, Fire Control Systems (FCS) has established its position as one of South Africa’s leading providers of fixed fire protection solutions to the construction and mining sectors.

With a head office in Johannesburg and regional offices in Durban, Cape Town, Port Elizabeth and the Botswanan capital Gaborone, the company designs, supplies, manufactures and installs fixed fire protection solutions anywhere in Africa, from Algiers to Cape Town, and from athletics facilities and shopping malls to diamond mines and factories.

The organisation today has a turnover of more than R400 million a year and employs around 130 permanent engineering, design, sales and administrative staff at its HQ and regional offices. There are a further 110 employees at its manufacturing facility, which is largely responsible for manufacturing pipes and tanks, and 24 long-term preferred subcontracting enterprises who install the systems onsite. The company is, however, in the process of introducing meaningful change.

“This process was originally triggered by a changing of the guard over the past 24 months,” says managing director Rodney Dodkins. The process began two years ago when the original shareholders, including founder John Robertson, came to the decision that it was time to bow out of company ownership. Importantly for continuity in the company, though, they have remained actively involved in strategy and decision-making as consultants to the business.

Three of the original criteria for selecting a suitable replacement investor were to find an individual or organisation capable of partnering with FCS to help it migrate from what was essentially a commercial entity to a corporate entity; to prepare it for growth to the next level; and to enable it to become

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a Broad-Based Black Economic Empowerment participant. “Jala Capital came out top in our evaluation of suitable suitors and partners,” says Dodkins. “And being a progressive company with plenty of experience at its disposal, it was felt it would add value to our business.” The BBBEE transaction went ahead in 2008 and was concluded in 2010.

The vision and strategy for FCS going forward is to build on the success and reputation of the 25-year-old business. “Put very simply, our goal is to become the leading provider of fire protection solutions in sub-Saharan Africa.” It’s certainly an ambitious goal, and in preparation for this, an overarching rationalisation of the core business structure has been put in place.

Dodkins was appointed to the position of managing director in September last year to spearhead these changes in the company’s strategy and structure. “Since my appointment last year, we have made a number of consolidations in the business. Where we used to run the separate divisions through separate management heads, we now have a single operations director responsible for all divisions. Similarly, we have a single sales director, and commercial director.” The rationale behind this is that it will improve the efficiency and decision-making across the company, reduce duplication of processes and to ensure that all divisions share a single interpretation of vision and objectives. “By removing ambiguity across the organisation we will become a lot more focused.”

Flowing down from this, a whole range of changes and improvements are being put in place, and are at various stages of implementation and completion. “Most of the improvements we are putting in place come down to the individual.

Therefore, we’re promoting a performance based culture where we encourage individuals to take ownership of their role in the business,” Dodkins explains. “This will also help us with a planned introduction of staff incentive schemes.”

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Considerable effort has also gone into streamlining, improving and developing various functions in the business. Previously the HR element of FCS had been relatively informal, but the company is now establishing it as a core management discipline at the centre of the business, to formalise many of the policies and processes and to provide support for the change process. Ongoing staff training, for example, has always been encouraged as part of the FCS culture, but that is now being built into a more formal and targeted structure.

“Customer focus has also been highlighted as key to our future as we develop the business,” Dodkins points out. A significant element of improvement from this perspective will be achieved through formalised staff training: not only will this be targeted at continuously improving and updating engineering and design skills and industry knowledge, but also at improving customer interfacing skills and instilling the corporate values of responsibility, accountability and integrity.

The second element of the strategy for improving the customer experience is the establishment of a

phase II of the project. Planning for the survey was initiated last year, and once it’s implemented, the results will then feed back to the EXCO as part of the continuous improvement process.

“We are also establishing initiatives to look beyond the internal operations of the business to other stakeholders,” Dodkins reveals. “Our subcontractors are as much a part of our business as our permanent office-based staff, and as we grow our business we want them to grow with us.” This is a critical element of the company’s growth strategy and is being approached from several angles. To date, the company has been discussing with the industry watchdog, the Automatic Sprinkler Inspection Bureau (ASIB), the drafting of a set of training programmes for the industry’s installing subcontractors. FCS is also actively assisting their subcontractors introduce a more formalised business structure to enable the delivery of a quality product.

A great deal has already been achieved.

“We are already beginning to see benefits from the changes and improvements we’ve been introducing. I believe those improvements place us in a position to play a leading role in the local

“Our goal is to become the leading provider of fire protection solutions in su national 24-hour call centre, which is scheduled to open during the second quarter of the new financial year. Capable of handling a whole range of customer calls, ranging from technical and emergency requests through to general sales enquiries, it will also roll out a customer satisfaction survey as

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industry,” Dodkins asserts.

In the longer-term it also prepares the company for its next strategic move—the planned opening of satellite offices across Africa. “And we have a programme in place for the forthcoming year that will initiate that process.” http://www.firecontrol.co.za

Fire Control Systems

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Moving

mo

2011 will see Taggart South Africa emerging as a one-stop-shop for bulk materials handling projects for all southern Africa’s mining projects, plus the ability to offer full EPC and EPCM services to its clients

W

ith 40 years of mining experience behind him, Dave Morris has a unique understanding of an industry that is without any shadow of doubt going to continue to drive the economies of southern Africa for decades. Morris is based at Taggart Global’s headquarters in Pittsburgh, USA; but as chief operations officer for Taggart South Africa, spends half his time in South Africa managing a portfolio of contracts related to national power supplier Eskom’s strategic new coal plants and to new installations and plant upgrades for major private mining companies such as Anglo American, BHP Billiton, Exxaro and Xstrata Coal.

Taggart Global is a well-established international engineering and construction company with expertise in the design, construction and commissioning of coal preparation plants and materials handling systems in the US, China, Australia, Canada, Russia and Brazil. Before becoming COO for both Australia and South Africa in 2008, Morris was instrumental in developing Taggart’s business in Russia.

As the Australian business developed, he relinquished that part of his job to focus on operations in South Africa. “We are already branding Taggart JHDA and Taggart LSL/Tekpro as Taggart South Africa, and that will happen gradually over the course of 2011,” he says.

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Ta g g a r t S o u t h A f r i c a

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Ta g g a r t S o u t h A f r i c a

Fire Control Systems (Pty) Ltd Fire Control Systems (Pty) Ltd is the market leader in providing fire protection solutions to the following: the petrochemical industry, the power generation industry, the mining industry, process plants, shopping centres, commercial & industrial warehousing, office blocks, hotels & leisure resorts and commercial factories.

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For more information, see our ad.

Taggart South Africa will draw together two established entities, each with its own unique network, into one of the most capable mining services companies in the region. Taggart Global has a controlling interest in both Taggart JHDA and Taggart LSL/Tekpro—the former managed by Jim Harrison, the latter by Dimitri Simigiannis. Consolidation was always the intention when Taggart acquired a majority interest in Jim Harrison Design Associates (JHDA) in 2008 and LSL/Tekpro in 2010; however, it was important to bring all the stakeholders into the process, says Morris. “We had to reach agreement on value and ensure the minority shareholders were satisfied. We have developed a formula to merge the companies by the end of 2011.”

This formula includes personal development and training, recruitment and the enhancement of the amalgamated company’s B-BBEE rating through a review of its procurement policies and community development programmes. Another important objective is to continue bringing together the different projects that both companies have with common customers.

As Morris explains, both Taggart JHDA and Taggart LSL/Tekpro have separate contracts with Anglo American relating to the New Largo open cast deposit which is being developed to feed Eskom’s Kusile power station located in Mpumalanga. It’s expected to become one of the world’s largest coal-fired power plants once it is completed in 2018. “Taggart LSL/Tekpro has the largest share of the work because that project involves substantial materials handling—long conveyors, tips, crushers

and the like,” says Morris. “Taggart JHDA has a separate agreement with Anglo Coal to do the feasibility and engineering on the processing plant.

It will now be easier for Anglo to talk to just one entity, rather than two.”

Eskom’s new generation power stations, of which Kusile is just one, will boost coal demand for a generation. But coal is not the only resource being mined in South Africa. “Materials handling presents much the same challenges whatever the commodity,” Morris says. “For example, we have been keeping busy constructing a R200 million manganese plant for United Manganese of Kalahari [UMK]. We have done a good job for this client, and have been gaining additional work as a result both from UMK and from some of the other companies that are mining and exploring manganese in the Northern Cape.”

In the past JHDA was more closely associated with coal projects, while LSL/Tekpro had long term relations with Kumba Iron Ore, specifically the operation at Sishen in the Northern Cape, as well as excellent coal experience. “Its expertise in coal has been a key strength for JHDA, but we are taking these strengths into other markets now,” says Morris.

“We have recently done a screen for one of the platinum mines, and we are looking at a gold project that involves mostly materials handling. In cases like these, it doesn’t matter what the commodity is.”

While Taggart South Africa will continue to concentrate on its long-standing domestic clients following consolidation, it would be impossible for it to ignore the potential just across the border.

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Mozambique has the potential to become an important exporter of coal, being singularly wellplaced to ship coal to India, whose demand for coal is insatiable.

