Henry Ngugi, Managing Director, Atlas Copco Tanzania

Atlas Copco leads the way for equipment suppliers in Tanzanian mining.

Atlas-Copco-BLOGCould you introduce us to Atlas Copco in Tanzania and tell us about the role the branch plays in the wider region?

HN: Atlas Copco has been present in Tanzania since 2003, but we only established a legal entity here in 2007. Since then growth has been quite fast. As part of a 140-year-old multinational group which has pioneered mining technology, we have been able to pass on a lot of experience and specialist knowledge, and a wide range of equipment to the local industry. We are a manufacturer of equipment for surface and underground mining, as well as exploration. We also produce the spare parts and tools used by these industries. Foremost, we provide the service and support required for our highly specialized products.

We have 125 employees, spread across different parts of Tanzania: in Dar es Salaam, Mwanza, Kahama and different mine sites including Geita. From this year, Tanzania is Atlas Copco’s regional head office for mining throughout the whole of East Africa. This area includes Eritrea, Ethiopia, South Sudan, Kenya, Uganda, Mauritius, Madagascar, Rwanda, Burundi and even the eastern part of the DRC.

Having set up this regional hub, what is the company’s strategy to increase business with the mining industry in East Africa?

HN: In Tanzanian mining, Atlas Copco is one of the leading suppliers of equipment, spare parts and service. Atlas Copco is stronger in Tanzania than elsewhere in the region, so the strategy is to replicate what we have built here in the other countries. Generally, the mining industry is much better developed in Tanzania than the rest of East Africa. We want to become the supplier of choice for all the new mines setting up, and to maintain our core strength in aftersales support, which can bring us business on a daily basis and keep us in close contact with our customers.

Most of the mines we serve have Atlas Copco people on site. In some cases we have technical support contracts, whereby on-site technicians and engineers help maintain the equipment; in others there are full-fledged contracts, whereby we handle importation and management of the spare parts supply chain, as well as safety aspects of the equipment.

80% of your business in Tanzania comes from mining. How have you adapted to the industry’s slowdown?

HN: Atlas Copco’s strategy has been to work very closely with the owners of mines and exploration companies. With the price of gold down, it will be very hard for the mining companies to sustain production without reducing their operating costs. We have therefore been trying to help our customers achieve these efficiencies, identifying areas where we can jointly improve productivity. This has involved looking at their equipment and logistics, and rationalizing their organizations. As they have been downsizing and reducing their expat numbers, customers have subcontracted a larger percentage of their activities to us, particularly in the servicing of equipment; they believe, as the manufacturer, we can do this at a lower cost than they can. Atlas Copco has also been helping companies reduce their fuel consumption. Therefore, our business has not suffered too much from the downturn.

Atlas Copco has a strong focus on innovation. In the past how have you introduced new equipment to improve the Tanzanian mining industry’s operations?

HN: Atlas Copco was voted last year by Forbes as one of the 100 most innovative companies in the world. At Geita Gold Mine, we are working with the drill and blast contractor to test new rock drilling tools and reduce the total cost per meter drilled. In the exploration industry we have also released new tools in response to the market demand. Furthermore, for use in processing plants we have released new oil-free air compressors, which are very friendly to the environment, and variable speed drive compressors, which reduce electricity usage by upto 30%; these machines have higher initial costs, but they save the customer money over the life-cycle of the product.

Are customers in Tanzania increasingly coming to Atlas Copco for more environmentally-friendly solutions?

HN: Environmentally friendly solutions are a very big part of our competitive advantage. Clients require them, especially the big companies like Barrick and AngloGold Ashanti. The environment, health and safety are built into any discussions Atlas Copco enters into. You can do no business with the multinationals without meeting their conditions. This is how it should be. A mining company can spend as much money as it wants, but one fatality or spill might jeopardize the whole investment. It is this that keeps us awake at night.

What are the main challenges you encounter in Tanzania on a daily basis?

HN: The cost of doing business in Tanzania is quite high. Power and road infrastructure push costs up. Of course, the government is working hard to improve these issues, and we appreciate its efforts. However, many of the mines here require big backup generators, at enormous expense. The distances involved here are also huge. Mining is relatively new in this region, and although the Tanzanian labor force is developing at a high pace some jobs require 25 years of experience; sometimes, therefore, the industry has to draw on older mining countries.

Tanzania does have certain advantages, though: it is quite a stable country, socially and politically; the economy is also stable and is growing. The country is very secure compared to its neighbors. We do not have problems with foreign exchange controls and are not landlocked like Uganda, Rwanda and Burundi and Ethiopia further afield.

Do you have a final message about Atlas Copco for our audience at African Mining Indaba™?

HN: Atlas Copco’s focus is on the customer: to help them improve productivity and sustainability. We want to be here in the long term, and if our customers are successful, so are we.

This interview was conducted as part of the research conducted on African mining jurisdictions by Global Business Reports (GBR) as part of our partnership with African Mining Indaba LLC. The aim of this partnership is the production of the single most comprehensive intelligence report on the continent’s mineral sector. The Official Mining in Africa Country Investment Guide, will be launched next February 2014, as the only official publication providing country-specific information at Africa’s top mining event, the 2014 Investing in Africa Mining Indaba™ held in Cape Town, South Africa.

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