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Ford is starting to wrap up its R15.8-billion investment in its South African facilities to assemble the new Ranger pickup, with mass production for the local and export markets scheduled to start in October.

The vehicle will be exported to more than 100 markets.

The first batch of tooling trial (TT) Rangers have already been produced at Ford South Africa’s (SA’s) Silverton plant, in Pretoria – an essential step in validating the new equipment and processes.

“We have been encouraged by the quality of the components and vehicles produced during this initial TT phase, which has justified the scale of our investment and the mammoth job it required in building completely new facilities, as well as revamping our entire assembly line while continuing to build the current Ranger,” says Ford SA operations VP Ockert Berry.

“We are about to commence with our pre-production runs in preparation for launch later this year.

“The Silverton assembly plant is virtually unrecognisable from 18 months ago, and this transformation has not only allowed us to introduce the latest technologies and quality control systems, but also gave us the opportunity to redesign the flow of the plant for maximum efficiency,” adds Berry.

“The result is a high-tech facility that compares with the best Ford plants in the world, and will enable us to deliver on the 200 000-unit installed capacity, which is the highest capacity ever for Ford in South Africa.”

Of the R15.8-billion investment, around R10.3-billion went directly into Ford’s operations, including the company’s first in-house stamping plant, a completely new body shop, and the total transformation of its trim, chassis and final line.

The latter has seen the introduction of a flexible new skillet system for vehicle assembly operations.

The vehicle is automatically raised or lowered based on the ideal height for the completion of the required tasks, and can be adjusted to suit the height of individual operators.

The skillet system is based on a moving conveyor platform, enabling the operators to move with the vehicle as it proceeds down the line, thereby improving working conditions, reducing cycle times and contributing to safety.

The plant also saw the installation of a new box line. This separates the vehicle cab and load compartment at the start of the assembly line for improved access and efficiency, before the two parts are re-joined and bolted to the chassis towards the end of the line.

“We have also built our own frame line in the Tshwane Automotive Special Economic Zone (TASEZ), adjacent to the plant, which is the only Ford-owned and -operated facility of its kind in the world,” adds Berry.

The frame line measures 100 000 m2, and features two manufacturing lines to produce the ladder-frame chassis for the new Ranger.

It incorporates an automation level of 95%, employing 585 robots, using a high-tech SKS intelligent welding system capable of manufacturing 15 chassis derivatives.

Measurements of all manufactured parts are conducted on the line, supported by a GOM ATOS ScanBox blue-light scanner system that creates a detailed three-dimensional model of the completed chassis.

Alongside the manufacturing area is a multistage e-coat facility where the frames are immersed in a range of cleaning and phosphate solutions, before being submerged in an electrically charged tank where the paint is uniformly bonded to the metal.

Thereafter a robotic station applies a protective wax to provide rust protection and durability. Once completed, the finished chassis is delivered straight to the Ranger assembly line in the Silverton plant.

In addition to the significant investment in the Ford facilities, the US vehicle manufacturer also invested R5.5-billion in supplier tooling, with 14 of Ford’s component suppliers having set up operations in the TASEZ to support production of the Ranger.

In addition to the R15.8-billion investment in Ford’s Silverton operations, the company also invested R600-million in its Struand...

Mineral Resources and Energy Minister Gwede Mantashe reported that the bid submission deadline for Bid Window Six (BW6) of the Renewable Energy Independent Power Producer Procurement Programme would be delayed by between 45 and 60 days to ensure procedural fairness in light of President Cyril Ramaphosa’s announcement that the size of the round would be doubled from 2 600 MW to 5 200 MW.

The bid submission date for BW 6 was initially set down for August 11, after the request for proposals (RFP) documentation was published on April 6.

Speaking during a briefing of the newly established Energy Crisis Committee, Mantashe said it would be “unfair to expect people to bid for double the capacity if they're not given the notice”. However, government still needed to make a final decision on the duration of the extension.

He said a formal notice of the extension would be made soon.

