Johannesburg - Continental Tyres South Africa plans to invest more than R100 million in the country next year to expand and diversify its tyre manufacturing capacity at its plant in New Brighton in Port Elizabeth.
It hopes to become a hub for speciality tyres, particularly in the underground mining industry, for the sub-Saharan African and global market.
Darwin Zabala, the general manager finance and information technology, said on Friday that Continental SA had this year invested four times the company’s average annual investment and next year would be investing seven times. He declined to comment on the value of the investments.
Dieter Horni, the managing director, said it was a “three digit” figure in millions, adding that Continental had increased its investment in South Africa in each of the past five years.
The investment excludes its expenditure in its retail operations through its ContiTrade initiative tyre retail initiative.
Zabala said the investment would largely be in four areas: run-flat tyres that it sold largely to original equipment manufacturers; increasing the capacity of its 4x4 manufacturing, a market in which it had a large share and wanted to continue growing in South Africa and sub-Saharan Africa; increasing its manufacturing capacity in mining and agricultural tyres; and a project to invest in a new coal boiler to be more efficient and lower the cost of production because the price of electricity in Port Elizabeth was expensive.
He said Continental SA would by the first quarter of next year be able to produce about 3.6 million passenger and run-flat tyres a year, which was about 11 300 tyres a day, compared with about 3.2 million tyres in 2010. But Zabala said its capacity was mixed use and it could produce 4x4 tyres with the same equipment.
Shaun Uys, the head of marketing and sales in sub-Saharan Africa, said it was almost doubling its production capacity of speciality tyres and the plant would have the installed capacity to produce about 26 tons of speciality tyres a day in the first half of next year compared with about 15 tons a day in 2010. He said speciality tyres included those for underground mining machines, tractors and military vehicles.
Uys said if projected growth in the speciality tyre business did materialise, Continental SA could become a worldwide hub for underground mining tyres because of its unique situation and the technology in its Port Elizabeth plant.
“Then there is another round of investment that could come depending on how this goes,” he added.
Horni said that, depending on the demand in the market, Continental SA would export worldwide but this was a long-term project that would happen over the next five years.
Uys said Continental SA had no exports of significance of speciality tyres at present.
Horni said there had been a mindset change in Continental’s head office in Hanover, Germany, because in about 2010 speciality tyres were only focused on fork-lift tyres. Now the company realised that there was a huge demand and market for underground mining tyres. “This is something relatively new for us and we are excited about that.”
Uys said the difference now was that Continental SA was starting to produce for other mining applications after being predominantly in platinum mining.
“We will be going into coal and up into Africa. The ore belt runs down Africa, we’ll go into Zimbabwe, the Democratic Republic of Congo and Tanzania,” he said. - Business Report