Josh Foster, General Manager, Bell Equipment DRC on the effects of the feared export ban of copper concentrate for heavy equipment providers in the DRC

Josh Foster, General Manager, Bell Equipment DRC

Josh Foster, General Manager, Bell Equipment DRC

Bell Equipment is a global manufacturer, distributor and exporter of a range of material handling equipment. What are your core business activities and where do you foresee your future growth markets in the DRC?

Bell Equipment core business activities in the DRC relate to mining and infrastructure but recently demand for jobs in forestry and agriculture is also increasing. In mining, our after sales, or service and support business, is in strong demand and accounting for a larger percentage of our overall business activities year on year. We are therefore assisting at a shift in corporate culture, with mining companies identifying those service providers that actually follow up on their promises and requesting more adequate after sale support.

The DRC also constantly ranks as one of the most difficult countries in the world to do business in and working with reliable suppliers can save on your overheads and time. At Bell Equipment we believe that the key to building long-term relationships with our clients is providing reliable, consistent and timely support around our products. When a unit is temporarily shut down for instance, the greatest loss in value comes not from the cost of repair, but from the loss in production. As a result, our customers’ priorities during the manufacturing process are on service and support, and our vision involves ensuring that the customer derives additional value from working with the Bell brand. In terms of demand for mining machinery, our unit sales are increasing and with it the expectation for what you get as part of the after sales service. Bell Equipment has therefore been growing its footprint in the DRC and adding to its depot network with a new depot opening in Kinshasa.

Which of your mining machinery is most popular with the local mining industry and what type of service contracts do you offer to your clientele?

Bell Equipment haulage products account for more than half of our sales as it is the machines that are used in the extraction phase that make up the biggest population of any particular machine on site.  Mining companies may also resort to other specialist machines but when you compare the size of those fleets against your haulage fleets one can understand that they are fairly marginal in size. In terms of contracts, our teams either work on a fixed term project, for a fixed fee, or for smaller sites we recommend that our customers start on pay-as-you-go maintenance contracts, paying for the number of hours it takes to complete the job. The moment the billable hours are equivalent to having a team on-site, we will recommend a permanent on-site team. Close relationships with our clients are essential throughout the entire process, and we provide our clients with site analysis on a weekly basis.

2013 has been a challenging year for mining companies in the DRC, with feared changes in the mining code legislation and proposed bans on the export of copper concentrate. How were heavy equipment providers affected in their business activities?

All this uncertainty in the country has the effect of removing confidence from our customers and as a result heavy equipment providers business activities are also negatively impacted. Following the proposed ban on the export of copper concentrate, projects were put on hold as mining companies fear losses in revenues. Building plants is also capital intensive and producing concentrate and selling it in the first place would allow mining companies to go in cash flow sooner and evolve the mine further. While the purpose behind these export bans is understandable, as authorities are looking to increase the value of commodity exports and want to encourage development of the local processing industry, it is all the uncertainty around the execution of these bans which is more damaging to the local mining industry. One option could entail allowing the export of the concentrate for a limited amount of time only, and giving mining companies a clear window period within which they need to have moved on from doing just that. And therefore, rather than imposing bans outright, mining companies should be allowed to export the concentrate in say, the first five years of operations, and thereafter forced to process in country.

Have you seen competition for your services change lately and how important is after sales support to Bell Equipment in the DRC?

Competition amongst heavy equipment providers is certainly increasing, as there are more brands available. However, the smoking gun difference in a production environment globally, not just in the DRC, is service and support and this is the aspect that Bell probably takes more seriously than anybody else. Training our technicians to a high level standard is therefore a priority. Problems on machines are often not obvious and it is therefore essential to have staff that can diagnose a problem within a few minutes or hours, rather than within several days. Mining Company Katanga Trucks, one of Bell Equipment’s largest customers in the DRC is running Bell’s B40D articulated dump trucks (‘ADTs’) at 20,000 hours of service with this return on investment due to one main factor – our solid technical back-up team. The other aspect in which Bell Equipment is successful is being able to arrange funding for the financing on the purchase of machinery. An entire division at Bell Equipment is made up of ex-bankers who are capable to assess a project viability and structure machine payment to best suit the needs of our customers.

What potential is there for international investors to enter Katanga’s mining sector?

The potential within the DRC and specifically Katanga is huge, without a doubt. Within Katanga’s province, the area that is witnessing major growth is the area around Kolwezi that has always been an important mining centre for copper and cobalt. The road network between Lubumbashi and Kolwezi has also improved considerably to the point where transport costs to Kolwezi have almost halved and mining equipment providers, clearing agents, transport companies and banks are now all opening doors there.  In a long awaited and favourable development the DRC also joined OHADA (“Organisation pour l’Harmonisation en Afrique du Droit des Affaires”) in 2012, bringing the country’s commercial laws in line with international standards. Overall, the OHADA legislation provides the country with a more modern legal framework in which to operate, including new and more appropriate forms of companies (SA and SARL) and sophisticated corporate governance rules. OHADA is also promoting regional integration and economic growth in the country and is ensuring a secure legal framework through the harmonisation of business laws. The country’s and the province business environments’ are improving considerably but there is, however, still plenty to be done, including the now much awaited revision of the country’s mining code.