PEOPLE CULTURE TRAVEL PROPERTY BUSINESS WINE SPORT ENTERTAINMENT
ISSUE 22 R40.00
Nando’s celebrates its 25th birthday
Poised to empower East Africa
Chevron South Africa
Inside Chevron’s Milnerton refinery
A diamond in the rough
Africa’s largest pharmaceutical manufacturer
Take 5 As we celebrate 5 incredible years of creating originality for brands, we wish to thank all our business partners for walking the journey with us and for their continued patronage. So, take 5 when next considering a company who believes in innovation, real solutions based marketing, focused strategic thinking and pure undiluted passion! â€Śâ€ŚCount to 5 and give us a call.
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CHEVRON, VOLKSWAGEN, LETŠENG, HOLIDAYS AND MORE… SA MAG STARTS 2012 WITH A BANG Welcome to 2012’s first instalment of South Africa Magazine, your gateway to business, tourism and lifestyle. As with previous issues, we have a number of interesting features for you this month, including an insider’s look at Chevron’s Milnerton refinery. Steve Parker, Director & General
Editor – Ian Armitage Sub editors – Jahn Vannisselroy Marie Toms Tom Sturrock Writers – Colin Chinery Jane Bordenave John O’Hanlon
On page 58, we have a look at diamond mining
Advertising Sales Manager – Andy Ellis Researchers – Jon Jaffrey Marie Smith Elle Watson Luke Ashford Chris Bolderstone Sandra Parr Sales – Andy Williams Sales administrators – Katherine Ellis daniel George
company Letšeng Diamonds. Nestled high in the
Manager of Refining at Milnerton, says the secret behind Chevron South Africa’s success is safety, performance and reliability. He tells us more about that on page 30.
breathtaking Maluti Mountains of the Kingdom of
Financial Administrator – Suzanne Welsh
Lesotho, the diamonds produced at the Letšeng
PRODUCTION & DESIGN
any kimberlite mine, with a grade of less than
Magazine design – Optic Juice Production manager - Jon Cooke Images: Getty, Thinkstock News: NZPA, AAP, SAPA
two carats per hundred tonnes. Plans are now
DIGITAL & IT
mine sell for the highest price per carat of
underway to increase the annual treatment capacity
Head of digital marketing & development – Syed Ahmad
of the mine to around 10 million tonnes per annum,
with a carat output rising to around 200,000 carats per annum. Of course there is a lot more inside, where you can keep abreast of the news on page 6, find out about Volkswagen’s ‘racier’ “new” Beetle on page 12 and discover where you should going on your holidays on page 16.
Enjoy the magazine! Ian Armitage Editor
CEO - Kevin Ellis Chairman - Ken Hurst Commercial - david Alstin Publisher - TNT Multimedia Ltd South Africa Magazine, The Royal, Bank Plain, Norwich, Norfolk, UK. NR2 4SF TNT Multimedia Limited, Unit 209, 16 Brune Place, London E1 7NJ tntmagazine.com
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Contents BUSINESS An icon reborn
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All the latest news from South Africa
Volkswagen’s ‘racier’ “new” Beetle is aimed at men and intended to boost manufacturer’s sales.
TRAVEL 2012’s most exciting travel destinations
Globe-trotters everywhere, a new year means new travel opportunities. here’s our round-up of the most exciting travel and holiday destinations for 2012.
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NANDO’S CHEVRON SOUTH AFRICA INDUSTRIAL LOGISTICS SYSTEMS AFRICAN DYNAMICS GROUP DUFERCO STEEL PROCESSING LETŠENG DIAMONDS EVRAZ HIGHVELD THE BROWN GROUP KEYSTONE MILLING ICC DURBAN TANELEC THREE CITIES GROUP ADT ONELOGIX ASPEN PHARMACARE
All the latest news from South Africa Euro crisis
France and other eurozone countries
downgraded by S&P Ratings agency Standard and Poor’s has downgraded the credit rating of France and several other Eurozone nations. It lowered the long-term ratings on Cyprus, Italy, Portugal, and Spain by two notches, and lowered the long-term ratings on Austria, France, Malta, Slovakia, and Slovenia, by one notch. S&P said Europe’s austerity and budget discipline alone were not sufficient to fight the debt crisis and may become self-defeating. In a statement S&P said: “Today’s rating actions are primarily driven by our assessment that the policy initiatives that
have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone. In our view, these stresses include: (1) tightening credit conditions, (2) an increase in risk
premiums for a widening group of eurozone issuers, (3) a simultaneous attempt to deliver by governments and households, (4) weakening economic growth prospects, and (5) an open and prolonged dispute among European policymakers over the proper approach to address challenges.”
lawyers begin scrambles for appeal process toll solution Lawyers for embattled ANC Youth League president Julius Malema have submitted heads of arguments in his appeal against a five-year suspension from the ANC. Advocate Patrick Mtshaulana said they would detail why Malema’s suspension should be overturned. Oral arguments would be presented on January 23, he said. Malema and other senior ANCYL leaders were suspended after being found guilty of sowing division within the ANC and of bringing the party into disrepute. The suspension will come into force if Malema loses the appeal.
South African National Roads Agency (Sanral) will have to cancel its planned bond auction in March after the surprise postponement of the implementation of tolling, CEO Nazir Alli has said. Sanral’s new board indefinitely postponed the implementation of the unpopular Gauteng Freeway Improvement Project — for a third time. In the absence of tolling, Sanral loses about R300 million a month, money needed to pay its bondholders. Without cash from tolls, Sanral faces a huge challenge meeting its financial obligations. The delay to the implementation of the tolling project “came as a surprise to me”, Mr Alli said. “After this announcement this weekend, who is going to give us money? This is going to have an effect on our rating, not just Sanral but our country too,” he added.
Holcim write off millions owed by AfriSam The world’s second-largest cement maker, Holcim, will book a $819 million charge in the fourth quarter after writing off an investment in AfriSam, one of southern Africa’s foremost cement manufacturers. The Swiss company is writing off €343 million in debt and interest owed to it by AfriSam, which paves the way for the Public Investment Corporation (PIC), South Africa’s
state pension manager, to take over the debtladen company. The PIC, which manages about R1000 billion in South African state pensions, wants to restructure more than R20 billion of AfriSam’s nearterm debt into equity, to prevent it from bankrupting
the company. Holcim formed AfriSam in 2006 by selling 39 percent of its South African business to black investors and retaining a 15 percent stake. However, the recession affected the highly leveraged empowerment deal badly. www.southafricamag.com
Court stops Captain blamed Top TV from for Italian cruise
launching porn channels
TOP TV may not broadcast pornography channels without the permission of the Independent Communications Authority of South Africa (Icasa), the South Gauteng High Court in Johannesburg has ruled. The pay channel had applied to Icasa in September last year for permission to flight the channels Adult XXX, Playboy Europe and Private Spice on its newest bouquet. When it received no response after two months, it decided to go ahead without the regulator’s decision. Icasa then made an urgent application to the high court to halt the move until January 31, when it will give its decision.
liner tragedy The company operating a cruise ship that capsized after hitting rocks off western Italy says the captain may have “committed errors”. Costa Crociere, which also acknowledged that emergency procedures had not been followed, said in a statement that “it seems that the commander made errors of judgement that had serious consequences.”
“The route followed by the ship turned out to be too close to the coast, and it seems that his decision in handling the emergency didn’t follow Costa Crociere’s procedures which are in line, and in some cases, go beyond, international standards,” Costa Crociere added. The Costa Concordia hit rocks and began to keel over just metres
Capt Francesco Schettino is suspected of manslaughter, but denies wrongdoing. Costa Crociere said he appears to have sailed too close to land and not to have followed the company’s emergency procedures.
off the Tuscan island of Giglio. Several passengers and crew members were confirmed killed, apparently after jumping into the cold Mediterranean. There were up to 4,200 people on board.
of blackouts Electricity demand continues to outstrip demand, making load shedding over the next few weeks highly likely, power utility Eskom has warned. It called on consumers to use energy sparingly. Eskom spokeswoman Hilary Joffe said that although there were no immediate plans to reintroduce rolling blackouts, the risk that it would happen was high as the “system is tight”. “The risk is high, we have said before that 2012 would be a difficult year. There is too much demand and not that much supply…. We are also experiencing a lot of (technical) issues at our power stations … supply is very constrained.” Measures are currently in place to try to avoid load shedding, she explained. “We would like to remind customers that summer is just as challenging as winter, if not more so, and we appeal to all consumers to use electricity sparingly and use electrical equipment such as air-conditioning, geysers and swimming pool pumps as
efficiently as possible in order to reduce demand for electricity,” Brian Dames, Eskom’s Chief Executive, said in a release. “We suggest that pumps and geysers be switched off during the peak periods of 17:00 to 21:00 to assist in reducing demand.” Unit 2 of Koeberg will be out of service for a few weeks for repairs to the generator. The current hot weather conditions have also had an impact on supply, impairing the efficiency of some of Eskom’s dry-cooled power stations, and have caused increased demand as customers have increased their use of air-conditioning. “We are keeping the lights on by implementing supply-side initiatives, the assistance from some of our key customers and active demand side management,” Eskom said. “But we need the co-operation of all South Africans, and request all electricity users to reduce their electricity usage during this difficult period.” In 2008 (pictured), Eskom faced critical infrastructure and coal supply problems and resorted to load shedding, which cost the economy about R50 billion.
Transnet, Swazi Rail
launch new Almost 1500 R17 billion festive-season road deaths railway line Transnet and Swaziland Railways have launched an estimated R17 billion railway line that will run between the two countries.
The project will be commissioned in 2016 and is set to be the first large scale rail investment in southern Africa since the construction of the Richards Bay line in 1976. Of the R17 billion needed for the project, SA will provide R12 billion while Swaziland will provide the balance. Public Enterprises Minister Malusi Gigaba said government was committed to ensure that the line sees the light of day. “There is also an appetite from investors,” he said. “This investment is complementary to our other large coal investments that we are still going to rollout,” said Brian Molefe, chief executive of Transnet in Johannesburg. The new line will be developed from Lothair in Mpumalanga and Sidvokodvo in Swaziland. 10
Transport Minister Sbu Ndebele says at least 1475 people were killed in South Africa in road accidents over the festive season. Preliminary figures from the Road Traffic Management Corporation for the period from December 1 to January 10 add up to 1230 fatal crashes. In 2010-11, 1704 fatalities were recorded, more than the 1551 initially announced by the minister during his annual report on festive-season road fatalities. “The most common causes of the crashes during the 2011-12 festive period include speeding in unfriendly weather conditions, reckless and inconsiderate driving, and abuse of alcohol by drivers and pedestrians,” Ndebele said. “The non-wearing of seat belts has been found to be a major contributor to fatalities or serious injuries,” he added. “Emergency services personnel can testify that far too many people have been killed due to not buckling up.”
Pitso lashes out at
pessimistic media Bafana Bafana coach Pitso Mosimane launched an emotional tirade against the SA football media after a depleted national team played a 1-1 draw against West African giants Ghana. The SA Football Association was widely criticised after downgrading Bafana’s two recent home games from friendly internationals to practice matches and Mosimane’s third-string outfit was given little chance against Zambia and Ghana. “How many time have you guys written an obituary for me? How many times?”
Mosimane asked at the post-match press conference. “Everybody wrote an obituary for us before we started. Everybody saw us being slaughtered. “Everybody wrote, ’they turned the game into practice matches, they’re afraid, they’re scared’.” “Yes, another match we haven’t won, but nobody cares how it even went, or who you played,” Mosimane said. “We played with a team of Free State Stars, Wits and Ajax — that’s it.”
Fibre optic cable linking
Zim-SA delayed Logistical problems have delayed work on the fibre optic cable linking Harare-BulawayoBeitbridge to the undersea cable in South Africa. It was supposed to be completed by the turn of the year, When finished, the fibre optic cable, whose installation started in May last year, is expected to bolster service provision by state-owned telecommunications
companies NetOne and TelOne. The Zimbabwe government has so far
invested about $14,4 million in the project. In the 2011 National Budget, Government allocated $15 million for the installation of the Harare-BulawayoBeitbridge and HarareMasvingo-Beitbridge fibre optic links. The routes cover a total distance of about 1,340km.