In July, Eskom’s Grid Access Unit reported that it had received a total of 219 grid-access applications in relation to BW6, which at that stage was still limited to 2 600 MW.

On July 25, Ramaphosa announced that the round would be doubled as part of a broad-ranging set of interventions designed to add additional private generation capacity to the grid as part of efforts to respond to intensifying load-shedding, as well as to provide Eskom of the headroom it required to increase coal maintenance and reduce diesel use.

No specific update was provided, however, on when a new Section 34 Ministerial determination would be published to allowed for the procurement of the balance of the renewables capacity catered for in the Integrated Resource Plan of 2019, which includes an allocation for 14 400 MW of wind and 6 000 MW of utility scale solar photovoltaic (PV) by 2030.

Mantashe indicated that the determination would be published only once concurrence had been secured from the National Energy Regulator of South Africa.

Meanwhile, Trade, Industry and Competition Minister Ebrahim Patel said that localisation “flexibility” had been introduced to address the difficulties that some of the 25 BW 5 preferred bidders were having in meeting local content requirements.

These difficulties were said to be partly responsible for delays in the projects progressing to financial close, which was initially scheduled for April, but which had since been shifted to a two-stage deadline of July and September respectively.

Patel said the 100% local-content designation for solar PV modules had been reduced to 35% and that those bidders continuing to face delays or difficulties in timeously securing modules from the two local producers – ARTSolar and Seraphim – were entitled to apply for a full exemption.

“This is a wide deviation and it's been put in place because we believe it's most helpful to the economy and at the same time it's been structured to enable local production of some of the demand from local producers,” Patel explained.

He added that localisation targets would be increased incrementally during future bid windows.

“We've taken the view in government, as set out by the President in the address to the nation, that the priority is to secure as much electricity into the grid as rapidly as possible.

“[Electricity supply is] fundamental: it's important for the economy, it's important for growth, it's important for industrialisation and even our localisation ambitions across the economy.

“And so, therefore, we've reached the conclusion that the localisation targets for component manufacturing – in this case, the PV solar module – should not retard the speed with which the independent power producers and Eskom can get energy onto the grid.”

The National Energy Regulator of South Africa (Nersa) has formally initiated the process of adjudicating Eskom’s next tariff increase with the publication of a consultation paper on the utility’s allowable revenue application for 2023/24 and 2024/25.

The paper includes a pro forma tariff calculation indicating that Eskom’s tariff could increase by as much as 38.1% on April 1 next year, followed by a further 5.12% increase in 2024/25.

The regulator typically does not grant Eskom the full allowable revenue for which it applies, but in recent years the utility has made several successful court applications against the regulator in which it has shown that Nersa has not properly applied its methodologies.

The calculation in the consultation paper includes an application made by Eskom for R317.7-billion in allowable revenue to be recovered from standard-tariff customers.

The figure arises from an application made by Eskom in June last year as part of the utility’s three-year fifth multiyear price determination, or MYPD5, submission.

The first year of that MYPD5 application was eventually adjudicated only after the intervention of the courts and, in February, the Energy Regulator announced that Eskom’s tariff could rise by 9.61% on April 1.

The increase was less than half the 20.5% hike for which Eskom had applied.

In addition, Nersa’s 2023/24 calculation includes two regulatory clearing account (RCA) amounts with a combined value of R14-billion (of which R3.5-billion has been approved to date) and a R15-billion amount, arising from a legal settlement associated with Nersa’s illegal decision to remove a R69-billion equity injection from Eskom’s allowable revenue in 2019.

The settlement stipulates that the regulator must add an amount of R15-billion to Eskom’s allowable revenue for the financial years 2023/24 through to 2025/26, as well as a further R14-billion in 2026/27 so as to remedy the exclusion of the injection.

The publication of the consultation paper has been made following a more recent court order, issued in July, stipulating that Nersa should adjudicate the 2023/24 application under the existing MYPD methodology and make a final determination by December 24.

Nersa indicates that it intends announcing its decision on November 7, having given stakeholders until September 8 to make written comments, after which public hearings will be held from September 19 to September 23.