Shipping coal from Mozambique will become more feasible once the 575 kilometre Moatize to Beira rail link has been upgraded, the port improved and a completely new rail line constructed from the Tete coalfields to the northern deepwater port of Nacala by the Brazilian company Vale. “We have been talking to a variety of companies that are already investing in or are thinking of investing in Mozambique, and we intend during this year to set up a representative office in Maputo,” says Morris.

Behind all this activity is a strategic move towards capturing EPCM (engineering, procurement, construction management) contracts in southern Africa, something that has hitherto been difficult for the two entities. “On some projects where the clients want to deal with a one-stop-shop we tend to team up with other entities in South Africa.”

An example would be where a project includes shaft sinking as well as above-ground work— LSL/Tekpro is used to installing slope conveyors as part of the materials handling requirement; but neither company is into mining as such. Taggart South Africa will continue to work with the large construction companies to supplement its inhouse team of construction specialists.

Most projects to date have been undertaken on an EPC or fixed price, turnkey basis. “We have not really got into large EPCM projects,” admits Morris, who adds that the skills associated with coal preparation plant don’t always include those nurtured by the largest contractors (though these contractors lack the specialised skills that Taggart JHDA has).

However, Taggart Global has plenty of experience in large-scale EPCM type work. In 2008 the company announced its joint venture with Ausenco Limited to pursue coal preparation plant engineering opportunities in excess of $10 billion worldwide, with the exception of North America and China.

“As we get into more EPCM type work, in addition to local engineering and construction companies, we may bring in Ausenco, which employs 2,500 people in 26 offices across the world. It will be a powerful partner once we get into major projects in Mozambique, but could be extremely helpful in implementing EPCM contracts in South Africa too,” Morris concludes. www.taggartglobal.com

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ife Technologies declares that it is a company dedicated to improving the human condition, and it would be hard to argue that this is not the case. In less than 40 years since RNA and DNA sequencing became possible through the work of Frederick Sanger and Walter Gilbert, these techniques have become fundamental tools for advancing medical diagnostics, organ transplantation, agricultural and environmental research, and forensics.

Invitrogen, founded at Carlsbad, California, in 1987, rapidly became the leading global supplier of the high grade reagents, media and consumables that support this activity. In 2008 it acquired Applied Biosystems, the company that provided most of the equipment used in the Human Genome Project. In doing so, it added to its portfolio a global supplier of machines and materials used by academic and pharmaceutical industry research laboratories.

Today, the combined company—renamed Life Technologies—has an annual turnover of more than $3.3 billion, and demonstrates convincingly that improving the human condition also makes for a sound business proposition.

The last two years have been a period of integration between the two companies under the Life Technologies brand, a process that was completed with the establishment of Life Technologies, South Asia, in November 2010. Devashish Ohri, who joined the company from one of its major private sector customers Eli Lilly, was appointed in April 2010 to lead the regional business, based in Bangalore— previously, he says, Invitrogen operated as a separate entity in India, while Applied Biosystems did its business through a dealer.

The strategy in India and across Asia will be to focus on creating a one-stop-shop for biotechnology customers whether in government laboratories, pharmaceuticals or clinical research organisations, says Ohri. “Our competitors can typically provide either instruments or certain consumables, but we have the capability of supplying from under one roof a wider spectrum of instruments, nearly 65,000 consumables, and software relevant to biotechnology research and bioinformatics.”

For the moment, India will remain the main focus for Life Technologies, where it has increased its number of offices from one to five and its staff level to 200—though Ohri expects this to go up to 300 by the end of this year. “We increased our distribution capability fivefold; we also support markets in neighbouring South Asian countries including Pakistan, Sri Lanka and Bangladesh.

Biotech activity has started growing as these economies stabilise.”

The largest customer sector for Life Technologies, South Asia consists of government-funded research labs, hospitals and universities. “It’s like anywhere else in the world in that they are looking for cures for any number of common diseases, insulin regeneration ability for diabetes and the like. But there is a different emphasis in a developing economy like India’s in terms of: how do we find the root cause of infectious diseases and manage them, either in screening or treatment?”

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India is rapidly be its scientists, doct restructured Life T to make rapid and

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ecoming the world hub for biotechnology research, with the quality of tors and pharmacology researchers regarded as second to none. Newly Technologies is ready to give them the tools they need, enabling them d meaningful progress in the areas of basic and medical research MARCH 11 www.bus-ex.com

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“We support markets in neighbouring South Asian cou and Bangladesh. Biotech activity has started grow

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ntries including Pakistan, Sri Lanka wing as these economies stabilise”

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If the public sector accounts for 60 per cent of the company’s business, 30 per cent comes from pharmaceutical research, one of the fastestgrowing sectors in India, driven by the generic drugs industry. “A lot of biosimilars are made in India, where the chemical structure of proprietary medicines is reached through a different process.”

Biosimilars or follow-on biologics are developed once the original patent has expired: they bring the price down, but are sensitive to manufacturing changes, so it is important to the generic drug companies to be able to say they are using the same reagents, culture media and serums that the original producers used.

As a global market leader in these consumables, Invitrogen stands to capture a generous share of this market, which is growing at something approaching 40 per cent per annum. Ohri estimates that in the coming two years around $80 billion worth of drugs will come off patent. This offers a two-fold opportunity to Life Technologies, since it stimulates both generic manufacturing and outsourced clinical research. “On the one hand biosimilar companies in India are ramping up production; on the other, big pharma companies are rushing to India to get their clinical research done more cheaply. Furthermore, work performed by clinical research organisations has trebled in the last two years.”

While Invitrogen retains some manufacturing capacity in Bangalore, producing specific reagents such as monoclonal antibodies, these are all exported back into the global organisation.

As long as this output can be loaded into the global supply chain so that customers can expect lead times in India comparable to those in Europe or the US, there will be no real necessity for local

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manufacturing in order to serve customers in South Asia efficiently, he says. It’s important to realise that life sciences research scientists are an international community. “They are also keen to avail of the latest products and technologies just like their Western counterparts. In India we have had very significant penetration into the next-generation sequencing market, in which we have become market leaders.”

Last year, Life Technologies launched a new, highly accurate, flexible and user-friendly next-generation sequencing platform for genomic analysis, called the SOLiD PI system. Next-generation sequencing (NGS) is about decoding the DNA structure of the gene profile, and within India, Life Technologies already has greater market share than any competitor. “Whatever instrument is launched worldwide, we have access to it right away because our customers keep in touch with their international colleagues through online communities and blogs—they want the latest technology quickly!” says Ohri. And customers appreciate being brought to Life Technologies’ demonstration labs for hands-on experience with machines and systems where other companies can only produce brochures and simulations, he adds.

So machines from the SOLiD stable, or the new realtime PCR (polymerase chain reaction) system that will advance the understanding of molecular biology in the pharmaceutical discovery and clinical research markets, are vital to the pharmaceutical R&D community as are Invitrogen’s consumables. However as increasing amounts of data are generated, analyzing this data and arriving at meaningful results from it becomes a major bottleneck. Life Technologies’ global teams are developing bioinformatics software to tackle this problem. So far the Indian company’s input has been limited, but Ohri believes that more sophisticated mapping methods for the huge amount of information resulting from genomic and molecular biology experiments will present a real opportunity. “Bioinformatics is an area where we can grow even faster once we have stabilised the integration.”

The Indian economy is growing at nine per cent; the Indian biotechnology sector at 15 per cent. Ohri confidently predicts that Life Technologies will grow by 40 per cent this year, stabilising to an annual rate of 30 per cent. “We still have room to grow because we currently only contribute about 12 per cent of Life Technologies’ global turnover. But the more mature markets will be growing in single digits and we will certainly become one of the bigger markets in the next three or four years.” http://www.invitrogen.com/site/us/en/home/Global/ Contact-Us/RegionalContactUs/India.html

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Established less than 10 years ago, Fortis Healthcare has become India’s largest private healthcare provider.

Managing director Shivinder Mohan Singh explains to Gay Sutton how the company is providing worldclass medical care while using economies of scale and improving efficiency to bring costs down

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ne of the greatest global success stories of the last two decades is the rise of India as an industrialised, business-driven nation, and its emergence as a global economic force. Think of the steel industry, software and call centres—the list is continuously growing.

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“We won’t compromise on our world-class medical standards, on our talent or on technology. Therefore, to provide quality healthcare at prices that are affordable in India, we need to leverage process efficiency and economies of scale” Despite the Indian government’s intentions to create a national health service, healthcare still lags behind in this race for the top, however.

Although some 70 per cent of the nation’s health infrastructure is owned by the government, only 20 per cent of the money spent is publicly financed.

A massive 80 per cent, amounting to four per cent of India’s GDP, is funded by the private healthcare sector and therefore paid directly through

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organization providing architecture and engineering solutions for the past 20 years. Working with big healthcare groups like Fortis and Wockhardt, we have brought healthcare architecture and design to a whole new level in the Indian sub-continent.

