BUSINESS
volumes, Ashmole says that in 2005,
Finstone employed 1 650 people
compared to 550 in the group today.
Beneficiation also affected
“We have the biggest beneficiation
facility for granite in the country, and for
the thin slabs needed in construction,
we are probably running at about 50%
of capacity. This market is now running
about 90% local. The thick slab facility
used to be an 80% export market and
is today almost 100% local. It’s just not
feasible to compete with slabs in the
export market, and that has to do with
our container costs in this country. We
did an exercise about three years ago
when we had an export market in the
UK — just in transport costs we were
able to save EUR2/m 3 (or around 5% of
the retail value) by shipping the blocks
and cutting them in Spain, and then
sending them by container to the UK,”
says Ashmole.
This is an instance of South
Africa’s prohibitive logistics costs and
inefficiency, effectively exporting jobs to
Spain. Ashmole gives a further example
when the company recently had to pay
an additional USD100 000 in costs to
a shipping company because of late
delivery of a consignment by Transnet,
as the ship had to wait in port an extra
three days.
The delays are for the same reason
as why South Africa experiences an
alarming incidence of train collisions.
Widespread theft of infrastructure has
left large sections of rail being managed
manually, meaning train drivers have to
14_QUARRY SA| MARCH/APRIL 2019
telephone each other to establish right
of way. There are also issues of poor
management and poor maintenance of
wagons. Ashmole says it is a struggle
simply to get enough wagons for the
delivery. It can then sometimes take the
port a week to unload the train. This
is not just Finstone’s dilemma — TFR
would also like its wagons back for the
next consignment.
Growing demand for its product does
exist, says Ashmole, and notwithstanding
the logistical challenges for the export
market, he says that production from its
Rustenburg quarries last year increased
40% on 2017, and budget projections for
this year anticipate a further 50%
increase. This is coming off a relatively
low base, Ashmole emphasises, given
the fall mentioned and refocus to the
local market.
Way forward
“If we could get logistics costs back down
to something close to what they were,
that would certainly increase volumes
even if we passed some of that saving on
to customers,” says Ashmole. He notes
that since a market fall at the time of the
global financial crisis in 2007, the market
has been steadily growing on average at
6% a year. “With the rand at where it is
now, the export market would be more
accessible to South Africa, were it not for
our prohibitive logistics costs.”
One of the first steps in the right
direction, says Ashmole, would be to get
a piece of land in the port where it could
build its own storage facility at Richard’s
Bay. “Having that facility would give us
The Port of Richard’s Bay opted for heavy-duty forklifts instead of the more economic and globally accepted gantries, such as this one at Finstone’s
Springbok Quarry near Rustenburg.
Finstone SA chief operating officer, Ian Ashmole.
the final reason not to use rail. We could
then ship three or four trucks a day on
road and get our required volumes to
the port on time. Another important
issue is that we are being approached by
entrepreneurs from local communities
interested in doing our trucking. We can’t
give them a contract because under the
current circumstances, it would be too
sporadic.” Without the facility, Finstone
needs to get a large amount of material
to the port in a short space of time,
with nothing to be moved the rest of
the month.
“With a facility, these businesses could
throughout the month steadily truck our
blocks down to the facility where they
await the ship. An alternative is that if
we had the facility, TFR could create a
dedicated fleet for the service and we
might then opt for rail. We are close to a
point of having to make a decision one
way or the other,” says Ashmole.
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