AN ICON Volkswagen’s ‘racier’ “new” Beetle is aimed at men and intended to boost manufacturer’s sales. By Ian Armitage
very year brings new uncertainties to the car business. 2012 will be no different. Will buyers be looking for big trucks or small cars, import brands or domestics, petrol-power or electricity? Whatever consumers are after, German manufacturer Volkswagen wants to be the numberone. Its “Strategy 2018” aims to position the Group as “a global economic and environmental leader” among automobile manufacturers. And innovation plays an important part in that. In 2011, the auto giant unveiled the third incarnation of one of the world’s best-selling cars, the Beetle. 12
The redesign is a sportier version of the iconic Bug, aimed at men. Gone are many of the features of the previous design, and Volkswagen claims it is the ‘raciest’ Beetle yet. “The Beetle has enjoyed an incomparable success story,” says André Tietje of product marketing at the Volkswagen brand, who tells South Africa Magazine that a lot of attention has been paid to give the model a more “masculine” facade. “To this day it is one of the world’s three best-selling cars ever. Its unique
An icon reborn BUSINESS
silhouette is recognised all over the globe. The new Beetle projects the original car into the future. It carries its genes and continues to authentically develop them. Contemporary everyday suitability, modern technology and iconic design come together and also create a new sporting character.â€? Lower, wider and longer than its predecessor, the model looks more like a coupe, and also features a turbocharged version. However, it has retained much of the character of its predecessor. It is only the second time the Beetle has been redesigned since it was created in 1938 - the brainchild of none other than Ferdinand Porsche and built solely to cater for people from all walks of life. www.southafricamag.com 13
Contemporary everyday suitability, modern technology and iconic design come together and also create a new sporting character
About 22 million were built over the following 60 years, with sales eclipsing the very successful Ford Model T; only the Volkswagen Golf and the Toyota Corolla have sold more. The second-generation arrived in South Africa in 1999 and seemed poised to take over where its predecessor left off. However, it was mustering 2,700 units in its 12-year lifespan in SA and was unashamedly a femalebiased proposition. “Consumer reactions were – as expected – extremely positive,” Tietje says. “The Beetle is Volkswagen’s iconic model and engenders empathy across all generations. It combines the emotional legacy of the ‘original VW’ with the future 14
of Volkswagen. This emotional aspect benefits the whole brand. “We wanted the vehicle to pay homage to the original and this we achieved by paying considerable attention to the original model and interpreting these into the modern design,” he continues. “The distinctive lines have been clearly emphasised and the car has gained a required more serious air. The proportions, in particular, have become sportier; the car is lower, wider and has an appreciably larger wheel diameter than its predecessors, with the 21st century Beetle, thus appealing to younger, trend-setting customers. Coupled with its outstanding product features the Beetle is no longer a niche vehicle, but attractive to a broad mass of customers, both emotionally and in terms of everyday use – all at an incredibly attractive price.
An icon reborn BUSINESS
“The style follows the DNA of the brand. The more masculine impression is created primarily by a wider track and lower silhouette. It again bears the silhouette of the original Beetle and the side surfaces are more strongly vaulted. Finally, you can see the Volkswagen look in the typical round headlight and the rear light clusters. “Inside, we had the freedom to consistently implement unconventional ideas. The instrument panel is just as unmistakable as the Beetle itself – with large-format elements in body colour and an instrument cluster with a central, extra large round instrument. The windscreen is set closer to the driver, enhancing internal dimensions, and it makes the interior more spacious and comfortable for all. And, of course, every detail bears our typically high level of quality!” The vehicle is produced in Mexico, as was its predecessor. “The Beetle is one of the new, attractive vehicles with which Volkswagen wants to win market shares
throughout the world, and to continue the Group’s very good progress made in 2011,” says Tietje. Volkswagen expects 2012 to be challenging, but the Group maintains its Strategy 2018 and the goal to become the world’s best automaker by setting economic and ecological benchmarks. With an eye on the global economic developments, it will put faith in its strengths: worldwide presence, flexibility in sales and production, and strict cost control, the company told South Africa Magazine. “With our strong dealer network around the world, Volkswagen is present in over 150 markets. We adapt our sales strategies individually to the different structures and conditions of the markets and regions. But for us, vehicle sales are only one indicator of succes: Environmentally-friend products, satisfied customers, and happy employees are as important to us as sales rankings and profitability. We are making good progress in all areas,” Volkswagen said. END
2012’S MOST ExCITING
T R AV E l
d E S T i n AT i O n S
2012’s most exciting travel destinations TRAVEL
Globe-trotters everywhere, a new year means new travel opportunities. Here’s our round-up of the most exciting travel and holiday destinations for 2012. By Ian Armitage
Following the dollarisation of the economy and an improving political situation, Zimbabwe is becoming more attractive to travellers. Among Africa’s most beautiful countries, an ongoing drive to promote conservation projects and opportunities to volunteer means Zimbabwe is appealing to a growing number of ethical tourists. Visit: Victoria Falls, Mana Pools, Harare, and the Eastern Highlands. www.zimbabwetourism.net
The royal wedding made it one of the world’s most buzzed about destinations in 2011, but England is about to get even hotter in 2012. There will be so much going on that it’ll be hard to keep up. Amongst other things, the country will celebrate Queen Elizabeth’s Diamond Jubilee – 60 years on the throne – and London will host the 2012 Olympic Games. www.enjoyengland.com
PANAMA Panama is a destination unfettered by tourist crowds. Go to Panama City for five-star service at three-star prices and a rollicking nightlife. Then, venture further afield for spectacular Caribbean beaches, volcanic landscapes, lush rain forests, rivers and mountains, and remote archipelagos that offer unique experiences in the way of indigenous culture. Hurry, though – it won’t be a secret for long. www.visitpanama.com
MEXICO AND CENTRAL AMERICA With the ‘apocalypse’ approaching, Mexico is going to be one of the hottest travel destinations in 2012. The Mayan calendar ends on December 21, 2012, and interest is skyrocketing in the Maya, the ancient civilization known for the great cities it left behind in Mexico and Central America. December 21 marks the end of a 5,126year cycle on the Long Count calendar developed by the Maya, and there will be events on the occasion in Belize, Guatemala, Mexico and Honduras. If you want to see incredible ruins, Tulum and Chichen Itza in Mexico are very popular with tourist. We’d recommend heading to Tikal in Guatemala or Chiapas, Mexico, if you want to avoid big crowds. www.visitmexico.com
uRuGuAY Uruguay is a travel destination that has stayed below the radar for many tourists. It has pristine beaches, atmospheric cities, and a happening nightlife. The main tourist destinations are places like Colonia del Sacramento, Punta del Este and Montevideo. In the non-summer months, there’s a pretty good chance that you’ll be the only gringo in town. www.visit-uruguay.com
2012’s most exciting travel destinations TRAVEL
MYANMAR (FORMERLY BuRMA) Myanmar is set to become a hot new destination for travellers along the ever-popular route through Southeast Asia. The Burmese people have always had a reputation for being some of the world’s most welcoming, but nearly 50 years of military rule virtually closed off this treasure to the world. Now, the leaders of the National League for Democracy (NLD), the opposition party that has urged foreigners to stay away since 1996, have a new message: “We want people to come to Burma.”
The NLD revised its boycott to encourage independent travel late in 2010 following Suu Kyi’s release from house arrest. Myanmar offers the chance to experience a taste of the type of adventure travel that in 2012 you normally only get to read about in books. Think rickety buses, creaking bridges, uneven potholed roads, and curious locals. Combine visits to picturesque pagodas, monasteries and hill stations with a cruise on the Irrawaddy River, made famous in Rudyard Kipling’s poem, The Road To Mandalay. www.myanmar-tourism.com
ARMENIA It’s not the first place you’d think to go trekking, but Armenia has earned its crust as a bucket list destination. This rugged, canyon-pocked part of The Silk Road is made up of lush forests, volcanic formations, glistening lakes and the spectacular Sulema mountain range. Passing through villages, you’ll gorge on eastern and western culture collisions, navigate some jagged peaks and may be lucky enough to spot a wolf, lynx, bear or Caucasian leopard prowling the region. www.armeniainfo.am
JAPAN Japan had it tough last year, with visitor numbers plunging more than 60 percent following the devastating earthquake and tsunami in March. But traveller confidence is steadily improving. The Land of the Rising Sun is now the proud owner of a new Unesco World Heritage Site, the Ogasawara Group, an archipelago of more than 30 volcanic islands home to endemic species – as sort of Galapagos of the east. www.jnto.go.jp END
‘LOCAL GONE SUCCESS STORY
With casual dining chain Nando’s about to celebrate its 25th anniversary, Thabang Ramogase, Marketing Manager, spells out the brand’s expansion plans. By Ian Armitage 20
hat the world’s appetite for spicy chicken is growing is evident from the fact that South African casual dining chain Nando’s continues to expand. Nando’s is one of South Africa’s most enduring and risque brands, and it sells some of the best chicken you can buy.
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Its core product, which is the signature peri-peri flamegrilled chicken, is made from the freshest A-grade butterfly cut chicken, marinated for 24-hours and with excess fat trimmed off. It also prides itself on only serving food with no added colour, flavour, additives or MSG. Its famed ingredient, the peri-peri, is rich in vitamin C, vitamin A, high in anti-oxidants and, best of all, the capsaicin in the chillies helps enhance metabolism and, consequently, burns fat quicker. Nando’s has a lot going for it. “We are a successful brand,” Thabang Ramogase, Nando’s South Africa Marketing Manager, says. “Of course we celebrate our 22
Its famed ingredient, the peri-peri, is rich in vitamin C, vitamin A, high in anti-oxidants
25th anniversary in 2012. We are still in the planning phase of the celebrations. However, I can say that the celebrations will, in a word, be audacious. The plan is to drive them from out of South Africa, with an idea that not only celebrates our South African roots, but also amplifies our global presence in the hearts and minds of our fans. The celebrations will kick off in earnest in the second half of the year, employing an integrated approach. Expect great creative output, song and
dance and, of course, more of our great peri-peri chicken.” The key to Nando’s success in recent years has been threefold: convenience, health and value for money. Convenience is vital. There is a demand for food that is prepared in a suitable timeframe in locations that are close to where people live and work because people have increasingly busy lives. Health is another big factor. The more people eat fast food, the more their need for healthier eating increases.
The celebrations will kick off in earnest in the second half of the year, employing an integrated approach. Expect great creative output, song and dance and, of course, more of our great peri-peri chicken
Finally, value for money has been extremely important. Nando’s is, and always will be, a premium brand but that doesn’t mean it can’t offer value. You certainly get what you pay for when you pay them a visit. “The brand at all times strives to remain relevant and desirable in keeping with our role as the leading quick service fine dining experience,” says Ramogase. “To this end we have been revamping our current store universe of some 300 stores at a rate of around 40 stores per annum, with new livery. The themes aim to
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We still see opportunities abound for us led by a combination of additional outlets as well as penetration into new market segments
back, Ramogase says. “Nando’s SA has delivered a stellar performance YTD, with one month left in our financial year,” he explains. “Specifically, we have delivered consistent double-digit growth, on the back of innovation, strong promotional presence and even more improved quality standards. The brand’s strength continues to lie in large metropoles, however some strong growth has started to come through from smaller geographies across the country, largely as a result of better opportunities being afforded to the previously disadvantaged. “The opportunity however still exists for the brand to drive trial in the fast food user category, as our research has shown that disproportionately more consumers that try Nando’s, are more likely to become users of the brand versus the competition. “Given the state of global finances and the impending meltdown of specific European countries, that unfortunately are major trading
partners with SA, the prognosis for 2012 is neutral to negative,” he continues. “Having said that, 2011 was no different, yet our performance was outstanding. We always plan for growth, as any good business should and are optimistic that we will continue on our current trajectory. “The competition has seen very modest to flat growth over the past year and the outlook for 2012 is probably no different, save perhaps for the relative newcomers who are getting organic growth from aggressively opening new outlets. We still see opportunities abound for us led by a combination of additional outlets as well as penetration into new market segments.” On a local level, Nando’s will be opening new stores in 2012, while revamping existing ones with its “new look and feel”, Ramogase says. “Our international expansion will continue
into key markets,” he explains. Another project in the offing is one that aims to develop a monolithic brand system, that will see Nando’s rationalise its CI globally. “Our feeling is that the brand needs to present a consistent face to consumers, wherever in the world they may have a craving for our delicious chicken,” Ramogase says. “What do I think is the key to Nando’s success? Authenticity. The brand has remained true to itself both intrinsically and extrinsically. While the tonality of form has shifted with the times, the core values of courage, integrity, pride and family have remained steadfast. Also, the brand while a force to be reckoned with, has never taken itself too seriously and this has given its people the latitude to do bold and exciting things,” he concludes. END www.southafricamag.com 29
focus: c H EV RO n â€™ S
M i ln ERT O n
R Ef i n ERY
Chevron South Africa FEATURE
Steve Parker, director & General Manager of Refining at Chevron Refinery in Milnerton, Cape Town, says the secret behind Chevron South Africa’s success is safety, performance and reliability.
ustralian-born Steve Parker is Director and General Manager of the Chevron refinery in Milnerton, Cape Town’s successful 45-year-old refinery, which consistently operates the 100,000 barrels per day refinery at “high utilisation”. Parker’s role is challenging -Chevron South Africa is of course a world-renowned refiner and marketer of petroleum products -- and he is responsible for the overall oil refinery management at Milnerton. “I have to understand the technology, safety practices, regulatory and legal compliance at the refinery, while driving optimal profitability and operational excellence each day,” he says. Parker has been in the industry for over 36 years and has gained invaluable technical and operational experience.
