Sep 23, 2011
Bombay|Engineering|London|Pretoria|SECURITY|Africa|Components|Denel|Engineering News|Gaborone|Mining Weekly|Security|Shrenuj|System|Africa|Botswana|Canada|Germany|Namibia|Nigeria|South Africa|United Kingdom|USD|Security|High-tech Item|Manufacturing|Mining|Security|Diamonds|Gillian De Gouveia|Martin Creamer|Security|Engineering News
© Reuse this
De Gouveia: We see that there is some good news for our neighbour Botswana after 120-years De Beers is apparently moving its diamond sorting from London.
Creamer: Botswana has staged something of an economic coup by grasping the full spectrum of diamond control away from London. This is part of a ten-year deal. Of course, it is good for De Beers because the supply of diamonds is quite constrained, they can’t find new mines. This gives De Beers more then 60 % of its supply for the next ten years, so it has got that supply security.
But, for Africa there is also a lot. In exchange, what happens in London is going to come to Gaborone, lock stock and barrel. All that aggregation that takes place of diamonds around the world will now be done in Botswana. What I’m saying is that not just Botswana diamonds, but diamonds mined in South Africa, Namibia, Canada and the 20 other countries that De Beers is involved in come to Botswana for aggregation.
That means that they put like diamonds together and then they offer them. It also means that people have to come now to Gaborone to buy those diamonds, which has a great tourism fillip there and it has a banking implication as well, because trade will be at something like $6-billion a year from 2013.
This is an important aspect and the government of De Beers is also taking for itself the right to buy 10 % of those diamonds so that it has a verification window on all the prices. Then, to put these downstream and that was a big eye opener when I was in Botswana to see the downstream activities like the cutting and the polishing.
We saw that some of the South African-linked companies Safdico is very active in the Diamond Technology Park and also Steinmetz which has a South African link. Surprising was the company Shrenuj, which is listed in Bombay. I didn’t realise they were making diamond jewellery there and there I saw these engagement rings being fabricated before my very eyes and I was quite surprised.
De Gouveia: Not only good news this week for Botswana, but also for South Africa, the Germans have put a feather in South Africa’s cap saying that it has become a centre of excellence for manufacturing submarine periscopes.
Creamer: That is a high-tech item. Denel used to own a lot of activity in the periscope space in the past, yet now only owns 30 % of what is called Carl Zeiss Optronics, which operates out of Pretoria. They have said that South Africa make the hull-penetrating periscopes, we will make the non-hull-penetrating periscopes in Germany then we will give you that market.
In their first month South Africa got orders for periscope and periscope components worth about R100-million. They’ve only invested something like R30-million here in South Africa, so already you can see the pay-back is going to be pretty fast. None of the marketing has to be done by South Africans because Carl Zeiss is the off taker and we know that the Germans make quite a lot of submarines.
If the South Africans can then have a foot in here it will mean that most of these submarines have both a hull-penetrating periscope and the more advanced non-hull-penetrating periscope.
So, that gives us a ready market. It seems like a good deal for us to keep our high-tech trade deficit down, because we don’t like to import these high-tech items. We have got our own submarines here, which means we could feed them into the system.
De Gouveia: I was reading about this earlier, apparently there will be more then 15 South African companies involved in terms of servicing and also supplying, which means that there is an element of job creation there as well.
Creamer: That’s right, so it is a very good spin-off in that you have local suppliers that are private sector companies feeding in to what is partly a State-owned company, but now largely privatised and German owned.
De Gouveia: On AMLive we spoke about the failure of South Africa’s Sumbandila Satellite, but then again another positive spin-off there in that South Africa is planning to build a new one.
Creamer: South Africa is now planning to build a new satellite, the bad news is that SumbandilaSat is out of contact with its mission control. It hasn’t been producing any images since July. We didn’t really invest huge amounts in that SumbandilaSat. If you look globally at what it cost to put up a microsatellite, I think we are very competitive and we have gone on a very big learning curve.
We know that we’ve had that SunSat up since 1999 and that was a private-sector privately funded venture and the private sector did all the launching. That was our first satellite and we then put up the second one, which was State-owned, the SumbandilaSat, nearly two years ago.
Unfortunately that seems to have met with a sorry end. It seems to be tumbling out of control through space. They think it has got a flat battery. They haven’t declared it dead yet, but they are trying to make contact with it. The news now is that the South African National Space Agency (SANSA), hopes to start a programme to build South Africa’s next State-owned satellite next year.
It looks like this time it is going to come in with a far bigger budget. They are talking R400-million whereas the last time we spoke of R27-million. Although, I know that opposition speakers in Parliament say it didn’t really come that cheaply, it was probably R100-billion. There is probably not the full story being told about the cost of the satellite.
We know that in the world today they are no longer top secret and military devices that these satellites used to be. These are everyday things, we know that from the weather reports, from the television transmission and even telephone calls that make use of the satellite. They have become everyday items. We know that Nigeria have got three up, South Africa has got nil at the moment.
The last one that Nigeria built was built by Nigerian engineers, not in Nigeria, but in the UK, which means that they are even catching up to us technology wise. So, we definitely need to make sure that we keep abreast of this. Again for the high-technology trade deficit. If we have to import these images and import the licences it costs a lot of money so there needs to be a balance there.
We also need people to get abreast of the satellite technology. So, the news is that we are going to get a new satellite and the planning is beginning, but it is likely to cost about R400-million.
De Gouveia: We will be holding thumbs for the success of that satellite. Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly, he’ll be back with us at the same time next week.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Updated 12 minutes ago Sasol announced on Thursday that its broad-based black economic empowerment (BBBEE) transaction, Sasol Inzalo, has been partially refinanced, making a significant contribution to reducing its financing costs. The refinancing would see shareholders of Sasol Inzalo...
Updated 21 minutes ago International packaging and paper group Mondi has attracted a long-term credit-rating upgrade from Moody’s Investors Service. In a statement to shareholders on Thursday, the dual-listed group announced the credit rating hike from Baa3 to Baa2.
Updated 56 minutes ago Sephaku Holdings, which is in the process of finalising its interim results for the six months ended September 30, expects to swing to a basic loss a share of between 1.9c and 2c for the half-year, from basic earnings a share of 3.32c in the first half of the prior...
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
Integrated energy and chemical company Sasol has partnered with Unisa Graduate School of Business Leadership (SBL) professor and founder and CEO of PanAvest Partnership Dr Douglas Boateng to publish a series of books on executive supply chain management aimed at...
The World Wide Fund for Nature’s (WWF’s) 2014 Living Planet Index (LPI) indicates that there has been a 52% decline in vertebrate species since 1970. The Index tracked the trends of 10 000 discrete populations of over 3000 vertebrate species between 1970 and 2010.
Rwanda has joined a number of East African countries seeking to import electricity from Ethiopia as its demand grows. After it became apparent several generation project it is implementing will not come on stream early enough, now plans to import 400 MW from Ethiopia...
Metrorail’s first new passenger train will arrive in November next year, says Passenger Rail Agency of South Africa (PRASA) CEO Lucky Montana. “Next year we will be able to put our hands around the infrastructure and equipment we have been talking about for so long.”
The Competition Commission has launched an investigation into what it says are “price fixing, market division and collusive tendering in the market for the manufacture and supply of automotive components to original equipment manufacturers” (OEMs, or vehicle...