African Oxygen Limited (Afrox), leading gas and welding company in line with the growth strategy of its parent company The Linde Group, aims to strategically continue to unlock opportunities and capture growth on the African continent.
Brindaveni Naidoo spoke to MD Brett Kimber at the company’s recent opening of its R200-million air separation unit (ASU) in Pretoria, north of Johannesburg.
Afrox has underinvested in key facilities, he explained, but says following a strategic review, the company wants to continue to invest in Africa, while still remaining committed to South Africa.
"Africa as an emerging continent offers a plethora of opportunities, not just for Afrox, but for business at large around the world. As a proudly South African company, Afrox will continue to look to earning value from these opportunities that truly emphasise the value of South Africa being the gateway to Africa," he adds.
However, he points out, for this to be achieved, South Africa must also look to become a ´manufacturing hub´ to ensure value for business from opportunities on the continent.
Business, government and all relevant stakeholders must continue to work closer together to prioritise business imperatives that will grow the local economy.
"South Africa must also continue to prioritise efforts to ensure it gets is fair share of foreign direct investment on the continent. Yes, there are challenges to be addressed in the local economy, particularly around the issues that underpin uncertainty in the markets, but these can be overcome. South Africa has the resources and skills to get this job done – we [the country] just need to get it right," the new MD strongly advocates.
Afrox´s economic outlook for 2013 remains constrained and it believes that gross domestic product growth in South Africa is not expected to be in line with African emerging markets.
It has stated that it is vital to resolve the present labour unrest plaguing the mining and agricultural sectors to the benefit of all concerned: "A positive solution to the unrest and fragile labour issues will help South Africa concentrate on ´business as usual´. If resolutions are found, we could restore the confidence of local and international investors in the country´s future."
Last year, market activity remained depressed and cost pressures continued as rising fuel and electricity prices had an effect on Afrox´s margins and production. It said that an unsettled labour environment, which was characterised by the strikes and violence, saw production in key industries, such as mining and manufacturing, negatively impacted. The consequential drop in demand for gases and hard goods had a negative effect on Afrox´s volumes sold in the second half of the year.
However, in a globally challenging economic environment, Afrox has ensured that its restructuring has also identified which industries and countries offer growth opportunities for business.
"Market intelligence is the cornerstone of any business – knowing where, how and when to invest and how the company can expand its footprint. As Afrox, we have taken the decision to focus on the long-term benefits our investments will bring, in light of the short-to-medium terms challenges that present itself in business cycles."
During the reassessment of Afrox´s present position and discussions about the future, the need for further investment in the company´s infrastructure in South African and emerging African operations was acknowledged.
This process is already firmly underway and a R1.5 billion capital expenditure (capex) programme was identified. The programme will run between 2013 and 2016. The capital projects programme will boost capacity and improve customer service in KwaZulu-Natal, Gauteng and the Eastern Cape.
The ASU, in Pretoria West, forms part of Afrox´s 1.5bn capex programme and in line with the company´s growth strategy for South Africa and southern Africa.
The atmospheric gases plant, which produces high purity oxygen, nitrogen and argon, was designed and built to global standards, the company states.
Linde Gas, a subsidiary of The Linde Group, carried out the civil design and the overall project management, with Linde Engineering responsible for the design, supply and erection of the new ASU.
The plant replaces the two existing 750-t/d ASU. In 1999, Afrox discontinued supply of gaseous oxygen and nitrogen and operated only of the ASUs in a maximum turn-down mode.
In keeping with the reality of the electricity milieu in South Africa, Kimber explains that energy efficiency and low electricity costs remain a priority of the restructuring plan.
"Operating these large plants in turn-down mode is highly energy inefficient, and taking into account the age of the plant, Afrox saw this as an ideal opportunity to replace an existing plant, originally commissioned in 1987, with more modern and efficient technology by installing a new 200 t/d ASU."
The ASU is remotely controlled from a UK-based global operations facility. The new plant also included integrating an existing nitrogen liquefier unit into the new ASU at the site and linked production from the ASU to the existing cluster storage tanks. The cooling water system, the electric supply and instrumentation have also been upgraded.
Afrox operates in South Africa and in 11 other African countries. In these markets Afrox supplies a wide range of customers drawn from sectors as diverse as mining, manufacturing, heavy industry, healthcare and hospitality.