Archive: December 12, 2023

Hot Dip Galvanizers Association Southern Africa advocates local content to ensure sector sustainability

December 12, 2023

Over the past decade, South Africa’s steel value chain has been stretched to the limit with myriad challenges: from reduced infrastructure spend, conflicting policy implementation, to the global pandemic and more recently, national power grid supply challenges. However, the steel sector has proven to be very resilient, with strategically astute companies which survived the past decade determined to build sustainable businesses. These are now poised to benefit from opportunities generated by localisation and beneficiation initiatives.

The Executive Director of the Hot Dip Galvanizers Association Southern Africa (HDGASA) Robin Clarke describes the Association as remaining “optimistic while  staying realistic” in an industry which has recently been dealt another wild card: the announcement of the pending closure of the primary local steel producer ArcelorMittal South Africa’s two long steel products facilities.

“The HDGASA has a mandate to serve an extensive value chain including specifiers, architects and engineers, building and construction contractors, fabricators, steel specialists, galvanizers and end-users throughout Southern Africa.

As such, the Association is a passionate proponent and active supporter of local beneficiation – and is committed to developing and expanding the market for hot dip galvanizing as the preferred corrosion control technology across a wide range of industry sectors. At the same time, the HDGASA is both a voice for its members and a commentator on industry trends and developments,” Clarke explains.

This includes analysing the government’s gazetted document, outlining 51 local content and industrialisation priority projects. “It is no easy task,” Clarke concedes, but makes the point that companies which have survived the myriad challenges of policy uncertainty, competition from exports, economic turbulence, an energy crisis and a pandemic, are well equipped this time around not only to survive, but to thrive.

“Yes, it has been tough – however in the local steel and galvanizing sectors, we have improved agility and efficiencies. Difficult times have inspired businesses throughout the steel value chain to reflect, reinvent and improve – becoming far more ‘match fit’. There has recently been more pressure on policymakers to start delivering – the first tentative steps to start awarding infrastructure development tenders are indicative thereof. The galvanizing sector is now well positioned to ride that wave,” he says.

A call to ‘do the right thing’

Clarke points out that the closure of ArcelorMittal’s two long steel products facilities requires a pragmatic view: ”It is recognised that equilibrium in steel supply must be achieved through natural market forces. In light of this, we appeal to policymakers to ‘do the right thing’ from a strategic perspective and address the concerns of an equal playing field for all.

It is therefore of concern that the Department of Trade Industry and Competition (dtic) is heavily invested in the local mini-mills, and that strategic policy may suffer in terms of the requirement to safeguard these investments. In conjunction with the need to set enabling policies for the steel sector an acceleration in infrastructure spend is essential,” he explains, adding that tonnage is now at a threshold where many businesses in the steel value chain are struggling to cover overheads. 

Another challenge is a potential influx of steel with wide variability in metallurgical and dimensional tolerances: “This raises the possibility that steel may be sourced to the lowest common denominator which is a cause for concern,” he says.

Commenting on how this affects the galvanizing sector, Clarke explains that the large variations when it comes to metallurgy will impact negatively on the aesthetics of the galvanizing finish. This presents a challenge when surface finish is a requirement, such as in the architectural market.

Infrastructural inconsistencies

Inconsistencies in implementation of strategic initiations such as designation and local content stimulation to foster investment and job creation are also problematic.

A decision by the South African National Roads Agency (SANRAL) to award tenders to construct highway bridges worth billions to a Chinese company was just one disappointment, Clarke says. This has subsequently been withdrawn and re-advertised, and Clarke is optimistic that local companies could now benefit.

He also cites Eskom’s Transmission Development Plan (TDP), which promises the construction of some 14 000 kms of transmission lines which are needed to balance the electricity grid, as an opportunity for the steel sector. However, pricing issues and a potential lack of access to steel because of the ArcelorMittal long products facilities closures represents a significant risk for such projects.

“It is essential that a default position to import finished products to service these projects is guarded against. History has shown that we have the capacity and skills to service such infrastructure projects, and to do so will prevent further erosion of local investments and increased unemployment.

There is a potential for placing our industry under increased pressure through irresponsible imports. We need to do everything we can to try to stop this from happening,” he emphasises.

