The sustainable business review 14 (1)

People, Practice & Purpose Quarter 3 â–Ş Issue #103

Damus Group:

Mechanically Poised To Deliver

Brazil: A Sustainable World Cup

DHL Supply Chain: Globalisation in Practice

Panama Canal: 100 years of Connecting the World

Our online magazine is distributed via (Linkedin, Twitter, Facebook and the Website www.tsbreview.com) ensuring far reaching exposure across the world of business.

Please enjoy reading this Quarter’s articles and we look forward to sharing more success stories soon!

Editor’s Note Brian Jackson

Special Report:

editor

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elcome to September’s edition of The Sustainability Business Review.

We at the magazine, once again, look to strike a balance between the bottom line and how businesses contribute towards the overall welfare of the local and wider economies and the communities in which they operate.

It is clear when reading this quarter’s edition that the businesses we feature are totally committed to sustainability, CSR along with ensuring efficiencies and healthy profits.

From The Panama Canal through to Brazil’s preparation and implementation for a wonderful World Cup, you will see that the companies in this publication, across the globe, are following the principles of what we call caring capitalism.

Time and time again you will read about examples of social enterprise, investment in local infrastructure, the building of hospitals and schools, the employment of local people and contracts awarded to regional businesses.

During a time when many parts of the world has undergone tremendous economic downturns, which in turn has had negative impacts on

Contents issue-103 2014

many aspects of business trading, it is encouraging to learn that companies, such as those featured in The Sustainability Business Review, are still managing to succeed at both a commercial and social level.

We are in the business of celebrating companies whose pursuit of excellence, through strategy, supply chain, operations, innovation, courage and fortitude really benefits it’s employees, management, shareholders, clients, customers and the socio economic climate in which they operate.

The Sustainability Business Review is eager to hear from companies who have a story to tell. If you would like us to feature your company in our publication, whether it be a new product development, an improvement in efficiencies, an investment in a local community or just a good old fashion results review, please feel free to contact us on: The Sustainability Business Review is read by over 200,000 senior executives worldwide. It is read by decision makers, investors, entrepreneurs, and shareholders who share a common goal: to achieve business excellence! brain.jackson@tsbreview.com

04

A Sustainable World Cup

pROFILE:

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Panama Canal DHL Supply Chain KGHM Sierra Gorda Mumias Sugar Luis Muñoz Marín International Airport London Array Eti krom Hyderabad Metro Damus Group

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A Sustainable World Cup: Brazil 20 T

he 2014 World Cup in Brazil is a double-edged sword in many ways, presenting huge potential benefits yet at the same time creating a number of very serious potential risks, making effective risk management a priority.

Socioeconomic Impacts It is estimated that the Brazilian economy will benefit greatly from hosting the World Cup. The amount invested directly in event-related activities will increase

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by five times. The following figures are presented in the report: - R$ 22.46 billion will be spent by Brazil on the World Cup infrastructure and organization - The World Cup will bring an additional R$112.79 billion to the Brazilian economy - An additional R$ 142.39 billion will flow in the country from 2010 to 2014, generating 3.63 million jobs/

The Sustainable Business Review - Quarter 3 2014

year and R$ 63.48 billion of income for the population - There will be a resulting additional tax collection of R$ 18.13 billion by the local, state and federal governments.

- The direct financial impact of the World Cup on the Brazilian Gross Domestic Product (GDP) is estimated at R$ 64.5 billion for the period 2010-2014 – an amount equivalent to 2.17% of estimated GDP for 2010 (R$ 2.9 trillion).

Special Report: A Sustainable World Cup estimated to be up to R$ 5.94 billion for Brazilian companies.

R$ 22.46 billion will be spent

by Brazil on the World Cup infrastructure and organization

Direct Socio-Economic Benefits 1

Investments such as construction and renovation of stadiums/ hotels and infrastructure.

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Operation of the Event and oversight by local organizing committees and security firms.

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Visitor spending

These direct forms of socio-economic benefits increase levels of employment, income and tax collection.

Indirect Socio-Economic Benefits

014 Tourism Dollars The World Cup is popular with the host country as it represents an opportunity to generate tourism revenue directly through spectator tourism, and also indirectly through international media exposure.

Internationally Brazil has become more prominent over the last decade however this has not always been leveraged properly by the tourism industry. Brazilian airports are de-

Increased production will also be experienced in other sectors such as the raw materials for construction. A domino effect of the World Cup will be felt across Brazil’s industry. The World Cup generates a long chain of economic consequences. As employment and incomes increase so too be the ability of households to spend money acquiring goods and services, the income effect.

Investments Analysed in Report

Maracana Stadium-Brazil

clining in quality, and the number of tourists has remained stagnant. The study shows that if the opportunities presented by the World Cup are capitalized upon the number of tourists could increase by 79% in 2014, and therefore this could lead to higher numbers in subsequent years.

Tourism brings money into a number of industries including hospitality, transportation, communications, culture, entertainment and retail.

Money from World Cup tourism is

Building and renovation of sports stadiums: A number of host cities do not have stadiums capable of holding World Cup games in terms of safety and accessibility. Brazil has embraced this challenge and the building and renovation of stadiums is the biggest individual cost of the World Cup with investment reaching R$ 4.62 billion.

Expansion and adequacy of the hotel complex: With increased demand for hotels for the World Cup and any post-World Cup tourist. The challenge is to meet this demand through increased hotel rooms/ seasonal property rentals/ new housing units.

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The Sustainable Business Review Investments in media and advertising: In order to cope with the World Cup there will be an increased investment in media (including television, radio, internet, physical space and others).

Investments in media are estimated at some R$ 6.51 billion on account of the event in Brazil, conducted mainly by the private sector and mostly concentrated in the year 2014.

Investments in information technology: World Cup internet traffic demands an upgrading of IT infrastructure. Brazil plans to make investments totalling R$ 309 million which will accommodate the large flow of data and processing capacity associated with this event.

Implementation of media and broadcasting centres: Investments of R$ 184 million have been made in the media broadcasting centres necessary to coordinate the World Cup media coverage.

Public investments in transport infrastructure: to cope with the increase in traffic flow airports and highways have

been heavily invested in. These works will require R$ 1.44 billion in addition to the investments already planned without the Cup. Reurbanization of cities: There are twelve host cities for the games and the World Cup has necessitated an investment into the revitalization of these cities. This has been a challenge as these cities face a number of problems such as urban crime. These problems can be tackled if the necessary investments are made in areas such as police training and security infrastructure.

Organising the World Cup An organizing committee has been set up to ensure the World Cup complies with FIFA standards. Their responsibilities include the organization of team travels, advertising, World Cup personnel costs. FIFA is responsible for these costs.

Security is also an important factor to consider and the bill for the extra police officers required to carry out security operations is estimated at R$ 327 million.

The World will bring an additional R$112.79 Billion to the Brazilian Economy 6

favela

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FIFA also sets standards about the electrical infrastructure required including electrical redundancy across the host cities to increase reliability.

Social-environmental responsibility Discussing socio-economic impacts must include a discussion of the impact of the World Cup on the environment at large. Sustainable development requires the World Cup organizers to strive to reduce the social and environmental cost, to minimize waste, foster greater social integration and community development. Six priority areas have been identified by the United Nations Environment Program (UNEP): climate change, disasters and conflicts, ecosystem management, environmental governance, harmful substances and efficient use of natural resources.

World Cup organizers must take these six areas into consideration.

This requires them to mainstream working conditions in the construction, post-World Cup employment opportunities, urban quality impact, security and environmental education amongst other things.

Environmental impact is especially important and analysing the carbon footprint of the World Cup is on the FIFA agenda. The carbon footprint of

Special Report: A Sustainable World Cup

the 2010 World Cup is estimated at 896,661 tonnes of carbon, with an additional 1,856,589 tonnes contributed by air transport. Based on Brazil’s location and its continental size, CO2 emissions will be comparable to that of the 2010 World Cup. Measuring the sustainability performance of the World Cup requires a set of indicators:

Seven Steps to the Green World Cup: Performance Indicators 1

Energy conservation and climate change: Minimizing the carbon footprint.

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Water: Promoting water conservation.

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Integrated waste management: Reduce, reuse and recycle waste.

Transport, mobility and access: Attaining energy efficiency, using accessible means of transport that minimize pollution.

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Landscape and biodiversity: Preserving biodiversity by promoting natural landscape.

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Green buildings and sustainable lifestyles: Promoting awareness and sustainable lifestyle.

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Sustainable construction

Environmental and social responsibility - Consideration of the environmental and social benefits and impacts of implementing policies must be carried out.

tal Design). ISO 14001, a UK standard is also being introduced.

Carbon offsetting – Carbon offset projects should be integrated within all projects. These projects should go beyond tree planting and actually address emission reduction through eco-efficient solutions and rational use of resources. Indicators should be outlined for sustainable project management such as the “green building” concept for the construction of stadiums and hotels. All structural materials to be used must not be dangerous to health and the environment, should be from sustainable sources; all technology employed should reduce water consumption and; energy usage should be minimized and waste properly managed.

The Impact on the Micro-economy Alongside the impact on the macroeconomy the World Cup will also have an impact on the micro-economy of Brazil. Thousands of small enterprises and services will benefit financially from the same direct and indirect impacts mentioned previously.

Reduce, reuse and recycle - Contracts should prioritize suppliers that adopt sustainable management principles such as the three R’s for their services.

Certifications – In Brazil, two construction-focused environmental certifications are used: Acqua, a French standard and the US standard Leed (Leadership in Energy and Environmen-

Microeconomy and social impact

Social effect With international attention focused on the world there is a very definite social impact of the World Cup, a chain reaction of social effects arising from World Cup related events and media coverage.

These include: • The Volunteering Program impacts on the people’s education and income; • The country’s exposure in the world media and consequential effects on tourism; • Potentially reduced violence and crime as a result of investments in security;

A socially integrated strategy that includes the people in the Favelas Quarter 3 2014 - The Sustainable Business Review

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• Social benefits from investments in infrastructure; and • The microeconomic impacts of the construction and improvement of stadiums and a whole new window of opportunities that is created around them because of the mega event.

It is harder to represent the social impact on typical input-output methods of analysis. Social impacts are complex in nature. Brazil has made leaps forward socially however the media is always quick to find fault and protests during the World Cup have made headlines. This brings up the idea of the potential risks for Brazil in hosting such a mega-event.

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Meeting the budget and the quality standards is also incredibly important in determining the success of the project Risks and Constraints In order for people to benefit from the socio-economic opportunities presented by the World Cup it is necessary to understand the risks and constraints posed by holding the event • Meeting the needs of host cities: Specific action is needed to meet the needs of host cities, needs that

The Sustainable Business Review - Quarter 3 2014

go beyond just event infrastructure.

These include transport, safety, hospitality, and communications. Brazil has a history of top-down town planning with local organization points having little autonomy. This could create unnecessary expenditure and also a lack of coordination and political will. The large needs of host cities will ultimately require central planning which may encounter institutional failures. The smaller

Special Report: A Sustainable World Cup ly at the lowest possible cost, within budgets and deadlines. Historically Brazil has been somewhat inefficient in previous expenditure. Proper management is necessary.

Investing in human capital is really one of the biggest ways that Brazil can gain from hosting the World Cup

External factors: As with any international event there are external risks outside of the control of event planners.

