Africa’s Mining Industry Preps for Coming Growth

The year 2016 was a breakout year for mining, as the industry witnessed the advent of the initial signs of its recovery. The industry marches on to 2017 with renewed energy and confidence, all set to ride the coming growth wave. Is the cycle of uncertainty really over for mining? Majid Zahid, Altaaqa Global, in a free-wheeling conversation.

Majid Zahid, Chief Commercial Officer, Altaaqa Global

The year 2016 was a pivotal year for the global mining sector. 

Last year, the industry saw nascent signs of recovery and growth, spurred by strengthening commodity prices, revitalized exploratory activities, and re-engineered operational and financial strategies. 

The industry, therefore, rings in 2017 with heightened optimism and a fervent hope that the much-anticipated next growth wave finally comes. 

The wait may be over, as the green shoots are gradually emerging: Commodities has returned to a bull market and many mining companies are seeing a consistent recovery in value. In fact, 2017 is touted to be an encouraging year for mining stocks, buoyed by increased free cash flow, positive earnings momentum and the prospect of distributing excess capital to shareholders. 

Indeed, mining’s recovery was never a question of “if”, but rather of “when”. And for many mining industry players, the “when” starts now. 

“From the standpoint of a power solutions provider”, says Majid Zahid, Chief Commercial Officer of global multi-megawatt temporary power provider Altaaqa Global Caterpillar Rental Power, “we observe that the industry, together with its allied stakeholders, is actively preparing for the growth cycle at hand. 

“For example, an increasing number of mining companies have resumed funding new and expansion projects in the interest of capitalizing on the expected upturn. Investors are once again enticed to finance various segments of the industry, riding high on its impressive showing in 2016.”

Zahid also notes that governments have ramped up their support for mining companies in terms of exploring local and cross-border opportunities by allocating significant funds for mining activities and eliminating obstacles in doing business.

“Looking at the trend,” says Zahid, “the next few years may see the establishment of new mines and the expansion of a number of existing mines. Then, more than ever, electricity will be essential in powering their operations.

“Be they nascent mine sites or established mine operations looking to grow, our multi-megawatt temporary power plants will be able to satisfy their power demands. Our power plants are scalable so they can provide the exact amount of electricity needed by mine sites of any size.”

Zahid says that temporary power plants also represent an excellent choice for mining companies looking to explore new opportunities in remote sites. “Rental power plants can be delivered and installed anywhere in the world, so mining companies can rest assured that wherever they are, we can provide them power.” He says that the latest rental power systems have cutting-edge technologies that allow them to shift operational mode in minutes, and to directly connect to the grid even if sub-stations are absent. 

He, however, sounds a caveat. “Though the industry appears to be on its way to recovery, mining companies should still, to a certain extent, practice caution, especially in terms of utilizing their capital.”

Zahid endorses the view that turning to temporary power plants cushions mining companies from making huge investments in permanent infrastructure, like power generation facilities. “For a mining company, it may not make sense to make an outright investment in a permanent power plant, especially during the formative stages of a mine or the initial phases of a mine development or expansion. These are crucial times in a mine operation when its future of is still uncertain.” 

Zahid says that by choosing to rent power during these stages presents a win-win situation for mining companies. “When the operations grow, they can choose to add modules to the temporary power plant to increase its capacity. In case the project proves unsuccessful, the rental power plants can be easily demobilized, leaving no permanent system unutilized or that will need constant maintenance or repair.”

Altaaqa Global Caterpillar Rental Power is presenting the latest technologies in rental power generation at the 2017 Mining Indaba – the world’s largest mining investment conference. The company’s executives welcome you to booth 924, from the 6th through the 9th of February.

The Indaba, held at the Cape Town International Convention Center in South Africa, has attracted participation from heads of states, high-ranking government officials, global mining companies, technology and service providers and other significant stakeholders. 

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Power Leads to Economic Resilience

Africa is intensively pushing to build and grow its economy on the back of increased domestic demand, aggressive infrastructure construction activities and economic interconnection among countries in the continent. In fact, in a recent annual meeting in Rwanda, the African Development Bank (AfDB), presenting its African Economic Outlook 2014, reported that the continent’s economy was expected to grow by 4.8% in 2014 and 5.7% in 2015, approximating its growth figures pre-economic downturn.

The ongoing economic efforts in the continent will, naturally, have to be supported by energy. Gone are the days of organic economies, where economic growth could be achieved through mere human and animal strength. In this day and age, almost all economies rely on power to sustain their activities and produce tangible results. Power has become an integral component of any economy or society that outages and blackouts could bring about devastating consequences.

Africa’s power scenario   
To support Africa’s ambition to achieve economic sustainability, diversity and viability, it will primarily need to boost its infrastructure to support the growth of its various industries. To achieve that, the continent will require massive amounts of power. Does it, however, have enough energy to sustain this power-intensive phase?

