South Africa’s mining companies remained resilient and performed on all fronts, according to a PwC report, highlighting the bullish impact of stronger commodity prices and a weaker rand on the key sector.

Platinum basket prices increased, and investors turned to gold as a safe investment amid concerns about the COVID-19 pandemic and global trade tensions. In 2020, total market capitalisation increased to £59.5 billion from £39.1 billion. This marked a £20.4 billion (52%) year-on-year increase from 2019, largely attributable to the growth in market capitalisation of companies within the gold and PGM sectors. Gold and PGM accounted for 80 percent of the market capitalisation of the companies analysed this year and continue to dominate the sector.

“South Africa’s mining sector continues to be a meaningful contributor to the economy and has weathered the COVID-19 pandemic in many respects – showing good profitability and retaining strong balance sheets,” says Andries Rossouw, PwC Africa Energy Utilities & Resources Leader. “The long-term future is unknown, however, as there is little consensus on how the pandemic will impact the mining industry. The pandemic highlighted the absolute need to build back better and mining will play a key role in that recovery.”

The total revenue generated by the South African mining industry for the year ending 30 June 2020 grew by 4 percent. This was mainly driven by PGMs, gold and iron ore, which saw increases in revenue for the 12-month period. PGM generated the largest portion of revenue (28 percent), demonstrating a 56 percent increase from the previous year, overtaking coal for the first time since 2010. Gold mining companies had an increase of 35 percent in revenue. Revenue for the ‘other mining’ segments increased by seven percent.

However, production decreased by 8 percent year-on-year, with a 44 percent decrease in production noted in April 2020 because of the pandemic – the most significant of which was due to reductions in gold, diamonds and PGM outputs. Production levels increased in May 2020 following the easing of lockdown restrictions.

The report highlights four key Environmental, Social and Governance (ESG) focus areas that companies need to focus on if they want to build back better and ensure a just transition to a new economy and enhance their social license to operate:

These are:

1. Supply chain resilience

2. Measuring impact

3. Climate-related risks

4. Resource efficiency

“Our analysis shows that while mining companies are often at the forefront of ESG efforts, they are weak on their reporting when it comes to setting targets and measuring themselves. The COVID-19 pandemic called for a renewed focus from government and business to better peoples’ lives and support local communities. As such, this shows a need for ESG to be considered in its entirety,” says Luyanda Mngadi, PwC Assurance Partner and SA Mine 2020 Project Leader.

The pandemic highlighted the absolute need to ‘build back better’. Mining will play a key role in that recovery. It is therefore unfortunate that despite the increased profitability, capital expenditure only increased marginally.

“Whilst a cautious approach is understandable, impediments to investment need to be removed. Liberalisation of the energy market to ensure reliable and cost competitive electricity is essential for mining and potential beneficiation opportunities,” the report states.

“Progress in the regulatory environment should continue with a need to streamline processes and improve transparency for existing and potential investors. The mining tax environment should be considered as a whole, with an opportunity to incentivise exploration expenditure. Enabling infrastructure, supporting supply chain and mine- to- market logistics would provide immediate recovery benefits and enhance long- term sustainability,” it concludes, but stresses that investment can only be attracted if the SA mining industry can be cost competitive with its global peers.

The B-BBEE Commission has indicated that more than 83 percent of the 822 complaints received since 2016 were due to fronting, with the mining, transport, construction and engineering sectors accounting for the bulk of the complaints.

Speaking at the launch of the B-BBEE Commission’s Investigations and Enforcement Webinar Session on Tuesday B-BBEE Commissioner Zodwa Ntuli said fronting remained the biggest challenge to the power of the B-BBEE Act to deliver on economic transformation.

At least 687 of the 822 complaints received by the B-BBEE Commission since 2016 were due to fronting – where a black person or entity is given a stake but does not get the powers associated with it.

Ntuli said fronting remained a scourge that needed to be rooted out if South Africa was to achieve its goal of an inclusive economy.

“The commission considers compliance with the B-BBEE Act as critical to achieve the envisaged change in the patterns of ownership through the transfer of productive assets of the South African economy to black people. Fronting and misrepresentation sabotage this with these fraudulent schemes and falsification of status.”

The commission said after fronting, falsified B-BBEE Certificates (70) and contractual complaints (42) accounted for the most common complaints received by the B-BBEE Commission. To date, about 386 cases had been finalised, of which 22 had been referred to the Companies and Intellectual Property Commission (CIPC), and seven had been referred to the National Prosecution Authority (NPA) and the SA Police Service (SAPS).