Challenges and opportunities Brazil’s tourism numbers have remained stagnant for the last five years.

The World Cup gives Brazil an opportunity to present itself as a global tourist destination, to change this stagnation.

However it depends on their ability to overcome challenges:

Governance and planning Having a strategic plan for each host city is central to proper planning. Co-operation between government and each host city is crucial.

Monitoring, control and transparency In order to respond to the challenges posed by the World Cup effective management including monitoring, control and transparency is necessary. needs must be addressed at a local level however if the resources are not in place this too could create problems such as poor quality of services, a bottleneck effect on visitors, economic and human loss caused by inflow of visitors to a poorly managed host city and therefore subsequently a negative portrayal of Brazil in the international media. The social issues within host cities are also now open to international media scrutiny and it is important that these needs are addressed as much as is possible.

Capitalizing on the legacy: If well used the opportunities for industries such as tourism could extend beyond the World Cup itself. The legacy of the

World Cup will create different types of fixed capital; tangible capital gains such as stadiums and infrastructure, human capital gains such as training, technological capital such as security and telecommunication equipment and brand capital of Brazil as a tourist destination.

Economic efficiency: With such a huge undertaking it may result in unnecessary and costly expenditure and mismanagement of funds. Brazil has made a decision to incur significant investments. This is a trade off, an underlying cost spent in the belief that the opportunity cost of holding a mega-event can be significant. For Brazil to gain the greatest return they must carry out investments efficient-

Deadline, cost and Quality Meeting the deadline is non-negotiable for the World Cup and therefore Brazil has fulfilled this major obligation. Meeting the budget and the quality standards is also incredibly important in determining the success of the project.

A Steering Committee is responsible for the 2014 World Cup Management and Monitoring Support System (SGMC), an online tool that will monitor the activities of the host cities.

Financial Management Hosting the World Cup requires significant investment. Raising these funds is no small task.

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The Sustainable Business Review

Sao Paolo Nights

For the World Cup Brazil has cleverly pursued a combination of funding approaches.

Public-Private Partnerships (PPP) combine the ability to invest, to attract capital and the managerial expertise of the private sector with the public interest and a part of government resources.

Investing in human capital is really one of the biggest ways that Brazil can gain from hosting the World Cup

The National Bank for Economic and Social Development (Portuguese acronym - BNDES) will also provide lines of credit to fund works and buildings related to the 2014 Cup. The federal government had also provided as much as R$ 9 billion for works in the transport sector.

Alternative financing may also be pursued.

Regulatory environment Business transactions related to the World Cup also benefit from some tax exemptions with the government choosing this strategy because tax gains will far outweigh any exemptions it provides.

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The Sustainable Business Review - Quarter 3 2014

Special Report: A Sustainable World Cup Infrastructure and services

A successful World Cup will be organized without wasting huge amounts of resources and capitalizing on the opportunities Controlled advertising Brand advertising in and around stadiums may call for some change in regulations to comply with organizers’ requirements. Local governments may consider allowing advertising only at specific points during the month of the World Cup.

Brazil has understood that it must ensure stadiums, hotels, and telecommunications comply with standards set by organisations such as FIFA. These services must be adequate to cope with the demand placed on them by visitors.

Human Capital The World Cup will rely on thousands of volunteers to be a success. Investing in human capital is really one of the biggest ways that Brazil can gain from hosting the World Cup. It has given government the impetus to deal with issues of social exclusion and lack of training.

Reputation management The potential gain can go beyond purely financial. Reputation gain abroad is also an important potential gain therefore it is advised that proper reputation management is carried out, creating a World Cup atmosphere that will be portrayed by the international media.

Legacy and sustainability The report divides the legacy into three types: Tangible Legacy: Stadiums, infrastructure, improved telecommunications Social Legacy: Improved self-esteem of the people, gains in education and training, social inclusion of underprivileged through volunteer programs, investments in health and safety.

Institutional Legacy: Experience of managing a mega-event which means a gain in coordination and partnership.

The arena Da Amazonia Stadium

Success is defined at a number of levels, by the fans, the governments and the people of Brazil. A successful World Cup will be organized without wasting huge amounts of resources and capitalizing on the opportunities provided by hosting the event. So far Brazil seems to be doing well to comply with the needs of hosting the World Cup.

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The Sustainable Business Review

Industry News: Production from PNG LNG Poland’s Economic Growth Accelerproject reaches full capacity ates to Fastest Pace in 2 Years

NG LNG, the Exxon Mobil led Super LNG project is now producing at full capacity after it reported its first shipment to Tokyo Electric Power Co. just a few months ago.

P

P

The $19 billion PNG LNG project is a two train facility with a capacity of 6.9 million tonnes/ year of LNG. Its estimated to have a life time of about 30year and its expected to produce in the region of 9 tcf of gas over the period.

The central statistical office in Warsaw identified a welcome leap from 2.7% to 3.3% in GDP growth over the same 3 month period compared to the previous year. These numbers exceed the median 3.1% estimates provided by economist across the region.

The growing demand for energy in the growing Asian region has provided a ready market for this economic changing project.

owered by a record low borrowing cost, investment and increased consumer spend has propelled Poland to an enviable status amongst European Union’s largest post-communist members.

This signals that Poland is set to outperform its pairs in the region for the rest of 2014 and into 2015 considering its policy makers have promised to keep the key driver which is reduced borrowing cost low till at least the end of 2014 third quarter.

European Commission Launched €100m “Fast Track to Innovation” Program

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he European Commission yesterday presented details of a new €100m (£78.9m) “Fast Track to Innovation” (FTI) pilot action and five innovation prizes under Horizon 2020, the European Union’s research and innovation programme.

The Fast Track to Innovation scheme will be open to applications from January 2015. It will support small consortia of three to five organisations with strong business participation to give promising ideas the last push before entering the market. It is open to ideas in any area of technology or application and to any legal entity established in the EU or in a country associated to Horizon 2020.

three different thematic areas of research: health (“Reduction of the Use of Antibiotics Prize”, “Food-Scanner Prize”), the environment (“Reduction of Air Pollution Prize”) and ICT (“Collaborative Sharing of Spectrum”, “Optical Transmission Prize”).

The contests for the five innovation prizes will start in late 2014 and early 2015. The prizes, worth €6m in 2015, cover

All funding opportunities under Horizon 2020 are accessible from the participant portal

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Industry News throughout the Middle East and Africa region.

“MEA is the final frontier for global growth in the auto industry and thanks to the power of our One Ford plan, we are able to offer vehicles here that our customers want and value,” Benintende said.

Ford To Expand Range in Middle East ad Africa

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ord Motor Company has announced plans to bring 25 new vehicles models to Middle East and African markets by 2016 as part of its aggressive expansion plans in its newest business unit, Middle East and Africa The company has merged both markets to become a single operating market. This has

been done in consideration with the various differences in consumer culture and economies of individual countries in both regions.

Ford MEA President Jim Benintende said Ford is bringing a full family of safe, high quality, fuel efficient and fun-to-drive cars, trucks and SUVs to customers

Vehicle sales in the MEA are expected to grow by 40 percent by the end of the decade to 5.5 million vehicles.

The new Ford MEA operation – Ford’s fifth global business unit – is headquartered in Dubai

Event: 3rd Annual Water in Mining Summit September 16, 2014 - September 18, 2014 in Perth, Australia Four Points by Sheraton Perth, 707 Wellington Street www.water-in-mining.com

APESTRANS 2014 Cameroun African Petroleum Storage & Transport 23-25 September 2014, Yaoundé Cameroon www.apestrans.com

The 3rd East Africa Oil and Gas Summit & Exhibition (EAOGS): 15-17 October 2014 KICC Nairobi , Kenya www.eaogs.com

Senegalese Mining Conference & Exhibition “The Mining Sector, an engine for growth and prosperity “ 3rd Senegal International Mining Conference & Exhibition (SIM Senegal 2014) King Fahd Palace Hotel, Dakar Senegal 4-6 November 2014 www.simsenegal.com

Novermber 20-21, 2014 El Conquistador, A Waldorf Astoria Resort Farjardo, Puerto Rico www.relaccx.com

Ecobuild Sustainable Design construction energy Excel London 03-05 March 2015 www.ecobuild.co.uk

Mining Summit Latin America Sustainable development and realizing potential in Latin America October 22-24 2014 Santiago, Chile http:latam.miningsummit.com

APPP 6th Africa Public, Private Partnership 19- 21 November 2014 Abidjan Cote D’Ivoire www.africappp.com

RELACCx Renewable Energy Latin America & Caribbean Conference & Exhibition Quarter 3 2014 - The Sustainable Business Review

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Panama C Panama Canal is the most important infrastructure Program of Central America and Jorge Quijano, CEO of the Panama Canal Authority explains how this project has transformed from a concept to reality while talking to TSBR.

This canal is essentially associated with the pride and national identify of the Panamanians 16

The Sustainable Business Review - Quarter 3 2014

Panama Canal

Canal

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he Panama Canal has totally transformed the world of maritime commerce thanks to its unique position that divides the Northern and Southern America to connect Pacific and Atlantic oceans.

This extremely special water gateway is responsible for the existence of different international trade patterns that sculpt the modern global economy. The canal is even more important for Panama keeping in view the national perspective. This canal is essentially associated with the pride and national identify of the Panamanians and also represents the country’s aspirations for the economic growth in addition with contributing 20% of Panama’s GDP.

he Canal is about to celebrate its 100 birthday

The Centennial Bridge, Panama

The origin of the canal dates back to the distant colonial past. In the late nineteenth century, French tried to connect Atlantic and Pacific Ocean but could not complete the task due to financial problems, typically heavy tropical rains, yellow fever and malaria. It was actually American who completed the unfinished job when they constructed initial sets of locks and first two lane-canal that went into service in 1914. Americans tried to build second set of locks that would facilitate the transit of war ships and larger Quarter 3 2014 - The Sustainable Business Review

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commercial vessels immediately before the Second World War. The work that started in 1939 had to be aborted because Second World War broke out in the same year and since then; the canal has never seen any significant development t or upgrade.

Miraflores Locks, Panama, under construction in 1912

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The Panama Canal Authority (ACP) has been managing this strategically important commercial gateway since 1939 when Republic of Panama tool over the charge of the canal from Americans. ACP works under the Panama Government as an autonomous agency.

While the Canal is about to celebrate its 100 birthday, the ACP plans to double

Panama Canal

Panama canal locks

the capacity of the canal under its great programme of works. This will enable this important commercial gateway to facilitate the transit of new generation of super large vessels. The expansion programme will also open the canal to previously unexplored markets and new routes by doubling its capacity and accommodating larger ships. It is also estimated that the volume of cargo moving through the canal will increase by 3% per year on average. This simply means that capacity by 2025 will be almost double than that of 2005. This figure can increase dramatically if the maritime trade continues to increase even after recession.

The expansion programme will also open the canal to previously unexplored markets and new routes

The programme of works that ACP is currently undertaking is the largest development programme in the history of the canal as well as most notable expansion programme in Central America. It is a mammoth program worth $5.25 billion which will see the addition of third sets of locks very soon 75 years after the start and abortion of first major expansion project. Unlike the last project, this time the local Panamanian management and engineering talent is the main centre of attraction.

Two existing sets of lacks have been defining the “Panamax� standards as they lift the ships 85 above the sea level.