Chevron South Africa FEATURE
He has an impressive amount of experience in oil refinery management and has worked at seven oil refineries. Impressively, he was General Manager at three of them. Parker has been using that experience to ensure safe operations and practices are maintained at the Milnerton refinery. “The health and safety of our staff and the community are paramount,” he says. “Most of Chevron’s capital programme budget is invested in compliance and health and safety related initiatives and we are aligned with the current trend in the oil industry to continuously improve safety standards. In that respect, we are doing a lot of work to ensure the operation is incident free by enforcing best practice processes and procedures. “A large part of our budget is used for risk management, replacement projects
The health and safety of our staff and the community are paramount
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and preparations to move towards cleaner fuels,” he adds. “Currently, we are awaiting direction and guidelines from the Department of Energy to find a sustainable way forward because it is a costly exercise moving to clean fuels. There needs to be a workable programme.” Commissioned in 1966, the Milnerton refinery employs some 400 permanent staff and 600 contractors. It has a refining capacity of 100,000 barrels and is arguably one of the biggest contributors to the economy of the Western Cape. “It is one of the safest places to be,” Parker stresses. “Safety is Chevron’s biggest priority. “We can all take a lot of pride in the fact that safety and reliability is at an all time high. We are operating equally to the other Chevron refineries globally, using world-class operation management systems and are well on track to meeting our profitability targets. “Also, and significantly, the quality of the crude oil we refine is good,” Parker adds. “A key advantage we have here is that we are close to Saldanha’s harbour and have access to West Africa, the Middle East and South-East Asia and all the other hubs regionally and globally. This provides us with the capability to select from various oils to refine the optimum mix for the highestvalue products.” As one of eight Chevronoperated refineries around
A unique combination of products and services John Crane designs and manufactures seals and associated products mainly for the oil & gas, chemical, pharmaceutical, pulp & paper and mining sectors. Since being established over 90 years ago John Crane has become the acknowledged global leader in its field. Today it provides the most complete selection of engineered
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Performance Plus – More than just seal supply! Performance Plus, the reliability division of John Crane is responsible for running the Managed Reliability Program (MRP)in the past two years. This proactive contract, undertakes to improve the Mean Time between Change (MTBC), measured in months, of 565 mechanical sealed centrifugal pumps on the refinery. John Crane has great success in these past 2 years with the introduction of continuous improvements in small steps” 1. Introduction of the workshop centrifugal pump quality control plan. 2. Operator training. 3. Failure mode analysis of every seal change and root cause analysis of the bad actor pump failures 4. Introducing new mechanical seal technology. Increasing centrifugal pump and seal reliability, begins with understanding the refinery processes, pump design and running conditions and maintenance and operator practice and behaviour. At John Crane, We do not just swop parts and get the pump back into operation. After the pump has come into
the workshop, we follow the QCP, measuring and record the pump critical sizes. When reassembled, the pump is put back to Original Equipment Specifications. The mechanical seal is taken to the John Crane Branch where it is stripped, inspected and assessed. The failure mode is established through the RCA process. Once completed, the seal is then refurbished to the original drawing and returned to site to be installed in the pump. Any recommendations identified during the seal and pump failure RCA process are then implemented for improved pump and seal reliability. The MRP key performance deliverables are managed through the Performance Plus, INTERFACE TM reliability managed software which is internet based. This database has all the 565 “in scope” pump parameters, including design and duty data, failure reports, improvement activity, asset related documentation and a reporting facility for the Program KPIs. The MRP , the specialist knowledge , tools and processes, all combined with a structured customer review process make this a very powerful tool for measuring and driving the customers performance improvement initiatives.
Chevron South Africa FEATURE
the world belonging to an organisation that consistently appears in the top five Fortune 500 Company list, makes this achievement even more noteworthy. “Of course we could do better,” Parker says. “Our aim is to take the refinery from one that meets the benchmark globally to one that sets it. We are meeting all benchmarks globally and are considered a world-class facility. But, our long-term plans are to improve on this while supporting the quest for the production and refining of cleaner fuels. To that end, Chevron is committed to investing and upgrading wherever necessary to produce a cleaner, more sulphur free, end product. “That said, as I alluded to before, the drive for cleaner fuels is a challenge and we need guidelines from Government in terms of making it work. Cost recovery is one of the key issues and we need a prescribed formula to recover costs that will go towards ensuring a transition to cleaner fuels.” Chevron is famed for providing economic empowerment opportunities for the communities surrounding the Milnerton refinery, Parker says, and this will continue into the future through skills development training programmes and other initiatives.
Our aim is to take the refinery from one that meets the benchmark globally to one that sets it. We are meeting all benchmarks globally and are considered a world-class facility. But, our long-term plans are to improve on this while supporting the quest for the production and refining of cleaner fuels.
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Chevron South Africa FEATURE
Chevron South Africa is a leading refiner and marketer of petroleum products in South Africa. Its network of Caltex™ service stations helps make it one of the country’s top five petroleum brands. Chevron operates a refinery in Cape Town and has interests in a lubricants plant in Durban. One of Chevron’s three global hubs for the supply and trading organisation is in Cape Town. Chevron South Africa is also a responsible corporate citizen, promoting health, education and the arts in South Africa. Nearly a quarter of Chevron’s Caltex™ service stations are in South Africa. These retail outlets sell products such as transportation fuels and axle grease. Caltex has about 800 retail outlets, 21 terminals and a fleet of some 90 tanker trucks.
“Our philosophy focuses on investing in people, partnerships and performance, while our social investment programmes in South Africa promote the maintenance and development of a socio-economic environment conducive to real and sustained economic growth,” he says. “This naturally applies to the way we give back at a refinery level too. Initiatives that we have been involved in include literacy programmes and special care service for those community members affected by the HIV/AIDs pandemic.” The company’s commitment to its community and South Africa are evidenced by other milestones too, such as the R107 million Effluent Plant Upgrade for the treatment of water leaving the Refinery to reduce the irritation factor for Kite surfers at nearby Blaauwberg Beach. The R30 million Water Recycling Project in association with Improchem is another milestone
Our philosophy focuses on investing in people, partnerships and performance, while our social investment programmes in South Africa promote the maintenance and development of a socio-economic environment worthy of a mention. By purifying sewerage water for use in the Refinery through reverse osmosis technology, the refinery re-uses its water and made it possible for the City of Cape Town to provide more drinking water to some 6,000 households. “It is initiatives like this that define us,” Parker says. One challenge facing the company, particularly in the current climate, is to ensure continuous profitability amid fluctuating crude oil prices. Parker says that it is not easy to maintain a constant return on investment. “It is an ongoing thing, looking to get that balance to ensure long-term profits.” Chevron prides itself on having high reliability, he concludes. Website: www.chevron.com
NOW CRITICAL KEY TO BIGGER PROFITS
Industrial Logistics Systems FEATURE
Real competitive edge in business now lies is having a better supply chain, leading logistics consultant Martin Bailey tells South Africa Magazine. “If you can get that right you can leap-frog your opposition.” But the positive Bailey delivers a number of warnings. By Colin Chinery
he age of production is over - we are now living in the era of the supply chain, says Martin Bailey, CEO of Industrial Logistics Systems. “Get it right and this is where the money is.” Bailey co-founded Johannesburg and Cape Town-based ILS 25 years ago, steering it to become a major sector player and pre-eminent name in ‘Start-to-Finish’ logistic consultancies. But if supply chain innovation and excellence are now a world-wide given, research by Frost & Sullivan for Barloworld Logistics last year showed South Africa still lacks the logistics and transportation infrastructure to compete on a global level, with poor infrastructure, high costs and currency instability. Bailey endorses its broad conclusions and says businesses must re-examine logistics from a completely different standpoint. “The big problem in South Africa is that the centre of our economy – over 60 percent - is based around Johannesburg and Pretoria, 600km away from the nearest port. This puts us at a huge disadvantage straightaway - Saudi Arabia and Riyadh is the only global comparison. “The second problem is our freight railway infrastructure has largely collapsed. Bulk rail freight still works fine but goods freight has almost disappeared.” Government moves to strip out costs in a loss-making business has pushed everything on to the roads, and with it costs and prices have been driven up says Bailey. “So to export or import anything you’ve got this huge lump sum that has to be stuck on the end. And this causes significant disadvantages for us as a country. www.southafricamag.com 41
Industrial Logistics Systems FEATURE
“To fix this would need monstrous investment. And as well as this, skills - which at the moment simply do not exist. Nationally we keep on producing more and more studies to say how we can put this right, but the execution is probably 10 years away. So we have a real problem.” Bailey says there are “many, many world-class operations in South Africa,” notably in the retail sector. “Shoprite, the largest retailer in Africa, runs better than world class operations. We can benchmark them against Tesco and even Wal-Mart - they are in the same numbers as these guys, even better. In most industries we can find some shining lights. But South Africa is a mix of First and Third World. And in amongst the shining lights you come across things that are quite frightening. “Let me sketch you a horrible scenario. As a company we like to employ industrial engineers – they fit our culture. The problem again is that technical education in South Africa has totally collapsed. 10 – even five years – ago I would employ three or four technical graduates and one university graduate. Today I cannot employ any technical graduates. The quality is so bad they are unemployable. “The result is I have to train graduate engineers, and my opposition and much of South African industry has to do the same. The result is we are sucking the number of engineers dry and the costs are doubling. It’s not because we don’t have enough graduates or highly skilled people 42
Goscor Lift Truck Company Goscor Lift Truck Company, part of the Imperial group is South Africa’s fastest growing materials handling equipment business. Its three leading brands are worldrenowned Crown and Doosan and narrow-aisle specialist forklifts Bendi. Crown is the world leader in electric materials handling equipment, while Doosan forklifts The Crown GPC 3000 picker, part of Crown's extensive range of warehouse equipment are famous for, available from Goscor Lift Truck Company. inter alia, their totally enclosed braking system on which Goscor offers a 60-month, unlimited hours guarantee. Bendi is a revolutionary counterbalanced, articulating forklift, which can work in very narrow spaces – even in widths of just 1.8m. Goscor Lift Truck Company has built a reputation for outstanding service to its customers resulting in exceptional growth every year of its existence. Contact: Darryl Shafto on 011 230 2600 or email firstname.lastname@example.org
– we’ve got them in South Africa - what we haven’t got is the middle level skills. Again this strange First World/Third World thing where we have plenty of labour – sometimes good labour - and plenty of senior management, but we haven’t got the bits between.” Bailey pinpoints what he sees as the fundamental cause. “We did something very similar to the UK -we tried to convert our technical colleges into universities. And it starts at schooling level - we took all the technical colleges out of schools and created one size fits all. “In my day we could go to a technical school or to an academic school. The Germans have got it right, and have
retained this dual stream. But here the choice doesn’t exist anymore and this is where the problem started and continues. There are no technical colleges, and everybody wants to be a university graduate. “We have to take a huge step back and re-establish those technical colleges and stream the people. We put a hundred people into university, we fail 80 percent and the rest end up nowhere. Of those 80 percent we could be turning half into useful, skilled technicians”. On a broader front Martin Bailey says the biggest challenge to business and with it the supply chain and logistics sector world-wide is the future movement of fuel prices. “Everything is inflated at fuel price and energy prices are inflating far far faster than the rest. And as prices start shooting through the roof all strategies need to be looked at. “So the real challenge is looking at energy price, putting our CO2 levels under control, and getting costs into line - whole new strategies. And what we are now teaching at universities is now 10 years out of date. We really need to re-
The real challenge is looking at energy price, putting CO2 levels under control, and getting costs into line
Industrial Logistics Systems FEATURE
look at our supply chain from a wholly different point of view.” How focused is South African business and industry on cutting-edge strategies? ”In retail hugely aware. Worldwide the retail industry has understood that the supply chain is core to their business - you’ve only to look at Wal-Mart and its supply chain system to see how successful it can be. “Elsewhere the picture is very mixed. In the mining sector for example, even through into the ‘seventies, the perception of a consultant was a guy with a lot of hair on his chest who would tell them to use a different kind of container. Again that mix of First and Third World. “And the Government here as elsewhere, loves consultants as long as they are strategic planning consultants; anything that gives them another strategic plan and delays the need for execution.” Bailey’s professional credentials are impressive.Along with Professor Roy Marcus he established the Materials Handling Research Unit (MHRU) at Wits University back in 1979. Three years later he was joined as research assistant by Gary Benatar, and the two went on to establish Industrial Logistic Systems in 1987. Unlike Europe where sector specialisation is familiar, the typical South African consultant works in all sectors. “This is a small country so we engage in everything from mining to motor car parts to retail. The sector is highly, highly competitive. The British are entering the market and so are the Americans. As economies around the world have dropped off, the developing parts have been the fashionable place to be. So we are getting all these guys, sometimes good, sometimes the best, often rejects from these countries where they can’t make it. “We probably still control 50 percent of the South African market in terms of warehousing and distribution. The biggest difference with us is that we do the complete range – the strategic planning and the execution. And there aren’t many guys world wide that cross that border. That’s the Number One factor that differentiates us. www.southafricamag.com 45
Industrial Logistics Systems FEATURE
UNIVERSAL STORAGE SYSTEMS Universal Storage Systems, one of South Africa’s leading manufacturers of industrial / commercial racking and shelving, markets a wide range of warehousing and storage products and systems. The company, through the use of its own research, technology and highly trained engineers - plus access (through world-wide relationships) to international expertise - has a reputation of being able to find solutions to most storage challenges. Through a network of company branches and distributors, Universal Storage Systems has a reputation for excellence of both product and service.
For further information visit us on the Internet (www.universal-storage.co.za) or contact: Universal Storage Systems (Tel (011) 793-1111 or Fax (011) 793-4920).