In parallel, Nersa is consulting on a new methodology for setting electricity tariffs to replace the MYPD methodology, which it intends finalising by September 30.

In response, Eskom has highlighted that the sweeping changes being proposed depart from cost-to-serve methodologies used internationally and, thus, recommends that an iterative approach should be adopted to any change.

It has also called for an impact assessment to be undertaken before any new methodology is implemented.

Such an assessment, Eskom argues, should include an evaluation as to whether the proposed methodology can indeed be implemented, as well as its impact on various customer groupings and the sustainability of licensees, including Eskom and municipalities.

Ford South Africa (SA) has unveiled a completely new body shop for the assembly of the new-generation Ranger bakkie at its Silverton plant, in Pretoria, featuring the plant’s highest-ever levels of automation and quality control.

The new body shop forms part of a R15.8-billion investment by the US vehicle manufacturer in its South African operations to enable the local production of the pickup.

Ford SA will produce the Ranger for the domestic market, as well as more than 100 export markets.

The plant will manufacture a wide variety of configurations, including single-sab, super-cab and double-cab, as well as left-hand drive and right-hand drive derivatives.

The new 44 000 m2 body shop and its supporting warehouse are located adjacent to the recently completed stamping plant, which enables the seamless flow of stamped panels to the line where the body and load compartment of the Ranger pick-up are assembled and welded.

Building a new body shop was essential for the Silverton assembly plan in order to achieve the facility’s highest-ever installed capacity of 200 000 vehicles a year, says Ford SA operations VP Ockert Berry.

This capacity jump – from 167 000 vehicles a year – necessitated a much higher level of automation, while it also enabled the introduction of “the latest quality control systems and technologies that are essential for delivering consistent, world-class quality vehicles for our local and export customers”.

All of this means that the body shop’s production line is designed around 493 robots that transform the numerous stamped body panels – including the underbody, floor, roof, body sides, cab framing and load box – into a complete Ranger body, ready for transfer to the upgraded paint shop.

The robotic welding guarantees the highest level of consistency, employing the latest 100-percent adaptive controllers with servo guns to deliver spatter-free body welds.

“Designing and building our new body shop from the ground up has allowed us to integrate Industrial Internet of Things into the manufacturing areas,” says body shop area manager Adheer Thakurpersad.

“This gives our production teams access to in-depth and up-to-date analysed data trends, which allows them to make concise decisions to consistently improve productivity and quality.”

Significant investment has also been made in quality control technologies, including two inline Perceptron measuring systems that measure and record every vehicle manufactured in the body shop, along with their respective geometric pallets that they are assembled on.

Vision systems attached to sealer application robots provides further error-proofing.

The handling of the vehicle body during construction has also been automated on the line, eliminating the need to move parts manually, which could result in damage.

As with the new stamping plant, the body shop is equipped with the GOM ATOS ScanBox blue light scanner system that provides a three-dimensional body scan for comparison with a stored design specification to highlight any potential quality issues.

Furthermore, a twin-column fixed bed coordinate measurement machine (CMM) performs a range of probe measurements that are accurate down to microns, or thousandths of a millimetre, to ensure that production remains within specification.

The team also has access to a portable FaroArm CMM, and a portable GOM unit.

“To assess our weld quality, we conduct non-destructive testing and ultrasonic verifications, and we have a fully equipped destructive teardown facility to test the integrity of the weld spots,” adds Thakurpersad.

The body shop has 38 salaried and 500 hourly employees.

“Being in a highly automated environment, ongoing skills development is a priority,” notes Thakurpersad.

“Therefore we have plans to install an advanced skills development facility in the body construction area, which will enable employees to continue developing their skills in automation and problem-solving.”

State-owned electricity utility Eskom has confirmed the award of contracts with a combined value of R4.4-billion to Hyosung Heavy Industries, of South Korea, and the Pinggao Group, of China, for battery energy storage system (BESS) projects that will be delivered across several sites by the end of June next year.