The B-BBEE Commission has in seven cases instituted proceedings in court to restrain any breach of the B-BBEE Act or to obtain appropriate remedial relief. Six entities have initiated review processes in the high court against the B-BBEE Commission.

Ntuli said the Commission wanted the public to know about these cases of fronting and misrepresentation of B-BBEE status to raise awareness of these practices that were detrimental to transformation and criminal in nature, with a view to identify and preventing them from occurring in our economy. “Our ability to publish findings in cases is restricted by the act, and this has significantly affected communication to the public.”

The commission noted that a multitude of trends that constitute a criminal offence continue to undermine the objectives of the B-BBEE Act. “These trends include, among others, willing black participants to fronting, non-existent participants in broad-based ownership schemes and trusts, non-adherence to section 10 of the B-BBEE Act by organs of state and public entities, false or fraudulent B-BBEE Certificates and white people, Chinese people and foreign nationals claiming black ownership.”

The consequences are dire and any person convicted of fronting may be imprisoned for up to 10 years and an entity may be fined up to 10 percent of their annual turnover in accordance with Section 13O of the B-BBEE Act.

The B-BBEE Commission stated its aim to emphasise cancellation of contracts, licences, blacklisting of entities under the Preferential Procurement Policy Framework Act (PPPFA) and delinquency processes for those involved in addition to referral to criminal law enforcement agencies.

The B-BBEE Commission was created in 2016 after the 2013 amendments to the B-BBEE Act to oversee the implementation of the B-BBEE Act, which includes receiving complaints and acting against fronting practices and other violations of the B-BBEE Act.

The B-BBEE Act requires that all organs of state and public entities include B-BBEE requirements in determining qualification criteria for issuing of licences, concessions or other authorisations, sale of assets, incentives and grants, and implementation of preferential procurement.

The new Bidtrans Portal provides real-time collaboration and interaction between clients and their deliveries via an online platform.

In a recent story covered in FleetWatch, we reported on Marcus Ellappan, director of road freight for Bidvest International Logistics (BIL), saying that the company has plans in place for an adjusted road-freight service offering which he believes will enable BIL’s road-freight division to offer faster and stronger supply-chain support in the wake of the COVID-19 pandemic. We promised to follow up on this and here we go…

The news is that BIL has now launched a new road-freight portal that will allow clients to manage deliveries seamlessly from start to end which, according to Ellappan, “takes away the pain of having to procure transport service providers and still manage them.”

The Bidtrans Portal provides real-time collaboration and interaction between clients and their deliveries – via an online platform – streamlining compliance matters, service deliveries, tracking, transport proof of deliveries (PODs) and invoicing. This will free up clients to spend more time running their businesses rather than managing the movement of their products.

The move online for freight-forwarding hasn’t been entirely without its hitches. This is evidenced via a report released last year by Deloitte’s transport practice in Germany which showed that global freight-forwarding companies involved in digitisation have run up against industry-specific obstacles

These include platform owners’ neglect to offer a customised service depending on the shippers’ specific requirements, a more consolidated way of invoicing, pricing that’s fixed, and guaranteed loading capacity. Other issues referred to in the report include ensuring a service that’s unquestionably reliable and robust; the need to involve several parties in the movement of the shipment; the temptation to expect immediate financial returns from investment in a platform; a conventional way of thinking; and the scarcity of capabilities to simultaneously explore and exploit, coupled with freight-forwarders’ digital talents.

“We’re not for one second questioning the validity of digitisation in freight-forwarding. It’s inevitable and makes business sense, especially in South Africa with the ground-transport issues the industry faces,” says Ellappan. “But we’re aware of the unspoken realities that industry incumbents or start-ups are facing as they’ve tried to establish digital platforms. Often players are swayed by the hype without understanding what the real challenges are, and then not being in a proven, credible position to effectively address them. There’s nothing worse than raising expectations and not delivering.”

The Bidtrans Portal will allow the company to source loading capacity seamlessly and meet client demand throughout the year. This in turn will allow BIL to offer an automated booking space service through the portal. Phase 1 of the platform’s launch is aimed at contracted customers while phase 2 will be aimed at the broader business-to-consumer market which will be more of an ad-hoc tariff structure.