A positive alternative

An alternative and very much more positive solution for potential steel shortages of critical steel sections would be for government to allow the import of quality, raw steel for beneficiation locally. Provided that standards are met, this would not only meet the needs of large local infrastructure projects, but also make local fabricators more competitive across all Sub-Saharan markets.

The increase in production volumes that are closely aligned with this could result in efficiencies that would, in turn, achieve more competitive pricing. “This is the ultimate high road. Vertical integration is also required for success. If we have this – combined with the right volumes in any steel fabrication and / or galvanising shop – as well as a stringent and enforceable quality assurance system –  then the steel and galvanising sectors have a viable operational framework which creates profitability for the entire value chain,” Clarke maintains.

‘Galvanizing’ job creation via volume

At present, Clarke estimates that approximately 2 200 people are directly employed in the galvanizing sector, with a further 1 500 working for companies which support it. It is however estimated that present market conditions only result in a utilisation of approximately 45% of total installed capacity. Therefore, employment could be doubled within the galvanizing sector if sufficient volumes were available for companies to add more shifts. 

“We still have the capacity, which could be turned on at minimal  investment. Yes, our surviving businesses are operating off a higher cost base, but they are also very experienced, good businesses – with the capability and expertise to ‘step up to the plate’. What we really need is a structured increase in volumes over a short period of time,” he says.

Building bridges for the future

Going forward, Clarke believes a number of opportunities could flow from policymakers’ support for local manufacturing and beneficiation. As an example, the SANRAL (South African National Road Agency Limited) coastal bridge programme, which would include the use of galvanised steel rebar as specified by civil engineers. This technology is proven to be beneficial, and is a cost-effective method of adding service life to concrete structures – particularly in coastal environments.

“We really hope that SANRAL does the right thing, as this would liberate thousands of tons for the industry and provide a massive boost for local content – including local employment across the fabrication, construction and galvanising sectors,” he says.

A resurgence in Transnet’s infrastructure investments would also provide a further boost to vital volumes across the sector – as would opportunities to take advantage of the trend of corrosion control for pivotal construction components such as nuts and bolts.

Another area of opportunity is renewable energy. “This is gaining traction in South Africa, and will run in parallel as a volume multiplier in our industry. It is a tremendous opportunity, but needs to be done with a very serious understanding of the sector and its attendant requirements, challenges and risks – and with excellent contracting capacity. Some of our galvanizers are already participating in this arena, and it is pleasing to note that their volumes are increasing, assisting with overhead recovery and ultimately, a return to profitability for the sector,” he concludes.

The chemistry of energy: AES ensures cost-effective and energy-efficient operations and maintenance in the chemical sector

December 11, 2023

“Anything that we can do to help manage inflationary pressures, and to ensure a manufacturer can get their products to market cost-effectively – so that their customers can affordably access what they need – is always a good thing,” says Associated Energy Services (AES) Commercial Director, Dennis Williams.

“As one of South Africa’s leading operations and maintenance service providers, with a 30-year track record of providing cost-effective energy-efficiency to the chemical manufacturing sector, AES understands the important role which chemicals play in the manufacture of everything from very technical, application-specific products to commonly used, everyday consumables,” Williams explains, adding that – by advising and supporting local chemical manufacturers in the optimisation of their energy plant operations and maintenance – AES contributes to greater productivity and cost-savings, with a positive knock-on effect for industry and the economy as a whole.

A track record of good chemistry

AES began working for its first client in the chemical sector 3 decades ago, in Pretoria during the 1990s. The company supplied super-heated steam for a steam turbine. Steam was also used in the by- products recovery plant at the same manufacturer, where wash oil was heated to drive off the tars – benzene, toluene and xylene – which could then be beneficiated. The cleaned gas was then returned to the coke oven battery for use as a fuel.

AES’s role in the chemicals sector then evolved, with various manufacturers which became clients. In 2003, AES worked on a dehumidifier regeneration steam supply project for a large pharmaceutical manufacturer in KwaZulu-Natal. Here, AES’s thermal system drove hot air through a humidifier filled with an industrial desiccant to remove moisture from the production plant. 

