Following several interviews before and after Electra Mining Africa, Peter Middleton finds a positive attitude emerging towards the draft Mining Charter III and B-BBEE.

Peter pic latestDuring an interview with Thomas Holtz of Multotec about the provision for local content verification in the draft of Mining Charter III, he asked: “Why has it taken 24 years for this to get into our mining equipment supply terminology? By its own admission, the DTI has said that it has been focusing on ownership at the expense of procurement. But with respect to jobs and local skills development, procurement is where the leverage is,” Holtz argues.

Multotec and Holtz have been extraordinarily supportive of the Preferential Procurement & Supplier Enterprise Development requirements of the draft Charter, most notably in the aspect pertaining to certified proof of local manufacturing and servicing supplier content from an external agency such as the SABS.

“We are enthusiastic supporters of this clause, with some recommendations. We think that the threshold may be a little too high, but in principle, verification will establish the real beneficial facts and enable us to systematically raise the thresholds,” Holtz notes.

And in a proactive move, in full knowledge that the Charter is still in draft form and that local content verification is a proposal, Multotec has already been evaluated by the SABS against the “well articulated” draft guidelines. Of the 13 product families evaluated, Multotec is already achieving a verified 60% local manufacturing threshold in each – this based only on direct input and labour costs.

Evidence that companies were positively engaging with localisation and the new Mining Charter was also apparent during the week of Electra Mining Africa at Nasrec. Sharing news of Zest WEG’s progress, CEO Louis Meiring, lifted out the integrated nature of the Group’s four local factories: Shaw Controls, with over 30 years’ experience in the manufacture of motor control centres (MCCs), distribution boards, switchgear, control desks and, more recently, portable and containerised substations and E-houses; WEG Transformers Africa, one of the largest manufacturers of mini substations and distribution transformers in South Africa; Zest WEG Group Generator Sets, a Cape Town-based manufacturer of custom-built generator sets; and EnI Electrical, the Zest WEG entity responsible for delivering integrated electrical and instrumentation projects throughout Africa.

“We have also recently established an Integrated Solutions division, which will spearhead our entry into the renewable energy sector,” said Meiring, adding that the integrated way in which these entities work with each other is what sets Zest WEG apart from its competitors.

Zest WEG has invested some R250-million in recent years upgrading its manufacturing facilities to meet the global quality standards required by its Brazilian parent. “But we can’t go to market in South Africa without also having the required B-BBEE status. And today I am proud to announce, following months of hard work by Juliano Vargas and his team, that we have converted Zest WEG into a Level 1 B-BBEE company,” Meiring said, while displaying the certificate.

“This is a fantastic achievement, which we believe demonstrates our commitment to transformation – and it is also likely to bring a step change in growth to our company,” he concluded.

In another Electra Mining interview, Graham Anderson of Mitak, an Alrode-based foundry that is among the largest dedicated hard-chrome white iron (HCWI) foundries in the world, took us through the company’s local manufacturing processes, starting with laser 3D scanning of the mill or chute lining panels required to protect a mine’s critical assets. From there, 3D printing enables a very accurate pattern to be created, which can be directly used to manufacture a sand casting mould.

A product sample, which can be quickly verified for accuracy and quality via the 3D scanning facility, can then be cast to a very high quality. “Over 60% of our product is exported, mostly into the mature markets of Europe and the USA,” said Anderson.

In mining, two of the harshest applications for cast components are mill and chute linings. Both are typically subject to extreme levels of erosive, corrosive and gouging wear. “Over the decades, Mitak has developed a range of singularly effective HCWI alloys that are well suited to these conditions,” he said.

The local content? Over 90%, the key inputs being iron, ferrochrome and ferromanganese, which are all products of the local mining industry.

South Africa’s local manufacturing base was built around servicing the mining industry. It slumps when the mining industry slumps. For long-term sustainability, job creation and stability, therefore, it makes total sense to strive for preferential procurement of locally manufactured mining-related equipment.

For too long, however, local procurement has been achievable by importing product and selling it on via black-owned B-BBEE front companies. Local verification may well result in a system that creates meaningful local manufacturing jobs – a much more obvious solution path to a healthier economy and a transformed society.

As Thomas Holtz points out: “We should all be supporting what is good for the country, instead of simply focusing on the financial benefits to owners and shareholders.”

Peter Middleton

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