This particular standard does not allow

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It is a mammoth program worth $5.25 billion ships that are heavier than 5,000 TEU to enter the canal. Wider and deeper access channels will strengthen new locks constructed on the Atlantic side on the east of Gatun Locks and on Pacific side on the southwest of the existing Miraflores Locks from 2014. This development will allow the transit of 13,000+ TEU ships as “post Panamax” phase of canal’ evolution will begin.

National Decision: The decision to expand the canal was considered so critical to the future of

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Panama that a national referendum in which entire population of the country was invited to participate and vote in the favour of or against this decision. The then president of Panama, Martín Torrijos Espino, opined before the election, that it was definitely the most important verdict his generation was going to give. Overwhelming public approval was evident from the fact that almost 76 percent people voted in the favour of canal’s expansion.

After a year, Martin Torrijos announced that the Cabinet Council has authorised ACP to seek financial support package required to launch this huge programme.

In response, a group comprising of bilateral and multilateral financial institution in the likes of the Inter-American Development Bank, the Japan Bank for International Cooperation, the European Investment Bank, the Andean Development Corporation and International Financial Corporation have so far promised to contribute a total of $2,300 million to the project.

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Jorge Quijano who is heading the expansion program has been assigned the task to fulfil the dream of expanding the canal. He formally took over the charge after taking the lead on the programme in 2007, a year after people voted in the favour of the project in the referendum.

He says that it might not be as big as other infrastructure projects being completed in countries like Brazil but it is definitely the most prominent with far reaching international impacts. Opening of new markets and creation of new routes will definitely reshape the contemporary maritime trade.

Key Contracts: The project of designing two new groups of locks and later constructing them was awarded to Grupo Unidos por el Canal SA (GUPCSA) according to a statement issued on July, 2009. These new locks will join both Pacific and Atlantic oceans to the Panama Canal. GUPCSA is a consortium incorporating Impregilo SpA of Italy, the

Panama Canal Gates Delivered

Panamanian construction company, CUSA, dredging specialist Jan De Nul NV of the Netherlands and Sacyr Vallehermoso SA of Spain.

ACP Workers at work on Site

Many companies bid and fought fiercely to win the project worth $3.2 billion where three of the four initially qualified consortia finally bid for the project. ACP, after evaluation all the proposals, concluded that GUPC has all the resources while presenting the best value proposition and therefore, it is capable enough

to complete the construction of locks before the final deadline of late October 2014, the year in which Canal becomes a centenarian. Meanwhile, Jan de Nul was awarded the job to dredge of the Atlantic entrance channel whereas Dredging International was assigned the task of deepening and widening of the Pacific entrance.

Construction of a new channel namely the Pacific Access Channel is also the part of the expansion project. The new

The Sustainable Business Review PAC 4. It will cover an important part of the new channel of the expansion project that links Culebra Cut, the narrowest part of the canal with the Pacific locks.

According to Jorge, above mentioned are three major projects that have been contracted so far. However, Jan de Nul is completing another small but important project at the start of the Access Channel that opens to the Pacific Ocean and it is expected to be completed be the midyear. potain and groves cranes on the expansion program site

channel practically bypasses the Miraflores lack as it runs parallel to old channels and locks. This channel was constructed by four different companies and measures 6.1 kilometres. In 2007 Preliminary excavation contract was given to a Panamanian contractor, CUSA. Cilsa PanamaMinera Maria, a Mexican consortium was responsible to complete the second dry excavation project. Constructora Meco SA won the third contract worth $36.6

million in 2008. All of these phases of projects have been completed.

ICA-FCC-MECO, the joint venture of Costa Rica, Spain and Mexico is currently working on the last excavation project that is also the most challenging and expensive.

This project after the new locks is the most complicated and second biggest project with the estimated cost of $267,798,795 and is commonly called as

concrete work at for the new Atlantic and Pacific set of locks

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He clearly justifies the decision of contracting four different firms to excavate 6.1 kilometre channel. He says that they would be able to complete the excavation in eight years by dissecting these projects into distinct elements. He further says that they could have lost two precious years because they were simply not able to fully design the entire stretch of the channel at one time for another two years. Another major reason was that they wanted to give both regional and local contractors an opportunity to participate by starting with smaller projects. The Canal Authority was able

to complete some parts of the expansion project within specified budget because most of the contractors offered very reasonable prices in their proposals.

He says that they have been able to develop a shared approach towards value engineering by working closely with different contractors. For instance, the ACP saved $0.7 million during the completion of first phase of the excavation project.

Similarly, the contractor redesigned a part of road for the ACP and still managed to make more profits than they originally expected. Similarly, all three dry excavation projects have been equally successful and have completed well within budget.

ACP transfers saved money to a Global Contingency Fund that can be used to support expansion project’s components that require additional funding. So far, all the projects have been completed within budget and on time despite of fact that no outcome is predictable considering the potent combination of geology

and nature. However, the phases of the projects currently underway are indeed the most import and critical.

Jorge asserts that they might need more money to complete these phases on time, especially the channel that connects the Culebra Cut to the Pacific locks. The ACP has started well with a large contingency fund of over $1.5 billion that will be used to counter unexpected expenditures and things like inflation. ACP received bids from various contractors and awarded the projects either on or below the specified budget and now it intends to use remaining contingencies to support the future components of the project if deemed necessary.

Risk Mitigation: Quijano keenly maintains that the engineers of ACP has designed all the works expect locks in-house with the input from famous Dam consultants. Extensive initial geological investigation was also the part of designing process. Inadequate

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and poor geological information gives rise to errors and problems that are mostly responsible for litigations. Quijano says that ACP did considerable amount of research work before asking for tenders to undertake these projects.

A critical issue in projects is to understand risk’s nature and transferring its ownership. There is only a small room to make preparations even in the projects as big as this one but the Panama Canal Expansion Program is different. Quijano asserts that it is important to spare some time to plan and prepare properly to get your project management right. In fact, if you invest one dollar in planning and preparation phase, you will save three dollars in execution phase. Quijano says that they are studying different options and alternatives in an attempt to find out how to increase lack’s capacity since 1997. Then they invited outside consultants to give their valuable opinion regarding the locks project to figure out how to avoid the construction of an extra reservoir back in 2002 and 2003. This decreased the number of contingencies we were considering by further mitigating the risk.

Quijano continues by saying that there is different risk profile for each contract. For example, ACP has been outsourcing work for more than twenty years and every time, contractors have to respond to the tenders that demand them to carry out

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Panama Canal excavation work of unclassified material. Nowadays, ACP tries its level best to include all the information that could be helpful for the contractors because it knows the geology of the area very well now. They also inform all the bidding contractors about what they have found so far as well as the sources from where these cores were discovered. ACP possesses cores that have been collected during the entire length of the proposed work. This method helps us to transfer our risk but it also makes the contractors working with ACP to limit the number of risks they are willing to take.

However, ACP took a different approach for a $3.2 billion value core locks project.

ACP decided not to take this element itself but to deliver it through a design-built contract. The Consortium has chosen MWH to design the locks’ record and this method practically and effectively transferred the all of the risk to them.

Although, ACP has been monitoring the process quite carefully yet the locks are being constructed as per design and specifications of MWH. Quijano is the head of an internal team comprising of more than 500 people out of which 300 work in the field to manage the project whereas other 200 provide engineering support. Similarly, more than 800 operational workers are doing dredging in Gatun Lake area as ACP itself is completing a project encompassing a million cubic meters of dredging at the site. The Gatun Lake is situated at an elevation of 85 feet (25.9 m) above sea level with the area of 164 square miles(425 km2), making it the largest artificial lakes in the world in 1914.

The dredging project will provide ships transiting through the new locks with an additional passage. However, another project that will increase the lack’s maximum capacity from 26.1 to 27.1 metres that is by 45 centimetres is under completion. This will enable lack to store more than 200 million cubic meters of extra water. Finally, this project will also increase the reliability of the lack’s drafts.

Costa Atlantica, luxury cruise With its 678 private balconies. Docked at the canal

The traffic through canal is most limited in the lake, also making it the most sensitive area for the project. It is also a priority for ACP that, while the project is in progress, the regular operations at canal should not be disturbed. The ACP decided that it is better to let their own dredging team with navigational dredging experience in the area spawning over 100 years to do the dredging because the vessels transiting through the canal move past the construction equipment quite regularly. However, ACP has outsourced the construction of northern sections of lock channels as they entail fewer operational and safety problems because they are relatively wider.

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The Sustainable Business Review from outside consultants to get the required integration.

4 potain and groves cranes on the expansion program site

Quijano implemented the operational framework of Project Management Institute (PMI) in each element of the expansion project in order to manage complexity from the very beginning.

This framework offers a very clear baseline loaded with resources that you can follow from the outset, offering an organised way to manage big projects but you can also use it to determine how to leverage value variations. ACP tests all possible impact and risk scenarios well in advance to very carefully address all the possible changes long before they actually occur in order to effectively control those changes. This method helps them to consider all contingencies and issues before taking important or critical decisions.

He also believes that it is important to put a right organisational structure in place.

Ability to manage might be more impor-

tant than technical skills at some places because it is not all about having talented people on board and it is very important to maintain right balance between them all the time. Here, ACP adopts a very innovative approach of consulting top minds in Project Management to enhance its knowledge in some specific areas in addition with promoting local knowledge and their own internal engineering talent.

ACP and CH2MHill signed a contract in 2007 according to which the later will support the remaining part of this massive expansion project. CH2MHill is famous for undertaking project management of events like London Olympics. They are concentrating their efforts on most complex area of the expansion that are locks. However, many other projects have become the part of the objective at the management level and ACP wanted support

He continues that some problems also arouse due to this mixed integrated management approach in the beginning but both parties made a combine effort and some adjustments to create a seamless working environment. ACP did not want CH2MHill to sell them the project by completing it because they have many experienced and skilled engineers at their own disposal. It wanted them to abridge experience and knowledge gaps and both ACP and CH2MHill are perfectly aligned with the objectives they have to obtain after working together for four years. Quijano feels that they are on verge of achieving an exceptional feet of engineering by successfully mixing the knowledge of top notch people in project management industry with the best of local talent.

Nothing can be more pleasing for Quijano and his team to see new channels operating as they should which is the result of best of the technologies pairing remarkably well with the geology. He further says that everyone associated with the project believes that he is contributing towards a historic event when the oceangoing vessels will pass through new locks in three years time. GUPCSA had almost 5 years to complete the task and now the clock is slowly ticking. However, only the final completion of locks and putting them into service by 2015 should be an outstanding achievement.

Box Project Status: march 31st 2014 Paciic Access Channel 82 % Pacific Entrance Dredging: 100 % Gatun Lake & Culebra Cut Dredging: 86 % Design & Construction of Third Set of Locks – 68 % Atlantic Entrance Dredging: 100 % Raisin Gatun Lake’s Maximum Operating Level: 68 %

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The Sustainable Business Review - Quarter 3 2014

The Sustainable Business Review

DHL Supply DHL is the global market leader in the logistics industry. At a time when many market sectors are struggling to find growth, we look at the key role DHL’s Supply Chain division plays in keeping its customers within Eastern Europe, Middle East and Africa competitive.

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ith a global network presence in more than 220 countries, and about 275,000 employees worldwide, DHL, a division of Deutsche Post, has grown to its present size by acquiring its competitors along with enjoying organic growth.

