June18, 2011 20:27
By JIM JONES, Business Times
''Where there's muck there's brass." That saying from industrial England is as true for today's SA as it was to England in Victorian times.
These days the brass comes from clearing and reprocessing old muck to recover products that can be exported.
A privately owned Indian company, Osho Coal, is clearing old colliery waste dumps to recover and export so-called "off-spec" coal to Asian markets. Osho's dump-clearing operations in KwaZulu-Natal are not only removing environmental pollutants, but also helping to support smaller haulage operators.
Benefits include removing discards that spontaneously combust and spew carbon and sulphur dioxide into the atmosphere or that leach acids.
Osho MD Tushar Agrawal said the company's annual exports had risen from 200000 tons in the 2009-10 financial year, to 700000 tons a year later - and were heading towards double that amount this year.
He and his family saw a niche five years ago when Asian demand for imported thermal coal was lifting off, and at a time when producers in SA focused primarily on sales to Eskom or exports to Europe.
Osho was originally founded in India as a coal-trading company by Agrawal's father, but it dropped out of pure trading in the late '90s when the Asian financial crisis hit. The business model needed to be rebuilt on the company's own coal resources in SA.
For years SA's export coal industry had been structured to serve the European market, producing and selling coal with tight specifications. In the middle years of the past decade, SA was exporting only one million tons of thermal coal to steelmakers in India each year.
Times have changed; last year the Asian market overtook Europe's, even though total export tonnages continued their years of stagnation.
Osho asked prospective buyers what specifications - such as ash or sulphur content or calorific value - they needed. It then blended products to match those needs.
The strategy was straightforward: tie up contracts to recover discarded coal that was unprofitable for the major collieries - coal that could be exported. Ten years ago, a national inventory found that more than a billion tons of off-spec coal were lying in the country's dumps.
There is more now. But recovering and transporting recovered discards is a low-margin business that depends more on volumes than on price for success. Off-spec coal does not command anywhere near the premium prices of the higher-grade product.
Osho approached dump owners to set up washing plants to recover coal that had been or would otherwise be discarded by collieries around Newcastle, Vryheid and Piet Retief. The coal is of little or no interest to Eskom - getting it to the utility's power stations would be too costly. But it is not too far from the bulk export facilities at Richards Bay.
Transport costs are a critical factor in the coal (and iron ore) business. While Australia might have an advantage in selling to China, SA is closer to India. And India's potential is enormous - the country is planning 75000 megawatts of additional thermal power capacity in five years.
Osho toyed with the idea of acquiring its own road transport fleet, but quickly realised the value of working with small-haulage contractors. These are people who may own a single truck, who may often be short of capital and who often cannot afford the two months' delay normal with payment from large coal companies. Osho pays promptly - often on a daily basis.
Near Brits, Osho has also started to recover hematite (iron ore) discarded as a waste product of vanadium ore mining and is selling it to cement makers. And it is looking at selling the ore to pig-iron producers.
By JIM JONES, Business Times
''Where there's muck there's brass." That saying from industrial England is as true for today's SA as it was to England in Victorian times.
These days the brass comes from clearing and reprocessing old muck to recover products that can be exported.
A privately owned Indian company, Osho Coal, is clearing old colliery waste dumps to recover and export so-called "off-spec" coal to Asian markets. Osho's dump-clearing operations in KwaZulu-Natal are not only removing environmental pollutants, but also helping to support smaller haulage operators.
Benefits include removing discards that spontaneously combust and spew carbon and sulphur dioxide into the atmosphere or that leach acids.
Osho MD Tushar Agrawal said the company's annual exports had risen from 200000 tons in the 2009-10 financial year, to 700000 tons a year later - and were heading towards double that amount this year.
He and his family saw a niche five years ago when Asian demand for imported thermal coal was lifting off, and at a time when producers in SA focused primarily on sales to Eskom or exports to Europe.
Osho was originally founded in India as a coal-trading company by Agrawal's father, but it dropped out of pure trading in the late '90s when the Asian financial crisis hit. The business model needed to be rebuilt on the company's own coal resources in SA.
For years SA's export coal industry had been structured to serve the European market, producing and selling coal with tight specifications. In the middle years of the past decade, SA was exporting only one million tons of thermal coal to steelmakers in India each year.
Times have changed; last year the Asian market overtook Europe's, even though total export tonnages continued their years of stagnation.
Osho asked prospective buyers what specifications - such as ash or sulphur content or calorific value - they needed. It then blended products to match those needs.
The strategy was straightforward: tie up contracts to recover discarded coal that was unprofitable for the major collieries - coal that could be exported. Ten years ago, a national inventory found that more than a billion tons of off-spec coal were lying in the country's dumps.
There is more now. But recovering and transporting recovered discards is a low-margin business that depends more on volumes than on price for success. Off-spec coal does not command anywhere near the premium prices of the higher-grade product.
Osho approached dump owners to set up washing plants to recover coal that had been or would otherwise be discarded by collieries around Newcastle, Vryheid and Piet Retief. The coal is of little or no interest to Eskom - getting it to the utility's power stations would be too costly. But it is not too far from the bulk export facilities at Richards Bay.
Transport costs are a critical factor in the coal (and iron ore) business. While Australia might have an advantage in selling to China, SA is closer to India. And India's potential is enormous - the country is planning 75000 megawatts of additional thermal power capacity in five years.
Osho toyed with the idea of acquiring its own road transport fleet, but quickly realised the value of working with small-haulage contractors. These are people who may own a single truck, who may often be short of capital and who often cannot afford the two months' delay normal with payment from large coal companies. Osho pays promptly - often on a daily basis.
Near Brits, Osho has also started to recover hematite (iron ore) discarded as a waste product of vanadium ore mining and is selling it to cement makers. And it is looking at selling the ore to pig-iron producers.
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