Our relentless efforts to perform better have given birth to unique ideas like Magic Module for highly efficient hospital design. Our extensive research on standardization of budget hospitals with focus of flexibility and expandability has resulted in affordable healthcare services for the masses.

insurance or out of the patient’s pocket.

That same private sector, however, has inherited a dubious reputation. Largely unregulated and unlicensed, it consists of a loose congregation of over 50,000 hospitals, 84 per cent of which provide fewer than 30 beds while only one per cent exceeds 200 beds. Lacking in transparency, it is often accused of overcharging, and blatantly making money out of ill health.

The last decade has, however, seen a breath of fresh air blow through this stagnant marketplace.

Launched in 2001, Fortis Healthcare began with the construction of a large high-tech hospital at Mohali in Punjab. It was the first of many. Ten years on, the company manages a nation-wide footprint of some 54 hospitals, roughly one third of which are large purpose-built institutions located in state capitals. One third came to Fortis through acquisition, and the final third are managed and run by Fortis on behalf of private or state owners.

Today, the company is India’s largest private healthcare provider and has achieved a reputation for transparency and clinical excellence.

“Our vision,” says managing director Shivinder Mohan Singh, who has guided the company through this period of dynamic growth, “is to provide world-class quality healthcare to anyone who needs it in our country. We fundamentally

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believe we’re in the business to deliver top quality care. Therefore, our financial viability is a byproduct and not the end game in our organisation.

And that affects everything we do.”

The company’s operational model is to deliver end-to-end healthcare with a full range of services, and to provide centres of excellence at each of its hospitals in six specialist areas: cardiac, orthopaedics, neurosciences, renal diseases, cancer and mother & child. From the very earliest days, considerable attention has been paid to achieving transparency throughout the organisation, and to refute the industry’s profit-oriented image.

To begin with, the company publishes a price list for all outpatient tests and procedures, and ensures those prices are rigorously adhered to; however, it is with the costing for inpatient care that Fortis has been truly innovative. Where

“Our vision is to provide world-class quality healthcare to anyone who needs it in our country” possible, clinical investigations and tests are done prior to admission. Meanwhile, a comprehensive range of packages has been developed for the different conditions and diseases, and this is used as an estimate for the final inpatient bill.

“We then very closely monitor the estimate to bill ratio. Any final bill that comes to five per cent more than the estimate is examined by the head of the hospital to see if anything has gone wrong. Was the estimate right, for example, or were there too many diagnostics or procedures performed, was the billing correct, and so on,” Singh explains. “In India as a whole, it’s not uncommon for patients to be charged 250 per cent more than the original estimate. I am very happy to say that on average 92 per cent of our bills are within the five per cent of the estimate.”

This same rigorous standardisation and verification has been applied to a wide range of operational processes over the last five years, resulting in increased efficiency and a higher patient satisfaction level. At present, 171 patient touching processes have been standardised across all the hospitals, and are monitored and

managed on a daily, weekly and monthly basis through the Fortis Operating System (FOS).

Enabled through a company-wide IT system, FOS enables the management team to ensure that activities ranging from waiting times for admission and turnaround for tests and investigations, through to ambulance response time and time to discharge, are all performed to the required standard and efficiency.

Having achieved significant benefits from FOS, the company has applied the same concepts to the development of an equivalent Medical Operating System (MOS). This monitors a whole host of parameters that measure the quality of clinical performance and medical outcomes, and is being used to improve medical excellence both at hospital level and across the group.

Both FOS and MOS are playing a key role in continuous improvement at Fortis, helping it to achieve world-class performance and far greater efficiency. But they are also being mobilised to help reduce costs as part of the company’s bid to make healthcare more affordable for the local

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“We want to be clinically comparable to the international institutions and to do it at In

population. “We won’t compromise on our world-class medical standards, on our talent or on technology. Therefore, to provide quality healthcare at prices that are affordable in India, we need to leverage process efficiency and economies of scale,” Singh says. Everything from consumables and equipment through to technology, IT and the services of consultants and experts, are much more cost effective for the larger organisation. “And this is one reason why we’ve grown at the rate we have.”

Fortis has faced many challenges during its 10 years in operation, and one of the biggest has been sourcing skilled staff. The company opened the first Fortis School of Nursing in 2001 at Mohali, Chandigarh, and since then, has opened four more, each providing full nurse training. “We are always adding to the training courses we provide, and always updating our staff,” Singh says.

“For example, we run specialist ICU and critical care nursing programmes. We provide dialysis and paramedic training, and teach a wide range of technical disciplines such as radiology and pathology. We also provide a 17-day induction programme for every new nurse who joins the company.”

Looking to the future, Fortis plans to continue developing its clinical excellence, and to cut costs across the organisation. “We are also developing different models whereby we can systematise, package and modularise our healthcare expertise, and take it out to the 70 per cent of the population living in semi-urban and rural areas,” Singh comments. “As part of this, we are committed to opening a dozen more hospitals in non-metropolitan areas over the next two years.”

Fortis has undoubtedly established its place as the leading private healthcare provider in India. “But what we have done is only a drop in the ocean,” Singh continues. “There are 50,000 hospitals in India of which we have just over 0.1 per cent. Of the two million hospital beds in India, we provide just over 8,500, which is 0.425 per cent. So whichever way you slice it, we’re making a miniscule impact on the country’s healthcare. And the scale of that challenge is what really haunts us. We want to be clinically comparable to the international institutions and to do it at Indian prices—affordable for all. So we have a long way to go,” he concludes.

If the company’s track record is anything to go by—expanding from one hospital to 54 in nine years and building a reliable and repeatable service based on medical excellence, care, quality and efficiency—then Fortis has what it takes to achieve this ambitious goal. www.fortishealthcare.com

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ndian prices—affordable for all”

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In 10 years, Al Suwaidi Equipment and Transport Company Limited has grown from being a basic equipment rental company into a major league player in the equipment services and engineered heavy lift arena for the petrochemical and hydrocarbon markets in Saudi Arabia and the Middle East— and by forming smart alliances, it is now active throughout the region wherever heavy lifting is required

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he Al Suwaidi Group of Companies of Saudi Arabia has under its umbrella 10 strategic business units with diverse activities in industrial services, manufacturing, trading, real estate and construction. Al Suwaidi Equipment and Transport (SET) is the second largest of these, though the largest in terms of assets.

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SET is a specialist in heavy lift and transportation solutions and keeps on its books a large portfolio of specialised equipment from generators, welding machines and earth moving equipment of all sizes to mobile cranes ranging from 25 to 400 tons.

The Heavy Automobile section of the Equipment Rental Division provides tractor units, trailers and buses— including more than 200 buses rented internally to the group construction arm, Al-Suwaidi Industrial Services.

Finally, under its Heavy Lift and Transportation Division, SET hires out a fleet of crawler cranes from 100 to 600 tons in capacity and related heavy lift services.

Equipment rental remains vital to SET’s business, but the company has evolved with the industry, and the rental business is being squeezed as investment pours into Saudi Arabia and Middle East generally. “The local market has become highly competitive and price driven, and in response we have changed to provide a higher level of service,” says general manager Masroor Sayed Malik. SET has stayed ahead in this business by providing engineering solutions and services from 12 depots throughout the kingdom, providing its customers with remote area aftersales service, preventive maintenance and tailored solutions to keep their businesses running smoothly. But the evolution of SET didn’t stop there.

SET needed to develop services that were not

commonplace within the region, and which reflected the global nature of the industry. Malik estimates that $1.3 trillion of petrochemical ‘megaprojects’ are at various stages of completion around the world, of which an increasing number are constructed and supplied by Korean EPC organisations. “Thirty per cent of the world’s large hydrocarbon and petrochemical projects are taking place in the Middle East; of those, 70 per cent are in Saudi Arabia, making it one of the largest markets over the next five years.”

Five years ago, SET developed its Heavy Lift Projects section, which offers a complete turnkey service with engineering backup, and all the CAD and design facilities needed for standalone heavy lift and transportation projects. “Previously we were working with the construction contractors; now we can go direct to the EPC contractor,” says Malik. “This is our USP—when a company like JGC, Samsung, Hyundai, Daelium, KBR or Snamprogetti is bidding for a job we become an integral partner, able to provide all the engineering and commercial estimates to enable them to bid competitively and to win.” With more than 200 Saudi Aramco-certified operators and riggers on its books, SET provides incoming clients with the local knowledge and credibility they need.

From 2008 even heavier transportation was added to the portfolio, and now SET has 110 modular axle line trailers and about 20 SPMTs—immensely powerful multi-axled self-propelled modular trailers.

The most recent addition to the SET service offering has been the inclusion of ‘jacking and sliding’ technology which introduces alternative lifting solutions with dramatic cost and time benefits, as Malik explains: “It’s a technique designed with the turnaround market in mind, where for example you need to install a vessel that is surrounded by other installations and you can’t get a crane in without shutting the whole plant down.”