The contracts cover the lion’s share of the individual projects included as part of Phase 1 of a two-phase roll-out being funded by the World Bank, the African Development Bank, the New Development Bank and the Clean Technology Fund.

Phase 1 involves the installation of some 199 MW/833 MWh of BESS capacity across eight Eskom Distribution substation sites in four provinces. It also includes 2 MW of solar photovoltaic (PV) capacity.

Eskom will seek to implement both phases, involving 343 MW/1 440 MWh of BESS and 60 MW of solar PV, by December 2024.

It has also signalled that the initiative forms part of a larger 500 MW BESS plan, which has been included in the package of interventions unveiled by President Cyril Ramaphosa on July 25 to tackle load-shedding.

The projects to be implemented by Hyosung and Pinggao will be used primarily for peak shaving purposes for four hours a day for at least 250 days of the year. However, they will also provide some ancillary services and local network support.

It is understood that Pinggao has been awarded contracts for the 80 MW/320 MWh Skaapvlei, 9.5 MW/45 MWh Paleisheuwel and 5 MW/30 MWh Graafwater projects, in the Western Cape, while Hyosung has been awarded the 40 MW/160 MWh Pongola and the 8 MW/32 MWh Elandskop projects, in KwaZulu-Natal, as well as the 20 MW/100 MWh Hex project, in the Western Cape.

Hyosung Heavy and Pinggao have been contracted to design, supply and install the BESS systems and to provide operating and maintenance support for five years.

The utility has decided to re-tender the 35 MW/140 MWh Melkhout project, in the Eastern Cape, as well as the 1.54 MW/6.16 MWh Rietfontein project in the Northern Cape, which will include 2 MW of solar photovoltaic capacity.

Eskom tells Engineering News that the combined value of the contracts placed with Hyosung and Pinggao is R4.4-billion "roughly split in half". The second phase will cost an estimated R6-billion.

The utility also did not indicate when it expected to award the Phase 2 contracts, which cover two sites in the Western and Northern Cape provinces apiece and will comprise 144 MW/616 MWh of BESS capacity and 58 MW of solar PV.

“Through the BESS project, Eskom aspires to diversify the existing generation energy mix by pursuing a low-carbon future to reduce the impact on the environment,” coal and clean technology GM Velaphi Ntuli says, indicating that energy storage in large quantities will be required to incorporate energy from renewable sources.

“The 1 440 MWh distributed BESS with 60 MW solar PV represents a giant leap forward in achieving this aspiration, as it will be one of the largest BESS projects to be developed and implemented in South Africa.”

CEO André de Ruyter linked the BESS roll-out to Eskom’s ‘Just Energy Transition’ strategy and indicated that the utility aimed to support the development of local industry.

A preliminary BESS localisation and industrialisation study has been conducted and Eskom will continue to “engage stakeholders to ensure that maximum benefits are derived from all the project sites”.

Creamer Media's Chanel de Bruyn speaks to Engineering News Editor Terence Creamer about the interventions announced by President Cyril Ramaphosa to address South Africa's electricity crisis; what needs to happen for implementation of the new energy plan to start; and when the new plan could start making a positive impact on ending load-shedding.

ArcelorMittal South Africa (AMSA) has confirmed that it will seek to secure third-party access to Transnet’s rail network as part of efforts to stabilise the logistics involved in supplying key raw materials, such as iron-ore, having experienced an intense period of rail disruption during the first half of 2022, which cost it some R650-million in lost sales.

CEO Kobus Verster reports it has told Transnet Freight Rail (TFR) of its intention to gain access to the rail network, despite the fact that the utility has not yet made a suitable general-freight slot available to AMSA, resulting in a legal lacuna.

TFR is currently running a process to sell 16 slots, bidding for which closes at the end of August, but Transnet CEO Portia Derby has reported that third-party access will be expanded to 42 slots in 2023 and will become a permanent feature of the rail operating model.