“As the Deloitte report suggests, robust and rigid reliability are critical in transportation so Bidtrans Portal’s simple, easy-to-navigate look and feel will integrate the BIL systems to effectively manage load collection, tracking, delivery, POD uploading and invoicing on time.”

That said, the portal will still be flexible in how it responds to client requests by conforming to agreed service-level agreements that may differ from one client to the next. Most important is that should clients still prefer to liaise with key personnel at BIL, they have the option to do so. Those people are available on a 24-hour basis. The portal will enhance the existing customer experience, specifically for those customers who want to enjoy an automated service offering.

“What many well-intended market disruptors sometimes forget is that the Uber model is based on people ‘loading’ themselves and the reality – and, in this case, our model – is based on a solid understanding of what it is to load a 20kg product or a 36-pallet shipment on the correct transport asset,” says Ellappan.

“We operate a multitude of warehouses, so we’re fully aware of the potential delays associated with loading and offloading points and therefore have incorporated a tracking module to proactively mitigate the risks surrounding a potential miss in on-time delivery in full.”

Addressing the issue of multiparty involvement with moving shipments, a driver will be briefed on new collection points and any special requirements but the process will remain basic and resilient: client – BIL – consignor – transit – consignee – POD – invoice.

“The market has to start eliminating the huge amount of manual administration involved with simply booking a load and we’re under no illusions about that,” says Ellappan. “The phone calls to various parties trying to secure space – or emailing a delivery instruction – can be a lengthy process when compared to the seamless nature of online ordering.”

The Bidtrans Portal will eventually launch an application for mobile use as well and one of the key features to combat a conventional way of working is Bidtrans’s escalations offering – loads not assigned will be escalated for management action in the company.

“As with any new product, users may take a while to warm to it because of an ingrained tendency to use what’s familiar and tested. However, we’re of the firm belief that once they experience the reduction in manual activities, the track-and-trace function, the ease of online ordering and equally important, its ability to uphold solid compliance management, people won’t want to go back to the manual way of working,” says Ellappan.

In essence, the company is providing a digitised platform that’s sustainable and makes a meaningful difference for its clients, without losing the all important personal contact and query resolution that has always been the cornerstone of the company’s success.

Bob Dylan sang it: “The times they are a’changing.”

MAN Automotive has come up with an extremely novel concept: a limited edition of trucks painted in the colours of the South African flag. CHARLEEN CLARKE reveals the story behind the creation of these extraordinary vehicles

From bad to good. That’s what the SA Flag Limited Edition trucks personify, as Eren Gündüz, chief operating officer at MAN Automotive, says: “They symbolise the incredible success of the MAN brand in South Africa.”

As recently as 2016, MAN’s market share wasn’t anything to write home about. “We were sitting at a little less than 7%, and we were obviously not happy with that. Our team worked incredibly hard to change that situation and, last year, we achieved 14%,” he reveals.

Gündüz and his team decided that they wanted to show their appreciation to customers. “MAN has been in the country for a very long time – uninterrupted. Especially given the fact that we were facing a pandemic, we decided that we wanted to do something very special for South Africa. We love and appreciate the country and we wanted to show this. We decided to come up with something that would pay tribute to South Africa and its people. Our trucks are our lifeline. All our goods and commodities are moved by truck! We thought about all sorts of different ideas and came up with the SA Flag Limited Edition. The flag exemplifies the spirit of the country, after all,” he notes.

There are 12 SA Flag Limited Edition trucks, says Robbie Virgili, head of retail truck sales at MAN Automotive. “We took the six colours of the SA flag and painted two trucks in each colour. We selected the 26.480 Efficient Line, which has the best fuel consumption in the country,”
he explains.

“The trucks have been pimped up with all the bells and whistles. We fitted leather seats, bullbars, stone guards, roof bars, special floor mats and side skirts. The whole vehicle is colour coded outside. The hubs and side skirts employ the same colour.”

On the tool compartment flap of each truck, there is a South African flag and it also highlights the colour of that specific truck.

The trucks were kitted out at MAN’s new modification centre in Pietermaritzburg, which was opened just before lockdown. Gündüz explains that this centre is great news for local customers.

“When we sell a standard truck to a South African company, they often add extras. Then we have to send the trucks to various suppliers. A couple of times we experienced problems with suppliers drilling in the wrong place. The damage is irreversible. To stop this situation, we opened our own modification centre. We have our own technicians and they use MAN-approved fitment methods and tools. A full warranty is offered,” he says.