The new service, now one of SET’s most advanced, was proved in the Khurais GOSP development, one of Aramco’s recent flagship projects completed in 2009/10. SET was assigned

by EPC contractors Hyundai and Snamprogetti to lift and position vessels without interrupting the ongoing construction work. Special approval was obtained from Aramco (who subsequently accepted SET’s solution as an industry standard) and as a result, significant time savings were

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achieved on the overall construction schedule.

Jacking and sliding has additional benefits including a safer operating environment, minimal disruption to the ongoing plant construction activity and lower logistics costs. The industry will always recognise the value of safety and best practice even without the cost saving: the customer wins both ways. SET will continue to invest in these systems as they get more advanced, Malik promises.

Two years ago SET registered ALE-Al Suwaidi WLL, a 50/50 joint venture company with UK ultraheavy lift and transportation specialist ALE, to offer turnkey heavy lift project solutions across the Middle East. This has brought the world’s largest land-based moveable crane into the portfolio, says Malik. “We were involved in the development of the SK 120 twin-boom crane from the concept stage. It is now capable of lifting 4,300 tons, and it can be containerised and shipped to any place in the world where it is needed. The first contract we completed was for the SABIC-affiliated Saudi Kayan Petrochemical project in the Jubail industrial area, where we lifted a 1,100 ton vessel at a radius of over 100 metres. We could do the lift from outside the construction area without disrupting the ongoing work. That is a huge technical and commercial bonus for the customer.”

After Kayan, the crane was moved to projects in Russia, Ireland, Scotland, the Far East, the US and Venezuela. Currently it is heading back to the US, and should be back in Saudi Arabia by the end of this year. The partnership with ALE rounds off SET’s capabilities neatly. “Between the three companies we can handle any size of equipment services, heavy lift and transportation project in the world.”

One of SET’s biggest projects currently is

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to handle the entire inland logistics for the mechanical project cargo for Saudi Aramco’s $10 billion Manifa project through its client JGC of Japan. It’s a good illustration of how far SET has come in 10 years. “We have grown from a rental business, developed the service aspect, and are now fully versed in project management.”

On the international front, Malik says, the joint venture with ALE brings in huge capability: locally there are partnerships with forwarding companies like Namma Cargo representing DHL, and Kanoo Freight forwarding company. “Say there is a massive 500 ton vessel being built at a Korean yard: ALE Korea can transport it from the fabrication site to the port; then our partners Namma Cargo or Kanoo through their international alliances will get it cleared and put it on a ship to Saudi Arabia. Namma or Kanoo will clear it for us; we will transport it to the site using our modular

trailer, then lift it, erect it, and place it in its final position. In that way we can offer the customer a truly end-to-end solution!”

As in most successful companies, at Al Suwaidi Equipment and Transport people are as important as systems. The company runs a full in-house training programme for operators, riggers and engineers, adding special skills needed for heavy lift handling to the basic qualifications they brought in with them. Malik takes it as a compliment that SET-trained personnel are in demand throughout the industry. “Many of our competitors thrive in this market because of our trained people who are working for them now. We will continue to train new people because they have fresh ideas and the will to innovate and make a difference in this growing industry, and a stronger drive to explore and experiment. That policy is working well for us.” www.setservices.com

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Oil and gas exploration in Bahrain is set to boom over the next decade; and the Bahrain Petroleum Company (BAPCO) is positioning itself to help drive this exciting period of development

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very year, images of Bahrain are televised around the world as the Formula 1 Grand Prix season kicks off at the spectacular Bahrain International Circuit at Sakhir, located among verdant greenery in the otherwise dusty arid interior of the island. Although Bahrain has only hosted the race for eight years, it seems very much at home in this Kingdom as it too, races to further make its mark on the rapidly evolving global stage.

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Yateem Oxygen Yateem Oxygen is committed to the vision it has inherited from its founder, Mr Hussain Yateem, and his family. Their life and achievements set forth a vision of intense commitment to the improvement of Bahrain, the development of business with integrity, efficiency and dependable service to customers, good employment practices and care for employees, and a passion for a good healthy environment. This is a vision that Yateem Oxygen is privileged to take as its own.

This land of date palms and fresh water springs, with a rich cultural heritage that can be traced back many thousands of years, is the cradle of the Arabian Gulf oil industry. A small island lying between Saudi Arabia and Qatar, Bahrain was the first country in the Gulf region to discover and harness the rich oil reserves that lie beneath the earth’s surface.

In 1929, SOCAL (now known as Chevron), set up the Bahrain Petroleum Company (BAPCO), and made the first discovery of oil in 1932. That event then paved the way for exploration in countries such as Saudi Arabia, Kuwait and the United Arab Emirates, leading to the industry we know today.

With operations across a wide spectrum of disciplines, from exploration, drilling and refining through to storage and wharfing facilities, and with a number of retail outlets on the island, BAPCO today is 100 per cent owned by the government of Bahrain—so it is essentially a national oil company.

The refinery processes over 250,000 barrels a day of crude, one-sixth of which originates from the Bahrain oil fields. From this, approximately 35 per cent is converted into diesel, manufactured to the highest global standards of quality, 20 per cent is kerosene—jet fuel, 20 per cent is black products (fuel oil or asphalt) and 15 per cent naphtha, with a small amount of gasoline also produced, predominantly for the local market. The refinery product slate is skewed towards middle distillates, being diesel and jet, for which demand is expected to grow more strongly than for gasoline.

BAPCO is now looking to the future to secure its growth and enhance performance in what is a rapidly changing world, under the banner of what it calls its refinery master plan, which will define how the refinery will need to look post-2015. Elements

of this plan include analysing the economic market, projecting what the quality requirements are likely to be after 2015, as well as environmental standards and community expectations. Based on these projections, something in the region of $2 billion to $4 billion is likely to be invested to upgrade the refinery, to improve its energy efficiency, and reengineer the product mix to reduce production of lower value or loss making products such as fuel oil and increase the production of higher value growth products such diesel and kerosene.

In parallel with this, the company also aims to diversify into other areas of the oil market and is engaged in researching and analysing the marketplace to identify trends and establish further opportunities. Its strategy for achieving this is to utilise its core strengths, which include project execution and operational excellence, and to find joint venture partners with expertise in complementary areas such as marketing.

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A lube base oil plant is currently being constructed in partnership with Neste, whereby BAPCO will operate the facility and produce the lube oil, and Neste will market it on behalf of the joint venture. Once up and running, the plant should produce 400,000 tonnes of high grade, group III lube oil a year.

Environmental issues are a major concern to the oil industry in general, and BAPCO has always striven to position itself ahead of the game. In 2009 it commissioned a new refinery gas desulphurisation plant costing some $160 million; and in early 2012 a new wastewater treatment plant incorporating the latest technology is due to come online—but this presented quite a challenge. Conditions in Bahrain are very demanding—there are high salt levels in the effluent, the quality regulations are stringent and the climate is very hot—so BAPCO built a pilot plant and

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tested it rigorously over a 12 month period.

Looking to the future, the government of Bahrain is at the start of a major exploration programme to more than triple oil production from the Bahrain oil fields, and to identify further natural gas reserves. Investment over the next 10 years or so is expected to come to around $20 billion. BAPCO’s role will be to oversee the technical aspect of the work on the government’s behalf, to ensure that it achieves value for money, that the right balance of long- and short-term goals is struck and that the work is done to high technical specifications. Already, a joint venture called Tatweer is actively developing the onshore oil reserves. Offshore reserves are to be developed by joint ventures with PTT of Thailand and Oxy of the US. And finally, joint venture partners are being sought to search deeper into the earth’s crust for further reserves of gas.

Having operated in Bahrain for some 82 years, BAPCO has developed a reputation for business best practice, always seeking win-win outcomes and social integrity.

It was, for example, the first company outside of North America to win the prestigious Robert Campbell Award from the National Safety Council of America. It undertakes all the usual charity and public outreach activities, and also plays a key role in developing the island’s future leaders.

Each year the company selects 15 or 16 talented students and sponsors them through university at home and abroad, taking an interest in disciplines ranging from chemical and mechanical engineering through to accountancy, geology and physics. Some of the graduates continue with BAPCO, and others step into fast track careers in other organisations on the island.

As a result, BAPCO is increasingly being regarded as a true powerhouse of talent. www.bapco.com.bh

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tate-owned Mhlathuze Water is the third largest of the 12 water boards operating in South Africa. Based in KwaZulu Natal, the company supplies an area covering 37,000 square kilometres, from the borders with Mozambique and Swaziland in the north to the Thukela River in the south. The company is responsible for inter-basin transfers, major water treatment plants and an offshore wastewater disposal pipeline, as well as the operation of treatment and sewerage plants on an agency basis for local municipalities. It has been chaired since 2006 by former teacher and noted philanthropist Dudu Myeni.

