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March 2014 MINING & MINERALS FREIGHT & TRADING WEEKLY ... for investors CRUNCH TIME ... for infrastructure delivery GET COMMUNITIES ON BOARD! ROLL OUT THE WELCOME MAT
March 2014
MINING & MINERALS
FREIGHT & TRADING WEEKLY
... for investors
CRUNCH TIME... for infrastructure delivery
GET COMMUNITIES ON BOARD!
ROLL OUT THE WELCOME MAT
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CONTENTS
March 2014 Mining & Minerals 1
NIGERIA TO UNSEAT SA?
fdi on the increase
GENERAL NEWS
4
‘get communities on board’14
‘no easy solutions to customs issues’19
ROLL OUT THE WELCOME MAT FOR INVESTORS
5
SLOWER GROWTH EXPECTED IN 2014
10
Open-pit copper mine in Zambia.Cover Design: Tanya Bosch
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Telephone : +27 11 552 4300Fax : +27 11 552 4337Email : [email protected]
Sabot Management Limited
2
INVESTORS WELCOME
INVESTORS WELCOME INVESTORS
WELCOME INVESTORS WELCOME
20
LOGISTICS
12
18
expansive footprint drives competitiveness11
swazi rail records 25% volume increase
volatile market demands flexible solutions
BOOST FOR ISO TANK DEMAND
15
www.ftwonline.co.za
2 Mining & Minerals March 2014
Liesl Venter
Delivering transport and energy infrastructure will be a key challenge for African governments as
the mining sector continues to see unprecedented growth.
Failure to deliver is going to result in a tough road ahead – especially convincing mining houses to remain focused on the continent.
According to James Fungai Maposa, consulting manager for the industrial unit at Frost & Sullivan, already infrastructure challenges are affecting mining.
“We are seeing mining projects drastically reducing targets and in some cases they are even being written off due to the lack of infrastructure,” he told FTW.
With mining dependent on transport and energy infrastructure – not only to get capital equipment on sites to develop mines, but to get commodities
from mine mouths to ports and eventually to end user markets – an increase in infrastructure delivery is required.
And while African governments – along with the African Union – have responded with a renewed drive for infrastructure delivery, the growth being seen in the mining and minerals sector in recent years is already outstripping the improvements in infrastructure.
In many countries already there has been a downscaling of expected output. In Mozambique alone mining house Rio Tinto, which bought into the coal district in 2011, have down-written coal output by
some $3.5 billion to date.Maposa says this is because infrastructure is just not
available to move the coal from the mine to the end-market.
Rio Tinto itself had hoped to move the coal via barges
on the Zambezi, a viable option proven by
extensive feasibility studies undertaken by the
company, but the Mozambican government threw this off the table saying it was not putting coal on the river.
Lars Greiner, materials management HOD, Worley Parsons RSA, says urgent infrastructure improvement is needed in countries such as Mozambique if mining is to continue operating at its current levels.
“We have seen major improvements in infrastructure in Ghana and to a lesser degree in Nigeria and Tanzania, however there needs to be urgent improvements in the infrastructure of Mozambique, Kenya, Cameroon and Guinea. Without them, projects will face severe hindrances moving forward.”
Maposa agrees, saying several countries – including South Africa, Nigeria, Rwanda, Ghana and to a certain extent Kenya – have announced sizeable infrastructure spend for the next few years, but even in these countries this won’t ease the pressure on the ground.
“We are still seeing a lot of talk about intended projects and upgrades, but access to the required capital to get these projects off the ground seems to be one of the biggest problems being encountered.”
In light of the global economy, Maposa says investors are more frugal and many are watching developments in Africa keenly.
“The lack of infrastructure is worrying,” he told FTW. “The infrastructure shortfall is billions of
dollars at present and if countries are unable to access the capital that is required to upgrade their infrastructure they are going to struggle to sustain the growth rates.”
He said even in South Africa, where a host of infrastructure upgrades and improvements have been announced in the past two years, the roll-out on the ground was not happening as quickly.
“Investors want a sure return on investments and they are looking very carefully at what projects to
invest in and also which countries to put their money into.”
According to Pramod Bagalwadi of DHL Global Forwarding Ghana, there are regions in Africa where one can clearly see the infrastructure upgrades taking place – especially
in the east and west of Africa.“The African middle blocks are
showing less progress and will need a lot of support internally and externally before we see any real infrastructure development as there are still issues around political stability and good governance.”
Bagalwadi says for Africa to continue seeing infrastructure growth, political stability will remain key.