The collapse of rail services during the six months to June 30 resulted in a 235 000 t loss of sales and also resulted in AMSA taking the “extraordinary step” of implementing a month-long shutdown of one of the blast furnaces at Vanderbijlpark “to avoid the risk of an uncontrolled stop due to insufficient inventory, particularly of iron-ore”.

A strike during the period resulted in the loss of a further 125 000 t of sales at a cost of R600-million.

The JSE-listed group reported an 8% decrease in sales volumes during the period and a 30% drop in crude steel production, which slumped by 441 000 t, from 1.5-million tonnes to 1.1-million tonnes period-on-period.

However, AMSA still reported a 22% rise in interim headline earnings of just over R3-billion, on the back of a 30% rise in realised rand steel prices.

The “dysfunctional” rail situation resulted in the JSE-listed company resorting to road transportation for as much as 35% of its iron-ore and, at one point, Vanderbijlpark was receiving 6 500 trucks a month.

“It should not be receiving material by road at all,” Verster highlighted.

TFR indicated that its inability to service the mill was the result of a combination of a shortage of locomotives and an unavailability of spares to repair its existing fleet, owing largely to an ongoing dispute with the Chinese Railway Rolling Stock Corporation.

In addition, the rail network had been badly disrupted by cable theft, with Transnet confirming that it lost 1 500 km of cable in its 2021/22 financial year alone.

In the short term, the steel group is developing a road-based strategy to “fill the gap” and has also built-up buffer stocks during the period when the blast furnace was shut.

However, it intends to approach TFR with a proposal for access to the network so that it can again increase the proportion of material it is receiving by rail.

AMSA does not intend owning the locomotives and wagons and will seek to partner with a rail operator on the strategy.

Verster says that at current low utilisation rates, Vanderbijlpark is able to operate with deliveries of ten trains a week, but that tempo should be closer to 16 trains a week for sustainable operations.

RENEWABLES & GREEN DRI

Meanwhile, Verster confirms that a decision has been made to push ahead with investments in solar photovoltaic (PV) and wind plants in Gauteng and the Western Cape, respectively, as part of measures to mitigate against intensifying load-shedding and to support its decarbonisation strategy.

It is also possible that the solar PV investment being planned alongside its operations in Vanderbiljpark could be enlarged beyond 100 MW given President Cyril Ramaphosa’s announcement that the 100 MW licence-exemption threshold for such projects had been removed.

The wind project proposed for Saldanha Bay was likely to take longer to develop, as environmental authorisation was still required.

Verster confirmed that AMSA, or the larger ArcelorMittal Group, would take direct equity in the projects, which were being prioritised as part of a decarbonisation roadmap, which would be released before the end of the y...

President Cyril Ramaphosa’s announcement that a feed-in tariff is to be created to incentivise businesses and households to invest in rooftop solar is likely to further stimulate the so-called ‘silent revolution’ that is already under way as South Africans seek to navigate their way through an intensifying load-shedding crisis.

The President confirmed that the feed-in tariff would incentivise homes and businesses to sell surplus power to Eskom.

This represents a material shift in position given that the State-owned utility has hitherto not allowed for residential solar, resulting in more than 27 000 unregistered solar installations across its distribution network alone.

The handful of municipalities that do currently allow such micro installations to feed electricity into their grids have done so only when households and businesses remain “net consumers”, which means they are selling less than they buy.

That said, on the very day of Ramaphosa’s announcement, the City of Cape Town confirmed that it would, in future, permit commercial and industrial small-scale embedded generators (SSEGs) to sell more electricity to the city than they use.

Mayor Geordin Hill-Lewis also announced that the city would pay cash for such electricity, rather than merely extending municipal-bill credits and also unveiled a registration process for those commercial and industrial SSEGs keen to take up the offer.

TARIFF STRUCTURE IN FOCUS

As the legal space for small-scale distributed generators opens, however, the tariff and the tariff structure are poised to become increasingly important.

There is particular concern that poor consumers should not be burdened, and that Eskom and the municipalities are able to extricate themselves from their utility death spirals through a migration to a cost-reflective tariff that fully reflects and recovers the cost of the grid and ancillary services.