An even more recent project for a large chlorine manufacturer saw AES installing four gas-fired boilers. Since installation was completed in June this year, the company has been working closely with this particular client to optimise and improve steam production, and contain their thermal energy costs. 

Steam for the people

“In the current economic climate, efficiencies across all business areas are critical. One of the significant challenges for local chemical manufacturers is global chemical producers, which make chemicals very cheaply. Local manufacturers risk having their products displaced by more affordable (but not necessarily better or safer) imported chemicals – which has massive implications,” says Williams.

He adds that the best way to manage thermal energy – and production costs as a whole – is by giving chemical manufacturers the best possible chance to maximise production efficiencies and reduce the amount of steam used.

“Although it may seem contradictory, it is in our interests to give clients the best quality thermal energy supply, and enable them to keep their demand for steam from AES to a minimum. This makes them stronger and more competitive – and that gives AES longevity on site – even though we may be producing smaller volumes of energy, he explains. 

“For example, when you think of chlorine products which are used in the treatment of water, you realise that these are supplied to every municipality. Any cost or availability issue will impact on every person in South Africa, as everyone drinks water, and uses it for domestic, agricultural, manufacturing and many other applications. Therefore, the knock-on effect of AES’s energy efficiency management impacts not only on those chemical producers – but also on their supply and export chains – and even the person in the street. Think every day consumables such as washing powder, shoe polish, almost any consumable one can think of,” he says.

Steam and sustainability

The next area where AES can make a difference is by developing a client’s thermal energy efficiency plans, and also by looking at how to replace their so-called ‘dirty’, carbon-intensive fuels – such as coal –  with ‘greener’, less carbon-intensive ones, to address their carbon footprint and sustainability goals.

Williams notes that the European Union recently (in October 2023) introduced stringent carbon border tariffs. Consequently, companies wishing to export chemicals must prepare to meet these strict requirements, and a specialised auditor is required to oversee the regulatory process.

AES can advise on adjustments to client’s energy plant and operations to ensure compliance. “For instance, we can offer alternative, less carbon-intensive fuels, or advise on renewable energy sources – such as biogas or biomass – or provide a sustainable energy mix.  We can furnish the operational data for the client to submit to their auditors too, ” he explains.

However, it is not as simple as flipping a switch, he advises: “Typically, chemical plants are frequently very energy-intensive, featuring legacy operational footprints and equipment. Traditionally, South Africa’s large thermal energy users have relied on coal or heavy residual fuels due to cost and availability. Despite these factors, there is still an opportunity for plants to be optimised to reduce carbon intensity and improve efficiency. This is where AES facilitates the application of plant management methodologies and oversights to reveal generation benefits for the client.”

When it comes to a fuel change, AES has 3 decades’ worth of technical knowledge and experience. The company operated a biomass power station for almost 10 years with 6MWe capacity, and has also executed several technical solutions in this space.

“We are solutions-, technology- and fuel-agnostic, so we can generate steam using multiple fuels. For example, we have clients where we can generate steam using their own by-products which, under other circumstances, would simply have been disposed of, often at cost. We increase the efficiency of the overall thermal energy process for our clients,” Williams points out.

Sustainability is also an ever-changing space. “Shortages of natural gas are currently being predicted, which will see AES finding alternative sources of energy for our existing clients which utilise natural gas.  This is where our accrued benefit of technical expertise and on-site industry experience really comes to the fore,” he says.

The cornerstone of steam

Williams admits that, in the chemical sector – where manufacturing is more complex and to an extent differs from other kinds – steam can either play  a direct or an indirect role in the overall process, and AES works closely with its clients to arrive at the right solution.

“Thermal carriers are common to all chemical industries but, in our service level agreements, we include services which are operationally tailored to the individual client: some may have a continuous offtake which is constant and predictable; while others may operate in batches based on demand. We could have different processes running concurrently, with a lead-time for demand. We design thermal systems that are customised for the client, and often we can offer strategic input in their processes. What we have developed – which is an innovation for our industry – is a system which is applied where steam is provided from multiple boilers. Effectively, it is a load-balancing system across the boilers which has delivered significant improvements in efficiencies and visible emissions,” he says. 