“Take the example of Ghana in the west or Tanzania in the east or Egypt in the north, all of them have developed a decent level of infrastructure. But if there is no political stability then it cannot continue to grow as is apparent in the case of Egypt,” he said.
time for infrastructure delivery
Ghana Nigeria Tanzania
URGENT
Mozambique, Kenya,
Cameroon and Guinea
Infrastructure
improvements
J J J
Mining projects are drastically reducing targets and in some cases they are even being written off due to the lack of infrastructure.– James Fungai Maposa
“
March 2014 Mining & Minerals 3FTW2860SD
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4 Mining & Minerals March 2014
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Despite its numerous challenges, Africa remains one
of the most attractive continents for mining houses.
“There are huge opportunities in Africa,” said Tom Butler, global head of mining at the International Finance Corporation. “The World Bank projects an investment of $87 billion in Africa the next few years with economic growth at 5%.”
He said while the continent faced some serious challenges – including eradicating poverty which has in fact increased despite the past ten years of growth – foreign direct investment was increasing, more mining projects were taking off and exploration was yielding positive results.
Africa is estimated to hold about 20% of the world’s
mineral reserves.“But for mining to be successful
it has to overcome some fairly big challenges of which infrastructure is just one,” he said.
“To connect the raw minerals with the final destination means travelling in Africa and the roads, rail and port infrastructure needs work.”
He said the lack of core infrastructure in the transport as
well as the power sector was crucial if the mining sector was to have any chance of success.
“Infrastructure bottlenecks in the power sector are negatively affecting mining which has a huge demand for power. The transport aspect is just as crucial to unlock projects that will not go ahead unless the rail and road corridors are in place and the ports can handle the volumes.”– Liesl Venter
FDI on the increase
Mining remains a key pillar in many African countries, but ensuring they have the right policies in place is essential if they want minerals to be a resource rather than a curse.
This is according to Roger Baxter, senior executive of the Chamber of Mines, who believes having the right structures in place is critical.
“In South Africa, on the policy and regulatory front, we believe good progress has been made and there is a lot less uncertainty now than there was some years ago. Also all the talk of wholesale nationalism is off the table and we have resolved many issues that worried the mining sector.”
But, said Baxter, for continued
certainty good clear laws were needed in a country.
“The key is to take a partnership approach between the various stakeholders. Government and the private sector have to work together and find solutions to their collective
problems rather than each going it alone from their own corners.”
Baxter said in South Africa labour unrest continued to be a concern despite major efforts to stabilise the sector.
“Strike activity still exists but
what is promising is that it is within the realms of the law, workplace rules are enforced and picketing rules are obeyed rather than what we saw some time ago.”
‘Get the structures and policies right’
$87bnProjected investment in Africa over the
next few years.
Government and the private sector have to work together and find solutions to their collective problems rather than each going it alone from their own corners.– Roger Baxter
“
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Liesl Venter
The African mining sector needs to embrace partnerships while governments on the
continent have to do more to make investors feel welcome.
Randgold Resources CEO Mark Bristow believes this is the secret to long-term prosperity.
While speaking from the perspective of gold miners, Bristow said it was important for mining not to repeat past mistakes by not creating real value when the going was good. “When the gold price dropped last year the industry was left floundering and we saw projects being cancelled across the spectrum.”
He said in light of Africa’s vast mineral resources it was important to create an environment in which investors wanted to participate.
“If you want elephants go to elephant country. If you want minerals, you go to Africa. Yes, there are challenges but in the mining sector there is profit to be made on this continent and
‘Roll out the welcome mat for investors’it is possible to discover and develop profitable mines, but it means creating better investment environments and the way to do that is through better private public partnerships.”
Bristow said mining houses were going to have to work more closely with governments if they wanted to see project success in the long run.
“Our experience has also shown that there are stresses on both sides but it is mutually beneficial to have partnerships.”
He said working closely with several governments across Africa it was clear that the public sector had come to that realisation.
Citing the example of Randgold in Mali, Bristow said they had been operational for at least 20 years, and despite the numerous challenges encountered, they had
helped the country grow to be the third largest gold producer on the continent. “We have been able to operate projects under the codes that we first started with. Yes, there have been revisions of those codes, but it has all been possible because of the partnership that
continues to exist and grow between ourselves and the public sector.”
He said opportunities were opening up across the continent but unless there was a combined approach it would be very difficult to exploit these opportunities to
the full.“If we want to
mine successfully in Africa we have to work together,” he said.
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T he logistics challenges in the mining industry are
unique and complex and how these challenges are addressed can help cut costs or erode profits. “Imperial offers outbound and inbound logistics
services. In both cases, utilising owned assets as well as leveraging appropriate external capacity in a managed logistics
environment,” explains Cobus Rossouw, Chief Integration
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its vast experience
in
outsourced value chain management for the benefit of each one of its clients – consistently driving their competitiveness.
