Last month, we spoke with Jindal Botswana to learn about their plans for Jindal’s freshest African frontiers. This month, we got to know the new CEO of Jindal Africa, to see how these operations fit into a bigger, booming picture for the Jindal Group.
An offshoot of the India-based Jindal Group, Jindal Africa predominantly focuses its efforts on mining. Headquartered in South Africa, with operations in some of Africa’s most resource-rich countries, the company sources and mines coal for both its parent company and the global market. As we touched on last month, Jindal Africa has several budding new ventures, including developing assets in Namibia and Cameroon and a potential power plant planned for Botswana. However, their two main areas of focus are South Africa and Mozambique. We returned to Jindal to speak with Jona Pillay, company CEO, to talk about these larger-scale sites:
“We have two main operations – one in South Africa, where we’re specifically mining for anthracite coal, and several sites in the Tete province of Mozambique, where we are mining for coking coal and thermal coal. Our coking coal supplies our parent company in India, whilst the thermal coal is sold on the global market. Output from the South African mine is sold both locally and internationally.”
Mozambique, in particular, is the focus of several development initiatives for Jindal. With multiple mines and two distinct products in the province, it is a site of diverse operations for the company, with equally diverse avenues of potential growth. One project is the expansion of the area’s downstream mining activities, such as their coal washeries; investing in an impressive amount of new equipment, their current washery output is predicted to double from 150,000 tons per month to 300,000. This dramatic change is expected to be complete by the first quarter of 2018. “We expect to be on about 300,000 by the end of March – it’s going to bring our cost per dollar to much more favourable levels.”
This would be impressive enough, but it is not even the company’s most ambitious project in the country. Jona divulged: “We’re in discussions with the government of Mozambique about setting up a 150 MW power plant. From the coal we actually mine out, 70% is ‘discard coal’ – coal we have no use for. However, it is good coal for power plant consumption.” The new plant would both improve profits for Jindal Africa and would greatly reduce waste, as well as providing much needed power and employment in the area. “The economics for the power plant are favourable – especially in a country like Mozambique, which has a power deficit. It will play well into the power pool.” It is a win-win situation. In fact, Jona believes that both projects will be a boon to the country’s economics, as well as Jindal Africa’s efficiency and profit margins.
Given the competitive nature of the sector, Jindal Africa has a challenge on its hands in setting itself apart from its rivals. “It’s all down to being cost effective. We’ve been doing a lot of initiatives in terms of keeping costs down – upscaling our people, refusing unnecessary expenditure. Once your costs are driven to the right efficiencies, you can compete in the market on price. Where others are priced a little higher, you can offer a favourable price to the end user.” Whilst this is a solid strategy, in areas such as Mozambique, Jindal Africa find themselves competing against several major players. Their coking coal is largely bought by Jindal in India, and any on the open market sells without issue, as it is not a widely readily available material in Africa. However, in terms of thermal and anthracite coal, the competition is there. “They have a better product in terms of composition, but I think there’s enough for everyone to play in this market. We deal in different volumes, different specifications etc. There’s a buyer for all the supplies that we have. Again, we ensure that our costs are kept to a minimum, meaning we can place our product at the right price in the market.”
Initiatives such as the new projects in Mozambique play an essential role in keeping Jindal Africa efficient, cost effective and at the top of their game. Between competition and a market with an unstable recent history, one would expect Jona to have concerns. However, an experienced hand at the field, he knows how to read his market, and he isn’t worried; “I think prices are relatively stable. They are obviously volatile from time to time, but currently we find that, specifically for thermal coal, they are at a very stable level.”
For coking coal, it is a different story, as the market has been far from steady. “On the coking coal side, we’ve seen two phases where the impact of China drove prices all the way up to $300 per ton, and then it came down as fast as it went up. So, before we could even reap the benefits of the very high price, the price was coming down. The same thing happened a few months later, when Australia had the flooding and the coking coal prices increased exponentially, but it also came down just as fast.” Again, this lack of stability doesn’t have Jona worried – he knows that a skilled company creates its own. Between their coking coal largely being consumed by the Jindal Group, and the coal type being a hard-to-come-by resource in Africa, these problematic conditions have had a minimal effect on sales. Meanwhile, Jindal Africa’s thermal coal is straightforward to sell; “Our thermal coal is anthracite, which is a well sought-after coal, so it’s highly acceptable in the market. Overall, we have a good bouquet of products that is well received.”