Overall, the AES’s competitive edge comprises technical know-how, experience, depth of institutional memory and wide-ranging ongoing research. The company is able to focus on steam production in a way that most clients would simply not be able to do if this remained under their own management.

Risky business

Notwithstanding these considerations, Williams adds that the crux of the matter will always be the provision of skilled human resources.

“We cannot get away from the importance of skills in energy efficiency management, however equally, we cannot ignore the prevailing shortage of technical skills in South Africa: not only when it comes to expertise, but also industry experience. The challenge is that these shortages can spill over into the substantial area of risk mitigation. The key part of what we do is to mitigate operational risks. We have, over 30 years, developed the baseline knowledge to successfully do this.

In fact, AES’s ISO 9 001, 14 001 and 45 001 certifications are specifically for  plant operations and maintenance. Once we have the workflows set up, we make room for the inevitable project variants and we manage that risk. The chemical sector is  broad field – there are fuel risks, flammable gases and liquids, emissions, hazardous chemicals, health and safety considerations and compliance requirements – right through to carbon tax.

Therefore, as a company, we invest heavily in our people, and in the training and development of staff on-site in the client’s energy plants. This is a crucial aspect of the value-add that we offer – particularly in a sector as dynamic and challenging as the chemical manufacturing industry,” he concludes.

Bolt and Engineering celebrates its 40th anniversary: the good things never change, but keep getting better

December 8, 2023

The Bolt and Engineering Distributors (B.E.D.) Group, founded in November 1983, has been supplying the mining, agricultural, construction and engineering sectors with quality fasteners and equipment for 4 decades, celebrating its 40th anniversary in November 2023, embodied in the approach and motto of ‘the good things never change’.

To this point, the Group has built its success on the power of people: from its valued internal B.E.D. team members to equally valued and longstanding customers and suppliers. In an age where customers are routinely relegated to call centre agents and artificial intelligence is the order of the day, CEO and founder, Mike Giltrow firmly maintains that for B.E.D., the human touch remains paramount – and that sound, old-school business practices win the day. 

A good example of this approach is the company’s decision to retain its logistics in-house – products are delivered to customers by fulltime B.E.D. drivers, in B.E.D. delivery vehicles.

“This is a physical manifestation of our belief in personalised service, and an extension of our motto and strapline ‘the perfect fit, fast’. Pride is a very powerful word in our B.E.D. vocabulary – and the passion, pride and persistence underpinning this and many other aspects of daily operations remains the bedrock of our company, and will also pave the way for our future success,” says Giltrow.

‘Bolted’ together for success

Giltrow set up the business with mentor and fellow entrepreneur Ernie Barnett in 1983.

“I met Ernie in 1981 when I was in my early twenties. Ernie was 15 years my senior. Although there was quite an age difference, there was an instant connection. He had the experience and I had the raw passion and energy. I do not think we would have made it without one another,” Giltrow fondly recalls.

Giltrow and Barnett had worked together previously at a company which they exited to create their own business, Bolt and Engineering Distributors Group. Their boss at the time declared that the new venture would not last more than six months.

“So, our initial aim was just to last seven months to prove him wrong. By the time we got past that seven month mark, we thought we might as well carry on,” Giltrow laughs.

“Celebrating our 40th anniversary is very emotional for everyone concerned,” he remarks. “Apart from our wives and families – to whom we are very grateful for their unconditional love and support – few people knew of the massive sacrifices made during those early years. We had to put B.E.D. first in order to successfully build the business. It was tough, and we knew it had to be done – it was all or nothing!

“It is amazing how quickly those 40 years have gone. We worked every Saturday between 1983 and 2000 but it was worth it,” he says. 

By 1986, Giltrow says that he and Barnett were confident that the fledgling company was standing firmly on its own feet and, two years later, expanded with its first branch in Klerksdorp.

Branching out

After 27 years working side by side, Barnett retired in 2010. Another like-minded industry professional, Jan Viljoen, ultimately took on the role of Managing Director. 

“We met Jan when the B.E.D. Group carried out its first acquisition of a family-owned company that became our Klerksdorp branch. After the acquisition, Jan became our Operations Manager and a shareholder. He brought with him a wealth of experience in the local mining industry,” Giltrow continues. 