The group’s outbound offering includes internal transport for mines, managing stock piles and offering specialised transport solutions. “Where possible – and cost efficient – Imperial offers its clients the opportunity to leverage the strengths of road and rail transport with multimodal solutions,” he notes.
Imperial’s inbound logistics solutions for the mining industry range from procurement, inventory management, warehousing to transportation. Procurement expertise includes low-cost country sourcing in partnership with The
Beijing Axis, while inventory management relies on the specialist capabilities of Resolve, Imperial’s professional services company. Warehousing includes on-site operations as well as consolidation facilities. Amongst all of this, Imperial provides general flatbed transport services across the southern African subcontinent.
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6 Mining & Minerals March 2014
FTW: Infrastructure has been a challenge in the mining sector. Is this still the case or are we starting to see an improvement in infrastructure delivery in Africa?
Mark Pearson, programme director, TradeMark Southern Africa (TMSA):
Infrastructure is still very much a challenge and is getting to be more of a challenge. There are railway lines and ports being upgraded, or being built from new, but even these new investments will not meet the demand in the sector to handle the projected volumes of minerals being exported. In addition, although there are planned major investments in electricity generation and transmission projects, these are also probably not adequate. The challenge will also depend on how the mining and mineral sector will develop in Africa. At present minerals are largely exported unprocessed or semi-processed so the current infrastructure requirements are
mainly transport corridors to the sea (including roads, railways and ports).
Lars Greiner, materials management HOD, Worley Parsons RSA:
Infrastructure and power generation remain two of the top challenges we face when looking at projects in Africa. Certainly in many places these have improved or are improving rapidly, however they are still short of requirements and in fact the growth in the mining and minerals sector is still outstripping the improvements in infrastructure. So while things have improved in terms of infrastructure, they have actually gone backwards in relation to the volume of cargo moving. This is evidenced by the increased port and road congestion in many of the African ports.
One worrying trend that we are seeing is some projects starting to create their own infrastructure, with capacity only for themselves. This does not benefit the country or its citizens – in fact it prevents any overall country development.
It is also worth considering how much of the improvement
in congestion in some ports is due to upgrades and how much is related to the global economic downturn.
Pramod Bagalwadi, regional operations lead – English-speaking Africa country manager
– Ghana, DHL Global Forwarding:
It’s unfair to compare the infrastructure in different countries as this depends upon several criteria that include the political stability of the country, its
political will, leadership and good governance, the literacy rate and the cultural ties or roots or beliefs it follows. However, one can divide the continent into 5 blocs (east, west, north, south and middle) and compare the existing infrastructure. To me the south is quite developed because of South Africa, and the neighbouring countries can build on this and develop it to their advantage if they want. The east, west and north also seem to be growing
slowly but steadily as they do have some challenges in meeting all the criteria mentioned. The middle bloc is a real concern as they are struggling to meet any of these criteria and it will be a serious challenge to create any infrastructure here until and unless the basics are in place.
Amine Mastour-Chatmi, ALE business development manager Africa:
Poor infrastructural development has added to the recently difficult business environment (eg commodity prices) to limit growth potential, making infrastructure a central issue for the sector. While investments in ICT have significantly increased over the last few years, power remains a major problem together with the lack of transport infrastructure – especially in landlocked
countries. This pushes up costs and compromises projects’ viability, particularly when heavy equipment and/or loads are required. The same applies to water and
sanitation, for which more drastic regulations across Africa should translate into improvements in the mid- to long-term.
Can’t keep up!Growth continues to outstrip infrastructure upgrades
In mining lies Africa’s hope say those in the know.But with large mineral deposits having been identified across the continent, the single biggest impediment to extraction is still the lack of infrastructure.FTW’s Liesl Venter spoke to some industry experts for their insights.
POWER PANEL&AQ
Growth in the mining and minerals sector is still outstripping the improvements in infrastructure.– Lars Greiner
“One can divide the continent into 5 blocs (east, west, north, south and middle) and compare the existing infrastructure.– Pramod Bagalwadi
“Although there are planned major investments in electricity generation and transmission projects, these are probably not adequate.– Mark Pearson
“
March 2014 Mining & Minerals 7
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8 Mining & Minerals March 2014
Logistical delays can cost mines a fortune in lost profits if start-up dates are missed – and
while mines will normally take out insurance cover for general losses, they balk at including advanced loss of profits (ALOP) as it is perceived as being too expensive.
The mining industry, by its very nature, is dependent on the transport sector, Eikos Risk Applications managing director Hugh Reimers told FTW.
