"The strategy is to make sure we can answer all the needs of a mine site by offering a full line of products and services. This is a response to companies increasingly preferring to work with just one supplier."

- Joel Cavaille

ARTICLES FROM THIS CHAPTER

Joel Cavaille & Samuel Modicom

CEO, JA DELMAS & COUNTRY MANAGER, SAUDEQUIP

November 13, 2018

Saudequip, member of the JA Delmas Network, has a long history of operating in Senegal – how has the company evolved?

JC: JA Delmas was first established in Senegal 160 years ago by Jean-Anselme Delmas, which was the basis for the company’s original name – JA Delmas. JA Delmas has been heavily involved in many business areas in Senegal over the last century. In the late 1980s, we focused our business around the Caterpillar brand, having started to work together in 1932.

Our agreement with Caterpillar also includes 11 countries around Senegal, mainly French-speaking. While the JA Delmas office is located in Bordeaux, France, where we have about 200 employees, the network consists of  2,300 employees located in Africa. Senegal acts as a hub to support our activities in neighboring countries. Saudequip is currently investing about US$10 million at its facilities in Dakar to create a centralized hub for our technical experts to support our operations in Senegal and further afield.

Where do you see most potential for growth and opportunity geographically?

JC: Most of our business is linked to the development of mining. Our local strengths reflect the size of the industry in the country, so Mali and Burkina Faso are where we currently see most activity since their mining industries started to take off about 20 years ago and are more mature. Representatives in Mali and Burkina Faso have about 500 employees stationed in each and a volume of activity of over €100 million.

Mining is now picking up in Côte d’Ivoire and Senegal. Although Saudequip’s turnover in Senegal is more in the range of €20 million to €30 million, we expect this to double in the next 18 months, mainly from new greenfield projects. Côte d’Ivoire has historically been a large market for us and, although having had some political ups and downs, it seems to have stabilized now and the country’s mining industry continues to develop, now with four industrial mines and an investor-friendly mining code. We tend to follow the mining investment since we become involved at the very beginning stages of a project in aspects such as drilling and provision of energy.

How extensive are the services offered by Saudequip beyond the initial supply of equipment?

SM: There is of course the initial capital investment in the equipment, but the real value for us comes when the mine begins operation – the training of the operators, for example, and then the maintenance. Some customers may choose to carry out their own maintenance, but it is increasingly common for companies to subcontract their fleet maintenance entirely. This means long-term business for us over the life of the machine. On average, about 40% of our revenue comes from our customers’ capital investment, about 50% from parts and services, and about 10% from newer services such as rental. In rental scenarios, we provide not just the machine and its maintenance, but also the financing.

Do you expect to see a growing trend towards equipment rental?

JC: Renting equipment is increasingly becoming standard practice. Most mining companies are private, so if the asset is carried by the rental company, the return on investment is more attractive for the mining companies. The only limit is the ability of the rental company to finance the equipment itself, as it can be difficult to find adequate finance. However, this is becoming easier. The banks are stronger than in the past.

With a significant portion of Saudequip’s business coming from maintenance services, how does the company ensure rapid response time and minimize logistical challenges?

SM: Senegal’s direct port access is an advantage over many countries, such as Mali, Burkina Faso and Niger. All main Caterpillar warehouses are located in Europe, which means less than two weeks shipping time to Dakar. We have a special agreement with the customs authorities, so we can do the customs clearance within a couple of days, after which we offer our customers delivery straight to their operating sites. Only a limited number of companies have this kind of arrangement with the customs authorities – this relationship stems from our long history in the country.

Nevertheless, our first solution is to use our local inventory. 90% of parts are available in country. For the large mining companies, we even provide on-site inventory.

Are there any planned additions to JA Delmas and/or Saudequip’s portfolio or new technologies coming into play?

JC: We are in an investment and development phase and looking to add more products and services to JA Delmas portfolio. Our main business is with Caterpillar machinery and we are now trying to add complementary products, such as drilling and crushing equipment, for which we have partnerships with major OEMs in the pipeline. Lifting and handling will be another area of diversification. The strategy is to make sure we can answer all the needs of a mine site by offering a full line of products and services. This is a response to companies increasingly preferring to work with just one supplier. We are also investing in technology to better monitor machine performance. We currently have 2,000 machines connected to this technology and it will rise up to 3,000 by the end of the year. Any fault will be relayed to us, so we can be proactive in repairs before major damage is done to the machine.

SM: We also currently have two projects using drones to survey sites and provide in-depth analytics about production and efficiency, safety & compliance. We have also recently received approval from the Senegalese authorities to transport parts with drones, which we will commence later this year.

Do you have a final message for companies investing in Africa’s mining sector?

JC: For West Africa in particular, now is the perfect time to invest, especially in Francophone countries, which have developed somewhat later than elsewhere. These countries are relatively under-explored, with high grade, easily operable mines, political stability and strong currency compared to neighboring countries. The West African CFA franc is linked to the Euro and guaranteed by the French government, so it will not fluctuate unexpectedly; financing rates are low, at about half of those in Ghana, for example.

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