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STEEL: Export Option Grows As Mining Industry Loses Its Shine

 





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Local structural steel companies with substantial exposure to mining projects in South Africa will have to enter, or further expand their export markets or face the possibility of having to substantially shrink their operations. This is the opinion of Neels van Niekerk, South African International Steel Fabricators (ISF) director.

“Taking note of the Fraser Institute’s globally accredited ‘Survey of Mining Companies’, it is clear that for local fabricators to find foreign contracts is becoming increasingly important as the local mining industry continues to lose its once famous shine,” says van Niekerk

The survey measures the overall attractiveness for exploration and mining companies to operate in 72 mining countries/regions/jurisdictions of the world.

In the last survey - 2009/2010 - South Africa was pushed from 49th to 61st position in the summary Policy Potential Index. “This only just beats the bottom ten regions, which include Venezuela, Ecuador, the Philippines, DRC, Mongolia, Bolivia, Honduras and Guatemala,” says van Niekerk.

He adds that there are several other African countries that do better than South Africa including Botswana (21), Mali (27), Ghana (34), Burkina Faso (36), Namibia (37), Tanzania (44) and Zambia (52), while all the important destinations in Southern and Central America - Chile (7) Mexico (28), Peru (39), Brazil (40), Columbia (48) and Argentina (59) - are above South Africa.

The top ten scores are Quebec, New Brunswick, Finland, Alberta, Nevada, Saskatchewan, Chile, Newfoundland /Labrador, Manitoba and South Australia. Seven of Australia’s regions lie in the top 30 scores. Scandinavia, with Finland (3), Sweden (12) and Norway (31), will remain important for many years to come.

Van Niekerk says that in circumstances like these exports have become mission critical for South African firms but warns that the export market takes time to develop and, of course, a certain investment. “To become a successful exporter is not an overnight thing. It is a process requiring focus and discipline founded on the understanding of several fundamentals in a changing global mining and structural steel scenario.”

He says that the South African fabricators that have the best chance of success in the global environment are those that run ‘lean and mean’ and utilise the latest world-best practices to genuinely meet customer needs including:

• An erection offering. Increasingly clients want to deal with a single supply source for their structural steel needs and that includes erection. This significantly helps projects to be completed on time. “Time in the structural steel process is critical to the cost of the entire project because it’s on the critical path of many other major parts of any mining project,” says van Niekerk.
• High accuracy of structural components. This is only achievable through automated equipment like, for example, the latest generation of beam lines. The cost of rectification through a lack of accuracy and the time lost on site as a result, is a critical expense risk.
• State of the art shop floor and site control systems. These should include in-line hard stamping of structural members and even micro-chip marked components to ensure tracking and location on site.
• Multi-lingual capabilities. English alone is not sufficient in many mining countries. For South Africans the most important languages today are French for Africa, Spanish for South America and Portuguese for some countries in Africa and wherever there are Brazilian interests.
• The ability to follow global trends. Commercial trends are changing so fast in the world that even to find work in southern Africa, local firms will increasingly require intimate knowledge of what is happening the world over.

Meanwhile the ISF continues to play an important role in facilitating relationships between local firms and foreign ones. “The principle is simple,” says van Niekerk. “Firms who want the business must meet the customers face to face wherever they may be. For example, there is a plethora of Russian projects in Africa including the imminent investment of about US$1 billion by the Russian State Atomic Energy Corporation (ROSATOM) in the development of their Namibian uranium interests. Should South African companies want to be involved they better be talking to ROSATOM in Russia.

“This is why the ISF has been travelling a lot lately to fulfil its main goal, which is to match people in the South African industry with markets in other parts of the world,” says van Niekerk.

This is no exaggeration. The ISF took part in several oil, gas and mining events in the past months including CIM 2010 - Vancouver, Canada; OTC 2010 - Houston, Texas; Expomin 2010 - Santiago, Chile; Euromin 2010 - Skelleftea, Sweden. In the near future, the ISF will spend two weeks in Australia including taking part in the African Downunder 2010 mining event in Perth.

On the question of Africa, van Niekerk says that Africa is obviously a crucial market and is, in fact, the ISF’s number one priority area for exports. "However, except for in South Africa and Egypt, there are no other major EPCM companies based in Africa, which is generally serviced by EPCM companies in Australia, Canada, Scandinavia, China and Europe. Ironically, our EPCM clients for Africa are in these countries and our role is to facilitate relationships between them and the South African structural steel industry,” he says.

While the ISF has identified Africa as its priority number one market, its number two priority is South America and it also continues to keep its finger on the pulse in identifying the next mining boom areas such as Iran, Kazakhstan and many other countries where mining potential is great.

Van Niekerk says many South African main contractors are world-class and winning foreign contracts in the ISF targeted regions is completely within their reach. "Apart from Africa, where we have been successful, significant strides have also been made in South America this year, where, due to the ISF's continuous market research programmes and marketing in general, one of our major contractors has opened an office there and another has made the strategic decision of targeting the entire continent as a major potential market."

He adds that he is optimistic about the ISF continuing to help open and develop new markets. "When the ISF started to explore the potential opportunities in South America more than four years ago there was skepticism about the successful outcome of the endeavour. But our efforts have paid off and now we're also vigorously monitoring opportunities in Australia, Europe and other regions especially in the deep-level mining arena where we are the indisputable world leaders," he concluded.


 
 
 
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