“Mining sites are often situated
in remote locations and South African mines import a lot of their plant and equipment. With the logistical challenges faced in the country, there are often delays which lead to a loss of
turnover every day until the equipment arrives,” said Reimers
He believes, however, that there is some room for optimism. “Transnet is making huge strides
in areas such as the replacement of damaged rails, a major contributing factor to derailments. Furthermore,
Transnet Port Terminals is spending R33 billion over the next seven years on upgrading and expanding South Africa’s ports, something the mines are very happy about,” he said. Road transport, however, continues to be a costly endeavour for South African mining houses, and there appears to be no respite on the horizon, he added. “Rising fuel prices and toll fees add further to their logistics costs.”
He said that it was “imperative” that mining houses review their supply chain solutions. “Part of this optimisation must be to ensure that at every stage, the correct risk management and insurance covers are in place. And that includes, crucially, cover for advanced loss of profits,” said Reimers.
Ensuring against loss of profit is critical – Eikos There are three main logistics
challenges which can cause major delays in getting essential goods to mines, according to Hugh Reimers of Eikos Risk Applications.
CHALLENGESLogistics
PORT PROBLEMS
Ports are crucial to the mining sector, and disruption creates more logistical problems for them. Take Richards Bay Coal Terminal which is the largest single coal export terminal in the world. RBCT has five berths and four ship loaders, and is linked by Transnet’s 650km rail line to the coalfields in Mpumalanga for export coal. On January 31 this year, RBCT suspended all operations relating to export coal services due to a power failure. This resulted in massive stockpiles and general inconvenience for the coal mining industry.
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The mining industries of Mozambique and Zambia seem
set to grow the fastest this year within southern Africa says Alwyn Rautenbach, executive manager of Airlink Cargo.
The mining industry is very important for the airline industry
as it is a catalyst for economic development in South Africa. That economic growth leads to development of support services, which includes a growth in demand for air travel and airfreight, says Rautenbach.
“The mining sector attracts specialists and investors that travel
by air but also generates cargo via all modes of transport – road, rail, sea and air,” he says.
Rautenbach says that the airline provides a service to the industry for urgent and express services. “Items vary from spare parts to laboratory samples and perishables,” he added.
Moz and Zambia set for fastest growth?
South Africa’s freight transport sector relies heavily on road transport, and this includes the transport of bulk mining commodities such as coal and manganese. This creates a further risk for mines as South Africa’s roads continue to deteriorate due to the demands placed on them. Added to this is the high accident rate, which according to a 2012 report compiled by the CSIR is created largely by a lack of law enforcement and high levels of non-compliance by many road-freight users.
Derailments continue to be an issue, and when
these occur, delays ensue. For example, getting a load of coal from Mpumalanga to Richards Bay Coal Terminal (RBCT) can be fraught with complications. An inept driver may cause a derailment of coal in the middle of nowhere. It is very expensive to recover the load, so it is often left where it fell.
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Slower mining growth expected for 2014A
fter a year of growth in 2013, SDV Mining, a division of Bollore Africa Logistics,
expects to see an increase in mining activities in North
East Africa, West Africa and South Africa, says
the company’s global
accounts manager for mining in Africa, Caroline
Brownson.“We expect
that 2014’s mining growth will be a little slower compared to 2013 due to the decrease
in certain commodity prices and mine owners looking at cutting operational costs,”
she told FTW, adding that the forecast projects for the regions mentioned are also dependent on various factors like sourcing funds, mining licences and environmental approval. “A good deal also still hinges on the pace of China’s growth to support the
supply and demand,” Brownson said.
SDV is working on 250 mining projects in Africa in different phases. Bolloré
invests over ¤300 million per annum in the African continent in rail and port concessions as well as country
infrastructure that supports the social environment, she said. “Infrastructure in Africa has always been a challenge when constructing mines in remote areas, and while there has been improvement in certain countries, we are still faced with difficult road conditions due to rainy seasons and little or no maintenance,” said Brownson.
Port and rail facilities also need to be upgraded to sustain development in certain countries but infrastructure improvements don’t always coincide with the various developments within the country, she added. “For example Mozambique has developed its Moatize and Riversdale Coal Mine but the country’s infrastructure does not support the volume of coal that needs to be mined and exported.”
We are still faced with difficult road conditions due to rainy seasons and little or no maintenance.– Caroline Brownson“
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March 2014 Mining & Minerals 11FTW1875SD
Expansive footprint drives competitivenessImperial Logistics is raising
its profile in the mining, construction and petrochemicals industries as it advances its growth strategy in the region.
But unlocking the continent’s potential is about working with and for Africa rather than “parachuting in” and expecting a “one size fits all” strategy to work, says chief integration officer, Cobus Rossouw.