Its story is one of outstanding success in an industry that has been characterised by consolidation as logistics has become

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an integral part of lean industrial strategy and a function that many companies have been driven to outsource. As a whole the group generated global revenues of more than €51 billion in 2010.

Perhaps the group’s most significant expansion was its €5.5 billion acquisition of Exel in 2005. Exel was the company that Jaguar Motors chose to

The Sustainable Business Review - Quarter 3 2014

set up and run its logistics centre at the Castle Bromwich assembly plant, newly configured in 1998 for the S-Type. By the time of the takeover, approximately 111,000 employees worked for Exel in 135 countries, and one of these, Mark Seager, now has what he considers to be the best job in the entire company, as CEO of DHL Supply Chain in Eastern Europe, Middle East and Africa.

DHL Supply Chain

global revenues of more than €51 billion in 2010. nies,” he says. “It allows us to share their challenges and successes because we work so deeply with our clients and their organisations.”

However, he is also fortunate to be managing a region, or rather a set of regions, that have been less affected by the global recession than some. DHL’s fortunes are linked to those of its customers, he admits, so growth in the economy means growth in his business. “I am lucky because our region has been much less affected than more established and developed markets. We are enjoying growth on a number of fronts. We have clients still setting up business to access local domestic markets that are growing as the wealth of their population improves.

Other clients are moving into our region to access the cheaper costs in land and labour. The recession has only dampened the growth rate a little and on the supply chain side we are happily growing at double digits every year.”

Chain Seager’s considerable job satisfaction derives principally from being able to play a crucial role in keeping his clients’ business

running smoothly and reliably, year in and year out. “It gives you a unique window—a privileged view into so many compa-

Double digit growth in the transport industry is pretty amazing in the current climate; but it’s not quite so amazing when one considers the massive infrastructure and natural resources development taking place in Africa, especially the rapid growth of spending power in countries like Nigeria, Tanzania, Kenya, Ghana and Uganda. The oil-driven economies of the Middle East enjoy unstoppable growth, while DHL’s Eastern European markets, principally Russia, Slovakia, Poland, the Czech Republic and Hungary continue to attract clients, he says. “We have seen many clients doing a strategic review of their supply chain, driven by the need to drive more efficiencies within their own business and so change the nature of the way they manage that supply chain, or indeed moving into my part of the world to cut cost. That has accelerated in the recession.”

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The Sustainable Business Review

DHL Supply Chain positions itself as a single source contract logistics provider that designs and implements comprehensive customer-focused solutions across the entire value chain, explains Seager. “Our customers rely on us to ensure a smooth logistics flow from planning, sourcing, production, storage and delivery to return logistics and end customer service. We can give them warehousing, distribution, managed transport and value-added services, business process outsourcing, supply chain management and consulting.”

With more than 160 of its own warehousing sites in Eastern Europe, the Middle East and Africa, totalling nearly two million square metres, he certainly has the resources to deliver this level of service. “DHL is not only present in all the geographical markets; we are strong in almost every sector. Automotive of course, which is an historic strength, but also in the energy sector, consumer goods, retail logistics and life sciences.” The last of these—including healthcare and pharmaceuticals—is one of the fastest growing sectors and a good example of how DHL is working with customers to keep ahead in a fast changing competitive climate.

DHL is globalisation in practice DHL Supply Chain’s ‘2D Coding—Serialisation of Pharmaceutical Products and Data Management’ project in Turkey is reducing fraud and counterfeiting across the country. For the first time in the pharmaceutical industry, it introduced an IT-driven solution throughout the supply chain, from manufacturer to end consumer. And its success is

Innovative schemes are originating in Turkey, says Seager, where healthcare legislation has changed in response to the proliferation of counterfeit drugs.

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attracting interest from other markets looking to follow suit in the future.

Turkey became the test bed for the new technology because of its particular problems with fraud—prior to 2010, it was estimated that the government lost US$150 million annually. The Ministry of Health first announced its intention to implement an anti-fraud solution in 2004, and DHL Supply Chain Turkey began work in 2008 on a country-wide 2D coding system that would support its 35 major pharmaceutical partners as well as 25,000 pharmacies. By the start of 2011, uncoded medicines were a thing of the past in Turkey and pharmacies were reporting high levels of satisfaction with the new system. The solution had dem-

DHL Supply Chain

All employees are encouraged to take part in the company’s ‘Living Responsibility’ programmes

onstrated collaborative working across DHL’s Operations, IT and Quality Assurance staff, and had involved liaison with some of the world’s biggest pharmaceutical companies, including Novo Nordisk and Bristol-Myers Squibb.

The industry solution that is emerging is 2-D, or Matrix barcoding, and DHL has developed a bespoke solution for its pharmaceutical industry customers in Turkey.

“That sort of activity is spreading around Europe, with Turkey really leading the way in pharma regulation. I believe we will see it introduced in the UK soon.”

supply chain management at Jaguar, creating its own hub there and sequencing suppliers’ components and sub-assemblies to the plant. Last year, however, DHL demonstrated an even more symbiotic type of partnership when it entered a new five-year contract with Europe’s largest car manufacturer, Volkswagen.

While pharmaceuticals and energy markets are among the fastest growing sectors, DHL continues to develop its longer standing relationships in the automotive industry. Automotive may have taken a hammering in recent years, but it is bounding back now, Seager observes. We saw earlier how Exel took on board the

Under the contract, DHL Supply Chain took over from another company a major part of the in-plant logistics for the Volkswagen assembly plant in the capital of Slovakia, Bratislava. Around 800 DHL employees will manage in-plant logistics for 50 per cent of the production materials of the models produced by the Volkswagen

The Sustainable Business Review Group at Bratislava. This involves engines, gearboxes and windscreens for the Volkswagen Touareg, Audi Q7 and Porsche Cayenne. Services provided include in-bound receiving, put away and storage, picking and kitting, sequencing and lineside deliveries directly to the Volkswagen production lines.

The contract is unique within the Volkswagen Group, which normally commits itself to such deals for just three years, but as head of Logistics at Volkswagen Slovakia Juraj Janáč observed, DHL’s extensive local presence and ability to understand VW’s business needs allowed it to develop a strong relationship with the Bratislava plant’s management.

“DHL’s ability to transfer established automotive experience and industry best practice from existing operations, plus the established reputation of 1,500 local IT, HR, technical, financial and operational personnel clearly positioned it as unique in the region.”

Once the terms of the partnership had been worked out, attention focused on achieving a transparent switch over of Slovakia’s largest outsourced logistics operation in just 10 weeks, says Seager.

With the need to transfer contracts for almost 700 staff without change to posi-

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Living Responsibility is subdivided into environmental (GoGreen), educational (GoTeach) and disaster relief (GoHelp) activities tion or salary, the local human resources, finance and quality teams were critical to success. But with planning in its final stages the upturn in the market he referred to called for some quick thinking. An upturn in global demand called for the addition of a third shift, requiring the addition of 300 staff just days before the switch over.

A consistent increase in demand soon required the addition of a fourth shift, with the DHL team carefully recruiting a further 400 people. Now, with the need for 24/7 operational management cover and recovery periods limited to Sunday night, people and processes exceeded expectations once again, further strengthening the partnership. Just nine months into the contract, overall standards reached an all-time high.

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According to Janáč: “In the first year of our partnership with DHL, and working together, we achieved all the goals we had set. Volkswagen Slovakia is becoming the benchmark in the logistics processes including in-house logistics operations and considering the forthcoming challenges in production, we require partners that are the best among the best.” Responding to strong demand, annual production at the Bratislava plant currently exceeds 144,000 vehicles.

The Volkswagen contract is a fantastic illustration of an embedded, seamless type of partnership that, if it works in a car plant, notoriously the most demanding lean environment in the world, will bring benefits to customers in any other sector, says Seager. “The great benefit we have is our presence in so many

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sectors. We are in a position to transfer knowledge and best practice from one sector to another. Automotive has been seen as leading the way in lean logistics and manufacturing for many years now.

We have tried to embrace that thinking and bring it into the supply chains of more traditional sectors.”

He cites the high tech manufacturing sector, with its mass customisation and continual design and function upgrading.

“Mobile devices are a case in point: there are a lot of virtually stockless supply chains. Suppliers, let alone retailers, can’t afford to hold stock because of the obsolescence issue. And in the food industry, chilled supply chains really are stockless—they operate on a cross docking principle where product is received from the supplier and distributed to retail outlets within a very short time.” It’s not a new principle, he explains, having been used in automotive supply chains for many years, but its successful implementation in fast moving modern logistics depends on sophisticated IT support from DHL’s ERP and warehouse management, EDI, barcoding and RFID systems.

Customised supply chains can’t be served by off the peg solutions, he stresses. “We try to develop a bespoke solution, very much geared toward specific customer needs; we are not trying to sell them a network solution by any

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means. That’s why we have dedicated account management teams focused on specific customers: the logic behind that is that if we achieve a close alignment with the customer we have a far greater chance of delivering what they want.” For most customers streamlining the supplier base is vital these days, and to do that they need a trusted logistics partner, he adds.

But when you are dealing with a customer like Volkswagen, it is never enough simply to be good at understanding the local market. Global customers need the same level of service wherever they are located. “I try to make sure that a customer in Lagos, Moscow or Nairobi has the same experience as one in the UK or the Netherlands.”

However multimodal its operations; however smart the technology it uses, DHL will always be in the business of moving goods round the world, a large percentage of them by road. It has huge environmental and safety issues, but unlike large sections of the industry, it takes steps to address these issues. All employees are encouraged to take part in the company’s ‘Living Responsibility’ programmes, which include all types of community involvement but seem to focus much of the time on children and their education.

The Sustainable Business Review - Quarter 3 2014

Living Responsibility is subdivided into environmental (GoGreen), educational (GoTeach) and disaster relief (GoHelp) activities. There’s an impressive array of initiatives, from the new UPstairs scholarship scheme piloted in the spring of 2011 with 50 scholarships made available in Indonesia, Mexico, Romania and South Africa. By 2014 the programme is scheduled to cover 600 scholarships in a total of 42 countries around the world. While UPstairs is limited to employees’ children, Trucks and Child Safety (TACS) aims to cut the number of seven to 11 year olds harmed in road accidents by making them more truck-aware. Employees take trucks into schools and demonstrate their sheer size, and impress on the children just what the driver can and can’t see or hear.

DHL is globalisation in practice: indeed it aspires to no less a goal than to be the logistics provider for the world. “We have a way to go yet,” says Seager, “but as world trade opens up we find ourselves in a strong position. I really do believe that if we can become the provider of choice to our customers we will inevitably be the investment of choice, bringing in the capital we need to grow, and the employer of choice too—because when it comes down to it, we are a people business. It’s not complicated!” www.dhl.com

The Sustainable Business Review

KGHM Sierr 2013 was a phenomenal year for the Sierra Gorda open pit copper mine project as the senior vice president, Joseph Tis explains. “The estimated project budget of 4,000 million was increased in February, 2013. The project accomplished a consolidated advance of 52.9 percent in following months and in February, 2014, it ultimately reached 91.2 percent.�

T

he Sierra Gorda project is located in Atacama Desert in Northern Chile. Companies likeSumitomo Metal Mining, Sumitomo Corporation and KGHM International Ltd joined hands to launch this mega project and it incorporates both measured and indicated deposits as well as reserves worth of 2.2 billion tonnes and 1.3 billion tones respectively.