Since then, the company has established a Head office in Wadeville and a network of 9 branches and an Exports division, as well as 2 welding and cutting repair centres in Gauteng and in the Western Cape.

Each branch has its own distinctive character and independence, but is closely aligned with the Group’s ethos of customer service and 100/0 – taking 100 percent accountability with zero excuses and continuous improvement. The operations managers of the various branches, although deeply grounded in their own respective regions, are often described as the ‘pegs that hold up the B.E.D. tent’.

People: the ‘nuts and bolts’ of the business

Giltrow acknowledges that the company is very people-centred. ”I realised, from a young age, how important a role people play in your life. It is more rewarding to be a giver rather than a taker. Giving far outweighs receiving and one cannot put a monetary value to that.”

Giltrow also pays tribute the B.E.D. team as being real ‘rainmakers’, who have all helped to grow the Group for 4 decades. Many of these are unsung heroes too, those in internal sales supporting the more externally-facing area sales managers – or those on the financial and administrative side of the business.

“Every person has something that makes them special. With all the people in our team, the good far outweighs the bad and they bring out the best in each other,” he says. 

Over the years, there have been many successes, with employees even progressing from the shop floor to management level.

“We have always had a culture in which, if somebody puts up their hand, they will be given an opportunity. However, they need to prove their capability to themselves. We strongly believe that our biggest asset is our team. Even after 40 years, we still know everyone well, conducting a country-wide roadshow twice a year to all the branches. We look after our staff, they look after each other and they look after us,” Giltrow enthuses.

“We have not always employed the best or most experienced people in a particular industry – but we have employed the right people. That can make a huge difference. There is more to doing well than just being the best. We prefer to have the right people who give of their best,” he explains.

To get an opportunity at BED you don’t need a CV. You just need 3 things

A good attitude, fire in your belly and integrity.

Similarly, strong and lasting bonds with customers and suppliers have been built on respect, trust and loyalty.

“Without having a customer and doing a sale, you do not have a business. The customer might not always be right, but they are still the king or the queen. Very closely tied to a customer is a supplier – that is the distribution supply chain. We have always treated our suppliers with huge respect. If we are going to represent your product in the market place, we will do so with pride, persistence, passion and positivity,” Giltrow continues.

These strong relationships and positive attitudes have resulted in diversification and contributed towards the longevity of the company.

“An existing customer is very hard to replace. So, we always look to preserve and add to our existing customer base, and look for opportunities with them in different areas. We started with nuts and bolts which – although critical in any construction project – are always at the bottom of the food chain. We then decided that those using nuts and bolts required a drill to make a hole, and a spanner to assemble something. We grew the company along those lines, and this is how we created our various divisions. We always look for opportunities that will add value for suppliers’ and our customers’ supply chains, and offer products and or brands to which we can do justice,” he notes.

Not only has the B.E.D. product offering successfully diversified over the years, but so, too, have the branches. Each branch has an individual product offering that is best suited to the different vertical industries that they each support.

That ensures that B.E.D. is not reliant on one particular sector.  Although mining remains important, it is strongly complemented by agriculture, a sector in which B.E.D. intends growing its market share. The company is also looking at other sectors where there may be synergies such as the automotive sector.

Looking to the future

Giltrow says the company has learnt from past challenges during volatile times and watershed moments. 

“We do not like using the word ‘problem’. This implies that you know something is wrong, but have not done anything about it. It is much like putting up a sign that warns motorists of potholes in a road instead of just fixing them,” he observes.

In addition, he believes strongly in the need for safety nets: “If you have your safety nets in place, then you are prepared if someone drops a ball.”

Giltrow is also proud that B.E.D. is a business which makes a difference in the lives of its people, customers and suppliers – as well as that of the larger community.

“We started our Welkom branch at a time when everyone said the lights were about to be go out. Some lights have dimmed, but we need to shine our own lights. For over 30 years, B.E.D. has shone its light, contributing to the economy in the area and making a difference in the lives of many people in and around the town.

Our vision for the future is simple: to continue doing the things we have done well for the past 40 years, but to do it even better. As we say, ‘the good things never change’ – but in the spirit of continuous improvement, we will work hard to ensure they keep getting better!” Giltrow concludes.