A huge part of Afrimat’s success over the years has hinged on its diversification strategy. Not only does this apply to its product line, but also to its geographical footprint. Its North Cluster – a combination of operations across South Africa’s key regions of Gauteng, KwaZulu-Natal and the Free State – is a true case in point of an interconnected support system, which demonstrates how the construction materials giant places immense value on its geographical footprint and proximity to the market and customers. By Munesu Shoko.
Most business professionals agree that, although it does not guarantee against loss, diversification is the most important component of achieving long-term financial goals while minimising risk. Diversification is a business strategy aimed at maximising returns by investing in different areas that would each react differently to the same event. Afrimat is one such company that has truly and successfully pioneered diversification.
With its roots in construction materials, the company has in recent years spread its wings to include Industrial Minerals and Bulk Commodities. Afrimat’s diversification strategy has not only applied to its product range, but also to its geographical footprint across the country. This enables the company to service projects of any scale, from major infrastructure and construction projects for state-owned enterprises and parastatals through to small private sector contracts.
A good example of this strong focus on its footprint is the reinforcement of its North Cluster region in recent years. The North Cluster includes operations across Gauteng, KwaZulu-Natal and the Free State, with a focus on Construction Materials (Aggregates and Concrete Based Products) and Industrial Minerals.
Through carefully considered acquisitions and subsequent turnaround strategies, Afrimat has over the years grown the footprint of its Construction Materials operations in this region to 32: three in Gauteng, nine in Free State and 20 in KwaZulu-Natal. This is complemented by the flagship Gauteng-based Glen Douglas Dolomite Mine, the only industrial mineral operation in the region.
The region contributes a significant portion of the company’s overall Construction Materials business. “During the past financial year, the North Cluster contributed 38% of the Construction Materials business’s profit and 12% of Afrimat’s profit,” explains Davin Giles, MD North Cluster.
Operations in detail
Under the Construction Materials division are several clusters of the business. The Concrete Based Products Division manufactures concrete blocks and bricks for small and large-scale commercial and residential projects.
The Readymix Concrete operations supply quality concrete to small, medium and large-scale civil engineering and infrastructure projects through fixed and mobile readymix plants where concrete is batched on demand and transported to the site by concrete mixer trucks. While the mobile concrete batching plants can be set up in any part of the region, the fixed plants are based in KwaZulu-Natal and the Free State.
“Close to 90% of our readymix’s raw material needs (excluding cement) are sourced from our own quarries,” says Giles. “One of our premium products from our Glen Douglas mine is super sand. The product’s low-water demand offers a raw material cost-benefit to the readymix industry.”
The Aggregates Division produces aggregates of a wide variety of sizes and technical specifications, which are primarily used for large-scale civil engineering and infrastructure projects.
Clinker Supplies produces aggregates through recycling and reclamation of old ash dumps. “This is an interesting aggregate deposit with high alumina contents (that react well with cement) and a low Loose Bulk Density (LBD) of 1 100 kg/m³,” says Giles.
SA Block, situated in Redan in the Sedibeng District Municipality of Gauteng, has a daily production capacity of 700 000 t S7 equivalents, and regular daily sales in excess of 1-million S7 (stock brick) equivalents.
Glen Douglas Dolomite Mine, located in Henley on Klip supplies the steel industry with metallurgical dolomite; the construction industry with a variety of aggregate products; and the agricultural industry with agricultural lime. The Glen Douglas Dolomite Mine is strategically positioned to supply customers in the southern parts of Johannesburg and northern Free State. This is the only dolomitic source in the Vaal area.
Unique to Glen Douglas is also the immediate access to a railway siding equipped with a mechanical loading facility to facilitate more cost-effective transport solutions for Afrimat customers.
Beating the odds
Commenting on the business performance of the region, Giles says the past three years have been tough, especially for the businesses in the south of Gauteng. “We have seen a steady decline in both government and private projects, impacting Clinker Supplies, SA Block and Glen Douglas. In 2018, we restructured our KwaZulu-Natal and Free State businesses, resulting in a strong improvement in 2019 which has continued well into 2020,” says Giles.
All the businesses in the North Cluster, adds Giles, are well positioned to take advantage of any opportunities that arise within the markets the company serves. “Our target market includes infrastructure development projects (both civil and building); government projects (including road and rail); traders and merchants that operate in the residential and other markets. We have in recent years seen annual increases in the demand for our agricultural lime, despite this being seasonal. Steel manufactures also continue to buy products from us.”