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Completion of infrastructure designed to provide water to electricity and water to the site in addition with purchase of necessary equipment and completing detailed engineering turned out to be extremely beneficial for Sierra in 2013. The site is now equipped with both 110KV and 220KV electricity lines with both of them going live in March and April of this year respectively.

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employment opportunity for a whopping 44,000 people

KGHM Sierra_Gorda

Sierra Gorda Prestripping a total of 192 million tons of material was removed including wast

ra Gorda Quarter 3 2014 - The Sustainable Business Review

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sierra gorda extra

production to reach 110,000 tonnes per day by the end of December, 2014

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The year 2013 also saw finishing of welding and assembly of sea water aqueduct for the project in addition with complete installation of power lines.

Projects processing plant is a striking example of the unprecedented progress the plant has been making for last year and a half. Tis agrees that the project team has advanced a lot towards the construction of the processing plant in last 12 months or more. Months between August and December were most productive as the team advanced from 8 to 12 percentage points during this time period alone. The delivery of items like shovels 4 and 5, 17 haul trucks that are going to be used in pre-stripping

The Sustainable Business Review - Quarter 3 2014

extract operations and the tuck shops to the operations are some of the most important milestones achieved in 2013.

Tis keenly adds that the tireless working of project workforce on the field is responsible for all the achievements mentioned in the above lines. This is evident from the fact that the employment activity with 9,500 employees on the field was highest in October, 2013 whereas a total of 11,236,934 man hours were earned in 2013.

According to Tis, approximately 45,000 people have been contributed in some way or other towards the completion of the project and its dif-

KGHM Sierra_Gorda

Sierra Gorda ABB mounted and equipped with first electric room for Sierra Gorda project

ferent elements as of January, 2014.

Tis further states that all of these individuals observed the “zero harm” ethos, in its full letter and spirit. It is the fundamental value of the project team that forces them to ensure the health and safety of both the employees and the communities in which they operate and while doing so, have

not only met the expectations but often exceeded them.

Regardless of its location, KGHM as a company has been generating a lot of employment opportunities for long and it is rightly proud of this fact. The Sierra Gorda project is performing the similar duty by offering employment opportuni-

ties to whooping 44,000 people belonging to surrounding and nearby areas. In this regard, the VIII Biobío Region has been the largest contributor so far from where 21.6 percent of total manpower that has worked at the project or some 9,557 employees have come from.

The Santiago Metropolitan Region XIII with 7085 people employed at the

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The Sustainable Business Review

The Sierra Gorda project has not only created employment opportunities for the locals but it has also enabled them 40

project, the V ValparaĂ­so Region with 6,306 employees and the II Antofagasta Region with 7,505 employees are other prominent contributors. Even better, a huge number of employees have come from at least eleven other regions, from the XII Region of Magallanes to the XV Region of Arica and Parinacota.

The Sierra Gorda project has not only created employment opportunities for the locals but it has also enabled them

The Sustainable Business Review - Quarter 3 2014

in particular and Chile ingeneral to grow economically. Tis further says that this project has not only allowed the local mining industry to establish on solid grounds but will also benefit national economy by increasing the supply of copper for both national and international users. He opines that this particular project has helped Chile to stamp its mark as one of the largest copper producers in the world.

Similarly, the project has helped Chile

KGHM Sierra_Gorda

to emerge as a country that offers outstanding investment opportunities to the investors by exhibiting the matchless expertise and professional quality of its workforce that is more than capable to handle a colossal development project quite successfully from its very start to the finish. One of the characteristic features of the project, right from its inception has been its ability to return to community in many different ways. Thanks to this mega project, a lot of development and infrastructure projects have been completed in the region and as a result, the quality of life in the region has definitely improved in general.

Installation of CCTV cameras and the expansion of security checkpoints to improve the law and order situation, implementation of programs focusing on the protection and preservation of local flora and fauna as well as construction of wastewater treatment plant are only few examples of numerous development projects completed in the area.

2013, was a phenomenal year in the history of Sierra Gorda project without any doubt buy 2014 could turn out to be better with chances to achieve even greater milestones. The project is very likely to enter into a new era of progress as its processing plant is planned to start production in current year. Tis concludes by saying that they are predominately focusing their efforts on the completion and pre-commissioning of the project’s processing plant and making it functional in the short run while staying committed to the zero harm ethos. He further says that they will launch many more projects throughout the remaining year and they also expect to increase the production to 110,000 tonnes per day by the end of December, 2014

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The Sustainable Business Review

Mumias Su Mumias is located in the Kenya’s Western Province and it is home to the Mumias Sugar Company, one of the most well established and largest businesses in the country. The history of the company spans over four decades when, when the Kenyan Government, before initiating a pilot project in 1967, ordered Booker Agriculture and Technical Services to determine whether it would be possible to grow sugar in Mumias.

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The Sustainable Business Review - Quarter 3 2014

Mumias Sugar

Sugar T

here is no denying of the fact that Mumias was one of the most underdeveloped areas of Kenya before the establishment of Mumias Sugar. The poverty of

the area at that time was epitomized by the fact that whatever land was under cultivation, it was used by local farmers to grow crops for grazing and subsistence animals.

Mumias was unable to progress its local economy at that time because of nonexistent communication infrastructure, the sheer remoteness of the area and of course, poor land utilisation. The fact that

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The Sustainable Business Review

the co-generation project produces 34MW of electricity

farmers had title ownership of their lands and the area was environmentally favourable to grow sugar, and land settlements had already been established, were some of the key reasons why the Kenyan Government decided to invest in this area.

Mumias Sugar Company was formally founded on 1 July, 1971 and it was assigned with the task to implement the project of viably growing sugar in the area. Mumias Sugar created more job

openings for the locals, providing them a consistent source of income as well as helping Kenya to reduce its dependence on sugar importation, discouraging migration from rural to urban areas and achieving self-sufficiency in production , were the prime objectives of founding this company.

The original plant could produce 45,000 tonnes of sugar and it was working to its full capacity by 1973. The capacity of the

company grew quite dramatically in the following decades. Currently, it is a facility with the capacity of 1.8 million tonnes of cane crushed and 173,000 tonnes of sugar produced per year respectively.

Major products of the company are sugar, cane and molasses and the production process also incorporates cogeneration.

Mumias Sugar acquires 90% of cane that it uses as raw material from its own cane farms. Subsequently, the company uses this cane to make most of its products.

Today, Mumias Sugar manufactures almost 60-65 percent of total sugar produced in Kenya each year, also making it the largest sugar manufacturer in the entire East African region. Apart from Kenya, Uganda, Tanzania and other surrounding countries are the primary markets of Mumias Sugar Company. It also manufactures table sugar for consumers as well as industrial sugar to be supplied to local firms. The company is also in the top 100 brands of East Africa. It also exports approximately 20,000 metric tonnes of sugar per year mainly to European mar-

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The Sustainable Business Review - Quarter 3 2014

Mumias Sugar

Mumias Sugar Company peter kebati - CEO

preferences in the Kenya, the company has recently introduced both brown and white sugar into the market. The majority of users in the country’s Mount Kenya and Eastern regions prefer brown sugar, whereas people in the Nairobi region prefer the white version.

15,000 cane farmers to progress economically and improve their standard of life

has become a true market leader thanks to its continuous commitment to these principles and it aims at staying at the top for a long time to come.

Obviously, the company has to live up to the expectations of its customers in order to retain the top position in the market.

The company is capable enough to meet these expectations and it has proven its ability on several occasions. For instance, in an effort to meet varying regional

The manufacturing and introduction of fortified sugar, that is especially rich in Vitamin A, into the market by the company is another interesting development. It is an attempt to help in the healthy upbringing of Kenyan children by allowing them easy access to products rich in micronutrients essential for proper growth.

Mumias Sugar Company has taken a very unique decision to diversify its operations by venturing into the power generation

kets but it is also trying to conquer other International markets as well.

The company is established on solid grounds ensuring the highest level of customer satisfaction by offering high quality products at the right weight and at the right price and that is why it enjoys an excellelent reputation. The company

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The Sustainable Business Review

it is a facility with the capacity of 1.8 million tonnes of cane crushed and 173,000 tonnes of sugar produced per year industry in order to maintain sustainable growth in both adverse and favourable economic times. The company took this initiative in 2005 when its board of directors approved the construction of a co-generation electric power production project that also included an ethanol plant.

In fact, Kenya’s demand for electricity is overwhelmingly greater than that of supply. The co-generation plant of Mumias Sugar Company has the capacity to give a partial solution to this problem. Currently, the National Grid directly receives 26MW

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of a total of 34MW of power generated by the company. This naturally supplements the domestic demand of Kenya that is constantly on the rise. The project is increasing its on-site power production through bagasse co-generation. However, the company still maintains that its full potential has not been realised yet but it is confident to achieve that milestone in the near future.

The technologically advanced power generation plant allows the company to produce clean energy and this is

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another positive aspect of company’s decision to venture in this industry. The company basically generates energy from by-products of its sugar generation process, reflecting the growing importance of sugarcane as the raw material for ethanol.

Mumias Sugar Company in particular and Kenya’s Sugar Industry in general

Mumias Sugar

have worked diligently to fully exploit the concept of integrated sugar production or bio-refinery technologies. During this process, different environmental friendly results have been achieved while utilising an entire crop. Companies can actually diversify and expand their sources of income through effective use of by-products in an integrated sugar plant that helps them to add the products of low, middle and high value.

Rising environmental concerns as well as limited refining capacity and supply of crude oil are some of the important regional factors that have offered a unique opportunity to Mumias Sugar Company to introduce new products.

Recognising this fact, the company is going to launch a distillery plant with the production capacity of 22 million litres of ethanol per year.

From investing in healthcare, education and training of its employees to enabling almost 15,000 cane farmers to progress economically and improve their standard of life, Mumias Sugar has been serving many important noble causes since its inception. The company accomplishes all these tasks while remaining the leader in both the power production and consumer goods market.

Rising environmental concerns as well as limited refining capacity and supply of crude oil are some of the important regional factors that have offered a unique opportunity to Mumias Sugar Company to introduce new products.

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The Sustainable Business Review

Luis M Interna 48

The Sustainable Business Review - Quarter 3 2014

José Luis Alberto Muñoz Marín

If there is one name that people of Puerto Rico really revere, it is José Luis Alberto Muñoz Marín. He was born in February, 1988 and is still regarded as the “architect of commonwealth” and “father of the modern Puerto Rico”. José was a statesman, politician, journalist and a famous poet. 1948 is a landmark year in the history of the Puerto Rico when he became Puerto Rico’s first ever democratically elected governor. Subsequently, he led an administration that introduced significant social, political and economic reforms that proved immensely beneficial for the country and thus, got lauded by international community for its achievements.

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J

osĂŠ Luis Alberto MuĂąoz MarĂ­n is the name of biggest airport of this Caribbean country. The president himself commissioned the construction of the airport in the place called as Isla Verde back in 1951. At that time, many of the airlines flying to Puerto Rico were upgrading their fleets from propelled to jet planes and many other changes were occurring in aviation industry as well. In response, the government decided to build a new airport that can accommodate all these changes.

