"West Africa is the place to be for gold mining, and operations will be ramped up across the region thanks to the bull market. This will create abundant opportunities for the supply of equipment, trucks, plants, all of which require lubrication."
How have the past seven months since the start of the pandemic impacted Dutylex in Ghana?
The pandemic has caused a slowdown in business with our most trusted clients scaling down, but we managed to use the quiet time to restructure operations and strengthen our foundations. For example, we worked on our CDS (common data service), and we reassessed our financial capabilities. As a start-up company in its formative years, financing is always a challenge, so these past months were an opportunity to engage banks and financial institutions. The pandemic has also brought technology and social platforms into the order of the day for the team, who have learned to operate in a more decentralized manner.
What have been the latest developments in the company's evolution?
Dutylex is a lubricant solutions provider. I insist on the word “solutions” because we provide a product matched by a service to ensure a holistic assessment of the client's production environment with a view to recommending a product to improve operations. We continue to engage the client after the product is delivered through technical advice, oil analysis and further training, always ensuring the promise of the product is met.
A considerable milestone in the last year has been a change from our primary supplier Mobil to Petro Canada Lubricants, whom we now represent in West Africa. The reason for the switch was to deliver on a fuller portfolio of products, thus strengthening the relationships with clients. We are also proud to represent a global giant who is well accustomed to the mining business, and we hope that the quality reputation and world-leading expertise of Canadian mining will be transferred to West Africa. The new set-up allows for close cooperation with Petro Canada Lubricants to offer globally integrated solutions.
Is there a need for educating the mining sector on the benefits of the lubricants for machinery?
A crucial aspect of our business is raising awareness and educating the market. In our part of the world, there is still a tendency to choose price over quality, and there is a gap in understanding the technicalities of lubrication. Only through educating the market can we empower clients to distinguish between good branding and good quality. Through training, we give our clients the tools to choose the right lubrication for the right equipment. We have found that even mechanics are unsure about what lubricants are suitable for each product, so we walk them through the process of making informed choices. Our commitment goes beyond profit-generation; it is about solving an existing problem and we are conscious that educating the market is a gradual process.
Dutylex caters to different industries, from automotive to agriculture, so what proportion of the business is made up of mining clients, and how do you expect this figure to change in the future, especially as gold prices have been going up?
My expectation is that at least 24% to 35% of the business will derive from mining. Dutylex is on a journey to prove we have a solid product line and that we have the deliverables that make our service much more impactful. Although we are present in almost every industry, from automotive, energy, oil and gas, food and beverages, and construction, the potential in mining is considerable, especially as the price of gold crossed over the US$2,000 mark. The record gold prices incentivize mining companies to invest in equipment and therefore in lubrication. West Africa is the place to be for gold mining, and operations will be ramped up across the region thanks to the bull market. This will create abundant opportunities for the supply of equipment, trucks, plants, all of which require lubrication. With Petro Canada Lubricants, we can provide anything from engine oils to hydraulics and greases - all high performance and perfect for the rough mining environment.
What do you identify as the main challenges as a new company starting out in Ghana?
Doing business in West Africa has its own unique challenges, which we try to convert into opportunities. As a new business, financing is a primordial challenge. To keep the cycle going, we need steady cash flows, but the procurement of lubricants is costly. Related to this issue, the other significant challenge is foreign exchange, since we buy in US$ and the conversion is unfavorable, leaving us with very small margins. Since we are just at the beginning, we need to break into the market at competitive prices and we are left with little to reinvest into the business. Finally, the mindset is leaned towards existing brands regardless of superior quality of competitors like ourselves, so changing consumption habits is difficult. We hope the market will move into making quality-based and merit-based buying decisions.
Dutylex recently opened a second office in Kumasi. What are the priorities for the next year?
We see Ghana as a case study for the region. It was important to cover the country in its full length and breadth, so have three offices in Tema, Kumasi, and Takoradi offers Dutylex a strategic position to serve different regions. We will then replicate this model in other countries. Ghana is a springboard for the entire West African region, but we cannot tap into new jurisdictions before we have fully exhausted opportunities at home.