In preparation for the prospect of having an ever-increasing number of prosumers on its network, Eskom has approached the National Energy Regulator of South Africa (Nersa) with a tariff restructuring proposition that seeks to separate fixed and variable costs.

The utility’s proposal to implement a fixed monthly charge of more than R900 for grid access, whether or not a household has a solar system, has sparked particular debate and concern, even ahead of any approval by the regulator.

Solar Photovoltaic Industry Association board member Frank Spencer, also of Bushveld Energy, says the move to a more cost-reflective tariff that distinguishes between fixed and energy charges is appropriate, particularly given the prospect of a possible feed-in tariff.

However, he argues that Nersa should still ensure that these are indeed cost-reflective and fair across the board.

“At the moment, there are huge discrepancies between various municipal tariffs, and Nersa should do more to bring these tariffs into being more fairly aligned with each other while also allowing for fair access to the grid for SSEGs,” Spencer tells Engineering News.

Centre for Renewable and Sustainable Energy Studies director at Stellenbosch University Professor Sampson Mamphweli believes the regulator should consider developing a methodology and process similar to the one used to determine Eskom’s wholesale tariffs so that retail tariffs can be standardised.

He is more cautious, though, about whether SSEGs should be allowed to immediately sell more electricity into the grid than they buy, given the importance of such revenue to both Eskom and most municipalities.

Nevertheless, Mamphweli is also strongly in favour of splitting the energy and fixed charges so that consumers without solar do not subsidise those with such systems and Eskom’s network costs are fairly recovered.

Mamphweli and Spencer both support Eskom’s proposal for a time-of-use structure, explaining that it will ensure that energy is priced according to what it actually costs to produce at different hours of the day.

“By having the right tariffs,...

State-owned freight logistics group Transnet intends launching its much-anticipated tender for new locomotives in August, having recorded a 5.6% drop in rail volumes last year as a result of a combination of locomotive shortages and serious operational and security problems.

The group lost a total of 1 500 km of overhead copper wire to theft in 2021/22 and was also unable to maintain a number of locomotives, largely as a result of an ongoing dispute with the Chinese Railway Rolling Stock Corporation (CRRC), which is refusing to supply the utility with specialised spares.

Operational and security difficulties on the main line between Durban and Johannesburg, for example, have resulted in Transnet Freight Rail (TFR) effectively forfeiting all container volumes to road hauliers, which have themselves experienced serious security incidents, often triggered by protests against foreign truck drivers.

Speaking during the release of the group’s 2021/22 results, CEO Portia Derby said Transnet initially intended launching the locomotive request for proposals (RFP) in July, but the internal deadline was shifted to ensure that various legal and governance matters were dealt with ahead of the tender.

Ongoing disputes with some of the original equipment manufacturers (OEMs) that participated in the so-called ‘10-64’ contract for 465 diesel and 599 electric locomotives is core to the delay, as Transnet did not want to proceed until it was satisfied that the tender would not be interdicted.

The R50-billion contract, which was halted in 2019 on the basis of it being deemed “irregular and illegal” by Transnet, has featured heavily during proceedings undertaken as part of the State Capture commission, which was chaired by Judge Raymond Zondo, who has since been appointed chief justice.

Derby said it was premature to offer specifics about how many locomotives Transnet would seek to procure under the new tender, nor whether diesel locomotives would be prioritised in light of the ongoing theft of overhead cables.

She had indicated previously, however, that it was likely that the RFP would be for at least 400 new locomotives, given that Transnet had taken delivery of 595 locomotives under the 10-64 contract.

However, with about 300 locomotives currently “parked”, partly as a result of an absence of spares, it is possible that the tender could be enlarged. That said, Derby indicated that an alternative OEM support strategy would be pursued for the existing fleet if the current deadlock with CRRC was not resolved.

She said that following a recent successful court application, which was taken together with the Special Investigating Unit, in relation to CRRC’s moves to have the review of the 10-64 matter dismissed, Derby said “we are now at least in a position where we can safely start a new procurement event”.