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huze Water is not only a full spectrum water company but inspiration and support for the people of KwaZulu Natal, ane Bordenave finds out

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“Mhlathuze Water owns and operates the biggest offshore wastewater disposal system in South Africa” The main source of water in the region is the Mhlathuze River, which rises in the mountainous area of Babanango and flows down to the Goedertrouw dam. This river is of particular importance during times of water shortage and drought, and moving water from the Mhlathuze to other areas is the keystone in one of Mhlathuze Water’s main responsibilities: inter-basin water transfer. The centre of the Mhlathuze Transfer Scheme is the Mhlathuze Weir, which has water storage facilities as well as a pipeline running into

Lake Qubu in eSikhaleni. During peak times or when water levels are low, water can be pumped from the weir into the lake to ensure constant, reliable supply.

The weir was constructed in 1983, three years after the company was founded, but was badly damaged by floods and underwent emergency repairs in 1987. Further investment in the facility was made in 2007, using nearly 9,000 tonnes of rock and 1,800 square metres of geotextile to stabilise the riverbed immediately downstream.

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Now, as part of the company’s five-year plan, R189 million for a further upgrade to increase the water supply was recently awarded.

An additional part of the inter-basin transfer system consists of two pump stations that pump water to Hillendale Mine (Exxaro) to supplement the supply of Lake Nsezi during periods of low rainfall. This augments the water supply to Nsezi Water Treatment Plant, the organisation’s flagship installation. Water is pumped from the lake through the raw water pump station by four on-site pumps working at a rate of 2,100 cubic metres per hour (2.1 million litres per hour). The purification process consists of removing large debris such as branches with bar screen rakes, then taking out smaller debris with a fine screen, before the water is chlorinated and purified. The clean water

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is then moved to the special reservoir outside the plant and finally pumped to the uMhlathuze municipality straight to the Brackenham reservoir at a rate of 27,000 cubic metres per day.

The final part of this cycle is wastewater disposal.

Mhlathuze Water owns and operates the biggest offshore wastewater disposal system in South Africa, consisting of two pipelines that stretch four and five kilometres out to sea respectively.

The first line, known as the A-Line, is connected to Alkantstrand pumping station in the Richards Bay harbour, transferring wastewater from certain industries and domestic effluent in the Richards Bay area. The sewage from this pipe is passed through diffusers and mixed with seawater before being discharged into the sea.

A laboratory information management system (LIMS) has also been put in place to improve the traceability of samples. The laboratory carries out over 200,000 tests annually, with samples coming from water, effluents, sludge, wastes and soils taken from taps, rivers, reservoirs, boreholes, sewage works, drains, farms, factories and estuaries.

For Mhlathuze Water, caring for the local community goes beyond the provision of clean water. One per cent of the company’s turnover is invested back into the local area, which is driven not least by Myeni’s commitment to philanthropy and corporate responsibility. In December 2007 she was awarded the Inyathelo Award for Women in Philanthropy, and she is also at the forefront of the company’s commitment to ensure that both

“Moving water from the Mhlathuze to other areas is the keystone in one of Mhlathuze Water’s main responsibilities: inter-basin water transfer” While the A-Line deals with ‘buoyant’ wastewater, the B-Line processes dense wastewater, which can be more problematic. After a 2004 feasibility study, the B-Line was put in place, connecting to the local fertiliser plant, Foskor, and disposing of gypsum diluted with seawater. In 2007, a largescale project to increase the capacity of the pump station and extend the offshore B-line began. The project was completed in 2008 and consists of a dedicated pump station and offshore pipeline.

In addition to this cycle of movement, treatment, provision and disposal, the company also engages in scientific research for itself and third parties.

Mhlathuze Water Scientific Services was originally an internal monitoring system, but now provides world-class services to its clients. It was given ISO/IEC 17025 accreditation by the South African National Accreditation System (SANAS) in May 2002 and, in addition to complying with the rules governing this certification, the laboratory also participates in two inter-laboratory proficiency performance evaluations: the SABS Water Check Study and the Inter-Laboratory Chlorophyll-A Study.

its employees and the people who benefit from its services are treated with respect.

Direct policies driving this high level of corporate and social responsibility include financial support of Zululand University and a bursary for ‘Women in water’, which is designed to help to balance the ratio of men to women in the water services industry. Myeni is very proud of having increased the number of female employees within her own company; additionally, the organisation has attained a target of 35 per cent of suppliers being black, another of Myeni’s initiatives.

In many ways, Mhlathuze Water is two distinct entities: it is a supplier of clean drinking water to the people of KwaZulu Natal, without which the area’s municipalities could not thrive and grow.

But it is also a provider of stimulation and support to the local community, striving for a future that is even better than it could be. A clear five-year plan and Myeni’s strong leadership will ensure that Mhlathuze Water will continue to be a source not just of water, but also of excellence and good practice in business. www.mhlathuze.co.za

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Jeff Daniels looks at one of the most imp energy suppliers in the Indian sub-continent p a role in India’s drive towards moderni

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ndia’s insatiable appetite for energy is no secret. More industrial activity and greater affluence have increased demand for just about every single resource imaginable. And although India does have oil and gas deposits, the demand is increasing at a rate which cannot be fulfilled by domestic production.

As far back as 2002, the supply of natural gas was 72 million standard cubic metres per day (MSCMD) and demand had already hit 151 million MSCMD. By 2012 demand is expected to have doubled while the supply will remain constant, leaving an even larger gap between demand and supply.

At the forefront of India’s drive to ensure energy security is Petronet LNG. Formed as a joint venture by the government of India to import liquid natural gas and set up LNG terminals in the country, it comprises leading names in India’s oil and gas industry: GAIL, Oil & Natural Gas Corporation, Indian Oil Corporation and Bharat Petroleum Corporation.

In addition, Petronet has a strategic partner in GDF Suez, said to be the largest importer of LNG in Europe for the past 30 years, which holds 10 per cent equity in the company. GDF Suez is recognised as a world leader and has expertise in every aspect of the gas supply chain. It has developed technology and safe working practices in liquefying natural gas production as well as its supply, transmission, storage and distribution.

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piped gas for commercial or domestic applications.

In energy generation, it is used as fuel for base load and combined cycle/co-generation power plants. It also functions well as an automotive fuel, being 30 to 40 per cent more efficient and

“To ensure continuity of supply, Petronet has initiated the process of building a second LNG jetty at Dahej”

Natural gas can be transported through pipelines but is extremely bulky. For example, a high-pressure gas pipeline can transport only about one-fifth of the energy transported through an oil pipeline. The concept of liquefied natural gas is a response to the inefficiency of natural gas pipelines and the technical and economic problems of running pipelines over long distances.

When natural gas is cooled to minus 160.5°C, it becomes liquid and more compact, occupying just 1/600th of the gaseous volume. This is because most of the heavier hydrocarbons are removed during liquefaction. The cargo that is transported in bulk by sea is predominantly methane—a colourless, odourless, transparent liquid which is non-toxic, non-corrosive and less dense than water. However, it is highly volatile and requires specialist handling.

Being cheaper than LPG, LNG can be used as

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much cleaner than traditional fossil fuels. For the petrochemical industry, it is a source of several vital products such as methanol.

Petronet’s activities are centred around two LNG plants. The first and most developed is at Dahej, some 300 kilometres north of Mumbai. It represents south-east Asia’s first LNG receiving and regasification terminal and has an original nameplate capacity of five million metric tonnes per annum (MMTPA). The infrastructure was developed in record time and at a benchmark cost. Since then, the capacity of the terminal has been expanded to 10 MMTPA with the construction of two additional LNG storage tanks and other vaporisation facilities.

This terminal alone is meeting around 20 per cent of India’s total gas demand.

To ensure continuity of supply, Petronet has initiated the process of building a second LNG jetty at Dahej. Not only is this required for risk mitigation but also to berth the higher capacity Q-Max and Q-Flex LNG vessels. On the supply side, Petronet has long term contracts with Ras Laffan in Qatar for 7.5 MMTPA of LNG on a long term basis and has secured three tankers chartered from a consortium led by Mitsui OSK Lines.

All of this activity is in the north of India where most of the industry is located, but Petronet has already commenced construction of an LNG receiving, storage and re-gasification terminal at Kochi, on the south-western coast, to help satisfy the demand for natural gas from power, fertiliser and petrochemical industries in the southern states.

The terminal will have a capacity of 2.5 MMTPA expandable to five MMTPA depending on LNG supplies and market conditions. Construction is progressing as per schedule and the mechanical

Petronet LNG

completion of the complete facility is expected by spring 2012. To feed the new Kochi plant, Petronet has a long term agreement with Exxon Mobil for the supply of approximately 1.5 MMTPA of LNG from the Gorgon LNG Project in Australia.

In the middle of 2010, Petronet gained a new CEO. Under Dr AK Balyan, it is likely that the company will take a somewhat different direction in future years. It’s already been determined that if the supply is increased, so too will demand grow; as such, Balyan aims to double volume in the next five to six years.

At the same time, the company is looking at taking on the marketing role in areas where there are no pipelines. The idea is to create small hubs with appropriate storage capacity, which can be supplied by tankers. Already they are supplying LNG up to 500 kilometres distant from Dahej to different industrial areas.

LNG can also be used directly in automobiles

and other industrial uses. Since LNG is not stored under very high pressure, unlike CNG (compressed natural gas), it is safer to use and requires low levels of investment for drivers, who also benefit from being able to carry much larger quantities of gas, which means less frequent refuelling.