All operations in this region are flagships, but Giles makes special mention of a few. SA Block’s brick-making factory, for example, comprises eight brick-making machines with a total capacity of 700 000 bricks a day. Over the years SA Block has refined its brick-making operations and techniques with the implementation of a highly efficient, semi-automatic and continuous process. The bricks from the operation are SABS approved and enjoy great market acceptance in Gauteng and surrounding areas.
Clinker Supplies reclaims ash from old Eskom Power Stations. A 100% of this “waste” product is converted into aggregates. Clinker Supplies has over the years cleared in excess of 50-million tonnes (t) of ash. The Vaal plant with a 750 tph capacity has recorded daily sales in excess of 8 000 t. Afrimat recently installed a 300 tph fixed plant at its Vierfontein operation to improve efficiencies, supply and quality of the products based on a growing market.
Glen Douglas, with a 160 000 t monthly capacity, supplies some of the highest quality lump and sinter products to the steel manufacturing industry.
“Our Qwa Qwa Quarry in the Free State has won numerous ASPASA Show Place awards, and produces some of the highest specification road and asphalt stone in the country. It is a benchmark of how any quarry operation should look like and is well worth a visit,” says Giles.
Continuously evolving
Like all other Afrimat quarries, operations within the North Cluster are continuously evolving in many ways, with more focus being placed on improvement rather than “turnaround”. This is achieved through the “Afrimat Way”, which encompasses many facets.
Some of the pillars of the “Afrimat Way” include growing the Afrimat culture throughout the business with a strong people focus; developing and training staff, and deploying them in positions where they can use their talents and grow further; streamlining the operations to reach required operational efficiencies through maintenance programmes and the correct plant balance.
Other facets include a low tolerance of poor performance, or “fit” into the organisation; a lean and flat structure where all work towards a common goal; creating a place of employment where all can work hard, have the freedom to explore opportunities, take some risk, and be accountable for their actions; as well as creating an entrepreneurial culture where all seek out opportunities. “It is not uncommon for a financial or HR manager to identify a sales opportunity at Afrimat,” says Giles.
Expanding on the need to continuously develop and train staff, Giles says development and growth of its people is very important to Afrimat. “We have a number of internal and external programmes that we offer to our people. The programmes are freely available to all employees at all relevant levels of employment and education,” says Giles.
Some of the external programmes that are offered include Adult Education Training and Portable Skills training such as computer skills and code 10 and code 14 licenses. The company also offers Trackless Mobile Machine training to its employees and its direct community. Young individuals get the opportunity to train as multi-skilled operators to assist them in their current workplace or to improve their chances when applying for employment elsewhere.
“The North Cluster is very proud of its learnership, internship and apprenticeship programme, where young graduates get afforded the opportunity to gain experience and to be mentored by our best artisans, engineers and managers. The programme has proven valuable to both the individual and Afrimat as a number of interns, learners and apprentices have built a successful career at Afrimat,” says Giles.
Afrimat’s internal training modules consist of the Afrimat Management Development Programme, which is offered from junior management level; Introduction to Afri-lead; as well as Afri-lead, which is Afrimat’s leadership programme focused on its talent pool and future leaders.
“Once the upcoming leaders complete our internal programmes, we also encourage and assist them with Management Development and Senior Management Development Programmes through external tertiary institutions,” adds Giles.
COVID-19 response and outlook
Commenting on the response to COVID-19, Giles says the North Cluster, and Afrimat at large, is adhering to, and implementing all regulations as legally required by government. At all operations, all employees are required to go for medical screening and attend inductions on safety protocols.
“We issued masks (which are compulsory to wear) and sanitisers to our staff, and also ensured that social distancing is enforced by way of signage on the floors, on posters and via email, indicating how many staff members may be allowed in an office/kitchen/restroom at a time,” he says.
“We are continually sharing information with employees on staying safe and healthy and are actively monitoring the wearing of masks, washing of hands, keeping offices and workstations clean and practicing social distancing,” he adds.
Commenting on the outlook of the market, Giles believes that “we are in for an interesting year that will buck conventional trends”.
“We have seen a sharp increase in demand for our concrete products in most areas, with supply to mostly rural markets and traders. The aggregate sales remain slow, mostly going to concrete product manufacturers and readymix concrete producers,” he says.
“We are waiting in anticipation for government to release funds for infrastructure development. This will give our economy the kick start it needs while addressing the unemployment struggles of the country. We remain confident that the remainder of 2020 will provide us with the growth opportunities we seek,” concludes Giles.