The company’s diverse capabilities extend from procurement to brand activation, and include all the logistics services in between, says Rossouw. “Today Imperial Logistics is the only company that can take your materials from their original source, via manufacturing to the end-
consumer point of sale. ‘Get me there; sell my product; build my brand’ is the catch phrase that we’ve coined to sum up our total, integrated, end-to-end value
proposition.”The company
has set out a three-dimensional growth strategy – new geographies, new industries and new capabilities. “We will achieve
this by effectively leveraging our existing skills and expertise; by partnering with other players where necessary; and through acquisition,” said Rossouw.
“We understand the testing African marketplace,“ he added, “where agility and f lexibility are critical, and it is our already expansive geographic footprint in the region that we are able to leverage to drive our
clients‘ competitiveness.“Recognising that every client’s
requirements are unique and customising service offerings accordingly will continue to be the Imperial approach to leveraging experience to the benefit of each client. This partnership approach will be key to our ongoing success in Africa,” Rossouw said.
We understand the testing African marketplace where agility and flexibility are critical.– Cobus Rossouw“
FTW2822SD
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12 Mining & Minerals March 2014
James Hall
Swaziland Railway’s performance in terms of freight volumes improved a significant
25% during the current business year soon to conclude.
“There has been strong growth in all four traffic categories: imports, exports, container traffic and transit traffic,” Stephenson Ngubane, CEO of Swaziland Railway, told FTW.
“We are seeing a much higher demand for imports by rail into Swaziland, and exports also. Containerised (freight) is all imports into Swaziland. Minerals from South Africa make up the bulk of transit traffic cargo,” he said”
An increase in freight volumes moving into and out of the country would suggest a more robust economy at work. By
Swazi Rail records 25% increase in volumescurrent economic measures, however, Swaziland’s economy is struggling. The chief rail executive explains the anomaly by noting that rail is absorbing a larger share of existing and not necessarily expanding freight
transport volumes.“In context, our volume growth
means that Swaziland Railway is gaining a larger market share from our competition. It may not necessarily mean more consumption here but rather a shift in freight movement more favourable to rail,” he said.
Swaziland Railway’s dry port in the country’s industrial site at Matsapha, outside Manzini, has proved key to rail growth.
“Importers make the decision to go to Matsapha, choosing to go by rail. Transit time has
improved by rail to Matsapha and that has attracted
more business. There are some
projects going on in Swaziland –
some are private and some are parastatals that require
construction material and certain components. Industrial inputs arrive by container,” Ngubane explained.
The reduction by one third in the rail transit time from Durban, the SA port linked to Swaziland Railway, has shaved an entire day from the shipping time. Clocked when a loaded train actually departs Durban, the trip that took 72 hours two years ago takes 48 hours today.
The secret is longer trains and the clout these behemoths command.
“We maintain bigger trains, 40 wagons and above. These move faster than a train of 20 wagons because they get preferential treatment at the border. Smaller trains are bumped and they wait on the side while the big trains go through. It’s the way the rail business works,” Ngubane said.
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Liesl Venter
Mining in Africa is plagued by negative perceptions despite the major
role it plays in the growth and development of the continent, according to Prof Gavin Keating, a mining analyst and economist from Rhodes University in Grahamstown.
He said with the continent’s people not always benefiting from the rich resources with which Africa is endowed, the nationalisation debate has regularly raised its head over the years, impacting negatively on perceptions of mining.
“The historical relationship between high commodity prices and resource nationalism is well known,” he said.
Keating explained that when commodity prices were high, the distribution of mining profits was perceived to be unfair and therefore the calls for nationalism increased. The same goes for local ownership calls that increase significantly during the boom times.
According to Keating, communities are deeply involved with mining activities in their regions. “The matter is further complicated when the mining companies are foreign.”
He said managing these perceptions – along with the
negative belief that mining continues to have a major environmental impact – was crucial for the sector if it is to truly grow its activities in Africa.
“When calls for local ownership increase – along with more fair profit distribution - there are also more attempts to try to force mining companies to sell product
below market prices to encourage domestic beneficiation. All of these challenges exist and it would be very short-sighted of mining companies to think they have gone away.”
He said mining executives needed to work harder at selling the positive mining story to communities and to change perceptions around the business.
At the same time Keating said renewed calls for new and improved infrastructure were necessary to grow the mining sector.
“The lack of ports, railways and roads remains one of the biggest challenges facing this industry. What is being done and where is it being done needs to be on the agenda of companies,” he said. “Infrastructure investment will be crucial in the next few years and already we can see the Chinese investing heavily in the continent’s infrastructure. One way to access raw materials is to provide the money to build the infrastructure needed to get to them.”
‘Get communities on board’Mining industry must sell its positive story
For bulk transporters to keep their heads above water in
challenging times and show growth this year, they will need to optimise logistics operations and collaborate more effectively with service providers.