“Number Two is our experience. In 25 years we’ve built over 500 warehouses. We can show the battle scars, and people like that. They can go to sleep at night and know we’ve done it before and are unlikely to screw it. We retain the same customers; we’ve never done any selling; no marketing or sales other than a web site. It’s reputation and word of mouth.” Future growth says Bailey is highly dependent on capital investment. “At the moment it’s great, in fact we have as much as we can handle. But will the economy shatter at some point and capital investment fall off like it has in Europe? Who knows, but we are optimistic. We can always look at re-engineering a business, not shiny new buildings but optimising existing operations. There’s a great fall back for us as a business. “There are massive things happening. The era of 46
production is over and we are in the era of supply chain. The real competitive edge in business now is having a better supply chain, and if you can get that right you can leap-frog your opposition. “Here is where real margin can be gained, where you can get your real profits. This is where the money is, especially going global and more than ever as fuel prices rise. The world is changing, and the benefits of getting your supply chain right are getting bigger and bigger.” END
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Committed to Excellence
people food for the
The African Dynamics Group has a vision to not only grow current successful operations but to also expand its footprint to the rest of South Africa and into the neighbouring SAdC region. By Ian Armitage
African Dynamics Group FEATURE
frican Dynamics has been a significant manufacturer in the South African food industry for almost two decades. The company’s roots stem from the private sector, where it provides food for government owned schools and hospitals. “We are able to address a wide variety of requirements, typically from governmental departments, non-governmental organisations, international relief-aid organisations and pharmaceutical companies,” says CEO Dr Johann Kritzinger who sees “significant” growth in a number of markets. The target is to achieve R1 billion turnover by February 2017, he says. “We have been shifting, adapting,” Kritzinger explains. African Dynamics was established as a manufacturer and distributor of food products in 1992. Recently, the firm was restructured and its companies – which include PSNP Caterers, Soya Nutritional Foods, Soya Foods (Pty) Ltd, B-Imune Food Products (Pty) Ltd and African Dynamics Eastern Cape – were consolidated into the new African Dynamics Group (Pty) Ltd, a black owned company. This coincided with the appointment of Kritzinger as CEO – the private equity firm he represents purchased a majority share in the firm. “We have started to focus a lot more on non-government related food contracts for manufacturing food, producing house brands for the likes of Shoprite Checkers, Pick n Pay and Spar,” he says. It has led to rapid expansion, with the company now making food stuff for clients all over South Africa and the SADC region. It is also in the process of securing high value contracts with Unicef and the UN. www.southafricamag.com 49
African Dynamics Group FEATURE
Blend-In Manufacturers Our fabricating team, with 20 years experience, have expertise and knowledge in establishing your power, blade and mixing time needs. This creates the perfect product that is required for blending. We have built blenders from the smallest lab units to the biggest company’s in various metals such as mild steel, bennox, and stainless steel and from motor sizes such as 25Kw to 37 kw soft start units. Our blenders come in two catogories namely – standard duty and heavy duty (standard being for light easy ﬂowing powders and heavy being heavy S.G. Dry powders).
“These markets represent significant opportunities, but it also mitigates the risk of putting all your eggs in one basket,” Dr Kritzinger says. “Our vision is to not only grow current successful operations but to also expand our footprint to the rest of South Africa and into the neighbouring SADC region.” Financial interests in the company consist of seven shareholders, one of which is an employee trust with a 10 percent stake. The rest are private shareholders. African Dynamics has two major manufacturing plants, one in Pretoria, and the other in East London. 50
We are able to address a wide variety of requirements
We can supply any component from our factory to the customer within 24 hours, and we are firm believers in after sale service. We can offer a maintenance contract, advice on total plant layout and requirements for tonnage to be blended and or installation of blender and plants. Blend-in also manufacture belt and screw conveyors, infeed and outlet holding hoppers, and variable frequency drive sifter units all in mild steel and stainless steel aswell as semiautomatic bag filler units. Our sifter units are custom designed units to suit your application to clean or sort product before blending or after discharge or even as a stand-alone unit.
MANUFACTURERS NO 87 BUTLER ROAD NUFFIELD SPRINGS 1559 ( J.H.B. )
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Blend-In Manufacturers have been building the food and chemical industry blenders and appropriate equipment for the past 20 years. Our blenders are designed to start on full load capacity, not to just above the shaft as others specify. We take much pride in our workmanship when it comes to the ďŹ nishing of our blenders, down to the welding, pickeling and polishing of the blender inside and out. Many standard sizes are available (from 10lt to 5000 lt) but custom units can also be built on request, in both stainless steel or mild steel. Please contact us on the above information for any further queries.
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AFROPAK PACKAGING EQUIPMENT (SA) (PTY) LTD Established 1986
Afropak is positioned to meet and exceed the needs of our valued clients. We provide cost effective and timeous solutions with correct specifications, within budgetary requirements. Locally supplied after sales service support and spare parts.
We are proud suppliers to the African Dynamics Group
“We have ambitious plans,” Dr Kritzinger continues. “And Africa is the perfect place to fulfil them: the population will double by 2050 and the spending power of Africans is gradually increasing. “We believe in the future of the business and we are dedicated to providing the best foods to people of varying requirements. “Our goal is to build a world-class business with a leading position in South Africa, through products and services that are appropriate and effective. Our unique experience and understanding of the African market gives us a competitive advantage, while we make food products that are nutritious, cost effective and convenient. Significantly, we are able to address a wide variety of requirements, be that from governmental departments, NGO’s, international relief-aid organisations or pharmaceutical companies. Our approach to food and food supplements includes addressing general nutrition and improved health through nutrition.” African Dynamics’ recent growth has been impressive. Bringing in more NGO’s has paid off, says Kritzinger. “We see growth coming from Africa; the expansion will come from the retail market and contract manufacturing, but also donor feeding. The growth since we have restructured has been 52
We have ambitious plans. And Africa is the perfect place to fulfil them
impressive. We have refocused and been able to bring in more revenue from non-government contracts. “I am always open to suggestions of what more we could do, but we have been very successful. In essence, we have brought the right people in, developed clear plans, and executed them in the right way. “The long term goal is of course R1 billion by 2017,” he adds. “We are happy with the progress we have
African Dynamics Group FEATURE
made on that and we are close to R250 million after just two years. We should, organically, do about R600 million by 2017 but one of the things we told ourselves was that there is at least one or maybe two acquisitions we would have to make in order to bridge the gap. We know exactly what we are looking for in terms of acquisition, that being to grow
and diversify risk away from strictly government feeding schemes and grow into contract manufacturing.” African Dynamics has certainly changed for the better and not for the sake of change. “All the elements are there,” Kritzinger says. “Our success is based on the fact we have a clear strategy that everybody understands; that we work hard and have detailed monitoring processes in place; and, also, we’ve had a bit of luck.” Website: africandynamics.co.za END
fORging nEW fROnTiERS AS A
glObAl And lOcAl
South Africa Magazine profiles duferco Steel Processing (dSP), the local subsidiary of Swiss trading giant duferco SA. By Ian Armitage Packing the final galvanized product 54
Duferco Steel Processing FEATURE
uferco SA is one of the world’s largest steel trading companies. Established in 1979, it was formed on founder Bruno Bolfo’s belief that there was an opportunity in emerging markets steel production for a “reliable and informed” steel trading company “to play a role in the growth of exports to previously unexplored markets”. In the years since, Duferco has grown into a multinational steel and raw materials trading company with 2010 figures showing in excess of 13 million tonnes of material traded worldwide, through a network of offices and distribution centres in over 40 countries. A total annual sales volume of 21 million tonnes includes four million tonnes of production spread across facilities in the USA, Western and Eastern Europe and Africa. The Duferco Group also includes mining assets, energy production and trading, shipping assets and engineering services. Vanchem Vanadium Products in Gauteng belongs to the Duferco Group, having been acquired in August 2008.
LOCAL OPERATIONS Duferco Steel Processing (DSP), the local subsidiary of Swiss trading giant Duferco SA, was established as a joint venture with the Industrial Development Corporation of South Africa Limited, the primary objective being to export cold rolled and galvanized steel coils. Principal markets for DSP are Europe, the Americas and overland Africa. The plant, 130 km from Cape Town on the West Coast, is 5 km from Saldanha harbour - the deepest natural port in South Africa. This strategic location ensures that DSP has a relatively quick lead-time over its competitors and is able to compete favourably www.southafricamag.com 55
Duferco Steel Processing FEATURE
within the international market place. “The erection of the DSP production facility, which started commissioning at the end of 1988, was a turnkey project by Voest Alpine the Austrian industrial group,” the company’s website says. “DSP was proud to see the first shipment of its manufactured products sail from Saldanha Bay in August 1999 destined for the UK closely followed by a shipment to the USA
Final product on its way to the port.
Crane Driver with hot rolled coil, the feedstock of DSP, in the background
and since then has built a solid reputation as a reliable and high quality manufacturer with an established client base and a high percentage of repeat customers,” it adds. DSP’s mission statement is simple - Prime, on time, every time! “Our mission is to process hot rolled coils into value added products that are sold on the international market in such a way that our customers’ expectations are surpassed, our shareholders and colleagues are completely satisfied and the inhabitants of the West Coast regard our business as an asset to both the community and the environment,” the company’s website continues. “Our drive for continuous improvement has led to a successful certification for ISO 9001:2008, a testament to the work ethic of all our employees and their focus to ensure customer satisfaction is paramount,” it says on a later page. DSP is committed to the protection of the environment and has also received ISO 14001:2004 certification. It produces a range of steel products consisting of hot rolled pickled and oiled, cold rolled galvanised and cold rolled finished products, in excess of 600,000 tons per annum.
AN INTEGRATED STRATEGY FOR THE STEEL MILL Quaker Products and Services Add Value at Every Step • Cold Rolling Oils for Sheet and Tinplate • Corrosion Preventives and Mill Applied Lubricants • Fire Resistant and Specialty Hydraulic Fluids • Hot Rolling Lubricants • Liquid Casting Lubricants • Process and Maintenance Cleaners • RoHS Compliant Passivation Products • Roll Grinding Fluids • Wet Temper Fluids
All equipment is the latest state-of-theart technology and regular and consistent shareholder investment ensures that capital expenditure is driven towards ensuring that DSP’s material exceeds the tough expectations of its clients. “Our vision is to be internationally recognised as one the best in the manufacturing and supply of thin gauge cold rolled and coated products,” DSP says. A company official said the company has a lean approach to operations that is measured through the Balanced Scorecard Approach of defined Key Performance Indicators. “Accountability throughout the whole production process is key to what we do at DSP,” he said. Despite the current economic climate, Duferco sees a bright future for DSP in South Africa and remaisn committed to the long-term success of the Joint Venture.
Final product ready for shipment
To learn more visit www.dsp.co.za. END
rough DIAMOND IN THE
diamond mining company Letšeng Diamonds is nestled high in the breathtaking Maluti Mountains of the Kingdom of Lesotho. By Ian Armitage
Drilling operation in the open pit 58
Letšeng Diamonds FEATURE
iamond mining company Letšeng Diamonds is nestled high in the breathtaking Maluti Mountains of the Kingdom of Lesotho, the highest diamond mine in the world at over 3,000 metres above sea level, Letšeng’s story began in 1995, when the previous General Manager, Keith Whitelock, commenced a process to re-open the Letšeng mine after De Beers had closed it in the early 1980s. In 1999, the mining lease for the Letšeng mine was acquired, during which time the South African company, JCI Gold, was the majority shareholder. It took a further five years for the mine to come into commercial production. In 2004 the mine had a single processing plant with the operation producing around 35,000 carats a year. Then, in 2006, Gem Diamonds Limited acquired JCI’s stake and became the 70 percent shareholder, in partnership with the Government of Lesotho, which holds the remaining 30 percent. In 2007, Mazvi Maharasoa joined Letšeng as the Company’s Resident Director and was appointed as CEO of Letšeng Diamonds in November 2009. The Letšeng Mine is currently the seventh largest processing kimberlite mine in the world, with an estimated 35 year mine life from its two primary vertical kimberlite pipes of the 33 known kimberlite pipes within the Kingdom of Lesotho. “Processing kimberlite ore and liberating the diamonds is Letšeng’s core business, and upon taking control of Letšeng, the first order of business for Gem Diamonds was to approve an expansion plan, which saw the construction of a second processing plant, bringing the processing capacity of the mine to circa seven million tonnes of
ore, producing circa 100,000 carats per annum,” says Maharasoa. Now in 2012, plans are underway to further increase the annual treatment capacity of the Letšeng mine to around 10 million tonnes per annum, with a carat output rising to around 200,000 carats per annum. Outlining the new expansion project at Letšeng, known as Project Kholo, Maharasoa adds, “Our business strategy is growth. The mine fundamentally needs to continue to drive costs down, improve efficiencies and maximise revenue. The Letseng expansion project was approved in November 2011 by both the Letšeng and the Gem Diamonds Boards. Project Kholo will commence in January 2012 and when this expansion is complete, the Letšeng mine will rank amongst the top four largest kimberlite diamond mines in the world.” “The total project capital expenditure for Project Kholo is estimated at US$280 million,” says Stephen Gould, the Chief Operations Officer of Letšeng Diamonds. “The expansion project at the Letšeng mine is a major step forward. The number of carats of diamonds which we produce will effectively be doubled,” he adds. “Through Project Kholo, we will be improving the recovered grade through the increased liberation of diamonds from the kimberlite ore, while we introduce new technology to reduce diamond damage and unit costs.” The requirements of project Kholo go far beyond just increasing the capacity of the treatment plants. The current open pit mine will increase in depth from 150 to 500 metres. In order to expose sufficient ore for the plants, the waste mining activity has to increase from moving 15 million tonnes of waste per annum to in excess of 60 million tonnes
Letšeng Diamonds FEATURE
per annum. “This will further increase job opportunities at the mine,” says Maharasoa. “In order to improve the efficiency of this large earthmoving operation, the size of the equipment employed will be increased by a factor of three. A logistical challenge will be to get this large equipment up the mountain and the project will also include building the required earthmoving workshop needed for maintaining this equipment.” The challenge of providing the increased power required is being carefully managed, and currently the plan is to increase the capacity of the current power line, Maharasoa says. However, this will stretch power supply to its limit, and in order to cater for a possible underground mine in the future, other options such as a second
Snow clad Maluti mountains behind the tailings conveyor belt
Diamondiferous ore being loaded from the open pit
line and the possibility of using wind generated power are being looked into. “The additional provision of fresh water, accommodation and other services are also being addressed in the planning of project Kholo,” Maharasoa adds. In order to ensure that the implementation of project Kholo does not negatively affect the life of mine, a programme of geological drilling has already commenced to map the kimberlite deposits to greater depths in order to better understand the diamond resource deposits. “At some point in the future, it will become more economically feasible to mine these deposits from underground, and a pre-feasibility study has been commissioned to establish this depth and to examine possible mining methods,” says Gould. “I am extremely excited for the future,” adds Maharasoa. “There are a great many factors for contemplation and great potential for growth and development at Letšeng.