The new, modern airport was to serve different causes for the country. First of all, Puerto Rico was the first Caribbean country to have a modern airport with a long enough runway to facilitate landing of jet aircrafts. Secondly, it would become a hub for air cargo as well as an important junction for tourists coming to Latin America making it a major international airport in the area. Similarly, Puerto Rico Air National Guard also used it as their headquarters for a long time as well.

The airport adopted its current name in 1985, 30 years after it was officially opened for operations. The airport made rapid progress during three decades in between such as inclusion of a second runway completed in 1972, a 200 space car park and three terminal buildings. A number of important Caribbean airlines such as Pan America, Eastern Airlines and Caribbean Airlines have been using this airport as hub for their flying operations. From 1966 to its dissolution in 1985, the first international airline of the country, the Prinair also used this airport as its headquarters.

Officially, this facility is the property of Puerto Rico Ports Authority. However, according to a 40 years lease agreement signed in 2013, it is currently under the management of Aerospace Airport Holdings, a public-private partnership. Statistics of Federal Aviation Administration indicate thatalmost five million people travel through this airport per year also making it the busiest airport in the Caribbean region in terms of passenger traffic. Today, innumerable airlines including United Airlines, Air Canada, American Airlines, Jet Blue, West Jet, Air America and Delta Airlines operate into and out of the airport.

As per Manuel Gutierrez, Commercial Director of Grupo Aeroportuario del

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José Luis Alberto Muñoz Marín

Aerostar Airport Holdings will invest $1.4billionin the airport over the period of 40 years Sureste, more than hundred flights take off and land at Luis Muñoz Marín International Airporton a typical day.

Grupo Aeroportuario del Sureste is a Mexican company which alongside Highstart Capital have a 50% share

in Aerostat Airport Holdings. They provide services to almost 80 % Puerto Ricans using this airport and flying to and from mainland America and even beyond. Apart from the local citizens, mostly tourists visit this country

that want to generally escape from busy city life and enjoy the yearlong good weather in addition with exotic beaches scattered throughout Puerto Rico.

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$240 million to carry completely renovate the terminal buildings

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Puerto Rico has a strong desire to fully exploit the ever growing business and tourist sector and for that matter, the government is improving infrastructure throughout the country including JosĂŠ Luis Alberto MuĂąoz MarĂ­n International Airport. The public-private deal signed with Aerostar Airport Holdings also obliges the company to invest $1.4 4 billion in the airport over the period of 40 years to attain the goal of making it a world class aviation gateway. This massive investment will also enable government to surmount the tough competition it faces from 30 other Island in the region in terms of attract-

The Sustainable Business Review - Quarter 3 2014

ing tourists in addition with making the airport a premier facility serving people in the Caribbean.

The Aerospace Airport Holdings announced in last October that it is setting apart $240 million to carry completely renovate the terminal buildings. The project also includes the vital upgrades of terminal B and C, easily making it the first massive renovation work on the airport ever since the company is managing it. These renovations are the series of development made at the airport since 2008 including construction of new press conference room, different

José Luis Alberto Muñoz Marín

food and retail outlets, installation of new light systems and most importantly, addition of terminal A. Gutierrez further says that the company is has plans to make a lot of changes to the existing airport. Most of these efforts are focused on improving terminal B and C such asexpansion of check in areas and increasing passengers’ accessibility by making those building wider that were previously too narrow. Similarly, a new security check point with 12 access points is also under construction and hopefully, it will be fully operational by December this year.

However, a lot more development work is needed to be done without any doubt.

From installation of new scanning technology, lighting and electrical systems and air-conditioning units to installing new terminal floors, a lot of complimentary works needs to becompleted. However, Gutierrez maintains that all concerned will benefit massively from outcome of these development programmes.

Gutierrez continues by saying that although a lot of investment, time and effort are required to complete aforementioned task but the outcome is quite satisfactory, that is they will get a to-

tally new airport able to meet the challenges posed by ever changing modern world. The airport is rated as number twelve in Latin America as far as passenger volume and traffic is concerned.

The authorities intend to challenge the airports thataccommodate as many as 12 million people annually and are rightfully on top of the list, in near future.

Gutierrez realizes that they need to expend much more if they want to attain the goal but he also asserts that they can definitely make this airport one of the best in Caribbean in terms of quality of services and customers’ satisfaction at the same time.

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London Array James Blyth, the Scottish academic installed the world’s first wind turbine for generation of electricity k in July, 1887. These wind turbines turned out to be very cost effective for countries with low population despite the fact that they were considered uneconomical for UK at that time. Recognizing this fact, Charles F Brush, the American Inventor, installed first automatic electricity generating wind turbine in Cleveland Ohio as a follow up to the work of Blyth.

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London Array

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ow in the 21st century, the world is seriously interested in exploring all sources of renewable energy including wind energy because of increasing concerns over depletion of fossil fuels, global warming and energy security. This rising interest in renewable energy sources has driven the commercial wind power industry to grow at a phenomenal rate of 30 percent per year due to falling costs , effective wind farm management and improved technology and readily available and inexhaustible wind resources.

the wind farm that will generate 630MW of energy London Array is not only the most well known offshore electricity generating wind farm in the UK but it is also the largest of its kind in the world. This project was officially initiated in 2001 once it was confirmed that the land was perfectly suitable for building a wind farm. The consortium of operators including companies like DONG Energy, E.ON UK Renewables and Shell WindEnergy Ltd was established

by Crown Estate. In addition a 50 years lease was awarded for the site and finally, a cable route joining the wind farm to the shore which went into service in 2004.

In 2006, the planning consent for the 1GW was granted and the permission for working on the onshore farm was granted in 2007. In July, 2009, the first phase of the project , namely the construction of the new buildings on the onshore substation of Cleve Hill, Kent, began. Similarly, the work on the offshore farm commenced in March 2011 when the first of the 175 foundations for turbines was laid. The first and final turbines were installed in December 2012. The first turbine started generating energy in October of the same year.

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The Sustainable Business Review The progress of the project was also hampered by many prolonged periods of severely bad weather in addition to several logistical problems. The weather was in fact, worse than was actually factored in by the consortium. However, the project had a remarkable year in 2012 despite of all the setbacks and challenges. Rigg explains that they had installed 90 of 175 foundations, three of the four export cables and almost all the array cables by the end of 2012 in merely ten months. This implies that it was a successful year for the project that ended with the installation of the last turbine within a few weeks of the actual deadline set in May, 2009 which is a great achievement to say the least.

Richard Rigg, the project Director for London Array states that they achieved the milestone of commissioning the final turbine on 6th April, 2013. This event completed the construction of the wind farm that will generate 630MW of energy. The farm has proved very successful and is generating excellent revenues.

The sheer scale of the London Array wind farm is evident from the fact that almost half million homes are expected to benefit from the electricity generated by its 175 turbines. Furthermore, it will reduce the emission of harmful carbon dioxide by massive 90 thousand tonnes per year.

Rigg continues by saying that many people believed that a project of this magnitude simply could not be undertaken when the idea of London Array was first conceived. Indeed, there was no legislation in place at that time that would allow the construction of such a big project in UK.

However, Riggs says with great pride that the London Array is all set to fulfil all the promises made at the time of its inception despite the challenges the consortium had to meet over the last ten years. One of the biggest challenges was the location of the project in the outer Thames Estuary that created many hurdles for the consortium to overcome. At this place, depth of water can vary from 25 metres to as low as minus one metre at the lowest tide. This simply means that some areas of the project just dry out at various points.

As per Rigg, it is easy to imagine that if you want to take a huge vessel carrying components weighing around 6500 tonnes to be installed on the site; you have to do so during a high tide followed by jacking the ship up.

Subsequently, you have to wait for the high tide to return so that you can get it sailing again. All these problems makes the work you are more complex.

it will reduce the emission of harmful carbon dioxide by massive 90 thousand tonnes per year 58

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The consortium now consisting of Masdar, E.ON and Dong Energy maintains that London Array is indeed the biggest industrial scale offshore wind farm found anywhere in the world. Rigg further asserts that the success of this wind farm will enable many others similar farms to appear off the shores of UK in years to come.

Rigg also hopes that future development programs will take London Array as an inspiration because of its efforts to benefit local and environmental communities residing around the site. The con-

London Array

sortium has long been aiming to enable London Array to help the UK government to meet most of its renewable energy requirements. The project will also help concerned parties to meet the challenge of global warming and climate change by reducing the harmful emission of CO2 by massive 90 thousand tonnes a year, providing long lasting and significant environmental benefits.

Rigg explains that there are many other offshore wind farms apart from London Array which are collectively aimimg to attain a common goal. In fact, people will soon recognise the impact of these contributions if more of these wind farms start operating. Subsequently, cynics will hopefully realise that these wind farms have the ability to produce

Rigg further asserts that the success of this wind farm will enable many others similar farms to appear off the shores of UK in years to come. electricity on an industrial level and thus playing a vital role to resolve future energy problems.

Onshore communities of Cleveland and Ramsgate have been heavily affected by the project despite the fact that its

wind turbines stand at a distance of 20 kilometres from the shore. The consortium has not neglected this fact. The plan of building the onshore substation on Cleveland, an integral part of the London Array, naturally faced resistance from the local communities in the early days

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Rigg states that they have established an excellent relationship with local villages, most important of which are Goodnestone and Graveney and it has already turned out to be extremely beneficial for all the parties.

of the project. Therefore, the consortium decided to engage the locals while respecting their opinions. The consortium did its level best to inform locals about the project progress all the time and keep them involved.

Rigg states that they have established an excellent relationship with local

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villages, most important of which are Goodnestone and Graveney and it has already turned out to be extremely beneficial for all the parties. There are many positive outcomes of this outstanding relationship such as the formation of a community fund managed by an independent trust, support of a university bursary scheme by London

The Sustainable Business Review - Quarter 3 2014

Array and annual donations to three local schools and various wildlife funds.

The authorities have also worked equally hard to incorporate Ramsgate into these development programmes.

Here, the consortium has opened as many job opportunities as possible for locals by adding them to their main-

London Array

tenance, construction and operational teams. Similarly, the consortium has tried its best to source from local suppliers ranging from the local high speed internet provider for its Cleveland Substation to hotels and taxis for all of its operations.

Currently, the consortium is focusing its efforts to ensure that London Array works as efficiently and effectively as possible as it has entered into its operational phase. The owners are expecting London Array to produce some excellent results so that they can demonstrate to the rest of the world that wind farms have become big and important players when it comes to finding solutions to today’s energy crisis.

Rigg recognises the fact that a lot more work still needs to be done if mankind really wants to benefit from offshore wind farms, although what has already been achieved is quite

There are many positive outcomes of this outstanding relationship such as the formation of a community fund managed by an independent trust significant in its own right. The wind farm industry is aiming at making offshore wind farms more reliable and cost efficient. Finally, people behind the construction of the next generation of wind farms can learn

plenty of priceless lessons from the London Array offshore wind farm project and its success in overcoming many challenges which it has had to face over the course of its development.

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The Sustainable Business Review One of Turkey’s most important home-grown mining companies is weathering the decline in demand for chromium ore and continuing to supply its customers year-round.

ETI KROM T

here’s an interesting tale relating to the discovery of chromium ore in Turkey. Apparently, in the 1930s, a German company was mining and smelting copper in the Elazig region of the country and local inhabitants were making some extra cash by collecting wood in the hills that the Germans then converted into charcoal.

