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Steel-pipe maker pulls back from brink of closure

IMPROVED PROSPECTS Hall Longmore has a growing order book

PROJECT PIPELINE Hall Longmore is manufacturing and processing pipes for use in water projects

11th July 2014

By: Ilan Solomons

Creamer Media Staff Writer

  

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Privately owned industrial components manufacturer Barnes Group acquired local steel-pipe maker Hall Longmore from construction and engineering group Murray & Roberts (M&R) in February.

Hall Longmore MD Kenny van Rooyen tells Engineering News that, prior to the takeover, the company “had incurred tens of millions of rand in debts, owing to the tough economic climate in which it was operating”.

He explains the poor performance of the company resulted in M&R disposing of the business and the company was initially to be sold to a Nigerian consortium.

“This would have resulted in the business closing down local operations and all its equipment being exported to the free trade zone in Ono, Nigeria, which is a large oil and gas area.”

However, Van Rooyen highlights, government has tried to revive industrialisation in South Africa during the past five years.

“Therefore, the Minister of Trade and Industry, Dr Rob Davies, wrote to M&R, urging the company to re-evaluate the sale of the business to a Nigerian consortium, as Hall Longmore supplies components that are integral to the country’s National Infrastructure Plan (NIP), particularly in water infrastructure development,” he says.

This intervention resulted in Hall Longmore remaining in South Africa, under the new ownership of Barnes Group.

“Hall Longmore is a world-class steel- piping manufacturer; it is currently in good financial health and has an ever-growing order book, which is impressive, given the current challenging market conditions,” Van Rooyen enthuses.

He points out that the company is manufacturing piping for the Magaliesburg municipality’s Pilansberg water scheme, in the North West.

The project comprises about 43 km of 950-mm-diameter pipe for the Pilanesberg North and 43 km of 1 016-mm-diameter pipe for the Pilanesberg South projects.

The pipeline will provide water for mining operations and the Magaliesburg community. The project is worth R300-million and Hall Longmore is scheduled to complete the manufacture of the pipeline by the end of this year.

“We are also manufacturing 20 km of piping of between 760 mm diameter and 813 mm diameter for diversified mining company Exxaro’s KwaZulu-Natal Sands (KZN Sands) operation, in Richards Bay,” Van Rooyen adds.

The pipeline will provide water for the KZN Sands operation and the local community.

The project is worth R70-million and Hall Longmore is scheduled to complete the manufacture of the pipeline by the end of September.

Further, the company also manufacturer and processes pipes for use in water projects that are being undertaken by provincial bulk water services provider Rand Water, Amatola Water, the Umkhayakude district municipality and Bloem Water, as well as for State-owned power utility Eskom’s Medupi coal-fired power station, near Lephalale, in Limpopo.

Challenging Business Climate

Van Rooyen laments that, despite government’s best intentions to reinvigorate the local steel industry through various infrastructural development plans, such as the NIP, the steel industry remains under pressure.

“One of the challenges . . . is that steel producer ArcelorMittal South Africa (AMSA), is not as cost effective as Chinese and Indian steel manufacturers.”

He adds that about 75% of steel products’ manufacturing costs is attributed to steel prices, while the remainder arise from electricity and labour costs.

Van Rooyen notes that local labour and electricity costs have been rising significantly over the past five years, which has placed greater strain on the company’s operations.

However, he says Hall Longmore is in discussions with AMSA to achieve parity with regard to imported steel as, “in many cases, imported steel is cheaper than the steel produced by AMSA”.

Hall Longmore is also in discussions with the Department of Trade and Industry and the International Trade Administration Commission of South Africa about increasing import tariffs and enforcing duties, as well as preventing the dumping of cheap steel piping imports in the country.

Van Rooyen expects this process to continue for the next six to eight months.

Operational Opportunities

Van Rooyen says there are several opportunities locally and in the rest of Africa that the company is considering.

“The prospects of the development of shale gas operations in the semidesert Karoo basin region will provide us with significant opportunities to supply piping applications.”

He says the development of the Kudu gasfield, which contains an estimated 1.3-trillion cubic feet of gas, off the coast of Namibia, will require large pipelines and is another opportunity for Hall Longmore to explore.

“Also, with the growth of the mining industry in Africa, mines will require water pipelines to feed water to these operations, which will provide us with many additional opportunities,” Van Rooyen adds.

About Hall Longmore

Van Rooyen highlights that the company exhibited in April at the Dusseldorf Wire and Tube Show 2014, in Germany, and earlier this month exhibited at the Oil and Gas Exhibition, in Cape Town.

The Hall Longmore exhibit at both events featured electric resistance welded (ERW) pipe to a maximum diameter of 610 mm and spiral submerged-arc welded pipe to a maximum diameter of 2 500 mm. A selection of high- performance protective corrosion-resistant coatings and linings suitable for various applications were also on display.

Van Rooyen says the 90-year-old company is “among a handful of leading international steel pipe manufacturers capable of producing ERW pipe of up to 610 mm diameter and to the American Petroleum Institute (API) 5L standard”.

He notes that Hall Longmore’s operations are API 5L- and API 5CT-accredited, in accordance with the ISO 9001:2008 quality management certification entrenched in company process and management systems.

The company maintains an Occupational Health and Safety Management System in accordance with the requirements of the BS OHSAS 18001:2007 standard and implemented the ISO 14001 environmental management system in March.

Hall Longmore’s manufacturing facilities are located in Wadeville, on the East Rand, and in Duncanville, in the Vaal Triangle region of Gauteng.

Edited by Megan van Wyngaardt
Creamer Media Contributing Editor Online

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