Alliance is a Lesotho based insurance company, whose services are focused on the provision of: Short-Term Commercial and Personal Insurance and Life Assurance Products. Alliance Insurance Company is proud to have been Letseng Diamond Minesâ€™ Short Term Insurance Partner from the very beginning of the mining operations. Alliance is heavily involved in Lesotho as a Short Term Underwriter in Mining, Engineering, Construction, Contractors Guarantees and Professional Indemnity covers. Our Life business unit offers market leading Funeral Products, Group Life and Employees Benefits Schemes. Our Re Basotho Savings Plan is a one of a kind in Lesotho. Our products are geared towards reinvestment in the community; to ensure that everybody benefits from their association with us. We strive to continually deliver unsurpassed service, as well as innovative and value-added insurance solutions and products. Contact us or see our website : www.alliance.co.ls for more information on the insurance we can offer you. Mok'haphek'ha Lazaro [Mr] Executive Director - Short-Term Alliance House, 4 Bowker Road, Maseru, Lesotho P.O. Box 01118, Maseru West, 105, Lesotho Landline: (+266) 2231 2357 Cellular: (+266) 6211 6969 Direct : (+266) 2232 6027 Cellular: (+27)7 9885 1314 Email: firstname.lastname@example.org Fax: (+266) 2231 0313
Letšeng Diamonds FEATURE
“Strategically, Letšeng is looking at ways to increase the business potential in terms of developing in-country diamond cutting and polishing facilities, known as beneficiation.” The diamonds produced at Letšeng sell for the highest price per carat of any kimberlite mine, with a grade of less than two carats per hundred tonnes. Letšeng’s sales and marketing strategy seeks to maximise revenue, through additional margins further down the diamond value chain. “Although the Letšeng mine is characterised by a low-grade ore body, producing less than two carats per 100 tonnes of ore mined, it is also renowned for producing some of the world’s largest, most exceptional
EXECuTIVE PROFILE: MAZVIVAMBA (MAZVI) MAHARASOA, CEO, LETŠENG DIAMONDS Mazvi holds a Masters degree in International and Commercial Law. She joined Letšeng Diamonds as the Resident Director in 2007 from the Central Bank of Lesotho, where she was the Acting-Secretary to the Board, and simultaneously served on the Board of Letšeng Diamonds as a Government appointed Non-executive Director. Prior to working as the Acting-Secretary to the Board, Mazvi was the Principal Legal Advisor to the Ministry of Natural Resources, where she was instrumental in the negotiations of mining leases and the drafting of the current Mines and Minerals Act (2005). Mazvi was appointed Letšeng Diamond’s Chief Executive Officer in November 2009.
Letšeng Diamonds FEATURE
The first plant no 1 taken from no 2 plant against the Maluti mountain backdrop
diamonds,” says Gould. “The Mountain Kingdom’s gems are amongst the very best in the world and approximately 35 percent of the world’s supply of diamonds larger than 10.8 carats in size are produced at Letšeng with around 90 percent of the diamonds recovered at the Letšeng Mine being gem quality. “Over the years, the Letšeng Mine has recovered four of the world’s 20 largest rough diamonds such as the 603 carat Lesotho Promise, the 493 carat Letšeng Legacy, the 478 carat Light of Letšeng and the 550 carat Letšeng Star,” he adds. “The expansion project will enable us to increase the volume of this high value production even further, thereby allowing us to
Mining is an extractive industry, however, it is a finite resource
invest in appropriate cutting and polishing technologies in order to participate downstream and maximise revenue potentials.” Letšeng’s diamonds are extremely valuable and so the firm is are looking at all downstream options in order to capture additional margin beyond the mine gate, Gould says. “We are becoming increasingly successful in selling rough and polished diamonds, with good margins being realised. “A cutting and polishing facility will be built in Maseru, Lesotho. Naturally this will create jobs locally and would be positive for Lesotho. Mining is an extractive industry, however, it is a finite resource, so you
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need to have as many economic linkages with the community, and national economy as possible – it is just good corporate practice. “From cutting and polishing you can have spin-off industries such as the jewellery manufacturing industry, which can create SME enterprises and additional employment,” he continues. “That really is our objective. We want to put the seeds down for economic development from the mining industry.” According to Maharasoa, the global mid-to-long-term outlook for the diamond industry is overall very positive. “Given the industry consensus around the extremely positive supply/demand dynamics for high-end diamonds, Project Kholo is an investment which signals confidence in future growth for Letšeng,” she concludes. END
I nsi d e
H i g hve l d â€Ś South Africa Magazine profiles steel and vanadium producer EVRAZ Highveld Steel and Vanadium Limited. By Ian Armitage
EVRAZ Highveld FEATURE
VRAZ Highveld Steel and Vanadium Limited, is South Africa’s second largest steel producer and part of one of the world’s largest vertically integrated steel, mining and vanadium businesses, EVRAZ Group. On 19 July 2010 the Company’s name changed to EVRAZ Highveld Steel and Vanadium Limited, completing the integrated global rebranding strategy of the EVRAZ Group. EVRAZ holds an 85.11 percent stake in EVRAZ Highveld, which was previously owned by Anglo American, and the company is today a renowned integrated iron-ore miner, and producer of vanadium slag and steel products. “EVRAZ Highveld operates in three business segments: steel division, vanadium division and ferro-alloy division,” says EVRAZ Highveld executive Cathie Lewis, who spoke with South Africa Magazine in 2011. The firm owns and operates the Mapochs mine in Roossenekal, Limpopo, which it believes has “sufficient iron-ore for 30 years” and is a key part of future plans. “Mining is an important part of what we do because, in effect, we’re vertically integrated, and having an iron-ore mine is a major advantage,” says Lewis. “The Mapochs mine is unique,” she adds. “There are not many other people who could use this iron-ore, and the
whole iron-steel process was developed around the ore.” EVRAZ Highveld Steel and Vanadium Limited mines titaniferous magnetite ore at its Mapochs mine operation, and produces iron and steel products and vanadiumbearing slag at its Steelworks, based at its headquarters in eMalahleni, Mpumalanga. The steel and vanadium producer, which reported a net loss of R31 million for the nine months to September 2011, is optimistic about the coming year and expects significant operational and quality improvements to flow on from its extensive maintenance and improvement projects, which were nearing completion. The group told South Africa Magazine that its 2012 performance “should be an improvement” and that demand for structural products was also relatively strong. EVRAZ Highveld’s vision is to “create superior value and benefits on a sustainable basis across commodity cycles for all stakeholders, by developing the business into a low cost steel and vanadium slag producer.” To this end, the firm has recently been awarded a Level 5 Broad-Based Black Economic Empowerment (B-BBEE) contributor rating by BLogic, a SANAS accredited agency. “This followed an intense focus on transformation within the company over the past year,” Lewis says. www.southafricamag.com 67
EVRAZ Highveld FEATURE
EVRAZ Highveld was previously rated a Level 8 contributor, she says. “We took a number of measures aimed at increasing diversity across all levels,” she explains. These “measures” included improving representation of historically disadvantaged people in senior management structures; the provision of advancement opportunities to previously disadvantaged groups in the various management structures; education programmes aimed at skills development; preferential procurement, particularly among black owned SMMEs; and, the development of local black owned businesses within the eMalahleni community to
become preferred suppliers. Also, a number of external projects were implemented to target the economic empowerment of communities, on both social and business levels, through education, health, housing and supply chain initiatives. “EVRAZ Highveld aims to develop and support transformation both nationally as well as within the company. We strive to make our corporate structure reflective of the country’s demographics and to ensure that the principles of transformation are also reflected in the communities of EVRAZ Highveld’s operations”, says EVRAZ Highveld CEO, Michael Garcia. “In EVRAZ Highveld we strongly believe that transformation needs to be taken into consideration at all levels of the organisation as part of the business strategy. B-BBEE is part of our business philosophy and we are looking forward to moving further on and increasing our B-BBEE results.”
B & S - Stands for Best Service; Where we aim to provide high quality and consistent service to our customers, develop a long term symbiotic working relationship and constantly look for new expansion opportunities in which we could improve on existing services delivered in our industry.
To learn more about EVRAZ Highveld visit www.highveldsteel.co.za. END
Blasting & Excavating (B&E) is the benchmark in the Drilling and Blasting Industry in Southern Africa. B & E have been providing Drilling & Blasting, Load & Haul, and Crushing services to the Construction, Quarrying, Civil Engineering and Mining Industry since its establishment in 1972. We are proud to be associated with EVRAZ HIGHVELD.