“The mining and minerals sector is vital to the existence of bulk carriers in South Africa but it is plagued by strikes, diesel increases, e-toll fees and a weak, volatile currency,” says Johan van Lith, general manager of Kodav Supply Chain Management – a division of Kodav Logistics. “The days where mining and trading companies would pay shuttle rates for three months of the year, thus allowing transporters to be cushioned for the remaining leaner months, is a thing of the past,” he told FTW.
He said that the challenges mentioned above could be minimised by cutting overhead costs to the bare minimum. But another curveball has come from the mines as they now have shorter loading times – only during daylight hours instead of the previous 24/7 operating hours – and are utilising the big yellow equipment on multiple projects
on the same mine. “The latter means that for example one front end loader will service the mining operations as well as the loading operations. These factors have lowered the efficiency levels of the trucks by several percentage points,” he noted.
To show growth, trucks need to be utilised more efficiently and
more optimally, said Van Lith. “This can only be done by keeping the trucks as busy as possible,” he added. “The turning point for the industry will not be in the form of increased transport rates but rather through the collaboration of service providers and the optimisation of logistics of mines.”– Adele Mackenzie
Mining logistics needs to be optimised for transporters to show growth says Kodav Logistics.
‘Working smarter is the way forward for bulk transporters’
One way to access raw materials is by providing the money to build the infrastructure needed to get to it.– Prof Gavin Keating
“
It is not all moonshine and roses for the African mining
sector which faces some serious challenges.
While labour woes have continued to have an impact, along with legislative uncertainty in many countries, the continent’s lack of infrastructure and high cost of logistics is taking its toll.
According to American economist David Hale, there is no doubt that there are many opportunities in the mining sector, but he said amidst this optimism around Africa and particularly sub-Saharan Africa, now more than ever countries would have to deal with the challenges.
“The growth has been upward and is predicted to remain upward in the region at around 6%. If one takes the languishing South African economy out of it, it increases to over 7%, but the continent is still poor and only accounts for around 2% of global output.
“Africa has its work cut out if it wants to capitalise on the growth that it is experiencing now,” said Hale. – Liesl Venter
Mining sector faces serious challenges
March 2014 Mining & Minerals 15
Bulk storage needs boost ISO tank demand
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M&S Logistics has ordered 1 000 new ISO tanks which
can be used for bulk storage by mining companies in Africa for petroleum, lubricants and certain hazardous material, provided they do not adversely react to the stainless steel of the tanks.
“The tanks are suitable for multi-modal transport and can either be left on site for long-term or temporary storage or transported via rail, truck or ship,” said M&S Logistics managing director Kreason Pillay. He told FTW the company was “very focused” on growth, particularly in east and west Africa.
“We see the fact that mining companies are still buying product in drums for bulk use and storage and transport as both a challenge and an opportunity. It means there is a large untapped market to create awareness of the benefits of using ISO tanks,” Pillay said. The benefits include efficiency, economy, quality and safety over a container load of drums. “For example, receiving just two tank container loads each
day eliminates the handling and storage of up to 260 drums and they have a much greater load capacity,” noted Pillay.
The ISO tanks provided by M&S Logistics have a 24 000 to 25 000-litre capacity and they
are durable and long-lasting, with a shelf-life of up to 20 years. “Furthermore, we provide ongoing maintenance and service on the tanks, with regional technical representatives on hand
to provide on-the-ground assistance. This is backed up by the global technical department,” Pillay commented.
Another opportunity for growth is the fact that there is a shortage of rail wagons and road tankers that are equipped for bulk. “We provide an easy, resilient and economically friendly solution,” he said. “There are some very nice rail developments in Africa, especially East Africa, and our customers in Africa are increasingly looking at moving cargo off the roads and onto rail,” he said.
We see the fact that mining companies are still buying drums for bulk storage and transport as both a challenge and an opportunity.– Kreason Pillay
“
The M&S Logistics ISO tanks meet the mining industry’s increased
demand for bulk storage.
M&S Logistics opened its own office in Singapore in February this year.
M&S Logistics’ global offices have seen “phenomenal”
growth in market share into Africa, particularly Zambia, the Democratic Republic of Congo (DRC), Malawi and Namibia, says company MD Kreason Pillay.
“The United States office in Houston, Texas has seen a 50% market share increase over the past 12 months and is focusing its efforts on growing that even further,” he said.
With Asia’s increased interest in Africa and to gain a competitive
edge, M&S Logistics has opened an office in Singapore to serve the
entire Far East region. “Previously we were operating through agents but we took the bold step on February 1 this year to capitalise on the growth we’ve seen from that region.”– Adele Mackenzie
African growth
www.ftwonline.co.za
16 Mining & Minerals March 2014
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Supply chain costs are “significant” in Africa and the logistics
industry has recognised that systems which address operational accountability and financial controls can boost competitiveness.