Petronet has also talked about entering into power generation. Being an LNG importer, Petronet wouldn’t have to pay any transportation charges or VAT, unlike other players, for the gas used in generating power. At Dahej, 50 acres of land near the terminal have been acquired and a detailed feasibility study is underway.

The plans on the drawing board are for 1,200 megawatt capacity brought on stream in phases, with a total capital expenditure of around Rs 4,000 crore. The entire capacity could be delivered within 36 months and when fully commissioned, it would consume over 1.2 million tonnes of LNG annually. www.petronetlng.com

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This South African-based specialist in aircraft seating made from composite materials is well-placed to take advantage of the international effort to reduce the weight of airliners

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AT Composites is a specialist in the manufacture of high-tech, high-specification composite carbon and glass fibre seating components for the airline industry. The company was founded near Cape Town, South Africa, in 1983 as Aerodyne Technology, later becoming Aerodyne Aviation Technology.

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Specialty Fasteners Specialty Fasteners offers a complete service from design through to supply of a wide range of hardware and fasteners in areas covering: fluid systems with Hydraflow couplings and hoses; corrosion

protection

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Avdec

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gaskets and sealing compounds; access solutions with quick release fasteners and high strength inserts for light alloys and composite panels.

All complemented by stock holding of standard fasteners and next day delivery.

Aerodyne established itself as a leader in the design and manufacture of innovative high performance products using advanced composite materials and became well known in the aerospace and sport markets for products ranging from bicycles to primary structures for supersonic aircraft.

Aerodyne was restructured into a group of four companies in the 1990s, with a view to exploring a diversified product and market range. One of these four companies grew into AAT Composites, which now specialises in the design and manufacture of composite parts for aircraft interior structures, mainly seating, although other applications are also being developed.

The company certainly has the right pedigree for seating, with its major shareholder being iconic German seating group Recaro. With customers for advanced aircraft seating rather thin on the ground in South Africa, however, 100 per cent of ATT’s production is exported to Europe and the United States.

The manufacture of sophisticated composite parts can be a laborious process, but one of AAT’s core capabilities is high volume manufacture. The company has a proven moulding capacity in epoxy and phenolic prepreg (pre-impregnated composite fibres) of more than 10,000 items per month.

AAT has extensive experience in the use of

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prepreg materials, as well as some wet infusion processing. Prepreg processes can be grouped broadly into four categories, autoclave moulding, press-clave moulding, frame moulding and vacuum bag/oven moulding. AAT has four autoclaves in operation, but prefers the press-clave system to meet its high production volume requirements.

Another key attribute is the level of vertical integration which gives AAT control over virtually the whole process from design to final production.

The company is involved in the original seat concept, then designs and manufactures its own tooling, before manufacturing the composite parts.

Composite seats have a huge advantage over traditional aluminium seats. Composite materials are much lighter and can be moulded and shaped into configurations that would not be possible with aluminium. Composites save up to 40 per cent mass over traditional aluminium backrests, offer high stiffness and excellent fatigue characteristics, and easy incorporation of video and telephone units.

The material is, however, more expensive to work with and the complex shapes mean that the finishing process is extremely labour intensive, which gives AAT a distinct competitive advantage over European competitors. The company has competitors in China, too, where labour is even cheaper, but AAT outscores them on technology.

The location of a high-tech industry like this in South Africa does present some challenges, however. With very few companies working in the field of composite materials, there is no pool of experienced skilled labour waiting to be recruited, so workers must be trained in-house. AAT has therefore set up its own training academy which takes the workforce through all the practicalities of working with different carbon and glass fibre materials.

A few years ago AAT introduced a lean manufacturing program which has improved shopfloor efficiency and quality. Scrap has been virtually eliminated and customer-related issues have also dropped drastically. Some European customers have made favourable comparisons to the standard of their European suppliers, but the company knows that lean is a process of continuous improvement so there is no let up in its effort.

The training academy has been of great value here, too, providing training in lean manufacturing techniques and world-class manufacturing methodologies. There has been an increased focus

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on multi-skilling, more time is being dedicated to the improvement process, and there is more freedom to explore new market opportunities.

Composite materials represent a relatively young industry sector, with great long term potential.

It’s a vibrant industry, with plenty of ongoing research. Despite the effects of the recession on air travel, there is a huge global effort to reduce carbon emissions in all sectors of the economy.

Reducing the weight of items being transported, or the vehicles that transport them is crucial to fuel economy, giving composite materials an ever increasing advantage. With that in mind, AAT is looking at opportunities to produce other components for aircraft interiors from composites and may eventually look further afield than that.

In June 2010, AAT took an expansion opportunity with the acquisition of Advanced Composites Group SA, a South African-based subsidiary of UK-owned Umeco, a compositematerials and supply-chain services company.

Also based in Cape Town, ACGSA’s principal business had previously been the supply of tooling suites and composite carbon fibre parts to McLaren Automotive for its high-tech sports cars. That programme has now been completed and ACG decided that the strategic rationale for retaining the business had diminished. With the purchase, AAT acquired full CAD/CAM facilities with a complete five-axis machining capability, supported by state-of-the-art autoclaves and full component trimming and spraying facilities.

AAT has also become involved in what could be the start of something big in the airline industry— seats made from carbon fibre-reinforced plastic (CFRP). The story developed like this: Australian

airline Qantas decided to reinvent the cabin interior of its new fleet of Airbus A380 superjumbo passenger jets to improve the customer experience.

Renowned industrial designer Marc Newson was enlisted to create a stylish and comfortable interior to include the overall design of the cabin as well as the seating, lighting, lavatories, galleys, furniture and even cutlery and soft furnishings.

Qantas went to Recaro to create a new economyclass seat—streamlined and contemporary but focused on functionality and comfort.

Recaro responded with a unique combination: a dramatically thinner profile, innovative comfort features, and a sculpted CFRP seat back with exposed woven carbon fabric to give it a visually stunning aesthetic. The resulting Recaro CL3610 economy seat has been recognized worldwide as an exemplary design, winning the 2009 Australian International Design Award, among others.

AAT comes into the picture with the manufacture of the single CFRP beam that forms the seat’s primary load-carrying structure. Invisible to the passenger, the single-beam design eliminates the traditional rear beam, increasing the leg room between seats but also reducing seat complexity and part count. The beam spans the seat width, providing attachment points for all major seat components and its lightness helps to offset the weight of added comfort features.

Each A380 aircraft has 332 CL3610 seats in economy class and four additional seats for the crew. Qantas is also upgrading its Boeing 747-400 aircraft with new in-flight entertainment and seats, including economy and premium economy seats from Recaro that will feature the same design.

The sky’s the limit. www.aatcomposites.com

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Since acquiring Ghana’s state telecommunications company, Ghana Telecom, in 2008, Vodafone has been working to deliver the best network with the best products and services, with the best people

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“Although Vodafone is an international brand, the company is wo with the community to ensure that Vodafone in Ghana is still Ghan

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household name across the world, Vodafone is an international company with a commitment to high standards.

It is the world’s leading mobile telecommunications company with a significant presence in Europe, the Middle East, Africa, Asia Pacific and the United States.

In 2008, the company bought Ghana’s state telecommunications company, Ghana Telecom, including fixed, mobile, internet and international services. The brand itself was launched in April 2009, when Ghana Telecom and Onetouch, the cell network brand, both became Vodafone.

Entering the telecommunications market in Ghana is not without its challenges. Ghana Telecom had been cash starved for some years and had suffered underinvestment in its network and technology. Vodafone therefore inherited a business that required a significant turnaround.

To address these challenges, Vodafone implemented a three-step strategy as part of an ongoing investment programme combining voice (both mobile and fixed), high speed broadband internet and a major focus on people.

The first phase was to expand its mobile network coverage by 300 per cent and to substantially improve network quality, because more Ghanaians have cell phones than fixed telephone lines. Mobile network reception was very patchy in Ghana, so most people had more than one sim card for their mobile phone. Vodafone’s investment in this area will mean that nearly everyone will have access to a reliable service so they can rely on their Vodafone sim. The company signed a $120 million contract with Chinese telecom solutions provider Huawei to put the mobile service element of the plan into practice by improving and expanding its mobile network.

The second phase of Vodafone’s programme of improvements was to update and expand its high speed broadband and fixed voice infrastructure, as the number of homes and businesses with a broadband connection or fixed voice telephone line in Ghana was relatively low. The infrastructure in terms of fixed lines was antiquated and largely obsolete, so the fixed strategy included the upgrading and completion of a national fibre optic network covering the whole of Ghana.

Home internet access has not been widespread in Ghana, with 80 per cent of internet users accessing

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the web via internet cafés with low connection speeds. Vodafone has begun to remedy this and probably the most revolutionary development is the launch of ultra high speed Vodafone internet cafés in the capital, Accra. In these cafés, customers can access the internet at speeds of 100MB, compared to the 4MB most people in the world are able to access in their home.

