Huge steel component maker to supply sector

Saldanha Bay is ready for the West African offshore oil and gas industry, but now the question is whether the industry is ready for Saldanha Bay.

A new facility for the construction of the huge steel components needed by the offshore oil and gas industry was officially opened near the small but strategic West Coast town yesterday, amid great fanfare.

Attended by representatives of the engineering and ship repair industries and with Deputy President Phumzile Mlambo-Ngcuka as special guest, the event promised to mark a huge boost to industry and job-creation in the area.

But the prime movers of the project, Germany's MAN Ferrostaal and South African company Grinaker-LTA, have admitted that the project was a huge financial challenge that depended on efficient competition in a mature international market.

And no business deals have yet been concluded, although Grinaker-LTA is said to be following up "strong business leads".

With the facility in place and the back-up industry geared up, the marketing was going to be critical, they said.

"One of the most important factors counting in the favour of this facility is its location with reference to the offshore oil and gas industry in Africa," said MAN Ferrostaal chairman Dr Matthias Mitscherlich.

"The main alternatives for the industry are in Singapore, Europe, the Middle East or the Gulf of Mexico. There are no such facilities elsewhere in Africa," he said.

"At the time we planned this facility, we were thinking in terms of an oil price of $22 a barrel, with predictions that it could go up to $30. Recently, the price has tested the $90 mark.

"The world is urgently looking for further oil resources, due to the instability in the Middle East and the offshore industry along the African coast has great potential.

"The increase in the price of oil will pay for a lot of the development that will go in here and it is therefore of strategic importance that SA is ready with this facility to make money from that market."

Mitscherlich said when the idea of such a facility was first suggested, it was received with scepticism and disbelief.

"But we have been able to build it in record time, within our deadline, despite having had a 20-day rain stoppage.

"It was also significant that 99% of the materials were sourced in SA, that 50% of the companies involved were black economic empowerment firms and that 15 of the 20 companies involved were from the Saldanha Bay area."

The fabrication yard was funded by MAN Ferrostaal within the framework of its offset obligations through the Navy's purchase of three submarines from the German Submarine Consortium.

The investment in Saldanha Bay amounted to approximately R240 million and was the largest project that has materialised within the framework of the South African National Industrial Participation Programme.

Even before business began, plans were already being drawn up for the expansion of the facility, he noted.

An associated project, the planned offshore service hub at A-Berth in Table Bay Harbour, was expected to be finalised early next year.

This facility was to have been announced at the same event yesterday, but there had been a delay in signing the lease agreement with the National Ports Authority, he said.

"I suspect the delay is probably typical of the problems you have when dealing with departments of state anywhere in the world," he said diplomatically.

Carl Grim, chairman of the Aveng Group, of which Grinaker-LTA was a subsidiary, said the Saldanha Bay fabrication site was mainly a construction site rather than a huge machine shop.

Most of the work at the site would entail hand welding to build large components of up to 5 000 tons in size.

"To give you an idea, consider that the Eiffel Tower in Paris contains 7 000 tons of steel," he said.

"The site may appear to be unequipped with machinery, but the machinery is in place at other facilities already, where the smaller parts will be made."

The project also includes an extensive skills development and training programme that has already been launched and is already turning out trained artisans, especially welders.

With acknowledgement to Henri du Plessis and Cape Argus.