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PLAN SMART… DREAM BIG…
a n d th i n k A f r i ca
ast year saw South Africa’s largest-ever liquidation, auctions and sales among major properties fast-tracked to the hammer, the R720 million failed Bel Air and Lone Hill shopping malls in Gauteng. As 2012 starts to unfold what does this, along with the depreciated Rand and predicted sharp growth cut in the SA economy, foreshadow for the retail property industry? With retail sales over the Christmas period the largest for two to three years, sector specialist Mark Brown is positive, even bullish. “It seems that the consumer is spending more. Depreciation should not affect the commercial property sector because funds are raised locally and largely produced locally. As for growth, I think we are about half a percent off projection so the country is still going to grow at
two and a half to three per cent over the coming year. Urbanisation is increasing and there is evidence of growth. Retailers are definitely looking for new spaces, plus new markets. There is a noticeable trend towards investing in Africa.” Brown is founder and CEO of TBG, The Brown Group; this is a Johannesburg-based property development company that in three years has amassed an impressive 30-project portfolio including Soweto City Mall and the New City Mall in Asaba, Nigeria. The liquidation figures leave him unsurprised. “Over the last five to eight years banks where a lot more liberal with funding and as a result developers found it easier to put up commercial and residential developments without sounds fundamentals in place. Both Bel Aire and Lonehill shopping centre are prime examples of this. Before any development is started, a great deal of research needs to be completed. For example, research needs to indicate that there is a fundamental need for a shopping centre in an area, there needs to be a full analysis of the demographics, etc. As a result,
The Brown Group FEATURE
In three short years, dynamic property development company, The Brown Group (TBG) has grown an impressive portfolio of major projects. Founder and CEO Mark Brown tells South Africa Magazine that Africa is increasingly the place to be. By Colin Chinery
many of the retail centres that did not follow the correct procedures and research are now coming on to the market through auctions as distressed properties. “Now it’s back to proper market dynamics. Questions such as: Is there a direct need, what is the competition in the area like, is it sustainable, will the shoppers come to it, are tenants wanting to take up space in it? These questions will need to be fully answered and each project will have to provide comprehensive evidence that it is a feasible and viable project before development can commence.” TBG specialises in property development and management, national and regional leasing, asset management, debt raising, leasing expansion and cash flow. Other specialities include sourcing optimum sites for tenants, tenanting, renewals, increasing turnover, tenant coordination, and marketing and
branding to ensure maximum development and tenant exposure. “Any successful developer needs to have a hands-on approach. We feel that we have the distinctive edge as developers as we are asmall hands on, fully committed bunch of professionals who are prepared to debate each point so that the development successfully meets the needs of the community.” Brown, 35, started TBG three years ago at a time when he was working in partnership with other developers. “I decided I would rather follow my own track, starting off in pure leasing before returning to my passion i.e. development. I then started finding my own land, putting together my own projects and teams, and just grew the business from there.” Soweto City Mall, he says “is my passion and signature project as I have been involved in every aspect from concept to design to construction and tenanting”. It is planned to be a regional shopping centre. It was an incredibly challenging project to put together - not a vanilla shopping www.southafricamag.com 71
The Brown Group FEATURE
centre where you start from scratch. “We have such a unique site and building. The old power station offers us such a unique site and the existing buildings provide us with a framework for the design, which in itself was a huge challenge as we had to work out how we could take such a huge building and make it profitable while at the same time making it an exciting place to shop.” Phase one is due for completion in April/May 2013 with the final stage scheduled for the end of 2013/beginning 2014. With regional offices in Cape Town, Swaziland, Zambia and Nigeria, the Brown Group is pursuing a dynamic pan-continental growth strategy. The soil turning ceremony of its first big shopping development in Nigeria – a 30,000 sq metre shopping centre plus 150 bedroom Inn hotel at Asaba is weeks away and Brown says he’s got all the important Nigerian, South African and European retailers on side. “It’s fully financed and we’re very excited.” Over the next three to five years TBG plans to roll out a further 10 shopping centres in Nigeria’s main cities. 72
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“We have a big student project in Zambia and we are also investigating opportunities in Ghana. We are cautiously expanding and looking for exciting opportunities in many African countries. I think South Africa is reaching the saturation point for shopping centres but the whole of Africa is definitely, where you find interesting opportunities. We look for good opportunities, partners and tenants who want to expand throughout Africa.” No one doubts that TBG will be playing hard and smart. “Running your own business, especially if you are a developer, means you’ve got to have a huge amount of entrepreneurial spirit. You have to be involved in everything, from the sourcing of the land, to having a gut feel about what kind of shopping centre you could put there. You need the best professional team to support it, you need to know how to sell it to the banks, how to find suitable tenants and your internal team needs to be effective and efficient. Sales, marketing, accounting, that ‘gut feel, you need to be an entrepreneur to do it. Getting all the many variables,
the right tenants, banks, professionals, government, electricity and everybody else lined up into the same path and singing the same tune is often incredibly challenging.” Listening to what is wanted ranks high in The Brown Group success story - “Listening to your tenants, big retailers, banks, architects. From there the challenge is to put all the pieces of the puzzle together with all the knowledge you have gained from listening. Obviously, you need to put your flavour into it, a retailer knows what works best for him/her in terms of space and layout design, so listen and use their knowledge in your design, says Brown. “The space has to work for them. I don’t take the approach of going to a retailer and saying in effect ‘take it or leave it.’ It’s very important to see what the best fit is, and working with space and design and being involved in understanding the process. “When you look at a potential project you have to ask whether it’s realistic, viable, and is it common sense? You must have your feet on the ground, but you’ve got to dream to do it.” END www.southafricamag.com 73
S TA P l E b u T u n c E R TA i n
W H AT i S T H E f u TuRE fOR
Keystone Milling FEATURE
While for millions of South Africa’s poorest, maize is the Number One nutritional must-have, input costs, market prices and other variables are raising some fundamental questions. But Henk Slingerland of sector leaders Keystone Milling tells South Africa Magazine that the future of the primary staple food is looking good. By Colin Chinery
nd of the Road for Maize?” - a start of year shock headline for those involved in South Africa’s biggest cereal crop and sub-Sahara’s main staple food. But with investment in better crop varieties in recent years doubling per hectare yields, maize production in South Africa has “saturated”, according to John Purchase, Chief Executive Officer of the Agricultural Business Chamber. And with maize accounting for 70 percent of the country’s grain production and sixty percent of its cropping area, agriculture industry representatives are debating how to deal with the future of this sector backbone. But from Henk Slingerland, Operations Manager of premium leader Keystone Milling, a more sanguine assessment. “The future of maize, a staple diet for the majority of the South African population, is huge, and at present the signs are that over the next few months raw maize might be in shortage in the country. “There have been excellent crops but because of the prices increasing a lot of the farmers and trading houses have been exporting to take advantage of good prices overseas. In fact there might have been an oversight on the part of the Government in that we exported rather too much.” www.southafricamag.com 75
Keystone Milling FEATURE
Some strategists believe that long-term, South African growers should look at growing maize for animal feed, or even biofuel manufacture. Slingerland however is more guarded. “Animal feed is already a part of the normal milling process – a by product called chop accounting for around 30 percent, and we sell it as such. As for biofuel, at the moment this doesn’t really prevail in South Africa, we are lagging a bit behind the rest of the world.” Based in Rustenburg in the North West Province, at the foot of the Magaliesberg mountain range, Keystone Milling offers a variety of top end, high quality maize products fortified with vitamins and minerals for better health. These include super maize meal, special maize meal, samp, maize rice, braaipap, fine meal and hominy chop - used for animal feed. “Our mission is to consistently produce, sell and distribute via our own truck fleet, the highest quality products to our chosen markets by establishing a culture of excellence,” says Slingerland. The fore-runner company had been serving the local community for more than half a century when the two current directors, Hugo Ottermann and George du Toit joined Rustenburg Mill 12 years ago. They changed its strategic direction to a businessorientated approach while maintaining the established product excellence, and Keystone Milling was born. The new company rapidly addressed the demands of a very competitive industry and soon developed into a dynamic business, and a staff of 250 now serves a growing client base in North West Province, Gauteng, KZN, Mpumalanga and Limpopo.
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Keystone Milling FEATURE
With maize a staple diet in South Africa and beyond – and especially for poor communities - Slingerland stresses Keystone Milling’s wider interests and concerns. “We are very much pro socio-economic development, playing a part in lifting the living standards of everyone that buys our products. Much of our operation is performed by unskilled labour, and there’s lot of on the job training. Outside and in the wider community, we actively support a number of foundations, including HIV, Aids orphanages, and SPCA - the only animal welfare organisation in South Africa to be governed by an Act of Parliament.” Maize is the largest locally-produced field crop and the most important source of carbohydrates in the Southern African Development Community (SADC) for both human and animal consumption. And South Africa is the main grower - chiefly in North West, the Free State and Mpumalanga - with an average production of about 8.9 mt a year over the past ten years. More than 8,000 commercial maize producers account for the major part of the South African crop, with the rest coming from thousands of small-scale producers.
Power Super Maize meal packaging gets a face-lift Afripack Consumer Flexibles, Africa’s award-winning packaging manufacturer, has changed the face of one of Africa’s favourite consumable products. In 2008 the industry giant joined forces with Keystone Milling to change the packaging of their Power Super Maize Meal from manual/semiautomatic fill paper bags to a fully automated, form, fill, and seal ﬂexible pack. A first in maize meal packaging, the revolutionary new look was launched in early 2010 and the exciting makeover was recently applied to Keystone Milling’s Janpap Braaipap brand. Both the Power Super Maize Meal and Janpap Braaipap brands are supplied in polypropylene/Idpe lamination with full graphic print. What’s more, the cutting edge material is supplied in reel form. Through its successful partnership with Keystone Milling, Afripack can boast yet another pioneering achievement that will ensure it continues to be a progressive packaging company.
Not only are current international maize and grain prices far stronger than those of most other commodities, but domestic prices have been boosted by the depreciation of the rand. Since the start of this year maize prices have increased to record highs, climbing to more than R2 700 a ton for white maize and topping R2,800 a ton for yellow maize. The SA Grain Information Service reports that maize deliveries to local silos for the current marketing season increased to 9.609 million tons in the week to January 6, compared with 9.601 million tons at the end of December last year. And initial intentions to plant estimates indicate a 10 percent increase for maize, with crop prices expected to remain high until harvesting of the 2011/12 summer crops begins. With a supply chain characterised by excellent relationships and agreements, Keystone is driving its strategy of new markets and new clients. “One of our biggest
clients is CCW, a division of Wal-Mart controlled Massmart, and we have many independent and large wholesale customers. We want to grow this latter section of our business still further, as well as exporting more to countries such as Botswana, Zimbabwe, and elsewhere in subSahara Africa.” Keystone Milling’s biggest challenge is the pricing of raw maize and other input costs, notably fertilizers and fuel. “Many of our competitors cut their prices, and with ours being at least 10-15 percent higher it’s a big challenge in a country where a lot of the people are on the breadline. But we are countering this by campaigning, promoting and media advertising,” says Slingerland. “Keystone is a premium brand, and while our prices are significantly higher than the run of competitors, what defines our products is their outstanding quality combined with value for money, a feature resulting from having the very best extraction equipment. In a very competitive market, this is part of our secret.” END
ICC D u r b a n :
Helping eThekwini flourish
International convention centres make a huge economic contribution to both the local and national community. By Robert Michaels
or event organisers, persuading people to sit though daylong (and sometimes weeklong) meetings or conferences can be tough. One sure-fire way to guarantee success is to hold it somewhere beautiful or iconic, where there are ample recreational facilities – perhaps even enough so attendees might bring along the spouses and kids and wrap a family vacation around the event. This is exactly what the International Convention Centre Durban (ICCD) has to offer. It has a whole city of recreation at its disposal and is positioned as Africa’s leading convention centre, which means it is able to contribute big to the local and national community.
The ICCD is a focal point of Durban’s business district, a short distance from King-Shaka International Airport, and just minutes from world-class hotels and beaches. eThekwini, as Durban is popularly known, is a cultural goldmine. As a sightseeing location it has a lot to offer. You can enjoy the beaches, you can enjoy the wildlife, you can explore the Drakensberg Mountains and you can visit the Umgeni River valley, which is a traditional Zulu stronghold. What is important to note, however, is that there is more to the ICCD than it’s location and that Durban is more than a tourist attraction. It is also an important economic centre. ICCD is one of the most advanced conference facilities in the world in an economically important city. It hosted the Commonwealth Heads of Government Meeting in 1999 and the International AIDS Conference in 2000.
International Convention Centre Durban FEATURE
Perhaps most significantly, Durban ICC recently hosted COP17/CMP7, the biggest conference in its history, as well as one of the most critically important events South Africa has ever held. The event called for 27 simultaneous meeting rooms with the capacity to host between 20 and 500 delegates, two plenary halls hosting between 1300 and 1900 delegates, 235 administration and country delegation offices, 800 computer internet stations, 278 exhibition stands in the ICC exhibition centre, a large travel and accommodation desk and three banking facilities. “Flexibility and versatility are key factors in the design of the ICCD,” says Jeremey Hurter, ICCD’s CFO. “We play host to a number of different events, concerts, sporting events, conferences and meetings.”
The ICCD together with the adjacent Exhibition Centre offers 33,000m² (355,209ft²) of flat floor space making it the largest convention complex in the country. The Convention Centre offers a raked Auditoria seating of 1800 and flat floor seating of 5000. The country’s first purpose indoor Arena offers fixed tier seating of 2250, flat floor seating for 5200 and a standing audience of 7500 (10000 people capacity altogether). The Convention Centre and Arena can be combined offering 18,000m² of space. “Through the use of operable walls the Convention Centre and Arena can be subdivided into over 40 configurations to suit any event requirement,” adds Hurter. Little wonder then that ICCD is where Africa and the world “meet, play and live”.
We play host to a number of different events, concerts, sporting events, conferences and meetings
“The ICCD is regularly voted Africa’s Leading Conference Centre,” he says. “International convention centres make a huge economic contribution to both the local and national community.”
