Motor and controls manufacturer Zest WEG Group, which designs, manufactures, markets and installs electrical products and solutions across the full electrical spectrum, is achieving great success with its new specially crafted ‘pavement pounding, search and solve’ business model that ensures optimum cost effectiveness for investors entering the burgeoning junior mining project space in Africa.
Business out of Africa currently provides Zest WEG with 35% of its revenue and the company’s strategic target is to have 50% of revenue emanating from the rest of Africa and 50% from South Africa by 2020.
While mining remains Zest WEG’s single biggest pursuit, it can no longer rely solely on South Africa’s big greenfield and brownfield mining projects for 60% of its revenue and has thus adjusted its business model away from the fixed approach of targeting large mining companies towards directing solution-based marketing efforts at investors in Australia, Canada and Europe who are developing mining projects in the rest of Africa.
Its success with enlarging its African footprint has involved walking the pavements of Perth, Toronto and Paris, studying the tenant notice boards on buildings, knocking on doors to interface with new clients and tailoring cost-effective solutions for projects at feasibility, bankable and commercial stages.
The upshot is that a list of 60 mainly junior mining projects is now lighting its path across Africa as the company strives to underpin various phases of the projects of its new client base.
Zest WEG spares no effort to become involved from the initial stages of project viability analysis through to examining the attractiveness of the costing model and studying a multiplicity of ways to lower input costs so that investors can achieve mandated capital return.
“We’ve got to go and find business where it is, and that’s in Africa,” Zest WEG CEO Louis Meiring points out to Creamer Media’s Mining Weekly in an exclusive interview at the company’s head office in Linbro Business Park, east of Johannesburg.
Zest WEG has 740 permanent employees and 2 000 nonpermanent employees scattered across African project sites, and comes with a solid sales proposition of cost-effective rand-based technical solutions that meet the tight capital-expenditure targets of private-equity companies and private investors across the full spectrum of extraction, processing and logistics.
“We’re in the very fortunate position of being involved in all project phases,” says Meiring, who began his career as a R400-a-month electrical engineering apprentice with giant General Electric, before joining Zest WEG 26 years ago as its technical sales engineer and then moving up the ranks to his current position of CEO.
A major advantage in all transacting is the international compliance of its product offerings.
In securing project work from project developers on the continent, much has hinged on understanding their needs, arriving at conceptual packages to match targeted returns on capital employed, and providing technical teams that spend many hours engaging with clients on the finer details of project scope and execution.
Currently, junior mining projects present expansive new opportunities for Zest WEG, which has established an inventive Africa division that drives the unique marketing dynamic required for the mining industry across the rest of Africa, which differs markedly from the dynamic of marketing into the mining industry of South Africa.
POWER GENERATION ASSISTANCE
A major African challenge is the scarcity of access to electrical power and Zest WEG deploys its skills sets to provide what developers require across a broad energy spectrum, which includes hydroelectric, gas, diesel and renewable power in the forms of solar and wind energy.
“If you’re building a mine, power’s the first step, and we can take that step for you,” says Meiring.
On a recent project, Zest WEG developed a continuous diesel power plant for Syrah Resources’ Balama graphite mine, in Mozambique, with its group company Zest Energy providing an initial capacity of 12.5 MW.
In other instances, the company’s entry point into projects has been through the provision of substations to take power off available electricity grids.
Zest WEG regularly adjusts its own business model to ensure project approval and ensures that it is constantly ahead of the competition to pre-empt any decision by the client to put the project out to open tender.
“You have to be in front of the client regularly and you’re only as strong as your last visit,” Meiring confides.
Meanwhile, more than three decades of experience in Africa is standing the company in excellent stead.
Since its inception in 1983, Zest WEG’s electrical construction company EnI Electrical has done most of its project work in Africa.
Construction is generally a far bigger contributor to revenue than the sale of products and, although Zest WEG is an electrical business, it generally employs more mechanical artisans than electrical artisans.
On a recent diamond project, the company’s construction team connected the products of the mechanical vendors, including pumps, fans and gearboxes, in addition to meeting all the electrical requirements.
In South Africa, Zest WEG has achieved top-level black economic-empowerment status through the creation of a broad-based and sustainable ownership foundation that complies with this country’s Broad-Based Black Economic Empowerment (BBBEE) Codes of Good Practice.
Ownership of the company’s shares has been facilitated for two black-owned nonprofit organisations (NPOs) that directly benefit communities in need. The two NPOs, together with the company’s employee trust, hold 51.6% of Zest WEG Electric, the South African arm of Zest WEG Group.
All South African sales are done through Zest WEG Electric, which falls under Zest WEG Africa, the holding company for Africa. EnI and Zest Energy are separate businesses under Zest WEG Africa.
The three divisions of the new South African company, Zest WEG Manufacturing, are the genset division, the transformer manufacturing division, and Shaw Controls, the group’s electronics manufacturer based in the south of Johannesburg.
The black employees of those operations form part of the employee trust that underpins the South African company’s BBBEE status.
One of the NPOs is in the education sector and the other is in the microenterprise support sector. Significantly, the shareholding comprises 31.68% black women beneficiaries, which the company believes helps to sustain the good work of these NPOs into the future.