So the story goes, one such forager needed a rock to counterbalance the panniers straddling his donkey for the trek down the mountain. He didn’t need the rock to go back up, so left it lying around, only for it to be noticed by a

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sharp-eyed German engineer who recognised what he was looking at. In true

It’s the largest and richest chromite source in the country

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Cinderella fashion, the local worker was found, the source of the ore identified and the Germans switched their attention from copper to chrome—at that time, a particularly strategic ore with many geopolitical implications.

“It probably meant,” says Dr. Alp Malazgirt, recently appointed chief executive officer of Yildirim Holding, “that the Germans had not focused on chromium mining until it became a strategically important metal. I’m not a trained geologist but on an inspection tour of new leases we have acquired near Adana’s

ETI KROM

operations. It’s the largest and richest chromite source in the country and generates much of the over $1 billion in revenue for the group.”

The mine itself is located on a 200-hectare site 55 kilometres from Elazig. The main activities there can be summarised as open pit and underground mining of chromium ore, a chrome beneficiation along with a briquetting facility, production of high carbon ferrochrome, and the recovery of ferrochrome from slag.

In total, the Eti Krom operation numbers around 80 chrome ore mines with 20 of them currently active. Proven reserves top 100 million tonnes, with current annual production capacity of about 1 million tons of chromium ore. Ferrochrome production capacity is 150,000 tonnes and the smelting operation takes place in four furnaces, two open and two new semi-closed arc furnaces near Elazig, all of which have been updated and modernised in the past five years.

Turkey has no shortage of chromium mines but what sets Eti Krom apart is the high quality of the ore. There’s a very high ratio of 2.7:1 chrome to iron but even more desirable is the low silicon content. “Silicon can be removed readily,” explains Malazgirt, “but at a

Productivity and process improvement has led to increased flexibility and low cost operation higher cost as neutralising the silicon needs more carbon and therefore more coal. The phosphorous content of our ore is also low which means it is ideally suited for the very high grades of stainless steel.”

These characteristics have helped Eti Krom weather the decline in demand and the suppression of prices seen since 2008. At the time, chromium ore was fetching around $750 per tonne; now the price is either side of $270.

Nevertheless, through a combination of operational hedging and optimising its mining and manufacturing units, Eti Krom has remained viable. Productivity and process improvements have led to increased flexibility and a low cost op-

Aladag region, it is possible to see many such lumps of chrome ore and I am sure it was even in greater abundance at Elazig back then.”

After the Second World War, the Turkish state continued to run Eti Krom, as the mine and processing plant was known, but never very profitably. At the start of 2000, the country began a wholesale privatisation programme and in 2004, when the mine was losing over $100 million a year, the brothers Yildirim took over the mine. “Today,” says Malazgirt, “Eti Krom is the flagship of all Yildirim

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The Sustainable Business Review the best out of its partners. Next year we shall build a new electricity generation plant near at Elazig using coal imported from South Africa, Colombia, or Russia—the best source of coal for the high temperatures needed in the smelting process. What we don’t need for our own purposes will be fed back into the grid.”

eration. Eti Krom has used its financial strength and steady cash flow to make capacity-increasing investments with zero leverage.

Eti Krom remains an important partner to its customers as it is the only Turkish chrome ore supplier that can produce chrome ore all around the year, without any suspension, even through the tough winter season. By stockpiling product in 18 strategically located warehouses, it can rapidly supply customers worldwide with the ferrochrome they need.

When it comes to ferrochrome, the market for standard grades is now dominated by the Chinese, who have taken over from South Africa as the world’s greatest producers just recently. “South Africa has 70 per cent of all known chrome ore,” says Malazgirt, “but that hasn’t stopped China investing hugely in its own ferrochrome production. Of course the power shortages in South Africa haven’t helped, as the smelting process is extremely energy-hungry.”

By 2023, the target is for mining to generate five per cent of the country’s wealth. In other words, there will be plenty of work for local suppliers.

Electricity supply is just as critical for Eti Krom but more under control. The grid supply is reliable but is gradually being supplemented with Eti Krom’s own generated electricity. “Yildirim has been importing coal since 1995,” says Malazgirt, “and we have a very experienced team which knows how to get

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In a relatively short period of time, the Yildirim brothers have created a group with a very wide range of interests (10 sectors in all), many of which provide synergy for the mining and fertilizer operations. Yildirim has its own fleet of 18 ships, of which 9 are tankers and the rest are dry bulk carriers, so has the means of shipping product to customers or importing those commodities it needs. In the case of coal, ore is shipped in wagons down to the Mediterranean ports for export and then coming back, the wagons will haul imported coal for the future 200 MW power generation plant. Hence, the synergy will be accomplished by combining all, or most

ETI KROM of the steps in the ferrochrome operational supply chain.

Despite these interlocking divisions, Yildirim has yet to take any interest in manufacturing, although it comes as a great pleasure to Malazgirt to note the extent to which Turkey is developing its ability to be self-sufficient. “When the crushing and beneficiation plant was originally built at Elazig,” he says, “all the technology had to be imported.

Now we are seeing that much of what a plant like ours needs can be produced within the country.”

Such improvement in manufacturing capabilities will be good news for the government also. Considering the number of new mining developments that have been seen over the past decades, the mining sector still only accounts for one per cent of the country’s GDP. By 2023, the target is for mining to generate five per cent of the country’s wealth. In other words, there will be plenty of work for local suppliers. But

for this target to be met, Malazgirt is warning that the country’s bureaucracy needs to become as efficient as its manufacturing.

“Getting approval for anything is a slow process,” says Malazgirt. “We have li-

censes for 20 other sites all over Turkey that are waiting for development and which could be creating new jobs and export revenue. Most of the concern is for environmental protection of the countryside, which is admirable, but the process needs to be streamlined.”

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The Sustainable Business Review Eti Krom already has good credentials in trying to create a sustainable operation. We’ve already seen that by tapping into Yildirim’s logistics network, coal is being imported and finished products exported with the maximum degree of efficiency—thereby minimising its carbon footprint.

As electricity is the largest single cost associated with smelting, becoming self-sufficient is high on Eti Krom’s to-do list. In addition to the coal power generation plant underway, the operation is also trying to recycle some of the energy found in the hot gases produced during smelting. A system is currently being built which will collect 600°C waste gases from the smelter, filter them and cool them down to 400°C and then use them to power the boilers. This way it is hoped that 5.5MW of electric-

it is the only Turkish chrome ore supplier that can produce chrome ore all around the year ity will be produced in a clean, closed circuit.

A by-product of any smelting operation is the impurity carrying slag that forms on the top of the molten metal. In the case at Eti Krom, the chrome content is already very low—at no more than four per cent. Nevertheless, slag is being recycled in order to re-claim as much of the chromium as possible. When the last drop of value has been wrung

from the slag, it can still be processed for secondary purposes. Rather than disposing of it as waste, Eti Krom is investigating ways in which the slag can be put to good use, for example, as a wear-resistant additive to concrete.

Although there is no shortage of job opportunities in the mining industry in Elazig province, Eti Krom remains the most important employer, with currently around 1,000 people on the payroll. It’s

But for this target to be met, Malazgirt is warning that the country’s bureaucracy needs to become as efficient as its manufacturing.

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ETI KROM the largest source of tax for the city and the whole of the province and its long history makes it an important part of the countryside’s social fabric.

“Eti Krom has been part of Elazig life for as long as most people can remember,” says Malazgirt, “something that Yildirim is keen to maintain. As well as supporting local institutions such as schools, the group has a major project underway to convert one of the most important historical buildings in the city into a museum, celebrating the region’s mining heritage.”

What a pity the lump of chrome ore that started it all off can’t be available as the principal exhibit.

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A People Project

Hyderabad Metro Hyderabad is situated to the north of Deccan Plateau on the banks of River Musi and is the capital of Indian state of Andhra Pradesh. It is the fifth most populous city in the country with its metropolitan population almost reaching eight million. As NVS Reddy, the Managing Director of Hyderabad Metro Rail Limited, says, Indian cities have their unique characteristics despite facing same population pressure on services and traffic challenges as that of other cities in the world. One thing is for sure, the life at ground level can be disastrous as they usually lack sidewalks

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onstruction of elevated rapid transit systems for the city was a good idea considering all these problems. Hyderabad is a heart of India’s growing IT and pharmaceutical

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industries but the traffic problems and bad congestion were preventing them to grow. The project, the largest in the world, was officially launched as a public-private partnership in 2008. The authorities

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awarded the Concessionaire (Design, Fund, Build, Operate & Transfer) contract to one of India’s most renowned and biggest diverse infrastructure, construction and engineering companies, the Larsen and Toubro, after initial bidding in 2010 was cancelled. Vivek Bhaskar Gadgil is serving as managing director as well as chief executive of Metro Rail (Hyderabad) for Larson and Toubro. He is clear about how to complete such a massive project.

He alongside Mr Reddy is also proud of the fact that the Global Infrastructure Forum also honoured this project with the title of “Global Engineering Project of the Year” earlier this year.

The project uses a very innovative financial system and is based on a private

ETI KROM

public partnership (ppp) and thus, does not consume much of the public funds.

The Indian government only provided ten percent of the total investment of $2.6 billion in the shape of viability gap funding.

The bank loans and equity put in by the L & T accounted for rest of the funding. The Andhra Pradesh government is spending an additional $33 million on relief and rehabilitation as well as the widening and acquisition of roads and lands respectively through its Public Sector Enterprise (PSE).

No more public funds will be used apart from these expenditures. L & T is carrying the remaining risk and recovering its money through advertising, fares and

developing land around the stations for rentals. It is entitled to earn through these measures for a concession period of 35 years that can be further extended for 25 years after which the entire project will become government’s property.

The World’s largest PPP metro Project

Representing the government, NVS Reddy is a real driving force for the project. He is a renowned financial expert and has completed many similar projects in the past. He has been to different parts of the world to analyse the failures and success of various projects and other similar problems. He insists that the purpose of the project is not only to construct a metro in Hyderabad but they also want to make Indian cities more people and eco-friendly.

He asserts that he is able to copy the best practices and avoid mistakes because he has had the opportunity to observe and analyse already completed similar projects.

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Mayor Enrique’s work in Peñalosa in Bogotá deeply impressed Reddy. He made Bogota one of the best cities in the world that was definitely once, one of the worst.

He built bicycle stations at the bus stops, provided good connectivity and created quality spaces for public and Reddy plans to do the same with Hyderabad. To find out how to resolve the congestion problem, he visited London and Paris (where tubes are only at 5 minutes’ distance).

However, the cities like Bangkok, Taipei, Hong Kong and Singapore provided him closer benchmarks in the shape of an elevated metro similar to the one being con-

structed in Hyderabad and the BTS Skytrain. Authorities in Bangkok realised that metro is not working to its full potential after its construction was complete. Subsequently, they made best use of elevated road levels by constructing skywalks underneath the tracks.

These skywalks transformed Bangkok into an efficient city as they automatically became a platform to connect adjacent facilities with the station.

Hyderabad Metro incorporates this concept right from the start. The road traffic requires 5.5 metres for clearance whereas racks are approximately 8.5

Singapore’s ‘one-hour city’ concept has especially inspired Reddy where no journey through the city takes more than one hour 70

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metres above road level. The public will utilise the remaining 3 metres. Reddy plans to construct skywalks in these gaps allowing people to easily access residential and commercial complexes, hospitals and schools without going down into the roads. Instead of retrofitted connections, Hyderabad Metro will boast intermodal connectivity unlike more than 200 other mass transit systems in the world.