NEW CEO In November, Durban ICC confirmed that JulieMay Ellingson had been appointed its new CEO – she had been serving in an acting capacity since April 2011. Hurter, who had been acting CEO, reverted to his position of CFO. Commenting on her appointment Ellingson said her vision for the ICC is twofold, “first, it is to be the best convention centre in Africa, offering a unique African experience with the highest quality service and second to be a centre for knowledge sharing through which new jobs can be created locally, provincially and nationally”. “Additionally we are looking at positioning Durban and ICC as one of the world’s premier long-haul international conferencing destinations. We will also continue our strategy of attracting high profile international conferences and events to 82
The ICCD is regularly voted Africa’s Leading Conference Centre
International Convention Centre Durban FEATURE
responsibilities. Under Ms Ellingson’s leadership over R6 billion was invested in projects across the city. The most notable include the iconic Moses Mabhida Stadium, upgrade of Durban’s central beachfront, development of Sports Hubs in Umlazi, Clermont and KwaMashu, city beautification and phase 1 of the Victoria Embankment Yacht Mole. Chairperson of the ICC Board, Ms Mato Madlala said, “The Board is extremely pleased to have secured Ms Ellingson as CEO of the ICC. Ms Ellingson is well known for her passion and hard work and we are confident that under her leadership the Durban ICC will be able to build on its existing strengths and identify new markets and its future sustainability and growth.” END
Durban together with our partners in the local business tourism sector.” Commenting on the immediate plans for the Durban ICC she continued, “we are looking at improving the organisation’s management systems and skills base and a programme of improvements to the infrastructure of the Durban ICC is ongoing. National and domestic marketing of the Durban ICC will be refocused in recognition of global economic conditions and to ensure that there is an even spread of business from the various sectors within the business tourism industry.” Ellingson joined the ICC from the eThekwini Municipality’s Strategic Projects Unit, which she headed since its establishment in 2005. As Head of Strategic Projects Unit, Ms Ellingson was responsible for driving Durban’s 2010 and beyond strategy and delivering on the city’s 2010 FIFA World Cup
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TANELEC POISEd TO
Itâ€™s respected, successful, strategically-focussed, and the only sector local brand in powerdeprived East and Central Africa. Managing director Ian Robertson tells South Africa Magazine how transformer and switchgear manufacturer Tanelec is perfectly placed to support the regionâ€™s acute power crisis through provision of its distribution products manufactured locally. By Colin Chinery 84
cross Africa countries are facing a massive energy deficit. Supplies in South Africa and the North are high but elsewhere availability trails well below 40 percent. In West, Central and Eastern Africa it gets worse, crippling growth and any prospect of social uplift. It is a crisis brought about by droughts, failed and delayed power projects, under-capitalisation, mismanagement and political ineptitude. “In some parts only 12 to 15 percent of the population has access to electricity – hard for outsiders to imagine,” says Ian Robertson, Managing Director of Tanzania-based Tanelec, the largest manufacturer of distribution transformers and switchgear in East and Central Africa. “So unsurprisingly, for us the main driver for growth is demand.” Tanelec began its operations in Arusha, northern Tanzania in 1981 and for the first 20 years its biggest customer was Tanesco, the national electricity utility. But when Robertson took over as MD in 2001, the company began addressing the vulnerability issue of single customer dependence. “A further factor was that many projects relied on external funding which meant you went from feast to famine as customer ability to purchase was frequently delayed. “We saw that we needed to expand throughout the region, and now we supply utilities not only in Tanzania but also Kenya, Rwanda, Uganda, Burundi, Malawi, Zambia and Mozambique, as well as the private sector in all of these countries.” Over this time Tanelec has won the trust of the East, Central and Southern Africa regional utility and private market through the provision of good quality, reliable products manufactured under IEC standards. Best delivery and
a compressive service underpinning product performance and lifespan have re-enforced its reputation. “With such a high percentage of the population without electricity the potential for growth is obviously huge,” says Robertson. “But there tends to be a gap between generation and demand. The region has been heavily dependent on hydro generated energy but following gas and oil finds there is now a movement towards reducing dependency on hydro generation. “Right now in all the countries in the region most of the utilities are seeing reasonable growth. We have a steadily growing business from Uganda, and in Kenya there are big demands. And the Kenyans are doing what they are saying they will do – some countries make big plans but fall short”. From a 2400 transformers per year capability in 2007, the company now has a capacity to produce 7,000, with a scheduled increase to 10,000 transformers per year by 2013. “7,500 transformers is not our limit and we could easily go to twice that.” It’s a scale of expansion made possible through the acquisition of new modern machines and technology coupled with employment and training to increase the number and skills of the workforce. “Just now we are looking at a factory expansion project that would triple turnover, and putting in additional plant and machinery that would make the company more self-sufficient and give increased local added value.” Winner for each of the past three years of Tanzania’s top industry award in the large electrical manufacturing category, Tenelec’s strength and impressive growth says Robertson, is the result of “combining both basic local knowhow and the latest global technology” to ensure excellent workmanship. “The world is our competitor, with the strongest competition coming from India, China and the Far East. We are seeing a big rise in competition from these countries. And with China giving export incentives to its manufacturing sector you can say we are trying to do business on what is not exactly a level playing field.” The allwww.southafricamag.com 85
Africa conquering Dragon? “Exactly. Everywhere I go I see the Chinese winning most of the building projects. Look along a street and you see lots of small shops run by Chinese and selling Chinese goods. But we need to compete with them not just sit back and complain.” With a full in-house design and engineering capability, Tanelec produces transformers under a technical licence with the ABB Group of which it was once part. “This gives people comfort on the quality of the technology we use. And being local can make a difference. We can provide shorter lead times than say a supplier in China. If something goes wrong, people are seeing increasing value in this. In the rare event of a customer having a problem we jump quick to sort it out.” As a relatively local company even in terms of Uganda (Arusha to Kampala 612 km), Tanelec has a unique pull. For as well as manufacturing and distributing the highest quality products, it delivers an aftersales and back-up service that goes beyond the servicing of its own brand. A new transformers sole supplier contract with a leading Ugandan utility includes an agreement to repair all transformer stock irrespective of make. “We send a truckload of new transformers and very likely return with a truckload of units needing repair. Through our service and refurbishment offering, many transformers have been restored to working condition at a fraction of the cost of a new one.” Currently Tanelec is working on a project to refurbish more than 500 transformers from varied manufacturers that have failed over the years. “In Rwanda I went into the yard of a utility and saw a pile of failed transformers that were being scrapped. No one realised they were repairable. We made an offer, repaired them almost back to new condition and returned them to their delight and amazement. “I think that’s a big plus for us here. If someone buys a small distribution transformer from say China or India and it fails there are no economics to support sending it back for repairit would be cheaper buying a new one. We give 86
Right now in all the countries in the region most of the utilities are seeing reasonable growth. We have a steadily growing business from Uganda, and in Kenya there are big demands
a guarantee – often 50 percent maximum percent of the cost of a new transformer. That’s very effective for the customer. The life span of a typical transformer is reckoned to be 25 years but in practice it can be as much as forty – depending on how it’s looked after and maintained. Here in this region it would be less owing to frequent overloading, poor network protection and poor maintenance.” Tanelec is currently looking at a factory expansion project tripling turnover, and putting in more plant and machinery to give it greater self-sufficiency and enhanced local added value. “Where we are we are quite far away from most of our suppliers, and it’s a big challenge to plan materials sometimes two to three months advance of needs. Sometimes we are planning to purchase materials even before we have orders. The more self-reliant we become the more we can take costs out of the job and reduce lead times for our customers.”
Climatic issues are among other challenges. “Droughts caused a major shortage of generation in Tanzania, and while this came to an end just a few weeks ago, these things can come back and put seriously unbudgeted costs into the company. And for a long time last year we were subjected to power cuts up to, and even exceeding twelve hours every day. Some of our operations such as drying are continuous 24 hour processes, so we had to run our own diesel generators – and that’s costly.” Tanelec Managing Director for the past 10 years, Robertson has an extensive ABB background, starting his career in Dundee in 1962 with leading manufacturers BonarLong Transformers, later incorporated into the Group. In the mid 1980s he was actively involved in setting up an ABB factory in Kuala Lumpur (Malaysia). “You could say this industry - transformers in particular - has been my life.” END
E x ceptional
choice, E x ceptional
hospitality Three Cities Management is a leading hospitality management company offering an extensive collection of hotels throughout Southern Africa. By Ian Armitage
hree Cities Management Ltd. was formed in 1988 as a hospitality group offering specialised services in the tourism industry. The group today manages and markets over 30 quality tourism and leisure properties, three campuses of The International Hotel School (I.H.S), an Equestrian Academy and Africa’s largest Marine Theme Park – Durban’s uShaka Marine World. This has resulted in two distinct divisions.
Three Cities Management FEATURE
“Three Cities, is made up of two divisions, the one being the Operations Division and the other the International Hotel School,” says Divya Parshotam, Three Cities Group Brand Manager, tells South Africa Magazine. “At Exceptional Hotels, the Hotel Management Company, we believe our ability to adapt to an ever changing environment sets us aside from our competitors. The nature of a Management Company requires that it is constantly assessing its efficiencies against a background of service excellence and this is how our performance is measured. “The synergy between the Hospitality Training division and the Operating Division, means that we always have access to focused and qualified personnel, further enhancing Three Cities ability to provide and exceptional experience to all its guests,” Parshotam adds. “We have recently changed our branding to reflect what our key focus is and that is Excellence. Words used to describe Three Cities are reliable, exciting, dependable, passionate and dedicated.” Brand flexibility is one of Three Cities’ hallmarks, which allows each hotel to own and maintain its singular identity whilst being sold to the travel trade under a single, strong brand. Each property has its own individual personality and the hotels are combined through a common bond of service excellence of international standard, with quality appointed accommodation and facilities appropriate to each of the properties marketed. “In tough economic times it has become essential to set yourself aside from your competitors if you are to be successful,” Parshotam says.
2011 was a tough year for the Industry in general and required Three Cities to re-asses its “modus operandi” in order to streamline operations in an ever increasingly competitive environment. “A low point in the last year was having to rationalise some of the businesses under our control in order that they survive the tough economic times,” Parshotam says. “We consider it an achievement that despite this rationalisation process we have still managed maintain and enhance standard in all of our hotels. “A high point in the last year was opening the Gateway Hotel in Umhlanga. There was a real focus on “Green” in the design and development phases of the Hotel and we are exceptionally proud of the end product and its low impact on the environment. “The world having become a much smaller place in terms of travel and communication means that global events on a macro scale could influence us and our business on a micro scale,” Parshotam adds. “Instability in the Middle East,
lack of confidence in the Greek and Italian economies and Natural disasters all play a role in influencing our targets markets behaviour. This coupled with instant communications means that travel patterns can change dramatically and our challenge is to constantly be aware of potential changes so that we can offer alternative so as to maintain business levels.” Three Cities represents some of Africa’s finest hotels, resorts, apartments and game lodges situated in the major tourist and business centres of Southern Africa. In addition to these specialised management and marketing services, Three Cities has become the leader of private tertiary training and education for the hospitality industry in South Africa. “The I.H.S opened its doors in 1994 and has grown to become the largest private hospitality training provider in South Africa,” says Parshotam. The school offers a range of industry related full and part-time courses, with three campuses for full time study located in Cape Town, Durban and Sandton, as well as a National Traineeship programme in which students ‘earn-while-they-learn’.
The courses are based on materials developed by the Educational Institute of the American Hotel and Lodging Association, the world’s largest education and training resource for the industry. “The Three Cities Group plays a major role in the future of the industry through its education and training facilities,” says Parshotam. “We also have a theme park management company,” he adds. That division was formed in 2002 and was formed with local empowerment and overseas partners to bid for and manage uShaka Marine World. “uShaka Management now manages one of the largest aquariums in the world,” says Parshotam. uShaka comprises a 1,200-seater dolphin stadium, 300-seater seal stadium and a re-creation of an old cargo ship with an underground themed Aquarium Gallery
Three Cities Management FEATURE
extending through 450 metres of spectacular fish and shark tanks. It also includes the Wet ‘n Wild water park, with 18 water slides, and a retail village comprising 89 specialty shops and restaurants. “The core of our business remains hospitality and exceptional hospitality is what the focus of our hotel division will be about going into the future,” says Parshotam. “Three Cities continues to grow from strength to strength. Its unique portfolio of properties offers a diverse range of Africa’s finest hotels, resorts and game lodges situated in the major tourist and business centres of Southern Africa. “We have continued to grow our corporate markets specifically in Cape Town and Durban,” he adds. “Traditionally, Three Cities has always had a broad portfolio, including City Hotels, Resorts, Exceptional Safaris and the Exceptional Collections. “We will continue to pursue opportunities that will enhance our portfolio in areas that our traditional markets have indicated a demand for. In addition, we have moved outside of our normal areas of operation, which included South Africa, Zimbabwe and Zambia and are currently involved with a Development in Nigeria and we represent a Hotel in Mauritius.” The Industry has and still is experiencing tough times. There were massive expectations leading to the 2010 FIFA World Cup and this led to an abundance of newly developed hotels and Bed and Breakfasts in South Africa. The subsequent oversupply of beds and the lack of improvement in the economic climate meant that the hospitality industry became far more competitive and yields were lower than in previous years. “We have faced these challenges by streamlining our
operations and focusing on our productivity,” Parshotam says. “We do believe that there are opportunities for innovative organisations that pay attention to the needs of their guests and provide goods and services accordingly. “As our portfolio extends to such a wide variety of product, it is not possible for us to profile a specific type of customer that would suit all. “In our opinion, the ideal customer is one who leaves the premises with us having exceeded his expectations. In order for us to achieve this we put a great deal of emphasis on communications with our guests. All departing guests have the opportunity to complete and electronic questionnaire and responses are analysed by the operations team. Suggestion and shortcomings are all actioned if appropriate,” he concludes. Website: www.threecities.co.za.END
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Safety first AdT:
ADT’s complete range of security solutions, from electronic article surveillance (EAS) to access control, fire detection and suppression systems and remote monitoring, is all backed by its well-established guarding, monitoring and armed response services. By Robert Michaels 92
ecurity systems are common nationwide. For the most part, they are used for more than just possible break ins from would be burglars and they also offer useful medical and fire alerts. ADT is the largest private security company in South Africa and a specialist in this field. The company’s story began in the United States in 1874, when the American District Telegraph Company (ADT), was formed through the amalgamation of several small telegraph delivery companies. ADT is, in fact, as old as the security industry itself – and it practically invented home security. “From the outset, ADT employed messengers who were sent to clients to deliver telegraphs or collect ones that needed despatching,” the company’s website says. “Later, call boxes
were invented, and placed in clients’ offices and homes. Now there was interactivity between ADT and its clients and when an electric signal was sent, an ADT messenger responded.” Though the technology has developed (to put it mildly!), the principle remains the same - a client in need sends a signal and ADT responds. “By 1910, messengers began to double as watchmen and guards, and clients’ signal timers were monitored at ADT central offices. Thus did the security industry begin,” the company’s website adds. “Home Security systems are a valued part of home protection,” explained Martin Ochien’g, Marketing and Strategy Director at ADT South Africa, who talked to South Africa Magazine in January and outlined the company’s history and operations in South Africa. He said, ADT, a subsidiary of the Fortune 500 company Tyco International, provides fire and security services to almost eight million business and residential customers around the world. “Internationally, ADT responds to tens of thousands of calls each day. And each day new learnings, experiences and technologies are fed back into the company, enabling continuous improvement,” its website says.
With over 100 years of industry experience and innovation in every aspect of security and fire protection, AdT is the world’s blue chip provider
ADT is the world’s largest and most technologically advanced security company, operating in over 50 countries and watching over some seven million commercial and residential clients. According to its website, ADT helps protect 80 percent of the world’s leading retailers, two million commercial enterprises, 75 percent of the world’s commercial shipping, over 300 airports and transit hubs, thousands of commercial buildings, and more. “With over 100 years of industry experience and innovation in every aspect of security and fire protection, ADT is the world’s blue chip provider,” the company says.