The International Monetary Fund (IMF) sounded a warning that an escalating power supply deficiency in Africa may hamper the projected economic growth. It has been documented that some 25 countries in Sub-Saharan Africa were facing an energy crisis, evidenced by rolling blackouts, and that some 30 countries in region had suffered acute energy crises in recent years. While the Key World Energy Statistics by the International Energy Agency reported that electricity generation in Africa rose from 1.8% in 1973 to 3.1% in 2011, the continent still remained to have the smallest share globally, despite being the second most populous continent.

With Africa’s population expected to double to approximately 1.9 billion people by 2050, and with the continent’s industries projected to require power at almost full capacity, the World Bank said that a much higher investment would be needed to at least double Africa’s current levels of energy access by 2030. In fact, it is estimated that the Sub-Saharan region would require more than USD 300 billion in investments to achieve total electrification by 2030.

The power instability: The bigger picture
Sub-Saharan Africa was observed to have absorbed much of the blow of the recent power crisis. Blackout brought cities to a standstill and spelt terminal financial losses to small- and medium-scale companies. Mining, one of the region’s pillar industries, was severely affected, even prompting mining companies to shelve expansion plans and curtail local power usage.

Nigeria, for instance, a country that has three times the population of the Republic of South Africa (South Africa), only has one-tenth of the power generation capacity of the latter, and business in the country are reportedly starting the feel the effects of power interruptions in their daily turnover.

In Tanzania, a blackout that lasted for almost a month was experienced in Zanzibar when the underwater cable lines supplying power to the archipelago failed, owing to a huge surge in demand. As a result, residents needed to shell out USD 10 daily to run diesel-powered domestic generators, while businesses requiring refrigeration or heating had to suspend operations until power was restored.

In Angola, the occasional recession of the water level in some of the rivers affects power production, distressing allied services, like water distribution. Luanda’s water supply firm, EPAL, cited that various areas in the city experienced water supply shortage, owing to challenges related to power distribution.

The Democratic Republic of Congo (DRC), touted to be Africa’s biggest copper producer, in May 2014 advised mining companies in the country to suspend any project expansion that would require more power, amidst a power shortage that, the government said, would take years to resolve.

Even the Republic of South Africa, the region’s largest economy, was not exempt from power-related woes. In a communiqué in June 2014, Eskom, supplier of 95% of the country’s electricity, warned residents of a rolling blackout due to load-shedding, which, it said, was necessary to protect the electricity grid from total blackout. Eskom said it had begun scaling down maintenance to prepare for winter, but in the face of a rising energy demand, particularly during peak hours, it appealed to the public to reduce power consumption by at least 10%. If the power demand does not decline, then, the company said, load shedding would be the last resort to avoid a total power shutdown.

At present, solutions are underway – but these, naturally, will not come without a hefty price and cannot be completed within days or weeks. Economic reports indicated that, at the prevailing growth rate of the demand from industries and residents, the region would have to double its power generating capacity by 2025, at an approximate cost of USD 171 billion in South Africa alone.

In order to sustain this projection, the governments in Africa have identified potential sources of funds, such as power rate hikes and foreign investment. Yet, power hikes could stir social unrest and could prompt industrial entities to cut down on operations, putting jobs and production at risk. Foreign investment agreements, on the other hand, could take time to materialize, and the planning, designing, installation and commissioning of permanent power generation projects may entail several years, if not decades.

How temporary power plants can help
Power is indeed a fundamental element for any economy to function, as every sector of the modern society, be it domestic, commercial or industrial, is, in a way or another, dependent on electricity. Nowadays, a power interruption affecting critical facilities, like hospitals, airports, telecommunications towers, data centers, mining facilities and oil & gas installations, has the potential to put an entire country, region or city to a standstill, and in light of globalization and economic integration, the consequences could spill over regional, national or even continental borders.

Hiring interim power plants to bridge the gap between the demand and the supply of electricity yields many advantages, particularly when there is a foreseeable delay in the construction of permanent power generation facilities or while waiting for the permanent power plants to be completed.
When time is of essence, rental power companies, like Altaaqa Global CAT Rental Power, are capable of providing solutions as needed, when needed. Utility companies in the region, like Eskom in South Africa, Kenya Electricity Generating Company, Tanzania Electric Supply Company, the Power Holding Company of Nigeria, the Concelho Nacional de Electricidade in Mozambique, the Empresa Nacional de Electricidade in Angola and the Société nationale d'électricité in DRC, among others, can hire temporary power plants in times when the demand outpaces the supply, when the electrical grid becomes unstable due to a spike in electricity requirement or when power distribution networks are unavailable, like in the rural areas. This will allow them to bridge the supply deficit immediately. Hiring power generators can prove to be a viable solution to power supply inefficiency, bridging the power gap while the permanent power solution is still in progress.

With an immediate solution on hand, the governments and the utility companies can avert resorting to raising the prices of electricity or curtailing the supply of power during peak hours. On a greater scope, an instantaneous resolution of Africa’s escalating energy supply challenges will preclude social and political instability and massive financial losses to businesses and individuals.

