Resources boom keeps project market pumping

DRIVEN BY the resources boom, the southern African project market is pumping. On the back of rising world prices for the likes of copper and cobalt, there’s been a proliferation of projects – and it’s a story of resources kick-starting infrastructure because without the supporting infrastructure projects are not feasible. The positive impact for the region has been immense, says project specialist Paul Runge of Africa Project Access. “One of the milestones has been the Belinga iron ore project in Gabon. “The Chinese have won it against stiff competition from the likes of Brazil and France – and the reason was that they used all their financial instruments to clinch the deal, which is what South Africa should be doing. “It’s an incredible project involving an additional rail connection and major port expansion. And although it’s all about iron ore, it goes far beyond iron ore extraction, illustrating the prevailing theme – infrastructure based on resource. “Similarly in Mozambique there’s a need for expansion of the Port of Beira because of the Moatize coking project.” The oil and gas industry has largely driven upgrades at Lobito port in Angola, which has been expanded to some degree to cope with the planned liquefied natural gas (LNG) plant. And there are examples wherever there are resources. What’s also clearly evident is the entry into Africa’s project domain of the so-called BRIC countries – Brazil, Russia, India and China – with South Africa merely picking up the crumbs to a large extent. “When you consider the Chinese advance into Africa, they come in with an entire package, which means it’s hard to tender against them.” The biggest rail project, says Runge, is the Benguela rail line in Angola in which the Chinese are involved. “It’s been delayed due to topographical problems but it’s been undertaken in order to connect the Copperbelt to Lobito and Benguela. “It’s a massive project based on the same principle – resources leading to infrastructure upgrades. “Africa is benefiting enormously from the resources boom and we’re increasingly seeing the impact on power supply, roads, rail, ports and airports.” But while it’s causing a mad scramble among global players, South Africans are not taking advantage to the extent that they should be, in Runge’s view. “There doesn’t appear to be a coherent strategy for getting into these projects. “The way to succeed is to do your homework – find out the needs of the customer and ensure that you have the skills on board to make it happen. “It’s not the procurement of the spare parts for a particular project that is the challenge – it’s getting the spare parts on site timeously and in the right specs and at a reasonable price. And that’s where a competent logistics operator can play a role.” The massive infrastructure spend in South Africa is, however, a detractor. “We have limited skills and hands and it’s easier to do business in South Africa than in the Congo, for example. “But as long as we leave that vacuum, when we rub our eyes again once we’ve completed our infrastructure upgrades here, other global players will be entrenched.” Local ports should also be taking stock, says Runge. “The likes of Nacala, Beira, Lobito and Walvis Bay may in future provide competition to Durban and Cape Town. “One angry copper miner was keen to divert all his cargo from Durban to Dar es Salaam over inefficiency and delivery issues.” And in terms of ports we’re increasingly seeing overseas companies like Dubai World Ports entering into the market in a big way. “The funding and activity from Gulf countries is huge – we are seeing traditional colonial powers winning fewer contracts.” Rail, which has been grossly neglected, is also getting a major re-look. “That comes back to resources – there’s no way you can move major resources by truck. You need rail trucks to get the bulk through.” Clearly there are huge opportunities which are there for the taking and South African companies should be gearing up now to extract their fair share.