Local Knowledge ADT is South Africa’s largest private security company, where it offers both the “sophistication of a major international corporation” and the hometown knowledge of a local organisation. “Since ADT entered the South African market in 2001 by merging and welding together South Africa’s leading local security companies, we’ve grown dramatically,” the company’s website says. Over 420,000 South Africans trust ADT to protect their homes and families. This growth has been paralleled by accelerating growth in the business and commercial sectors. “ADT provides commercial security solutions to thousands of South African businesses in all major urban centres with a growing list of blue chip clients,” added Ochien’g, “We offer a comprehensive range of dedicated security solutions including manned security guards, access control, burglar alarms and alarm installations, CCTV security cameras and armed response, as well as business and residential fire systems.” 94
Our strategy is to use our local experience, coupled with global knowledge, to put into practice locally what has worked worldwide
ADT’s complete range of security solutions, from electronic article surveillance (EAS) to access control, fire detection and suppression systems and remote monitoring, is all backed by its well-established guarding, monitoring and armed response services. “Our strategy is to use our local experience, coupled with global knowledge, to put into practice locally what has worked worldwide,” said Ochien’g. “This constant flow of information keeps us abreast of trends so we can advise our clients and put preventative measures in place before incidents occur. We also pride ourselves in pushing the boundaries with new technology developments and staying abreast of global advancements in this field.” To learn more visit www.adt.co.za. END
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Specialist OneLogix CEO Ian Lourens says there is no substitute for deep intuitive knowledge and entrepreneurial insight.
neLogix is a logistics services group focusing on niche, high margin, cashgenerating businesses with predictable earning streams. The AltX-listed firm has enjoyed a period of solid growth, despite tough economic conditions, and reported a 41 percent jump in revenue to R701 million for the financial year ended May 31, 2011 - with the diversified logistics company generating profit of R50.2 million for the year. That was 18 percent more than in the previous financial year. OneLogix CEO Ian Lourens explains
that the group’s operations – which include seven companies (Vehicle Delivery Services (VDS), Commercial Vehicle Delivery Services (CVDS), PostNet, RFB Logistics, Magscene, OneLogix Projex and Atlas Panel Beaters) – have performed very well. “We are pleased with performance,” Lourens says. “OneLogix defines its business activities as falling into three segments. The biggest segment is labelled ‘automotive and abnormal’. Revenue here increased by 46 percent during the past year and it consists of, first, VDS, an operator in the auto-logistics arena both within the borders of South Africa and throughout the southern African region. VDS is the largest and most
logistics By Ian Armitage
established business in the entire group â€“ it has a trading backbone that stretches from Durban and Johannesburg, through Beitbridge to Harare, and finally Lusaka, in Zambia. Second, we have CVDS, which transports new commercial vehicles over three tons on their own wheels to destinations throughout South Africa and neighbouring countries. RFB Logistics, a recently acquired business, is then engaged in general freight with an emphasis on abnormal loads, and OneLogix Projex, a new start-up within the group, is closely aligned to RFB in terms of activity, but with a greater focus on project logistics. Atlas Panel Beaters, acquired two years ago, also falls into this segment and it undertakes structural repairs
on heavy commercial vehicles. â€?It is a clearly articulated strategy of the business to utilise this backbone to lever growth opportunities for other businesses in the group,â€? Lourens adds. The remaining segments within the group are Retail, comprising PostNet, a 242 franchised retail store network within South Africa and Namibia offering business solutions with a special emphasis on courier, and Magscene, which is categorised as the Media segment of the business, and it imports, warehouses and distributes international, together with some www.southafricamag.com 97
local, magazines to the retail trade in major metropolitan areas. “We performed well in all areas of business and the new additions to the business have been welcomed,” Lourens continues. “Typically we acquire businesses where there is a strong entrepreneurial spirit. We help those businesses grow, as it were, to the next level. “In most of our divisions the founders of the businesses are still running them, and their deep intuitive knowledge of the industry and entrepreneurial insight are a competitive advantage when
We performed well in all areas of business and the new additions to the business have been welcomed it comes to exploiting growth opportunities. Furthermore, we place much emphasis on empowering the individual management teams.” In order to achieve this, the company structure is fairly decentralised. Head Office is a comparatively small component and attends to matters such as finance and administration, HR, IT and higher-level strategy. “This structure and philosophy ensures that the businesses are keenly aware of new opportunities, which they can readily exploit,” says Lourens. “It also ensures that all business processes are constantly under review to ensure a continues ability to respond to the market demands.” Lourens aims to keep the company on the current growth path. He describes the company’s cash resources as “comforting” and says they act as a driver of acquisitive and startup growth. “I’m very excited by the future for OneLogix,” he says. “The plan is simple: continue the growth
OMEGA RISK SOLUTIONS Omega is a dynamic company which has caused much excitement in the security industry since its inception nearly 8 years ago. The company connidently offers its services as superior, yet lexible, and tailored according to the clearly identiiied risk and need prooiles of customers.
Core services provided by Omega to achieve the idea risk management mix include protection services such as manned guarding by multi – skilled security officers, monitoring, response, loss control services, security technology; ire risk management services and health and safety. The company provides services to discerning customers, leading enterprises and to installations of strategic as well as commercial importance and focus on niche markets such as Oil and Gas, Motor Manufacturing, Mining, Retail, Aviation Security, Maritime Security, Diplomatic Missions, Hotel, Leisure and Gaming, Financial Institutions and Macro City Centre Surveillance. The business philosophy of Omega is based on a thorough understanding of its clients’ requirements in order to present them with unique, cost-effective and sustainable solutions. The company’s commitment to their customers is to deliver superior innovative services to minimise their risk and maximise their inancial rewards.
Omega has certainly made an impact on the industry and can be regarded as a benchmark in the provision of advanced integrated security solutions. Omega Risk Solutions (Pty) Ltd Eastwood Office Park, Celtis house, Lynnwood Road, Lynnwood Ridge, 0060
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SECURITY WITH INTEGRITY
of the business. There is a lot of potential in many markets. Africa is certainly very appealing. After decades of slow growth, Africa has a real chance to follow in the footsteps of Asia.” He has a point. Over the past decade six of the world’s 10 fastest-growing countries were African. In eight of the past 10 years, Africa has grown faster than East Asia, including Japan. Even allowing for the knock-on effect of the northern hemisphere’s slowdown, the IMF expects Africa to grow by six percent this year and nearly six percent in 2012, about the same as Asia. “There are a number of niche, high margin, cash generating markets we are looking at,” Lourens says. OneLogix goes back to the turn of the Millennium when, as one of a group of business partners, Lourens acquired a shell company on the JSE and proceeded to acquire several transport companies – 11 in total – with the objective of becoming “a major broad based player in the logistics industry”.
While that venture traded “relatively unsuccessfully”, in Lourens’ words, lessons were learnt that led to its downscaling in 2003 and the transfer of OneLogix in May 2004 to the newly instituted AltX. The group adopted a “new approach”, he explains. Rather than competing with the larger established players, it aims to be a niche player in various markets. “One approach is to look for small margins on large volumes of business – we are focused on doing the reverse,” says Lourens. “We like to operate in markets we can reasonably expect to dominate, and in which there are comparatively high barriers to entry.” Its financial performance shows that the direction taken by OneLogix is a sound one. The group continues to make profits, after all. An excellent BEE rating is a distinct further advantage, Lourens concludes. “We have spent a lot of time and effort because it becomes a competitive advantage.” END www.southafricamag.com 99
success A n
When Stephen Saad established Aspen Pharmacare in a small house in Durban in 1997, little did he think the small sales company would one day become South Africa’s leading pharmaceuticals producer. Stavros Nicolaou, Senior Executive, Strategic Trade Development, tells us more about the “Durban Dynamite” and this African success story. By Robert Michaels
Aspen Pharmacare FEATURE
n 1997 Stephen Saad, then aged 33, saw an opportunity; he saw a need. The opportunity: to build a major pharmaceutical manufacturer capable of supplying the South African market with brand name, generic and over-the-counter medicines at affordable prices. The need: to supply South Africans with the essential medicines required for the treatment of life-threatening diseases such as HIV/AIDS, tuberculosis (TB) and malaria. Through a series of wellplanned deals and calculated risks, the biggest being the R2.4 billion acquisition of SA Druggists, Saad, who remains Group CEO, turned Aspen -- a company he started with R50 million in capital -- into the largest producer of tablets and capsules in Africa. This achievement is thanks to Saad’s foresight in securing voluntary licences from multinational pharmaceutical companies for the manufacture of more affordable generic antiretrovirals (ARVs). He appreciated the potential to supply ARVs and TB treatments to the South African government, and when he acquired SA Druggiests, he sold off almost everything other than its manufacturing capabilities. In the decade that followed, Aspen signed a number of agreements with multinational pharmaceutical firms, gaining the rights to manufacture and market generic versions of their products.
Although these initially focused on ARVs, Aspen soon branched out into various drug categories. It also engaged on a growth strategy that took its operations into sub-Saharan Africa, Latin America, Asia Pacific and the UK. “I thought I was going to run a small business from Durban,” says Saad, now 47. Aspen now has a presence in over 100 countries, with around 40 percent of its operating profit accrued outside of South Africa. “Aspen established itself in South Africa thanks to the local demand for generic ARVs and TB treatments and became one of the most efficient pharmaceutical manufacturers in the world,” says Stavros Nicolaou, Senior Executive, Strategic Trade Development. “Aspen’s success has been based on an aggressive growth strategy, made possible by the demand for generic pharmaceuticals,” he adds. Aspen Pharmacare is today ranked in the world’s top 10 generic manufacturers by revenue by Generics Bulletin, the world’s leading newsletter for the generic medicines. It has an annual capacity of 7.5 billion finished tablets in its flagship Port Elizabeth facility and, although most of its manufacturing capability is South African based, it has nine manufacturing sites around the world - four in South Africa and one in Uganda, Tanzania, Brazil, Mexico and Germany. It is active in a diverse range of segments, including branded products, fine www.southafricamag.com 101
chemicals, OTC products and generic drugs and fine chemicals. “We have a diverse product portfolio and pipeline, and we pioneered the first generic ARVs on the African continent,” Nicolaou says. “We continue to be a major supplier of HIV/AIDS therapies to the African continent, providing ARVs to in excess of one million Africans.” With its roots still firmly in Durban, Aspen reported revenue of R12,383 million and operating profit of R3,149 million for the year ending June 30, 2011. It is a real South African success story. But it isn’t the end of the story. The firm has sound strategy for even more international expansion through both organic and inorganic growth, Nicolaou says. “In 2011 we grew group revenue by 29 percent and significantly expanded our global footprint. Looking forward, there are lots of opportunities for further growth and expansion. “For example, our recent acquisition of Sigma, Australia’s largest generic firm, presents synergies for the extension of Aspen’s existing operations. We are already beginning to see the benefits of synergies in that business and creating a foundation for further development of our business in the region. “Our growth strategy focuses on continuing
to look at South African growth and realising opportunities in offshore markets, Latin America and Asia Pacific are particularly interesting opportunities for Aspen,” he continues. “Australia’s proximity to Asia Pacific makes it an ideal base; from which we can expand and leverage our product pipeline into the Asia Pacific region. “Ultimately we want to further increase our footprint and further consolidate growth opportunities.” 2012 is set to be an exciting yet challenging one for the pharmaceutical industry. A wide range of factors and “moving parts” will likely make it one to remember. China, India, Russia and Brazil are predicted to be the fastest growing regions among developing countries for the pharmaceutical industry, driven by aging populations, an increase in chronic diseases, expanding healthcare insurance coverage, urbanisation and investment in rural healthcare services.
Our recent acquisition of Sigma, Australia’s largest generic firm, presents synergies for the extension of Aspen’s existing operations
Aspen Pharmacare FEATURE
Aspen is well placed to capitalise on Pharmaceutical emerging market growth. For 12 years it has delivered annual revenue growth of around 50 percent, operating profit of 56 percent and headline EPS of 49 percent, Nicolaou says. “Among Aspen’s strengths are its marketing relationships, underpinned with the manufacturing prowess to support sales in this highly competitive Industry,” he explains. There are challenges however, chief amongst them being strong international competition. “A positive, particularly in terms of South African manufacturing, remember most of our manufacturing capability is in South Africa, primarily in Port Elizabeth, is that the government is in the process of formulating new preferential procurement regulations,” says Nicolaou. “The new regulations are expected to give a boost to local pharmaceutical companies that produce their drugs in South Africa. The government is keen to bolster the local pharmaceutical industry, as imported drugs are the fifth-largest contributor to South Africa’s trade deficit and although Aspen has grown jobs in the sector, overall jobs in the sector have declined in the past decade. “Local manufacturing also improves security of supply,” he says. “This development is highly encouraging, as it is bound to improve access to patient treatment and present local growth, skill and new technology opportunities.”
The regulations include provisions allowing the state to designate specific products in sectors identified in the Industrial Policy Action Plan for exclusive local procurement. “The Department of Trade and Industry is understood to be working on a list of designated products,” Nicolaou says. In Africa Aspen is expected to roll out its current business model, which includes a joint collaboration with its partner and Pharmaceutical giant GSK, in addition to its own “on the ground presence in select African markets. “Globally, a company like Aspen, a mid-sized, midcap, emerging market player, is in an interesting space because we have the flexibility to leverage our productive product pipelines into existing and new geographies,” says Nicolaou. “We continuously look to improve our operations – operational efficiencies are key to our group – and we are continually adding to our product pipelines and geographies. I think we have done reasonably well in these three areas over the years. And, although much has been achieved, we continue to have growth plans and a committed management to see these through. Our management ethos is best espoused by our Group CEO’s mantra, “To rest is to rust”.” To learn more visit www.aspenpharma.com. END