International supply chain software provider, Core Freight Systems, has noted increased industry interest in the potential to institute better systems to control the forwarding aspect of the mining and minerals sector.
“The mining and minerals sector is vital to the economic development of the African continent, providing not only employment and potential skills enhancement but also much needed foreign exchange to all producing countries,” said Sydney Ramoorthy of Core Freight Systems. He says the need for improved systems is not restricted to the South African-based operators, although the country’s historical role establishes this as an important
leg in the logistics flow, “whether as a conduit for the export of raw materials or the source of equipment in support of mining activity on a project freight basis”.
Ramoorthy commented that with the improvement in telecommunications infrastructure across the continent, a ‘hosted solution’ allowed users to easily access the CoreFreight application over the internet. “This means that support and maintenance of sophisticated IT equipment in remote locations is unnecessary, and the information in the system can be accessed real-time by all authorised
users irrespective of their physical location,” he said.
Multi-currency processing and advanced disbursement control/file profitability analysis is an important element of the system. “Although the primary requirement is the
provision of an overall operations support system which delivers
comprehensive management control of the business, the ability to provide and interface data with the United Nations-sponsored
ASYCUDA system, used by many
African revenue authorities, is an additional benefit,” Ramoorthy said.
Supply chain costs can be lowered with IT
The need for improved systems is not restricted to the South African-based operators.– Sydney Ramoorthy“
R esources are not so much Africa’s curse as the continent’s
inability to extract what lies beneath its core.
“Most of the investment on the continent is foreign-based,” says James Fungai Maposa, consulting manager for the industrial unit at Frost & Sullivan. “This is where the funds lie for the exploration and ultimately the set up of a mine. Finding a midway between the needs of these companies and that of governments is often where the problem arises.”
According to the Build Africa Forum, an initiative aimed at crafting solutions for Africa’s infrastructure challenges, public private partnerships are key to Africa’s development.
“For sustainable long-term operations where everyone’s needs are met government and mining houses must break bread and find mutual solutions while at the same time finding some common purpose.”– Liesl Venter
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March 2014 Mining & Minerals 17
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Abnormal load specialist Transnetwork Logistics may soon have to invest in 15 more trucks and
lowbeds to meet the growing demand in the mining industry for project cargo transport, said company managing director Jeremiah Naidoo.
“Over the last two years demand from the mining sector has increased dramatically and 99% of
our project cargo work is for the mining sector,” said Naidoo. He told FTW he was expecting further mining sector development in southern Africa, notably Mozambique, Zambia and the Democratic Republic of Congo (DRC).
“This provides further opportunities for growth for us, which is why we are considering the fleet expansion,” he said, adding that the company’s offices in Zimbabwe Zambia and the DRC positioned it well to capitalise on the growth.
One of the challenges that could restrict growth is port and road infrastructure, particularly in Mozambique, Naidoo said. “Over the last eight months I’ve noticed increased deterioration in Mozambique, as well as in South Africa,” he said.
Industry growth pushes up demand for trucks
Naidoo believes there has been increased deterioration on main mining sector routes in SA and Mozambique, including this road from Phalaborwa to Maputo.
99% of our project cargo work is for the mining sector.– Jeremiah Naidoo“
www.ftwonline.co.za
18 Mining & Minerals March 2014
Liesl Venter
In the competitive mining environment delivering top quality service at the best possible price remains
one of the biggest challenges, according to Joost Hogewoning, business manager in 4PL’s minerals division.
To stay on top of its game the company has invested heavily in its minerals division by expanding the service bouquet to include larger capacity for rail and warehousing, as well as import and export services.
“The trends we have been used to during the past decade no longer exist,” said Hogewoning. “Usual f luctuations and cycles in volume movement and pricing seem to have been
completely wiped out. The markets have become extremely volatile and remain soft across the board.”
But, he said, they did expect an increased level of stability, which is good.
“We experience the same trends as our customers do in terms of the state of the industry. Hence the logistics industry is continuously challenged to evolve and to become more and more creative in terms of new solutions, strategies and cost management,” he said.
Clear evidence is the fact that volumes have grown considerably since the expansion of the company’s warehousing capacity and implementation
of more rail solutions.
“The volume throughput in our business has grown by almost 150% compared to 12 months ago. We have also expanded our road transport offerings into Africa, which
has been very successful. The volumes in this section of our business have nearly doubled since June 2013.”
Volatile market demands flexible solutions
Local mining suppliers seem to be changing their focus into Africa,
providing opportunities for logistics providers who have strong transport networks into the continent, says Sue Wood, operations director for CargoCare Freight Services.
