Tuesday, February 16, 2016

Renting power: Keeping mines thriving through volatility

The mining industry is currently in the doldrums. As commodity prices remain stubbornly depressed, and economic recovery remains elusive for developed and emerging countries alike, mining companies are in the midst of challenging times.

Along with stagnant commodity prices, weak demand for products, low levels of economic growth in established markets, increasing stockholder pressures and employment and social issues, power supply deficit is also one of the mining industry’s most pressing hurdles. Many mine operators around the world have been facing numerous production-related challenges, owing to electricity shortages, not helped by the ongoing El Nino weather phenomenon. Mining companies in Africa, for instance, particularly those located in hydropower-dependent areas, have been experiencing consistent output drops as hydroelectric power facilities fail to generate enough electricity to sustain large-scale mine operations. As a result, mining companies in Africa, established and nascent alike, are at present struggling to maintain profitable production, resulting in job cuts, tighter cash flows and limited capital expenditures.

Hiring the services of a temporary power provider can be an immediate solution to the industry’s electricity-related challenges. A continuous supply of reliable electricity is indispensable in mine operations, be it for exploration, production, climate control or site visibility, and rental power plants can instantly provide the necessary electricity as and when it is needed. Temporary power plants are readily available and are rapidly deployed anywhere in the world where electricity is urgently required. Rental power plants can be tailored to any power or voltage, and the capacity can be increased or decreased according to demand, so mine operators will be able to add additional power modules that will increase the rental power plant’s generation capacity as their operations expand and their power requirements increase.

By opting to rent power, mining companies do not need to spend scarce resources on capital purchase, which is usually required when building permanent power stations. They can also pay for the electricity produced by the hired power plants from their operating revenues. The investment that mine operators will make in hiring electricity has proven to be marginal compared to the cost of foregone business opportunities, lost production time or wasted man-hours. This factor can be very significant at the feasibility stage, when mining companies are applying for finance.

Temporary power plants are containerized, so that they can be delivered to and installed in any mining site anywhere in the world, and be operational in a matter of weeks. They are fully able to function even in remote locations and in sites where traditional power infrastructure, like grids and substations, is outdated, damaged or absent. They can be installed and powered on in a matter of days, so power can be immediately supplied or restored.

Rental power plants are fuel efficient, and can run on diesel, natural gas, or on a combination of the two. Modern natural gas generators are also capable of converting coal mine methane to electric or thermal power, which contributes to the reduction of greenhouse gas emissions.

The mining industry, not only in Africa but also in other parts of the world, is going through tough times prompted by natural and economic circumstances. Hiring electricity can give mine operators a sustainable competitive advantage. It can provide operational flexibility, enhance a site’s productivity and help optimize its processes without the need for a long lead time and a sizeable capital expenditure. Instead of acting in exasperation and fear of the future, and getting lost in a web of operational minutiae, mining companies should draw ideas from allied industries, and give premium to innovation and imaginative solutions.


Altaaqa Global
Tel: +971 56 1749505

Monday, February 15, 2016

Power Up! Q&A with Altaaqa Global's Julian Ford

The February 2016 issue of Construction Machinery Middle East featured the major players in the power projects sphere, including Altaaqa Global. Julian Ford, Chief Commercial Officer, spoke about the challenging industry and shared his insights on the sector's outlook.

What is the background of Altaaqa Global? 
What ‘market gap’ did you set up to target? 

In 2004, Saudi conglomerate Zahid Group formed Altaaqa Alternative Solutions in Saudi Arabia to provide temporary power services to the country. It has grown to be the largest Caterpillar power generation fleet owner in the world, and the premier rental power services provided in the Kingdom.
With the desire to replicate the success of Altaaqa Alternative Solutions on a global scale, Zahid entered into a Global Power Projects (GPP) agreement with Caterpillar and formed Altaaqa Global in 2012. Altaaqa Global was appointed by Caterpillar to deliver multi-megawatt turnkey rental power projects around the world.

Since then, we have widened our geographic coverage, opening branches in Bangalore, India; Nairobi, Kenya and Johannesburg, South Africa. We have also secured several contracts in key regions across the globe, including the Middle East and Sub-Saharan Africa.

