profile
RG: As a relatively young company, though it does come from established companies, what would you say is the secret to Afrimat’ s success? AvH: I think there are three main things that set Afrimat apart and contribute to our success as a company: our values, our culture and our ability to execute. And all of these areas are related – you couldn’ t choose just one or two and get the kind of consistent results we have achieved.
I personally feel very strongly about the values that we as a company operate by, and I think that this has become a real anchor in our business, making sure that we adhere to a very strong set of values. In terms of our company culture, we have a very entrepreneurial, action-oriented culture, with a‘ can-do’ attitude. So, our values and culture determine the way in which we operate and are the starting points for everything we do.
The third element, our ability to execute, translates these two into action and ensures that we get results. One thing I appreciate about my colleagues is that they don’ t come up with excuses for why they missed a target or a deadline – they rather make a plan and deliver on it. This includes delivering on financial expectations; whenever we do a project we make sure that we actually achieve the predicted returns, and we make it work.
RG: What are your thoughts on the new BEE regulations in South Africa? How much impact do you think they will have? AvH: I think that BEE, including the new regulations, is one of the strategic realities in our environment, and no matter when or where you operate, you have to take cognisance of the strategic environment and work out your specific strategy in such a way as to remain competitive, making sure you’ re operating according to the same rules as your competitors. I know it’ s a very theoretical answer, but that’ s the kind of situation it is.
While my personal view is that the new regulations are very restrictive, it is still a reality that we must work with. So, we will make sure that we understand the rules and find the most applicable strategy to deal with it and to operate successfully within this environment. We want to do business in South Africa, so we’ ll have to make sure that we play according to the rules.
RG: What is your outlook for the South African infrastructure sector over the next five years? AvH: I’ ve been quoted a couple of times as saying that I believe the infrastructure is currently at a high, based on the total amount of money being spent on roads, on water infrastructure, on low-cost housing, and so on. In fact, in rand terms, it is the highest it’ s ever been. And I don’ t think that is going to change any time soon. Infrastructure spend stimulates the economy, and we need all the stimulation we can get, so I don’ t see government slowing down on this.
One of the biggest changes we’ ve seen over the past five years is that there’ s been a swing away from big construction companies working on a few large projects towards smaller construction companies working on more, albeit smaller, projects. I’ m watching to see how the new pact between government and the larger construction companies to stimulate black empowerment and support black-owned companies will play out. It’ s not clear exactly how this will work out, but I believe that, while it might have an impact on government’ s spending on infrastructure, overall the current levels are likely to be sustained and possibly even grow slightly.
RG: What are your thoughts on the state of the ready-mix market in South Africa and Africa as a whole? AvH: While I can’ t speak for the rest of Africa, as far as the countries Afrimat is operating in, ready-mix is not really a big market – site-mixing is far more common. I’ m just not equipped to know what is going on in all African countries, but in South Africa readymix is an overtraded space. The industry is used by cement companies as a marketing conduit for cement, and they are subsidising it. So it’ s an industry with very low barriers to entry, and also an extremely difficult space to operate in if you’ re not a cement player. That’ s why it has become a very small part of Afrimat’ s business – while we’ re still sticking to it in areas where it makes sense for us, we’ re definitely not expanding.
RG: Do you think they will institute standards to try and remove the low barriers to entry any time soon, or not really? AvH: The industry has been trying to do exactly that for the past 25 years, and it’ s not an easy task. I know there are people who are trying, but it’ s not a natural barrier to entry as is the case with resource mining, where if you don’ t have a proper iron ore deposit, for example, you cannot play. The problem with the ready-mix market is that it has an inherently low barrier to entry. If you can convince a bank to lend you some money, you can buy yourself a batch plant and get a subcontractor with two ready-mix trucks, and then you’ re in business. So while you can try to introduce regulation, I don’ t think that in a free market economy you’ ll be able to monetise that low barrier to entry.
RG: LafargeHolcim has partnered with a French company to work on 3D concrete printing, do you see this as a viable area of development in the short to medium term? AvH: I definitely think that 3D printing is going to be an area to watch. I recently read the book The Fourth Industrial Revolution by Klaus Schwab which looks at how advancing technology is going to fundamentally change the world we live in, and I think 3D printing is definitely one of those technologies that is going to have a huge impact. Moore’ s Law basically states that the body of knowledge of any specific technology tends to double every 18 months. If you think about the progress that we’ ve made in the field of 3D printing over the past 18 months and you extrapolate that over the next five years, I don’ t think we can understand just how much this is going to change our world. There are already companies that are 3D-printing entire buildings, and there’ s a Chinese company that has successfully printed a 3D five-storey apartment building.
So I definitely think that we as an industry need to ensure that we understand where technology is going, and even embrace it in certain areas. It’ s a very interesting strategic question for a company like Afrimat, to decide when we actually want to get involved with a specific technology. Do you want to be on the bleeding edge, or do you want to be the second guy? Personally, I’ ve always believed in being the second guy – let the first guy make the mistakes and then we come in and perfect the technology. The short answer is that we can expect this‘ disruptive’ technology, whether it’ s 3D printing or something else, to disrupt our environment quite dramatically.
Another disruptive technology that I think could have a significant effect on the aggregates industry is drones – not only the small ones that most people are familiar with, but large weight-carrying drones that can transport passengers or cargo. Large autonomous drones controlled by a supercomputer could practically eliminate the need for road aggregates. Why build new roads when you can have multiple lanes of traffic travelling in three dimensions? And the computer can ensure the vehicles all remain on course and prevent collisions. And this is not as far off as you might think. Earlier this year there was an article on Dubai’ s plans to launch an autonomous, passenger-carrying
QUARRY SA | MAY 2017 _ 35