COMMENT: Desire to grow can turn things around
Two years ago, just over 1 300 workers in KwaZulu-Natal were about to lose their jobs.The workers who faced this gloomy future were employed by the Zululand Anthracite Colliery and the companies contracted to the mine.
The owner of the mine, Rio Tinto, no longer saw a need to continue with the loss-making operations. The mine was, in Rio Tinto’s perspective, ripe for sale.
Looking for a challenge, I and my fellow business partners at Menar Capital, a mining investment company, saw an opportunity in Zululand Anthracite Colliery (ZAC).
We considered the uniqueness of the mine: located in an economically strategic region of Zululand. We also considered the uniqueness of the mineral resource: no known mine in South Africa produces low ash anthracite coal. The mine was, therefore, an attractive proposition. It even had an airfield, a legacy of the previous owners BHP Billiton, the mining giant that owned it long before Rio Tinto. We bought the mine in August 2016. Our plan for ZAC, as is the case where we invest in South Africa, was to grow the businesses and contribute to the country’s socio-economic priorities from the local economy’s perspective.
The strategy had huge implications for me personally. In pursuit of this strategy, I had to leave the comfort of my office in Sandton, dump my business suit for a “makarapa” (protective hat) and overall, and spend most of my time in Zululand. I tried to understand what was done wrong and what needed to be done to change the fortunes of the mine. I thought, if we can’t fix it then the retrenchment cost is huge not only on the workers, but also on the company itself. So, we didn’t have any other choice, we had to be successful.
Our ultimate aim was to turn around the operation to a profitable and sustainable business that contributes to economic growth and jobs preservation in the Zululand region. Now that we are approaching a second-year anniversary, it’s worth evaluating the results. We saved jobs and successfully turned a bleak picture for workers to a positive one. We retained a shareholding structure that includes the community and workers. And we work closely with the government and King Goodwill Zwelithini, who leads the Ingonyama Trust.
We invested in the processing capacity of the mine by building a plant. We looked for new markets for our product in the US, Brazil, Vietnam and Ukraine, among other markets. We also supply the domestic market in Witbank. Our customers in South Africa use anthracite coal as a replacement for coke (a type of coal) which is twice as expensive and is imported from China. Not only has our investment saved jobs; it has also helped the local community access basic services they would otherwise not have access to.
The mine supplies 42 million litres of treated water per year in 23 different points. In addition, we also have a vegetable garden run by the community. We are so encouraged by the progress we have made in two years. As a result, we are looking at investing more in the region by increasing production capacity at ZAC and securing more mining rights in the area. The ZAC thriving operation is a case study of how a strategy driven by desire to invest, grow, keep jobs, engage in community development and invest again can yield positive results.
Vuslat Bayoglu is managing director of Menar Holdings.