MEMSA: SA Capital Equipment Manufacturers and African market trends

2022-04-01T04:32:31+00:00 April 1st, 2022|Mining Indaba 2022|

In answer to questions posed by African Mining, the Mining Equipment Manufacturers of South Africa (MEMSA) comment on the current trends in the manufacturing of capital equipment in South Africa, and the challenges and opportunities for export into Africa in 2022 and beyond.

Manufacturing of capital equipment in South Africa is seeing an uptick with increased demand for equipment in local and African markets responding to improved commodity prices and demand, says MEMSA. Those who manufacture for developed markets are benefiting from demand generated by stimulus packages and investment in infrastructure.

MEMSA members who had a strong established market presence prior to the pandemic are seeing full order books for the year ahead. A case in point is Bell Equipment, which reports increased production levels and the strongest order book since before the 2008-9 economic crisis.

Alongside strong demand, challenges in global supply chains continue to be experienced, with bottlenecks at ports and container terminals. These challenges require planning and agility to minimise the impact on customers.

Opportunities

African markets are also showing good signs of recovery to pre-Covid demand levels, exports of minerals are increasing and with that comes a need for capital equipment and in some regions, further growth is expected.

In terms of new markets, East Africa is showing promising developments, including Kenya, Ethiopia, and Tanzania. In Ethiopia, where there seems to be an end to the impasse which had blocked exports of mined raw materials in recent years, the Ministry of Mines and Petroleum disclosed in September of 2021 that the country has set a plan to increase foreign earnings from mines export by three-fold in the next three years while gold retains the lion’s share in the export trade.

West Africa is a strong and growing market, see trade statistics in the info box below, with Nigeria, Ghana, and Cote d’Ivoire as major importers; Senegal is also seen as a growing and accessible market for South African exporters.

There are signs of recovery in the Zambian copper mining industry, and the Mozambican market is becoming more prominent, with the DRC seen as a market with great potential for South African exporters. However, market access may still take time to develop for those who don’t already have market presence. Obtaining work visas for support teams can be challenging, and weak rule-of-law means that companies need to understand and operate within the system.

Zimbabwe remains a very important export market for South African capital equipment, and specifically mining equipment, as strong platinum prices have enabled investment in new equipment.

Approach to African markets

Other than direct neighbouring countries, successful exporters have found it most effective to work through local agents when engaging over-border. MEMSA member Dezzi Equipment have long focused on working through local agents, and found it works well for manufacturers and customers alike. Established agents offer customers a range of solutions due to their local knowledge, regional footprint, and existing reliable relationships on the continent. They often have a regional footprint, which is important as some markets are too small to warrant individual attention.

It is however important to invest in upskilling by sending technicians over-border, and also providing training to agents whether here in South Africa or via a technician spending time and providing training in the partner country.

Agents are also able to manage customs processes which remain cumbersome and a challenge to intra-African trade despite efforts by governments to bring greater efficiency. Custom clearance can still cost significantly more than regulated.

The Department of Trade Industry and Competition (the dtic) recognises the importance of African markets for SA mining equipment manufacturers. South Africa, through the dtic, is involved in the North-South Rail Corridor – a rail network that stretches over 3000km, from Durban in South Africa through Zimbabwe and Botswana, and links to the Democratic Republic of Congo passing through Zambia. It is SADC’s main international rail gateway for transporting inbound and outbound product/equipment.

The dtic’s funding of South African participation in over-border pavilions at 3 African exhibitions this year will be a driver of additional export into the continent.

Caminex, Zambia’s Premier Copperbelt Mining, Agricultural & Industrial Trade Expo is one of these events that delivers innovation and opportunity, taking place from 31 May – 2 June 2022 in Kitwe.

The DRC Mining Week is another of these platforms in Lubumbashi offering a 3-day (1-3 June) in-person event for face-to-face interaction across the entire mining value chain in the region.

Wampex, the West African Mining and Power Exhibition, is the third event. It takes place in Accra, Ghana, where local mining operators and numerous national and international institutes and suppliers involved in the industry exhibit their products and services from 1-3 June 2022.

Unfortunately, all these opportunities are scheduled for early June so manufacturers will have to choose where to be represented – or stretch their resources to participate in more than one.  These events are seen as highly important to re-establish relationships after two years of cancelled in-person events and replacement online meetings that never became nearly as impactful. Generally, virtual engagement was enough to maintain existing customers, but was not effective in gaining new customers.

The Industrial Development Corporation of South Africa Limited (IDC) is working with MEMSA and The South African Mineral Processing Equipment Cluster (SAMPEC) on piloting finance and risk products that will allow SA manufacturers to be more competitive in African markets. The clusters are very positive about the progress of this project and hope to see implementation in 2022.

Trade statistics

The top 10 African importers of mining equipment (as at 2020 and excluding South Africa) include Ghana (at the top) as well as Nigeria and Cote d’Ivoire from West Africa; the DRC and Tanzania from Southern Africa; Algeria and Morocco from North Africa, and Ethiopia and Kenya from East Africa.

West African countries Mali, Guinea and Burkina Faso are also in the top 15, alongside SADC member states Angola and Zimbabwe.

Ghana, Ethiopia, Cote d’Ivoire, and Zimbabwe have shown exceptional growth in imports of mining equipment from 2019 to 2020, a period over which imports decreased in most countries.

When looking at a broader category of equipment used for mining and mineral processing, and likely crossing over into the oil industry, Nigeria rises to top African importer.

Statistical source: ICT Trademap (trademap.org)

 

MEMSA:

MEMSA is a manufacturing industry cluster organisation, which acts as a voice for its members in the South African mining equipment manufacturing industry and serves as a point of liaison for the government and private sector.

Its mission is to position SA mining capital goods, components & product manufacturers as a cost competitive, innovative, and transformative industrial cluster which is the preferred supplier to the local, regional, and global markets.

Clusters are all about activating the benefits of cooperation alongside healthy competition. Find out more at Memsa.org.za

Thanks to MEMSA members AARD Mining Equipment, Bell Equipment and Dezzi, all significant exporters to the continent, who contributed to this article.