Keen interest in the company’s BBBEE status is shown in Namibia and Zimbabwe, where similar requirements are sought, with the focus elsewhere in Africa on the company’s competitive pricing, product quality, project delivery and service excellence.
Not only does Zest WEG transact in English-, French- and Portuguese-speaking countries, but it is also well versed in the transacting norms of those countries.
Even when it receives an enquiry in English, it makes a point of responding in the language of preference of the country concerned, which is reaping rewards.
In dealing with French-speaking African countries, Zest WEG has found that many business owners, who are heavily invested in Africa’s francophone countries, are domiciled in France, and calling on them in France has been crucial for the success of Zest WEG.
Keeping in regular touch with its European clients requires flying to Europe yearly and taking into account that the preference of the people of francophone Africa is to deal directly with France.
This has resulted in company representatives again having to walk the streets, this time in Paris, where great success has been achieved in selling the company’s offerings to French oil and gas companies, milling companies and trading companies.
Companies operating in Africa, which, in the past, procured everything from France, are now buying from Zest WEG on account of better service, lower prices and technical specification compliance.
There are many examples of the manner in which Zest WEG has displayed its strong commitment to the development of the African continent in the past 35 years. One such example is the manner in which group company Shaw Controls showed its mettle by providing an optimal medium-voltage switchgear solution for the supply of power at a copper mining project in the Democratic Republic of Congo (DRC).
The switchgear was installed at the Kamoa-Kakula project in the DRC’s Katanga province, located 25 km west of Kolwezi and 270 km west of the provincial capital of Lubumbashi, where the company’s engineers provided an innovative design solution to incorporate the switchgear into a standard 12 m container.
Its in-depth understanding of operating conditions, applications and years of experience on the African continent have ensured that the Zest WEG Group service offering is fit-for-purpose.
Leveraging best practice engineering and manufacturing capabilities enables the group to offer a range of standard off-the-shelf products, as well as end-to-end energy solutions.
From single product installations to individually customised solutions, which are application specific, the latest technology is used to ensure optimum performance and reliability without compromising on energy efficiency.
The product line-up includes low- and high-voltage electric motors, vibrator motors, variable-speed drives, softstarters, power and distribution transformers, motor control centres, containerised substations, mini-substations, diesel generator sets, switchgear and cogeneration and energy solutions, as well as electrical and instrumentation engineering and project management services.
Its products are engineered to facilitate a safe and reliable mine and plant, with operational stability and the highest possible production levels as an objective.
Reduced maintenance and ease of serviceability assist in lowering the total cost of ownership for a mine.
Supporting clients is key and Zest WEG Group operates a strategically situated network of branches and distributors across the continent. The group constantly reviews its sales and support network to ensure that clients have access to the highest levels of technical support, as well as easy access to products and parts.
INNOVATIVE RESEARCH AND DEVELOPMENT
The imperative of continuous improvement is part of the culture of Zest WEG, which is researching and developing a major new software development that will revolutionise the continuous monitoring of electrical equipment.
It was the first company in South Africa to introduce energy-reducing premium efficiency standard machines and then to move to IE3 machines, at no additional cost to the end-user base.
In 2016, it took the unprecedented step of giving a five-year warranty on its electric motors.
“We’re always looking for innovation that sets us apart from our competitors. That drive will continue,” says Meiring.
THE 60 PROJECTS
The commodities of the 60 projects that Zest WEG is staying abreast of in Africa include phosphates, coal, gold, uranium, zinc, lithium, tantalite, potash, iron-ore, copper and diamonds. The African countries involved include Botswana, Burkina Faso, Senegal, Ghana, Namibia, Kenya, Madagascar, Mozambique, Gabon, Mali, Nigeria, Eritrea, the DRC, Angola, Lesotho and Zambia, with some projects in South Africa being developed by junior mining companies that are domiciled in Australia.
These projects are in phases ranging from the conceptual phase to the prefeasibility, feasibility and bankable phases.
The parallel approach that Zest WEG has adopted is to give junior exploration companies and end-users exposure to its offerings well in advance of business being done.
At the prefeasibility study stage, engagement begins with what could be an engineering procurement and construction (EPC) company or an engineering procurement construction management (EPCM) company and “if you are not in the starting block there, your chances are going to be zero”.
Investors tend to use the EPC company or EPCM company of the country in which they are domiciled and Zest WEG’s parallel approach ensures that it remains in touch with all the key parties.
Once the project enters the prefeasibility and feasibility stages, hard-core selling to the EPC or EPCM entity is pursued.
The other necessity is for Zest WEG to keep in close touch with the mechanical vendors, as well as the countries from which large equipment packages are bought.
In addition to its eight-branch South African enterprise, Zest WEG has registered businesses in Mozambique, Tanzania, Zambia and Ghana, with distributors in Angola, Botswana, Cameroon, the DRC, Côte d’Ivoire, Kenya, Mali, Mauritania, Mozambique, Namibia, Senegal, Tanzania, Zimbabwe and Zambia.
West Africa remains very important to Zest WEG, which carries substantial stock in Ghana, and the company is reporting growing demand from Burkina Faso, Guinea, Namibia, Mozambique, the DRC, Kenya, Tanzania and Nigeria.
The company sees each country in Africa as being unique and finds it essential to be face-to-face with clients on a continual basis.