Which market segments do you operate in? 

Altaaqa Global owns, mobilizes, installs and operates large-scale rental power plants tailored to customers’ specific applications. We are in the position to rapidly deploy fuel efficient, scalable and reliable multi-megawatt temporary power plant solutions.

Our technologies find application in a wide range of industries, including utility power generation, utility power transmission & distribution, mining, oil & gas, petrochemicals & refineries, government & NGO services, ports & harbours, and process industries.

What’s your current fleet size? 

Altaaqa Global and Altaaqa Alternative Solutions have a combined fleet power capacity in excess of 1,600 MW. The fleet includes generators running on diesel, natural gas or a combination of the two.

Being part of the global Caterpillar dealer network, we also have access to the power generation fleet of our co-dealers anywhere in the world, giving us exceptional fleet capability and flexibility to meet even the largest customer demands.  

Julian Ford, Chief Commercial Officer, Altaaqa Global

You’re supported by Caterpillar dealers around the world. 
What does this mean in practice when it 
comes to mobilising for a big project?  

In addition to our own in-house capabilities, as an authorized Caterpillar dealer, Altaaqa Global has access to the wide range of technical, engineering, logistical and service/maintenance resources of other Caterpillar dealers around the world.

In mobilizing for a project, for instance, we may tap the power generation resources, technical & engineering expertise and logistical facilities of the local Caterpillar dealers where we operate, or of any Caterpillar dealer around the world. We also have access to locally available parts and can call for local maintenance service or technical support. Thanks to this synergy, we are able to provide for a quick and efficient installation of power plants and ongoing support for projects anywhere in the world.

What sort of relationship do you have with Caterpillar’s product development team, when it comes to providing feedback on existing products, modifying your current fleet, or wishlists for new product development? 

As an authorized Caterpillar dealer, we work closely with the Caterpillar product development team to share perspectives of customer requirements in the power rental business. In this way, we expect to further improve our already-competitive position to meet the evolving needs of our customers.

How popular are your gas-driven solutions in the Middle East? Do you see this product sector growing? What are some of the constraints on this sector, and will they be overcome in the foreseeable future? 

Though it is expected that the diesel generator market will continue to grow and that diesel will remain the preferred fuel in the next several years, we are noticing the gradual growth of the natural gas and dual-fuel generator market as natural gas becomes available. The growth of the market is supported by the increase in unconventional gas resources in many countries not only in the Middle East but also in other parts of the world, and by the lower operating cost afforded by running power plants on gas or gas-diesel combination.

In the past, fuel availability and the costs of installing safe and reliable fuel delivery infrastructure have hampered the growth of the natural gas generator market. Today, gas is becoming increasingly available and gas generation technologies progressively find application in bigger and longer-duration projects. The availability of dual-fuel generators, which significantly simplifies the transition from diesel-run to gas-run generators, is also helping overcome these obstacles.

You’ve said that you want to be ‘the leading and the most preferred temporary power solutions provider before year 2020’. What are some of the industry chances you see coming over the next five years? How do you make sure to ‘future proof’ your business? 

The role of temporary power has evolved from being a local, short-term, transactional activity to a major global project-based industry. It is no longer uncommon to see power plants of 100 MW and up being rented on a longer-term basis. We expect that the diesel generator market will continue to thrive, and that the natural gas market will continue to gain traction.

To keep abreast of the opportunities in the coming years, we will continue to hone a highly skilled, motivated & experienced, world-class, power projects team. At Altaaqa Global, we strive to lead the evolution of the industry, and to be recognized as the premier source of innovative technical solutions and the highest level of customer service and support.

Do you see any likely trends in the power projects sector as a result of oil companies looking to trim costs?

While the fact that the prevailing oil price makes generators cheaper to run is an advantage in theory, we have to remember that the requirement for generators is proportional to the rate of economic activity. At present, the prices of oil and commodities are suppressed, and this is having a negative impact on the interest on power generation services. We, however, expect the industry to rebound quickly as and when economic conditions improve.  