Being part of the larger Jindal family puts Jindal Africa in an ideal position, providing them with security without smothering their operational freedom. Jindal Africa’s relationship with its parent company is close but separate. As the main purchaser of their Mozambique mine’s coking coal, there is naturally a great deal of back and forth over order placement, delivery, commercial terms and similar. In most other areas, the Indian parent entrusts Jindal Africa’s operations to its staff. “On any given day, we operate independently. Decisions are taken here in Africa – we deal with the local communities, local stakeholders, local customers.” Matters such as HR and PR are run past India for guidance and company cohesion, but the Indian company has the wisdom to know that local matters are best left to local minds that have the insight and feet on the ground to make those calls.
Heading up those calls is Jona; before he was recruited for Jindal, the CEO worked in coal-to-liquid operations for 16 years, leaving him more than qualified for the position. Although this experience was mostly in India, the South African local didn’t take long to re-acquaint himself with his home market. Jona was hired by the parent company to help with their most ambitious project at the time – India’s very first coal and gas liquification plant. The plan for the plant was an ambitious, first-of-its-kind process that would turn the coal to gas, and the gas to steel. The plant was designed to run on India’s indigenous coal for energy security, and it was intended to be the first of many in the country. Jona spent four and a half years on the project, which came to completion in 2014.
Prompted by the project’s success, Jindal’s chairman approached Jona with a new plant in the East of India. The $5 billion plant took six million tons of steel to construct, and was finally completed in May this year. Due to his previous experience and success, Jona was made the head of projects and engineering for this build, so it was no surprise that his second success was met with the offer of a CEO position, back in his home country of South Africa.
“By qualification, I’m a chemical engineer, so it’s a very diverse portfolio from petrochemical to steel to mining. When I went to India, that was quite challenging – it was a new country – but coming back to South Africa, because it’s home, you settle in easier. I got on top of things quite quickly.” Jona hasn’t wasted time – he has only held the position for a few months, but his progress as CEO is already measurable. “We went through a very rigid exercise of minimising costs, streamlining the business, improving efficiencies and up-timing different operations. In the last four months, we’ve already seen a sudden increase in production stability: much higher volumes, better outputs, better efficiencies. We’ve made big changes all around the business.”
With such fast results, Jona is clearly doing something right. Good leadership from a CEO calls for experience in the field and shrewd business sense, but it also requires the right approach with staff. “My philosophy is to empower, but to also hold accountable. I normally give free reign to the team to do what’s right for the business. Obviously, I set directions and goals, and set priorities so they’re not cluttered with 20 different things, but once that is established, I let them go. Then, I look at the results. I look at the scoreboard all the time – the scoreboard matters. My philosophy on leadership is tough love, so I think I would describe myself as firm but fair.”
Whilst tough love is an excellent strategy for encouraging and developing staff, Jindal Africa is not holding back on the love when it comes to developing their local communities, and Jona has been at the heart of the efforts. The Matafuleni Early Childhood Development Centre, inaugurated by Jona in September, was the latest in many community improvement projects funded and organised by Jindal Africa. The company works to improve the quality of life in the areas around their mines: “These very remote villages. We provide soccer fields for the kids, some fencing at schools, medical camps regarding HIV and cancer – we keep engaging in many activities.” In the case of the Early Childhood Development Centre, Jindal Africa saw a nursery in one of the areas neighbouring their mines that was in desperate need of a new building – so they bought some land and constructed it for them. “The local community had a nursery school for 50 kids. They were basically operating from a rough tin construction, so we decided to buy them a portion of land and built them a nice brick building that could accommodate 50 kids. We got it all kitted out, then invited the community and handed over the keys to the local leadership there. The kids were extremely happy with it.”
Jona has only recently arrived at Jindal Africa’s helm, but already the results are showing both for the company and the community at large. Given the efficiency and savings achieved in so short a time, the future for Jindal’s African operations are more than promising. If they can continue to streamline and cut out unnecessary costs, their secure place in the market could turn into a highly competitive position. Who knows which giants they may be taking on in the future? We look forward to catching up with them again to find out!