“Major local issues such as strikes and a weak rand have seen companies set their sights further north and with CargoCare having recently improved its African network, it allows us to take advantage of this development,” she said.
The company offers transport services to all major African countries from Burkino Faso to Egypt, Mauritus and Zaire and approximately 5% of its regular customers cater to the mining industry, said Wood. The company’s turnover increased “substantially” in 2013, compared to 2012, she added.
Africa focus provides logistics opportunities
Usual fluctuations and cycles in volume movement and pricing seem to have been completely wiped out. The markets have become extremely volatile.– Joost Hogewoning
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Liesl Venter
W est Africa’s booming oil and gas sector has seen
cargo volumes increase, and this has resulted in huge knock-on investment f low in the region.
According to David Butler, managing director of Control Risks SA, the f low of investment into general infrastructure and associated oil and gas industry sectors has been significant.
“It is a trend that we see across Africa,” he said.
According to Howie Frylinck of DB Schenker, there has been a dramatic increase in cargo volumes into West Africa in recent years. “There has also been an increase in international companies entering the market and competition has
increased dramatically.”He said countries such as
Ghana, Nigeria and Angola were continuing to attract attention.
“It is not necessarily easy to estimate the boom we are seeing in terms of volumes and revenues but activity is on the increase.”
Reynold Pinto, DHL oil and energy manager for Sub Saharan Africa, agreed saying not only were project cargo volumes increasing but also general cargo as fast moving consumer goods businesses were
setting up shop in West Africa.Both Pinto and Frylinck said
customs issues continued to hamper the movement of cargo into the region as procedures were often long and drawn out.
“There are no easy solutions to the problems experienced around customs,” he said. “Port efficiency
remains a challenge and often bottlenecks exist and moving cargo can be tedious and slow.”
While there is consensus amongst the experts that countries in West Africa are trying to address issues around customs and improving the efficiency of ports and border posts, the lack of infrastructure plays a big role.
“Infrastructure is lacking and it often results in the delays. In Luanda in Angola for instance there is so much congestion that cargo is just being dumped, and trying to track down a container can take days. There is no system in place and every second that one is delayed adds to the bill.”
According to Butler, there are no easy answers to the many challenges, but as the oil and gas boom continues there is hope for the region.
‘No easy solutions to customs issues’ There has been an increase in international companies entering the market and competition has increased dramatically.– Howie Frylinck“
Big growth in general cargo as fast moving consumer goods businesses set up shop in West Africa.– Reynold Pinto“
www.ftwonline.co.za
20 Mining & Minerals March 2014
THE FTW ADVERTISERS’ INDEX
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Liesl Venter
South Africa’s days as king of the African castle are numbered. In the new era it will all be about Nigeria.
“It is imminent and Nigeria will be overtaking South Africa as the biggest economy on the continent – and in light of the country’s low growth rate it is not going to catch up to Nigeria any time soon,” said American economist David Hale.
He said the ongoing revision of Nigeria’s GDP, which is supposed to happen every five years, is expected to be completed within the next few months.
“This is the first time in years that they are doing it and once it’s completed the number 2 will overtake the number 1 and Nigeria will be the economic powerhouse in Africa.”
He said with the country having announced some radical reforms last year, this was the start of bigger and better things for the West African nation.
“They have faced
some serious power issues and improving their power output was critical. Major steps have been taken to address this situation and their power output will increase tenfold over the next ten years,” said Hale. “This will boost the country’s growth from the current 6/7% rate to as high as 10%. In the next ten years its GDP will be at least 50% bigger than South
Africa.”
Hale said he would not be surprised if some serious questions were posed around whether South Africa should still be the top African country in the G20.
“We expect people are going to start asking to see Nigeria there rather than South Africa.”
Hale said the South African economy was languishing at present and in fact dragging down the growth rate of the entire sub
Saharan region.
Nigeria set to unseat SAArchbishop Njongonkulu
Ndungane has called on business operating in Africa to take the moral and ethical high ground.
He said as much as the continent needed “government officials with clean noses where anyone corrupt is unceremoniously booted out”, it needed ethical businessmen who took moral decisions and were not just driven by profit margins.
“No one is saying there should not be returns on investment or that business should not have high levels of profitability,” he said. “But it does not mean either that profitability should be the driving factor at all cost with no care of the impact on the human or environmental elements.”
Ndungane said mining houses and other role-players in the project sector had a major role to play in the development of Africa.
“We must not forget that many western nations’ economies were developed during the colonial era on this very continent with very little or no regard for the people of Africa.”
Ndungane said if mining was to be sustainable then it would have to take moral principles into consideration.
‘More to mining than profits’
Nigeria has increased its power output which will increase tenfold over the next ten years.– David Hale“
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