While the trucks were undergoing their metamorphosis at the modification centre, they were under the watchful eye of Hayden Wright, senior salesman at MAN’s Pinetown branch. Virgili and Gündüz are unanimous: “He managed the whole fitment process and did a fantastic job.”

Modifying the trucks was an effortless task, thanks to the skilled team of technicians. Getting MAN from 7% to 14% market share required considerably more effort. “We decided on a process of continuous improvement. It has been a huge amount of hard work. We have implemented a massive number of projects aimed at improvement. In aftersales alone, we introduced 22 projects,” reveals Gündüz.

For the MAN team, the top priority was uptime. “This has increased our customer satisfaction. Even in lockdown, our focus on uptime and customer satisfaction never waned. In fact, we started working two shifts at our workshops to support essential services customers. Whenever there was a requirement, our teams were there to support the customers. This made a big impact. When the market is difficult for customers, special support is so important. We tried to do everything possible for our customers – and this has paid dividends. Our customers will never forget this,” he contends.

Prior to lockdown, the MAN team doubled their truck stock (kit orders). “It was difficult to convince Germany to support us, but they did. We did not know if the ships would be working and whether or not the containers would arrive. We didn’t want to take any chances that could result in us disappointing customers. Yes, this was a massive investment, but it was the right thing to do,” notes Gündüz. The parts inventory was also increased by 25% before lockdown – for exactly the same reason.

He believes that good teamwork helped the company along its path of success. “When I look at 2016 versus today, we have only changed two senior managers. The right people were in the right place. We empowered and supported them. The team has done a great job. MAN has four values – team, respect, integrity and determination – and this governs every aspect of the way in which we do business,” he says.

“We respect the market, which has its own dynamics and challenges. We are determined to grow market share. We always work with integrity. Instead of giving the customers what we have, we try to listen and give them what they need. Sometimes big corporate companies forget the customer. But we put our customers at the very centre, and everything is around uptime.

“Just consider the telematics systems in Europe. They simply don’t work here. Therefore, we created a local solution that gives the customers exactly what they need. In South Africa, security concerns are paramount. Therefore, we designed our system around this need.”

The system is provided free of charge for three months with every new MAN truck purchased. “We also offer stolen vehicle recovery as standard. This is what our customers need. If the driver goes off route, alarms automatically go off. In Europe they don’t have these security concerns,” he notes.

These policies, coupled with lots of hard work, have really paid dividends. “Last year we were rated number one in truck sales. This year, I am thrilled to announce that we are number one in the market in terms of the combined results – truck sales, parts and service,” says Gündüz with a big smile. “In fact, four of our branches received 100% customer satisfaction in August.”

While truck sales, parts and service are flying, so too is the TopUsed organisation. “When the market is tough (and it is right now), used sales always grow. Plus, new vehicle prices are increasing due to the currency devaluation. The same has not happened to used. Accordingly, we knew that the business would grow. This is going to be a record year for TopUsed. We’ve never sold more than 90 used trucks in a single month. But we sold 119 in July and 92 in August. September is also looking good,” he reports.

He acknowledges that “staying at the top is more difficult than getting there. But we will work hard and come up with innovative ideas.”

One such innovative idea, of course, is the SA Flag Limited Edition concept.

“Seven have already been sold. Interestingly, bus fleets are buying them to transport cargo. This is because bus commuters often have lots of luggage when going cross-border (especially to countries such as Zimbabwe). Typically, a trailer has been towed behind the coach. But now, that’s simply inadequate. Accordingly, bus and coach operators are now going into the trucking business too,” Gündüz reveals.

Virgili adds some customers are rewarding their top drivers with a SA Flag Limited Edition truck. “We are putting a lot of money into them and, yes, they are more expensive than a regular truck. But it is a great driver incentive. Those drivers are beyond excited at the opportunity to drive one of these striking vehicles,” he says.

Customers can only purchase one truck; no more than one SA Flag Limited Edition MAN is being sold to a single fleet. “We wanted to make them as exclusive as possible,” Virgili explains.

And what if a customer approaches MAN and wants to order 100 of these incredible trucks? “We won’t take the order; there will only ever be 12 of these trucks,” he insists.

Now, the challenge is to come up with an even more innovative concept for 2021. “That’s going to be tough! But we have a great team of people at MAN. I am sure that we will come up with something,” predicts Gündüz.

Hopefully, they will. But one thing is certain: it’s going to be very hard to top a SA Flag Limited Edition truck.