K’Enyuka, a recent addition to the ranks of the project houses, focuses on building hydrometallurgical and pyrometallurgical process plants. It has been focused on the PGM sector in South Africa, doing Engineering Procurement Construction Management (EPCM) contracts, and from this base has initiated a drive into the rest of Africa.
K’Enyuka, an associate company of RSV, has existed since February 2006. It was formed because RSV, which is focused on underground mining, needed access to process plant project skills. These skills were then taken and incorporated into the new company, one which is independent but has a strategic alliance with RSV.
Currently, K’Enyuka, which has a staff complement approaching 150, is undertaking EPCM projects ranging in size from R20 million to over R1 billion. It has a number of contracts underway worth over R700 million and some around the R100 million value. Two thirds of the staff has technical roles and the remainder focuses on project support.
“We currently have capacity to take on another large project or two,” K’Enyuka CEO Mike Symonds says. The company has an order book to keep it busy for the next two years, but it also plans to double in size over the same period to enable it to take on further projects.
“At the moment it is easier to find a project than it is to find the people to carry it out; if you have the people you will get business.” However, Symonds takes the longer view. “At some point the market will turn, and to ensure we stay in it we have to differentiate ourselves through our performance.” (This interview took place prior to the October financial meltdown).
As a new company K’Enyuka won its first contracts on competitive pricing, but more recently it has been getting repeat work based on its previous performance. With the number of project houses proliferating, Mulalo Colin Tshivhase, K’Enyuka’s business development director, says when he attends tendering processes he finds that companies are fitting themselves into niches. “In some cases we go for a tender and find certain companies are there, and then we tender for other projects and find a different set of companies are present.”
While it has mostly done EPCM type contracts to date, K’Enyuka is looking to undertake turnkey projects. “If the risks are managed in the right way then one can do turnkey work,” Symonds says. He suggests that, at this stage, the company would be willing to take on turnkey projects in the R50 to R100 million range. “However, the key is how one shares risks and we could take on larger projects if we could achieve strategic alliances with our suppliers.”
The talk of turnkey contracting is due to the fact that this is the preferred contracting style the further north into Africa one progresses, and K’Enyuka is particularly looking at growth in Africa to the north of South Africa’s border. “If you look at the growth in the mining industry, sub-Saharan Africa is where it is happening,” K’Enyuka business development manager – Africa, Jacob Mtonga says. “The Southern African Development Community has taken note that mining will be a vehicle for growth in the region and we want to be part of it. Companies that want to do business in Africa are setting up bases in South Africa and we have the advantage of this being our home base.”
The company is looking to open an office in Zambia, with Kitwe being the most likely setting. “Kitwe makes sense as the majority of the mines on the Copperbelt are within 100 km of that town, and Lubumbashi, which is a mining base for the Democratic Republic of Congo, is only 192 km away,” Mtonga says.
K’Enyuka hopes to win a couple of projects in Zambia and initially work on these out of its office in Johannesburg’s CBD before setting up its Zambia office, which will be in place by the end of February 2009. “We must pay our dues and ideally we want to set up an office on the back of a project,” Symonds says.
The company is currently undertaking jobs in Botswana and Madagascar and has previously done work in Mozambique and Namibia. K’Enyuka has good relationships with the world’s two biggest platinum producers, and therefore Zimbabwe is of particular interest as this country will present opportunities once its crisis does comes to an end. “After the Bushveld Complex, the great Dyke in Zimbabwe is the world’s biggest source of PGMs and unlike in South Africa the deposits are shallow and unexploited, and will be cheaper to mine. In countries like Ghana and Tanzania gold was recently being surface mined at prices around US$350/oz, and we would like to participate in the inevitable expansion in mining projects in Africa using the experience built up and our base in South Africa,” Mtonga says.
Tshivhase says that to do projects in Africa’s mining sector, “One needs to know the geology, understand the people, and you can’t get away from some form of BEE or, to put it another way, local participation. Local understanding is key to success and one also has to manage the circumstances rather than go in with a set system.
“We are even starting to see the same situations emerging in places in South Africa, like Mpumalanga and Limpopo province. We are talking about understanding the dynamics and how to involve communities.”
Tshivhase says that in South Africa the commodity to be most excited about is coal, taking into account increased local and export demand. The development potential of the Waterberg is also exciting. “Other exciting commodities going forward are PGMs and chrome.”
Interestingly, Tshivhase notes that the company is not set to limit itself to the mining sector; other sectors such as steel and power although harder to access are target markets for K’Enyuka. These clients are more used to turnkey than EPCM contractors. “They still look to manage things in-house and in such sectors the technology and equipment suppliers replace the role of EPCM contractors.”
The question is, with the skills shortage and with large project houses increasing their headcounts and smaller companies starting up, where are all the people coming from? “The skills are being brought from other sectors, like the food processing industry, and also from operational environments in the mining sector,” Tshivhase says.
“The practical experience of people coming from an operational environment adds to the significant numbers of new recruits coming out of the universities, who still practice engineering using first principles,” Symonds adds.
Tshivhase says that the accelerated career paths in the project houses are an attraction, due to the perceived glamour of being able to work in metropolitan areas as opposed to working in mining towns further away from the buzz of major centres. Symonds says that the young recruits do require mentoring but if this is done properly they grow rapidly to take on projects on their own.
K’Enyuka has been able to limit its staff turnover to under 5% and the majority of the turnover is among non-critical staff. Tshivhase says that it might be that the company is of the right size, with career path development, responsibilities, and recognition, unlike larger groups where people feel they have become only a number in the system. Symonds adds, “We do plan to grow and the trick is to add a second layer of management while avoiding the pitfalls found in the larger groups.”