This is because Metro is only a part of much larger development programme for the city. Phase 1 is currently under construction and it contains three depots, 66 stations and stretches for 72 kilometres while phase two will further stretch

ETI KROM

Since its inception in Mumbai in 1938, L & T has proved its engineering capability again and again, actually making this a great project for them for 25 kilometres. Bicycle lanes as well as skywalks will support the system that also connects to a new rapid transit system running throughout the city in addition with old bus depots and stations. This is not a simple Metro bus but it is the part of

a bigger redesign project for Hyderabad that will transform the city into a green, people- friendly city. Singapore’s ‘onehour city’ concept has especially inspired Reddy where no journey through the city takes more than one hour.

The stations and depots have the ability to become independent educational, social and economic centres. Reddy is trying to develop a synergetic relationship between ridership?? and the property developers.

Theatres, hotels, hospitals, restaurants, schools and similar facilities will be in the vicinity of metro stations, practically converting them and their surroundings into destinations. This will help in reducing congestion at road level.

As the project is now under construction, it is expected to be completed by 2017.

2500 single pillars will appear from middle of the roads and almost 900 of them have already been completed. The 8 kilometre

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The successful completion of this mega project will bring more infrastructure projects into the region in addition with enhancing its reputation long test track and Uppal’s “mother depot” that is going to be the control station for the bus should be completed in late 2013. This will enable concern agencies to test the advanced signalling systems and the rolling stock by the end of 2014.

The task of concessionaire has been as tedious as remodelling an intractable and old Indian city. Perhaps, signing of contractual and financial agreements in least possible time was the first major success of L & T according to Vivek Gadgil. However, the key element for L & T during the

entire process was its leverage with ten nationalised banks involved in the project.

Subsequently, he had to invite a team of top consultants from across the globe, an initiative that achieved massive success. L & T signed the last important contract for this year with Otis Elevator Company (India) Limited for provision of 670 elevators and escalators, making it biggest ever project for the company.

Much of the procurement process was out of L & T’s control and risky because it had to import almost all the high-tech

The Global Engineering Project of the year Award” for the year 2013 in New York

equipment. However, Reddy made some really smart decisions including the signing of two major contracts in Indian rupees. This made two big and set price agreements signed with Hyundai Rotem (a Korean company) and Samsung more predictable.(why??) Samsung will maintain the automatic fare collection system (AFC) whereas Hyundai Rotem will be responsible for rolling stocks. Other notable vendors who have become part of the project are Tata Corus (rails), Voestalpine (points and crossings), Thales Canada (signalling and communications equipment) and Vossloh (rail fastenings).

The process of selecting best signalling system and untracked underground utilities raised serious engineering challenges. Latest communication base train control (CBTC), the first ever pure wireless system in India will control the movement of Metro bus. Gadgil says that it is important to support the office of Commissioner of Railways, who is authorised to allow the commercial use of the system, with relevant information and data as it hasn’t seen anything like before.

Since its inception in Mumbai in 1938, L & T has proved its engineering capability again and again, actually making this a great project for them. The successful completion of this mega project will bring more infrastructure projects into

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ETI KROM

the region in addition with enhancing its reputation. However, PPP entails more risks as compared to cash contracts.

The theory states that all parties involved should earn handsomely from ‘transit oriented development’ that is building and lease of a massive high profile commercial property on the land that government provides for that purpose. However, things are notoriously uncertain in practice.

For instance, rents will fall if more office space than the market actually needs becomes available suddenly. It makes it difficult as well as different. Commercial development equalling 18.5 million square feet will take a long time to complete although they want to construct Metro over the period of five years. ? Here, the business constraint is more obvious than the physical constraint. It is also important

Hyderabad Metro will boast intermodal connectivityworld to analyse the failures and success

for them to maintain balance among multiplexes, malls and offices as every city has its own unique environment.

However, Both NVS Reddy and VB Gadgil share an obvious excitement of transforming Hyderabad into one of the most efficient cities in the world regardless of all the problems. Reddy emphasizes that it is the pain they have to take. Only two percent of people own cars even in the cities in India where still only 35% areas are urbanised, making cars a real problem for the cities. They state that they have to deliver everything people want near the metro depots and stations while improving the public transportation model in a hope to minimise the congestion.

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Damus Gro

Mechanically Poi

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Damus Group

oup

ised To Deliver Both the onshore and offshore resources of Trinidad & Tobago , from production and marketing of petroleum products to the development and production of hydrocarbon, largely define the economic future of this tiny Island country in the Caribbean. Both large and small exploration companies are fighting to obtain licences and are willing to invest heavily into various development projects.

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Employees receive certificate for 1 day customer service training course

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owever, they also need to partner with competent and experienced local companies to succeed because they can provide them the support services they need, and this is where Damus, a major supplier in the country to both private and public sector comes into their own. The Mahabir family acquired the company in 1981 after it was founded in 1973 and since then, it has launched some nine affiliates and subsidiary departments. Over the years, Damus has developed into one of the largest mechanical fabrication and construction contractors not only in its home country but also in entire East Caribbean.

The company basically deals in procurement, maintenance, installation, designing and manufacturing of every class of components that the industry needs.

It has a permanent staff of 200 highly skilful and experienced employees who are further supported by temporary staff whose number, depending upon the size and length of a project and varies from 500 to over 2000.

The plant has the capacity to manufacture 30,000 tonnes of steel every day 30 kilometres to the south; it also carried out its main fabrication operations from this yard. This huge complex incorporates over 160,000 square feet

Damus currently operates from a site spawning over 12 acres in La Romaine, Southwest of Trinidad. The company built a larger and better shop at Point Fortin,

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of warehouses, an office building on a 30-acre site and a 50,000 square foot workshop.

The plant has the capacity to manufacture 30,000 tonnes of steel every day if workers do only one shift. The production increases by eight percent if the steel is fabricated round the clock. Nowadays, Damus uses its workshop at La Romaine spawning over the area of 24,000 to manufacture submarine pipelines for Petrotrin and for other light fabrication work. Petrotrin uses these pipelines to undertake offshore operations at Trinmar.

The achievements of Damus reflect its innovative approach to find long lasting solutions for its customers’ problems.

The Sustainable Business Review Liquified Natural Gas Plant- Train I, II ,III & IV for Atlantic LNG Trinidad

operates from a site spawning over 12 acres in La Romaine Petrotrin is pouring in billions of dollars into the Trinmar field and Damus’ directors recognise this fact. There are two methods to install undersea pipelines linking the rigs with the shore to trans-

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fer crude oil. The first option is to use specially modified vessels to join pieces of pipelines on site. The other option is to install continuous coils using a specialised coil laying ship. However, the later method

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is very expensive due to availability problems and high mobilisation costs.

Damus’ special barges to lay pipes are in constant use at Trinmar. These barges

Damus Group

Major companies such as Petrotrin, Repsol, BG, BP and BHP Billiton have all worked with Damus vessels enabling them to operate in tough sea conditions that prevented timely completion of the project in the past. Stuart Mahabir, Director of Damus Overseas Operations, says that it saves both time and money as the work is done above the

surface of the sea, also making it industry’s best practice.

Pipelaying is a classic example of the jobs Damus specialises in. However, it has acquired and successfully com-

carry ‘pipe strings’ or prefabricated pieces of pipes that are welded together on site.

It has proved to be most effective solution for the client. Its effectiveness increased even further after Damus modified their

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pleted some very important and difficult task in recent years, distinguishing itself from the rest. First of such projects was acquired in 1998 and it lasted for almost ten years. During this project, Damus built a gas liquefaction plant for Atlanta, one of the largest liquefied natural gas producers in the world at Point Fortin. The plant incorporates 4 trains and can liquefy fifteen million metric tonnes each year.

The project worth $5 billion had Bechtel Corporation, USA as its EPC contractor and Damus was chief mechanical contractor for Bechtel. Damus completed train one, two and three in 1999, 2002 and 2003 respectively.

The commissioning of fourth train was delayed till 2007. Stuart proudly recalls it as a great achievement for the company. Damus provided services like spool and utility tank fabrication and installation of rotating and ground equipment as well as all above ground piping on the facility that was the fourth largest in the world at one time.

Recently, Damus exhibited that it can provide a diverse range of services by completing a power generation plant, the largest project in the company’s history. Trinidad Generation Unlim-

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Damus is preparing to exploit a O&G boom which about to happen ited (TGU) had contracted Ferrostaal of Germany to build a new 720 MW combined cycle plant at La Brea and Damus served as the main mechanical contractor for the power plant. The $7 billion project can produce the electricity at half of units cost by other sources and therefore, hailed as one of the country’s most efficient power plants by Kevin Ramnarine, the Energy Minister for Trinidad in the opening ceremony of the project in October, 2013.

Major companies such as Petrotrin, Repsol, BG, BP and BHP Billiton have all worked with Damus. Various certifications such as ISO 9001:2008 highlight the company’s best practices necessary to work with such companies because they ensure the company’s Safe-toWork (STOW) accreditation and quality management system (QMS). Mahabir ascertains that this accreditation guar-

The Sustainable Business Review - Quarter 3 2014

antees both workers’ and environmental safety. It was an important landmark to achieve this accreditation in 2012 as it confirmed that Damus’ workers are qualified and trained as approved and is recognized by local regulatory body, also certifying company’s compliance record forever.

Damus understands that it is imperative for a large organization to have accredited and trained employees. The company runs a myriad of both internal and external training programmes.

Similarly, junior engineers study an in-house syllabus regarding mechanical and structural designs and other topics.

The company also encourages them to acquire various qualifications that its clients may require by offering them financial incentives.

Despite a regional economic slowdown of the recent global economic reces-

Damus Group Offshore Platform for BP Trinidad and Tobago

deep water acreage in the east coast as it is also very close to countries like French Guiana, Guyana, Surinam and Venezuela.

Stuart proposes that Galeota should become an important energy service station for Port-of-Spain which is about to become the Houston of the Caribbean.

He states that it is sensible to improve facilities available at Galeota including construction of a new fabrication facility in this eastern city to maximise the advantages of ever increasing investments in this area.

sion, Damus is preparing to exploit a O&G boom which about to happen. The country depends a lot on the port of Galeota on its south-eastern tip both for its shallow and

Damus is willing to explore new downstream opportunities regardless of the fact that it is very busy in completing offshore projects. The proposed $850 million plant to be constructed in La Brea at the United Industrial State is one such opportunity that Damus can explore. Mitsubishi Heavy Industries (MHI) of Japan is leading a consortium which will complete this project that will produce million tonnes of ethanol and

dimethyl ether (DME) per year respectively. It will be the first downstream power generation plant since 2010 in the country. Damus is rightly expecting to get the contract for the project’s construction phase because it is the only company in the area that has an excellent track record as well as capacity and experience to handle such large projects.

Meanwhile Stuart is looking to explore further opportunities in the region that is caught in an intensifying battle between oil trade and traditional industries like fishing and tourism. However, Stuart insists that Damus will not tarnish the good reputation it has earned over the years and will always maintain its standards by operating transparently. He hopes that their customers will keep on appreciating the matchless contraction services they render to both regional and local Oil and Gas industries.

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