The firm is in talks with a bank in Ghana, where the initiative will be piloted, on the financing of the scheme. The plan is mainly targeted at non-gold miners, some of whom are “running into cashflow problems,” says Nellessen. He expects that the agreement in principle with the bank will be formalised soon, and that the scheme will be running within the next three months.
Buying mining equipment usually means a down-payment of between 50% and 100%. The new plan will allow miners to make an initial payment of 20% and then repay a bank loan with cash generated from operations. Thyssenkrupp has reached agreement in principle with a credit insurer to underwrite the loans.
- If the scheme works, the plan is to extend it to South Africa and other African countries, says Nellessen, who is based in Johannesburg.
- That might need other banks to be bought on board, he adds.
- “It’s quite an easy idea but it’s the first scheme of its kind in sub-Saharan Africa.”
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In addition to Ghana and South Africa, Thyssenkrupp has offices in Mozambique, Tanzania and Morocco. The company supplies the mining, chemicals and cement industries. Capital projects have collapsed as a result of COVID-19, with the new order book at 25% of a typical full year, just weeks before the end of the financial year at the end of September, Nellessen says. “Nobody is willing to risk anything right now.”
Due to lower oil and gas prices, the chemicals business “has been clearly hit the hardest and will take the longest to recover, says Nellessen. Still, chemicals will “always” remain part of the company’s core business.
The impacts on mining have been much more diverse.
- Gold miners are performing strongly as prices have surged, while prices for platinum group metals and iron ore have held up relatively well, he says.
- Diamond mining has been hit hard and, as Nellessen estimates, will take two years to recover.
Services have held up much better and, overall, are running at about 80% of their normal level. But growth is constrained as the company can’t send people outside South Africa to fulfill any new contracts. But Nellessen expects the company to focus more on supplying services rather than capital equipment in the future.
Clients are likely to keep their machines running for longer and so will need more services, he says.
- A need for more digital solutions to allow remote monitoring and repair.
- The company is building electronic parts catalogues for each of its 250 customised mining machines to allow parts to be ordered digitally, and expects to have completed the task within 12 months.
Mining customers may have only one expert who goes around the different mines to check the equipment, he says. Unpredictable restrictions on mobility mean that automated warning signals are now becoming essential.
Equipment suppliers that can’t provide digital solutions are likely to find clients looking elsewhere.
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