Engineering group expects growth on the back of sugar, aluminium work

The Duys Engineering group is expecting a big growth spurt, based on the anticipated increase in demand for equipment for sugar mills and aluminium smelters. CEO Henk Duys says this is because there is limited capacity among Durban contractors, and Duys Engineering already has an extensive workshop in Mozambique, in addition to its sites in Durban and Richards Bay. The sugar industry is on the brink of rapid expansion in Africa. The Tongaat-Hulett group has approved a R1,3-billion expansion of its sugar-milling and cane-growing activities at its Xinavane and Mafambisse sugar mills, in Mozambique. Tongaat-Hulett CEO Peter Staude said recently that this base would be used to expand low-cost sugar production at the two factories from 115 000 t, in 2005, to over 270 000 t when the European Union markets open up to lesser- developed country sugar producers. “The mill infrastructure will be refurbished and/or upgraded, with new equipment being installed to increase the design crush rate from 150 t/h to 380 t/h, achieving globally competitive economies of scale,” he said. In a further development, Triangle Sugar Corporation, Tongaat-Hulett’s existing business in Zimbabwe, has acquired 50,35% of Hippo Valley Estates from Anglo American for $36-mil- lion. Hippo Valley Estates is listed on the Zimbabwe Stock Exchange. There are no expansion plans for the estates at this stage. Staude said that World Trade Organisation (WTO) ruling with regard to European Union (EU) exports that will result in EU exports reducing from between five-million tons and seven-million tons to a maximum of 1,4-million tons as from next year, the increasing use of sugar cane for ethanol production and the fact that the world’s sugar consumption growth rate is 2% a year were all contributing factors to exciting growth opportunities for Tongaat-Hulett. “The next few years will offer major opportunities for further expansion of the company’s low-cost production,” he said. Illovo is planning to expand its Maragra mill, in Mozambique, and also has production expansion plans for Tanzania. Last month, Illovo announced a R1,4-billion expansion in Zambia, where an additional 10 500 ha of irrigated cane will be developed by the company and Zambian growers. The mill serving the estate will be expanded by 200 000 t to 440 000 t over two years. On the aluminium side of the business, Duys Engineering has an arm called Duys Aluminium Smelter Services (DASS), which has two factories in Richards Bay, one dedicated to Hillside Aluminium and the other to Bayside Aluminium. It has also built a factory directly opposite Mozal, in Mozambique, to service that smelter. A new smelter is also in the process of being built at Coega, and Duys is optimistic that the company will win a tender to service the smelter because of its experience in the industry. “Pot shells come out of operation at regular intervals and need to be rebuilt,” Duys says. “We are specialists at this, repairing over 1 700 pot shells in Southern Africa at a rate of three a day. “Trucks are sent into the smelters to collect the pot shells, which are rebuilt and brought back to their original specification. You can prolong the life of a shell but, eventually, it must be refurbished. This needs to be done every two-and-a-half to six years.” Duys had a contract to invest in Coega when Pechiney was still in the running for the smelter, but the contract expired when Pechiney was taken over by Alcan. “We had expected to start construction of the workshop towards the end of the year as I had been negotiating with the original Pechiney team that was taken over by Alcan. “However, there has been a hiccup as Canada-based Alcoa has put in a bid to buy Alcan, so we are now waiting to see what happens,” he says. Duys is planning to repeat what it has done in Richards Bay and Maputo by building a factory dedicated to maintaining the Coega smelter’s equipment, and is currently working on a proposal. Duys says the company is also planning to make its own aluminium materials used in the smelters. “We are planning to melt aluminium in our own plants and we are currently building a pilot plant in Richards Bay,” he says. “We will buy aluminium ingots and cast the molten aluminium into anodes and busbar materials, which are used to transfer electrical current in an aluminium smelter.” Most smelters don’t produce the anodes and busbar materials themselves, as the volumes are too small, so the materials have to be imported at great cost.