The power to go further
The continent that was once regarded as a tail-ender in terms of development, is now making an aggressive move towards economic stability and viability. To sustain the economic growth that Africa is now enjoying, it is imperative that the governments in the continent address the critical issue of chronic power shortage, which could hamper the development of various industries in the countries. The effort that the African governments are putting to address this predicament is commendable, but there exist other entities that can help them to further alleviate the situation. Rental power companies propose solutions that address the issues of urgency, cost-efficiency, reliability, energy-efficiency and environmental safety. It is advisable that utility companies provide for a contingent power solution in cases of power interruption that may lead to operational delays and, ultimately, negative social, political, economic and financial consequences.

The foregoing articles was originally published in the October 2014 issue of IMIESA, published by 3S Media, South Africa.

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Robert Bagatsing

Altaaqa Global

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Altaaqa Global Opens East Africa Office

The new Nairobi office will serve as a hub for Altaaqa Global’s sales and operations in the East Africa region

Dubai-based Altaaqa Global CAT Rental Power, a global provider of temporary power solutions, has recently opened a branch in Nairobi, Kenya to serve the East Africa territory. 

Peter den Boogert, General Manager of Altaaqa Global, said, “The business activities in the East Africa region are flourishing and the economy has been thriving throughout recent years, resulting in an increased demand for power. At Altaaqa Global, our objective is to be on the ground as quickly as possible when customers require our energy solutions, and our new branch will enable us to reach this region faster than before. We realize that our industry is driven by emergency needs and hard deadlines, but uses equipment that requires substantial lead times to acquire. With the combined fleet of our sister company in Saudi Arabia, Altaaqa Global has approximately 1,400 MW of rental power readily available so that we can focus our efforts on rapid deployment and customer satisfaction.”  

Steven Meyrick, Board Representative of Altaaqa Global, commented, “This strategic expansion is in line with our vision to be the leading and the most preferred temporary power solutions provider before year 2020. During our geographic expansion, we will continue to heavily invest in human resources, further improve our business processes, and expand and diversify our fleet of CAT power generators. We now have the capability to provide power plants running on various fuel, such as piped natural gas (PNG), liquefied petroleum gas (LPG), compressed natural gas (CNG), liquefied natural gas (LNG), flare gas, diesel, dual-fuel (70% gas and 30% diesel), and, very soon, heavy fuel oil (HFO).”

Altaaqa Global will also provide environmental and social programs in East Africa. Meyrick added, “As part of our commitment to help local communities in East Africa and, eventually, in the entire Sub-Saharan region, we are actively embracing corporate social responsibility initiatives that will help alleviate the social needs of our immediate environs.”

“East Africa has a promising economic outlook within the energy and engineering sectors,” said Majid Zahid, Strategic Accounts Director of Altaaqa Global. “We are delighted to open our new office to provide interim power plants ranging in size and with the latest power generation technologies. We are determined to serve various industries, such as oil & gas, petrochemicals, mining, electric power utilities, industrial manufacturing and maritime. Through our office in East Africa, Altaaqa Global will be able to provide our clients with uncompromising personalized service. In the energy rental industry, all requirements are treated as individual and unique, and we will be able to deliver the exact rental power station to all of our enquiries using our local knowledge and global expertise.”

East Africa has experienced encouraging economic growth in recent years, and is gradually being regarded as an important supplier to different markets around the world. Market analysts attribute the notable growth of the region to several factors, including large-scale infrastructure development, economic reforms and new discovery of energy and natural resources. Kenya, among other African countries, is expected to become a vital regional financial and business hub, with a consistent 5% to 7% economic improvement year-on-year. Tanzania, Somalia, and Uganda are also predicted to make inroads into economic stability, following the discovery of oil and gas in their territories. Additionally, Ethiopia and Rwanda are projected to show remarkable development, owing to an expansion in agricultural activities and a strong reform record, respectively.

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About Altaaqa Global

Altaaqa Global, a subsidiary of Zahid Group, has been selected by Caterpillar Inc. to deliver multi-megawatt turnkey temporary power solutions worldwide. The company owns, mobilizes, installs, and operates efficient temporary independent power plants (IPP’s) at customer sites, focusing on the emerging markets of Sub-Sahara Africa, Central Asia, the Indian Subcontinent, Latin America, South East Asia, the Middle East, and North Africa. Offering power rental equipment that will operate with different types of fuel such as diesel, natural gas, or dual-fuel, Altaaqa Global is positioned to rapidly deploy and provide temporary power plant solutions, delivering electricity whenever and wherever it may be needed.

http://www.altaaqaglobal.com/press-media/press-releases

About Zahid Group

Zahid Group represents a diverse range of companies, offering comprehensive, customer-centric solutions in a number of thriving industries. Some of those include construction; mining; oil & gas; agriculture; power, electricity & water generation; material handling; building materials; transportation & logistics; real estate development; travel & tourism; waste management & recycling; and hospitality.

http://www.zahid.com/

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Altaaqa Global

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