Altaaqa Global
Tel: +971 56 1749505

Sunday, February 14, 2016

Plant on Demand

In its February 2016 issue, PMV Middle East magazine spoke to rental firms to find out how the market was going their way. One of the respondents was Altaaqa Global Chief Commercial Officer, Julian Ford. Here is what he said:

  • As the provider of rental services, are you experiencing growth in your segment? And is it possible for you to provide any figures to quantify such developments?
It is important to recognize that that the growth of the rental power industry in whatever region in the world, goes in cycles, and is dependent on the prevailing market and economic situation.

In the Middle East, for instance, the buoyancy of the rental power market is spurred by several factors, including the availability of diesel, utility shortages, intensified construction activities, sustained oil & gas production, repair and maintenance of refineries, and unreliable electricity connection in many areas.

In Africa, on the other hand, the nascent increase in the supply of natural gas combined with an underlying increase in demand for power in developing markets, and the ongoing El Nino weather phenomenon that adversely affects hydropower dependent countries drive the growth of the temporary power market. 
  • Is there any segment that is developing more strongly for your business than others?
Among the rental power technologies available, diesel generators will continue to dominate the market, mainly owing to the wide availability of fuel, fuel safety and economy and ease of installation. 

We are, however, observing that generators running on other fuels, such as natural gas or natural gas-diesel combination are gaining popularity. The growth of the segment can be attributed to the increasing availability of locally extracted natural gas, and, to some extent, to the environmental stewardship regulations in many countries around the world. Several countries in Africa are looking to monetize their ‘stranded gas’ reserves to generate useful low-cost electricity for the national grid, and rental power technologies can contribute towards that cause.
  • What rental or leasing pricing structures are currently the most popular among your customers?
In the depot business, where transactions are much more frequent and are lower in value, it is usual to have a daily, weekly or monthly charge for the use of equipment. On top of this, there can be an option to supply fuel, or the customer can provide his own fuel.

When it comes to larger power projects, as supplied by Altaaqa Global, it is more usual to make a capacity charge for having the power plant available, plus an ‘energy charge’, which covers the variable maintenance cost of operating the plant. The situation with regard to fuel supply is more complex here.

We are observing that customers of power projects business are increasingly asking for guaranteed levels of fuel consumption, and even for fuel supply arrangements to be made as part of the service. While fuel consumption can be guaranteed within certain operating parameters, the funding of fuel is usually subject to a separate financing arrangement.

Julian Ford, CCO, Altaaqa Global
  • What reasons are your customers providing as to why they are opting for rental arrangements? And are you seeing any particular trends?
Renting power affords many advantages to customers. Temporary power plants are readily available and are immediately deployed to virtually anywhere in the world where electricity is urgently needed. Rental power plants offer utmost flexibility in power and voltage, so that customers can choose to increase or decrease electricity output at short notice. Renting power also offers the customers the possibility of paying for the electricity produced by the hired power plants from their operating revenues. Additionally, renting electricity negates the need to spend scarce CAPEX that is usually required to build permanent power stations.
  • How are you currently adapting your services to adjust to changes in the market’s demands?
The temporary power services that we offer vary from industry to industry and site to site.
In recognition of the changes in the market’s demands, we will continue to offer the most fuel efficient, reliable and technologically advanced generators and power systems to our clients to reduce their overall operating costs. We will combine it with consistent technical support and expert advice on equipment selection.  

As we have stated above, the diesel generator market will continue to grow in the next several years, so we will continue to have diesel generators readily available in our fleet. As natural gas becomes increasingly available, and gas power generation technologies progressively find application in bigger and longer-duration projects, we will ensure to offer natural gas generators where it is appropriate.  
  • Is the push by more and more dealers and distributors to develop their own rental services noticeably increasing competition in the market compared with previous years?
Yes, definitely. The drive of more dealers and distributors to develop their own rental services have increased the number of players in the marketplace, particularly in the depot sphere. The depot entities often offer smaller generators and provide a wider range of services, which go beyond the realm of power rental. This makes putting up a depot business an attractive venture to new regional players, for instance. 

The power projects business, on the other hand, is more specialized, and offering integrated power services requires a high degree of experience, engineering expertise, technical skills, and equipment efficiency and reliability. Having said this, the increase in the number of entrants to the power projects sector may not be as pronounced as in the depot sector. 


Altaaqa Global
Tel: +971 56 1749505