“In the competitive market in Ghana, having a superior network is n enough; we must also strive to give our customers the best value” In January last year, Vodafone introduced new highly competitive packages for its commercial broadband consumers, aimed at providing better capacity for internet café operators wishing to provide their own consumer service. A dedicated team was set up to serve these valuable customers.

Marc Norris, Vodafone’s head of fixed services, said at the time: “Internet access services are key to the economy and society in Ghana. The services provided by Vodafone directly and indirectly via independent internet cafés are key to Vodafone’s internet strategy. Having listened to our customers we can say that we are poised to deliver not only best service but best prices. We will continuously improve our offerings in this area of the market.”

The third branch of the strategy is people.

Vodafone is undertaking a massive organisational change programme. Thousands of staff left the business in the past few years and leavers received training on dealing with change, entrepreneurial and business development skills, CV writing, applying for jobs and interview techniques. Those remaining in the company and the large numbers being recruited are being trained in a wide range of skills, from technology, marketing and IT to all other business areas. Vodafone is also rolling out its ‘Vodafone Way’ model in Ghana which is based on ‘speed, simplicity and trust’ in all aspects of the business, designed to generate customer admiration.

Although Vodafone is an international brand, the company is working with the community to ensure that Vodafone in Ghana is still Ghanaian.

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Initially, staff had to be imported to ensure a smooth handover after the purchase of Ghana Telecom from the Government, but the company is dedicated to localising employment and believes its commitment to using local labour and efficient people management will be the key to its success.

The latest development is a managed services agreement with Huawei of China, sealed in January this year, under which Huawei will be responsible for the operations and maintenance of the Vodafone mobile, microwave, SDH, and fixed switching networks. Network planning and optimization, the Network Operations Center, and management of spare parts will also be performed by Huawei staff.

The partnership provides Vodafone Ghana with a long-term sustainable operating model, reducing its operational expenses and enabling Vodafone to focus on providing more attractive

new services to its customers.

“The award of this managed services contract to Huawei is a significant milestone in meeting our objective of providing a superior network to our customers in Ghana,” said Tony Dolton, chief technology officer of Vodafone Ghana.

“In selecting Huawei we have combined their product innovation with an extensive training and development programme for employees, so that Vodafone delivers the best network with the best products and services, with the best people. In the competitive market in Ghana, having a superior network is not enough; we must also strive to give our customers the best value. We will expand our mobile network and improve the quality and speed of our fixed broadband network. This partnership is a step towards meeting that goal.” www.vodafone.com.gh

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ntries can often mean as Alan Swaby learns, help avoid the pitfalls

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here’s something about working in under-developed countries that brings out the resourcefulness in people. Sure, it’s attractive being at the cutting edge of industry and being able to call on all the backup a multinational organisation can provide, but as Danny Holmes can testify, it’s not nearly as fulfilling as pitting your wits against the trials and tribulations of working in a county like Zambia.

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“Outside of Lusaka,” he says, “the infrastructure is patchy as best. The M25 might have its problems but falling into a chasm while crossing a rickety, hand-made wooden bridge isn’t one of them.”

Holmes should know. Born and educated in Lusaka, he went to the UK’s University of Manchester Institute of Science and Technology (UMIST) to complete a degree in mechanical engineering.

Rather than return immediately he worked for a further three years in the UK before returning home to work for various engineering consultancy firms and BP, and then striking out alone.

“The contracting scene is competitive enough here,” he says, “but nothing compared to the way economic cycles caused engineering companies in the UK to wax and wane, swallowing up others or in turn being swallowed themselves. In Zambia, I saw the opportunity to be my own master and be in control of my own future.”

The result is DH Engineering Consultants, providers of design, project management and commissioning services for electrical, mechanical and water related projects throughout Zambia.

Just under half of the time, the group works with architects designing, project managing and then commissioning building services: air-conditioning, water, drainage and the like. A similar amount of time is spent supervising the building of service stations for a couple of the major oil companies.

“Zambia is woefully short of engineering skills,” says Holmes, “so close supervision of any type of work is absolutely essential and quite frankly, takes up most of our time on site.”

Fifty per cent of business comes from environmental consultancy work, where Holmes makes full use of the MSc in Environmental Technology he took at Imperial College, London. “We provide environmental impact studies,” he explains, “particularly where potential pollution may be involved; and we then provide technical solutions to mitigate against any potential damage a scheme might contain.”

Holmes has found that the overall lack of skills plays an important part in how projects should be designed. As a sizeable amount of capital expenditure in Zambia comes in the form of foreign aid, foreign contractors are often involved in the process. “If they approach projects as though they were in their own advanced Western societies,” he says, “the designs have a good chance of failure through an inability of the local infrastructure to provide long-term support.”

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DH Engineering Consultants

Cutting edge technology and advanced systems might flourish in the West but could quickly wither in the heat and inefficiency of Zambia. Holmes quotes a major EU development project in which DH Engineering was involved in a joint venture with the Spanish company TYPSA. “The project was to rehabilitate water and sanitation services for three markets in Lusaka. TYPSA followed our advice on what would work best in this country—as a result, the equipment we installed continues to work well and is easy for the locals to manage and maintain.”

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DH Engineering Consultants

Holmes sees this kind of collaboration as an ideal winwin situation. “If outsiders try to go it alone,” he explains, “there is a strong risk of getting things wrong by pitching the engineering at the wrong level. As well as engineering guidance, we also offer bidders a price advantage as we already have all the resources and connections in place.”

Zambia is predominantly a country of SMEs. Most businesses are owner or family run, and even local branches of major companies operate on a very lean structure. “In our capacity as suppliers of engineering support,” says Holmes, “our opposite numbers are usually only one level below the managing director. Unlike dealing with multi-layered organisations, getting decisions made is a much quicker process.”

This year, DH Engineering will celebrate its 10th anniversary.

It’s still modest in size—in line with the normal Zambian profile—with just six full-time employees but this number can be doubled or trebled as projects require by calling in agency personnel. Having chosen to work predominantly in the private and donor funded sectors of the economy, it means that the vast majority of major capital projects financed directly by the government are never pursued. “Inevitably, that type of project requires a different way of working we prefer not to be involved with—not to mention the fact that they tend to be well away from urban centres and thus require a different level of resource base from that which my company can afford. Despite this, we still manage to spread our projects and work across the entire country, from crawling along in 4WD across barren floodplains to designing air conditioning systems for multi-storey buildings. That is what I love about my work and this country.”

While not getting involved with manufacturing, DH Engineering often undertakes the commissioning of the systems it designs. Over the life of the firm, it has handled more than 100 such projects, ranging in value from $100,000 to $10 million and found in sectors as diverse as banks and office buildings, medical facilities and educational centres.

Holmes is realistic about how the future will develop and is content with organic growth, which is currently looking pretty healthy. After a couple of decades when the Zambian economy was in a hole, prospects have brightened thanks to the £9,000-plus per ton copper is fetching and the size of Zambia’s copper reserves.

“The outlook for the country is good,” says Holmes, “but after years of brain drain and under-investment in education, it will take a long time for the skills levels of the country to get anywhere near where they need to be. In the meantime, that is going to keep life very interesting for the engineers who do live and work here.” www.mbendi.com/orgs/cpnf.htm

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Newmont Ghana Gold Limited is determined to take the lead in both deli and implementing a far-reaching corporate social responsibility strategy. group executive, operations for Africa, talks to Jayne Flannery

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Newmont Ghana Gold Limited

ng

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ivering shareholder value . Adriaan van Kersen,

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olden days are here to stay it seems. The global financial crisis might be receding from news headlines, only to be replaced by a new, explosive situation in the Middle East.

Soaring oil prices can only impact on inflation, creating even more volatility in world markets. In times of uncertainty, investors seek safety and the recent turmoil has shown that there is nowhere safer than gold. And not only is gold a safe haven, but the precious metal still offers great growth potential.

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“We think that gold has tremendous staying power as a forward-looking investment,” states Adriaan van Kersen, group executive, operations for Africa at Newmont Ghana Gold. “Loose monetary policy in the US and abroad, plus the unresolved sovereign debt crises in many countries is set to keep investment demand strong for a long time to come.”

Demand is booming, but there are no signs, or likelihood, of an imminent bust in the cycle. There has never been a better time to be in the gold production business and Newmont Mining Corporation is one of the largest producers in the world. Celebrating its 90th anniversary this year, Newmont also is

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Shell Ghana Mining Shell understands that product innovation and operating costs are key factors that affect commercial success. The use of quality fuels and lubricants can be a decisive success factor and their effective use can reduce costly unplanned downtime.

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notably the only gold company included in the S&P 500 Index and Fortune 500. Headquartered near Denver, Colorado, the corporation has more than 34,000 employees and contractors worldwide.

“As a corporation, we have operations on all five continents, but the most exciting opportunities of all are in Africa at present,” van Kersen continues.

“Africa is the best growth story in our portfolio and Ghana is a key focal point of our operations.

Last year, we produced approximately half a million ounces of gold at below industry average costs and the West African region can only gain in importance when some of our regional projects are brought online in the near future.”

