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Aug 13, 2010

New China-based facility aims to increase global competitiveness

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VR Steel MD John van Reenen discusses the advantages of establishing a factory in China. Cameraperson: Nicholas Boyd. Editing: Darlene Creamer.
 
 
 
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Local producer of steel products for the mining industry VR Steel will open a new manufacturing facility in north-western China, early in 2011.

The move to open a facility in China comes in light of the company’s reduced global competitiveness, owing to the continued strong performance of the rand. VR Steel MD John van Reenen explains. “I estimate that the rand is currently being overvalued by about 30%, translating into higher local manu- facturing costs,” he says.

The company specialises in the construction of dragline buckets, hydraulic and rope shovel buckets, and truck bodies with capacities of up to 350 t. Van Reenen adds that locally ordered products for Southern Africa will, however, continue to be manufactured at the company’s Alrode facility, in Alberton, while products for the Australasian and Asian markets will be manufactured at the new facility in China. The company is also represented in the US and in Canada.

VR Steel reports that it had a long association with a Chinese steel products manufacturing firm before deciding to establish its own facility. The Chinese facility will be mainly engaged in constructing truck bodies for Chinese mines, dragline buckets and rope shovel buckets for export, while its South African facility mainly constructs bodies for large trucks for mining companies, as well as all VR Steel’s other products for sale in Southern Africa.

Meanwhile, VR Steel has fabricated the largest rope shovel bucket in the world, weighing in at 89 t. It will be used at a coal mine in China’s Shanxi province.

Further, Van Reenen explains that VR Steel has developed some of the most advanced design software in the world. “After considering existing software to design buckets and truck bodies, we have developed our own to suit our particular needs,” he says.

The company is able to simu- late soil movement within a bucket to the smallest detail. The software can simulate up to 5 000 different particle sizes entering and leaving a bucket, and programmes often run for weeks to simulate only about 15 seconds of a bucket movement.

Further, VR Steel uses spe- cific quenched and tempered steel, imported through steel manufacturer Swedish Steel, to construct its products. This helps to make the products more durable to meet the demands of tough working conditions, often being used continuously for digging in the earth.

“We examine a specific mine’s blasting practice to determine the thickness of the steel to be used in a design. The blasting is a big factor in determining the severity of the wear the equipment will experience,” he says.

During the construction of mining equipment, VR Steel cuts and bends steel to the required shapes by using 1 250-t- and 1 500-t-capacity presses. The company tries to reduce the use of welding on its products, making its products stronger. Welding is reserved for the less stressed areas of the products.

Van Reenen points to the importance of constructing mining equipment to the high- est possible standards, as it has to withstand continuous hammering from very abrasive environments. Dragline buckets are used mainly where coal is found in relatively flat seams, close to the earth’s surface, while rope and hydraulic shovel buckets are used where more undulating seams of minerals are encountered.

Further, the company reports that it is still struggling to escape the severe effects of the recession. Van Reenen says that the company’s profits decreased by 50% during 2009, and, during 2010, profits were down by a further 70%. However, there is potential improvement, as the company order book has seen a significant increase for the rest of the year and into 2011.

“I believe many mines are reaching the stage where their equipment is nearing the end of its service life, prompting new capital investment for its replacement. We expect a significant upturn in the manufacturing industry, as there are many new mines starting operations in Africa in the foreseeable future, as well as renewed activity in the platinum- and diamond-mining industries,” Van Reenen concludes.

Edited by: Brindaveni Naidoo
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