“We definitely need additional traction power,” she added.

Derby also confirmed that TRF was pressing ahead with a bidding process for the sale of 16 rail slots to third-party operators, despite market misgivings over the design of the slot-sale process.

She acknowledged that concerns had been raised, particularly about the two-year duration of the allocation, but said that TFR had committed to making slot sales a permanent feature of the rail business.

“It's not a pilot,” Derby insisted, adding that she was optimistic that there would be operators for the slots from April next year, by which time the number of slots would be increased to 42.

The bidding process had been delayed as a result of recent flooding in KwaZulu-Natal and the tender would now close at the end of August.

In its results statement, the group said it appreciated the importance of improving the performance of TFR’s operations.

It also stated that “significant progress” had been made towards concluding adjusted long-term contracts with the Coal Export Parties (CEPs) following the force majeure notices issued in April.

“Most CEPs have participated in good faith, and we have r...

JSE-listed chemicals group AECI has delivered record revenue, earnings before interest and taxes (Ebit) and headline earnings per share (HEPS) for the six months ended June 30, which outgoing CEO Mark Dytor attributed to improved market conditions.

The group declared an interim cash dividend of 194c apiece, which is an improvement of 8% year-on-year.

As customer demand progressively returns to pre-pandemic levels, AECI has reported a 31% year-on-year increase in revenue to R15.5-billion and an 8% year-on-year improvement in HEPS to 573c.

AECI also managed to report a best-ever safety performance, with a total recordable incident rate of 0.15.

Dytor, who announced he would retire on July 31, 2023, after a 39-year career with AECI, says the company’s revenue growth was boosted by strong commodity prices globally, while pricing discipline benefits in new and existing contracts served to offset higher input costs and help Ebit grow by 11% year-on-year to R1.05-billion.

Cash generated from operations amounted to R1.7-billion, against R1.5-billion of cash generated from operations in the six months ended June 30, 2021.

Net profit after tax came to R626-million for AECI in the half-year under view, compared with net profit after tax of R577-million in the prior half-year.

Dytor pointed out in a July 27 presentation of the company’s results that AECI had a stronger organic growth focus in the reporting period, spending 59% of its R748-million capital expenditure budget on growth investments.

It is expected that the initiatives invested in will begin to deliver returns in 2023, and include environmental, social and governance commitments. Some of these investments include building production facilities at customer sites in Botswana, Ghana and Australia.

AECI also spent money on debottlenecking some of its plants in the extraction and agri-chemicals space, as well as improved its bio stimulant production facilities.

The group is also investing about R505-million in two strategic growth projects that will double the profitability of AECI Schirm, in the US, on an ongoing basis.

The company has posted higher levels of working capital in the six months under review, which is reflective of higher raw material prices, which necessitated an increased short-term debt of R2.2-billion and, consequently, increased net finance costs.

AECI’s net gearing ratio of 44% in the six months under review compares with a net gearing ratio of 27% posted in the prior comparable six months.

AECI maintains its A+ credit rating and positive outlook from South African credit ratings agency GCR Ratings.

Dytor told Engineering News that market conditions have, for the most part, returned to pre-Covid-19 conditions, especially in the mining and heavy industry sectors. The big challenge, however, remains supply chain issues and spiking prices of raw materials, some of which escalated by 80% this year alone.

He elaborated that the world was changing its supply chains, with most companies looking to source products closer to home, which benefits AECI well on the African continent.

Meanwhile, the company’s long-term strategic objectives are to pursue more international growth opportunities where the company has a competitive advantage, and maintain its diversity in product and service offerings.

AECI also continually reviews underperforming businesses and sets clear targets for measuring delivery in this regard.

In his parting remarks during an interview with Engineering News, Dytor said he expects his successor to focus on the people within the business, as he considers this AECI’s greatest asset.

He added that the strategies to grow the business internationally were already in place, and should be focused on for the next three to five years.