Newmont is also exploring for gold in Ivory Coast, Burkina Faso, Guinea and Mali. But for the moment van Kersen is preoccupied with Ghana, where the Ahafo Mine is the jewel in the crown.

The first gold left the mine in 2006 and taking it from a greenfield site to full production required an $800 million investment.

Ahafo still has a great deal more gold to give up. The series of open pits that make up the mine produced 138,000 ounces in the last quarter of 2010. This year, Newmont will spend between $15 million and $20 million on drilling at Ahafo North to better understand the extent of the current deposit, which is already known to contain at least three million ounces of gold in reserves.

“Our team at Ahafo did an exceptional job last year producing more ounces than budgeted through

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greater productivity in the mill, as well as bringing online the Amoma pit earlier than expected. We are especially excited about our Subika Pit expansion project there,” says van Kersen. “This is set to extend the overall mine life of Ahafo and should lead to incremental ounces being produced. Lower grade ore from the open pits will be replaced by higher grade from the underground, which will add incremental production beyond the current 500,000 ounces per annum.”

To date, open pit mining has been the norm.

The Subika deposit provides the opportunity to move operations underground, which raises new challenges, but it also offers new rewards as the underground section of the pit offers the highest grade of ore yet seen. “Good ground and hydrology conditions have allowed us to advance the project ahead of schedule and we are currently

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working to complete the site’s operating permit,” van Kersen reveals. “Exploratory work is well underway and we have already completed 2,800 metres of lateral and decline development.”

With the potential to produce from Ahafo North as well as from the Subika UG, there is also an opportunity to expand the milling capacity of the Ahafo South mill or to add a mill in Ahafo North.

“It will become clearer which direction we will take as we go through the various phases of our capital approval process,” van Kersen says.

Ghana is also home to the Akyem deposit, which lies in the Eastern Region. This is West Africa’s largest undeveloped gold reserve and the next major project in Newmont’s portfolio.

“Production from Akyem, combined with the Subika expansion, will bring production in our

Africa region up from about 500,000 ounces today to possibly more than a million ounces. Most of the major engineering works are now in place, and we are just waiting for final approval from our Board. We expect to start production in late 2013 to 2014,” van Kersen says.

The Ahafo operation and the Akyem development project comprise about 20 per cent of Newmont’s worldwide gold assets, highlighting the importance of Ghana to the company. Equally, Newmont Ghana is a major contributor to the country’s economy: it generates nearly 10 per cent of the nation’s total exports; 4.5 per cent of its total foreign direct investment; and 1.3 per cent of the country’s GDP. Since recently extending operations at Ahafo, the company now directly employs more than 5,000 people; meanwhile, ten

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times this number of people benefit from indirect and induced employment.

Van Kersen believes that the company’s stellar performance record to date is intrinsically linked to its determination to be at the forefront of best practice in corporate social responsibility.

“One of our major strengths in Ghana is that through extensive and innovative stakeholder engagement, our operations have strong support within the host communities,” he explains.

“It is our belief that we can achieve a win-win scenario for everyone through our presence in Ghana. We recently commissioned Professor Ethan Kapstein of the INSEAD Business School in Paris to undertake a socio-economic impact study of our activities. The study he produced—the Ahafo Economic Impact Assessment—clearly shows that the communities around the mine have made tremendous strides forward at many different levels, while nationally, our contribution to the overall

economic wellbeing of Ghana is very apparent.”

Newmont in 2010 ranked 16th on Corporate Responsibility (CR) magazine’s 100 Best Corporate Citizens List. This ranking follows on from Newmont’s renewed selection in 2010 to the prestigious Dow Jones Sustainability World Index for the fourth consecutive year. In 2007, Newmont became the first gold company to join the DJSI World.

“We want to act as a catalyst for bringing information technology, communications, education, technology

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“The West African region can only gain in importance when some of our regional projects are brought online in the near future” transfer, human resource development, supply chain benefits, electricity, skills training, and better healthcare to the country,” states van Kersen. “Within our concession areas, we are working to operate and develop these mines in the most responsible way that we can in order to make a significant contribution to local employment and economic growth, as well as improve living conditions for local people.”

In December 2005, Newmont declared and has made good on its commitment that $1 of every ounce of gold sold and one per cent of annual net profits from the Ahafo Mine would be set aside for investment into a fund known as the Newmont Ahafo Development Foundation. The foundation provides

for grass roots directed sustainable development projects in the neighbouring communities. The structure and modalities of disbursement of the foundation’s funds was determined by the Ahafo Social Responsibility Forum. The forum has 55 members, including traditional leaders, elected officials, the regional minister, government, community group representatives, local NGOs and Newmont itself. The forum, which along with the foundation board decides how money accruing to the fund can best be invested, is the key instrument enabling host communities to identify and participate in the implementation of sustainable development initiatives.

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“We think that gold has tremendous staying power as a forward-looking investment” So far, the fund has attracted $5 million to improve the lives of local people. Fifteen community projects are underway in eight districts and more than 1,000 scholarships have been awarded.

The company also operates a number of four-year apprenticeships targeted at young local people. “Of course we want to increase local employment—our goal is to increase local employment in the Ahafo area to 50 per cent by 2016,” says van Kersen. “However, we don’t think that providing jobs and money alone goes nearly far enough. We believe we can also use our influence to take Ghana forward in other ways. For example, the fund’s activities focus on human resource development, infrastructure, social amenities, economic empowerment and support for cultural heritage and jobs. We also want to help plan for the long term when mine life is complete, so a portion of the fund is retained each year and reinvested to insure long term growth and sustainability beyond the closure of the Ahafo Mine,” he adds.

In another initiative, Newmont Ghana’s Ahafo Linkages Programme is designed to maximize procurement from local Ahafo businesses. This programme won the majority of the awards at the 2010 Chartered Institute of Purchasing & Supply UK Procurement Awards for the African continent.

The programme, which is operated in partnership with the International Finance Company (IFC), was the leading award-winner with three awards for Best Community Procurement and Best Supplier Diversity Project, while Newmont Ghana’s manager for local supplier and contractor development, George Brakoh, was named the Best Procurement Professional of the Year. He was judged to have made the most effective contribution to his organisation in terms of innovation, leadership, knowledge sharing and team-building.

The Best Community Procurement award was given based on the role Newmont’s supply chain management had played in enhancing the company’s reputation and brand values, while using its procurement role to bring about social and economic change.

Meanwhile the Best Supplier Diversity Project highlighted work undertaken by Newmont to work with local suppliers and small and medium sized enterprises, engaging them in supplier development programmes. This award praised Newmont’s achievements in increasing the employment, profitability and revenue generation of local suppliers while at the same time not over-exposing local suppliers to unnecessary commercial risks.

“We were very encouraged that our efforts at creating income and employment opportunities

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for local businesses in and around the Ahafo area and substantially improving the environment for local business development have been recognised at an international level,” van Kersen comments.

Newmont Ghana also strives to make an impact with its own workforce. Site safety and safety awareness are the first priority and van Kersen is proud of Ahafo’s outstanding safety record; but he is also keen that the mine works with its staff on other more personal themes. Last year, the Global Business Coalition on HIV/AIDS, Tuberculosis and Malaria voted Newmont Ghana as a leading company in the worldwide fight against HIV/AIDS and malaria prevention. The coalition of 200 organisations, which includes the United Nations, placed Newmont’s internal health education programmes top in the Workplace HIV/AIDS and Malaria categories.

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In future, van Kersen hopes to repeat Ahafo’s community successes at Akyem and also in Guinea, where the company has secured concessions to explore the one million tonne, world-class iron ore deposits in the Nimba area. “We have plans for projects in other countries, but Nimba is the most immediate, and we will invest $70 million into the next development phase during 2011,” he states.

The site will be developed through a joint venture with co-owners, BHP Billiton. Newmont is currently working with the Guinean and the Liberian governments on infrastructure and transport agreements, as well as putting in place a framework for future environmental and social responsibility programmes.

“It is at an early stage, but this project is not new to Newmont. We acquired this asset back in 2002 and expect to begin a pre-feasibility study by mid-2011. It is a perfect example of an asset in our portfolio that is undervalued, and it represents an excellent opportunity to expand our operations

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in Africa. Nimba definitely warrants further investment, both in terms of financial capital and human resources,” he says.

Van Kersen is convinced that the real success story of Newmont in Africa is yet to come. “Huge opportunities still await that we are extremely well positioned to take advantage of,” he declares. “The close focus on production and cost management in our portfolio has given us a very strong balance sheet, and we now have the ability to deliver the greatest cash flow leverage per share of any gold company in the world. This gives us the flexibility to fund exploration, which is by far the cheapest source of new reserve growth. It gives us the confidence to return capital to shareholders and it supports our transparent, proactive and innovative approach to environmental and social responsibility. It also allows us to consider investments in opportunities like Nimba that offer the potential for real returns.

Our project pipeline is both broad and deep, and we believe it has yet to show its true value,” he concludes. www.newmontghana.com

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