The Sunday Mail
Africa Moyo
recently in KWEKWE
THE small mining town of Redcliff, which lies 18 kilometres from Kwekwe, used to be a bastion of industry and commerce in the Midlands Province, spurred by the brimming underground iron-ore wealth that nourished most companies.
Most of the products that are made by the company are on order
Playing host to Ziscosteel, which was once Africa’s largest integrated steel producer, and ferrochrome concern Zimasco, Kwekwe held the promise of a town that was ready for take-off.
The furnaces at Ziscosteel, also once regarded as Africa’s largest, and smelters at Zimasco have since gone quiet.
But for the enterprise of dairy products maker Dendairy (Private) Limited and two top supermarkets – OK Zimbabwe and TM Supermarket – that are currently involved in a scrum for whatever market remains, it appears the town was in danger of turning into a real ghost town.
However, small to medium enterprises (SMEs) are now evolving as the greenshoots of a new economy in the area.
One such SME is Lamcast Refractories, which was established by Mr Lamulani Sithole, an engineeer who was ironically spat out by the struggling Ziscosteel in 1997.
The company’s staff complement of 20 belies the impact that it has had in the mining and power generation sectors of the country.
Established in 2001, Lamcast produces castable refractories (a dry-prepared mixture that,when reconstituted with water, becomes a concrete or mortar suitable for refractory use); crucibles (a ceramic or metal container in which metals or other substances may be melted or subjected to very high temperature); cupels (a container in which gold or silver can be refined); fireclay (clay capable of withstanding high temperatures, insulation bricks and refractories bricks.
The firm also provides forklift hire, refractories consultants, refractories service and refractories installation.
Lamcast managing director, Mr Lamulani Sithole said his experience, gained at the giant steel maker, served as a launchpad for the company.
“It is a passion, I have a lot of experience in this industry. I worked at Ziscosteel as the refractories manager for more than six years. Because of my experience, we just build our own implements here such as the crushing plant and heating furnaces,” said Mr Sithole.
Operations
Lamcast’s core business is to make refractors using “the best locally available” raw materials.
Refractors are basically heat resistant materials used in the manufacture of ferrous and non-ferrous materials (steel and non-steel).
They are also used in boilers in the generation of thermal electricity.
Raw materials used in the manufacture of refractors such as corundum, fireclay and kyanite are obtained from Mazowe, Nkayi (where they have a mine) and Karoi respectively.
Some of the raw materials are also available in Mutoko and Mberengwa.
Once the raw materials are delivered at the plant, they are processed in a crusher and screening plant.
“We then make fireclay, which is used as a motor in refractory firebricks, lamcast 1300, 1600, 1750 castables – these are monolithic refractors used in boilers and furnaces.
“We also make crucibles for gold and platinum fusion. We make all sizes of crucibles to the customers’ needs. These are fired in top-head furnaces up to 1150 degrees for over 24 hours.
“Ours is a specialised area,” said Mr Sithole.
The firm also manufactures cupels which are used for cupellation in the gold and platinum industry.
Cupellation is a refining process in metallurgy, where ores or alloyed metals are treated under very high temperatures and have controlled operations to separate noble metals like gold and silver, from base metals like lead, copper, zinc, arsenic, antimony or bismuth, present in the ore.
Raw materials for cupels are obtained from Japan since they are not readily available in Zimbabwe.
A brand new cupel-making machine was manufactured at the Harare Institute of Technology.
Lamcast gave HIT a sample of the cupel machine and asked them to replicate it, which they did successfully.
Unsurprisingly, given the specialised nature of its products, Lamcast’s biggest customers are Turk Mine, Zimplats, Unki, Mimosa, RioZim, Zimasco, Freda Rebecca, Metallon Corporation and Steel Makers.
“The companies have given us the room to develop.
We have also created synergies with the Zimbabwe Power Company (ZPC) to develop bricks specifically for their needs, to help them continue generating power.
“We also represent two South African companies – Intocast SA and Insimbi and one Germany company which is mostly in the bricks business. So we do the technical support for them. We also do a lot of business with PPC Zimbabwe and Lafarge.
“The whole idea is import substitution, getting products locally and not importing. So we want the relationship to be across the board,” added Mr Sithole.
The company is currently developing bricks used by ZPC for the generation of electricity, especially at the Bulawayo Thermal Power Station.
Most often, crucibles – one of the critical components that the firm manufactures – are handy in the mining sector where there are used to determine the amount of gold that can be found in the ore.
Through their use, it therefore becomes possible to determine the quantity of gold on a given area that is to be mined.
On the other hand, cupels determine the purity in the gold or platinum that will be mined at a given location.
Knowing the purity of ore is critical in helping the miner to decide whether or not to continue mining to invest in a given area.
A lot of artisanal miners, who are known for their hard work but get between little and no output, just “fire in the dark” without first testing the ore for the amount of gold that could be realised and its purity.
This is precisely the reason why Mr Sithole is presently pushing for the Ministry of Mines and Mining Development to introduce mobile laboratories so that artisanal miners can use them to test their ore and the purity of gold before mining.
In order to ensure that its products are of the recommended quality, Lamcast sends them to the Zimasco laboratory for testing.
Firm fairly doing well
Despite significant local economic headwinds, the fledgling company is faring “reasonably well”.
Zimplats gets about 10 000 crucibles per month while other mining houses also get reasonably high quantities too.
Different customers take different sizes of crucibles and cupels, depending on their operations.
The firm has an installed production capacity of 24 000 crucibles per month and 80 percent of them always have ready orders.
But with its new machine that was manufactured at HIT recently, it can produce about 90 000 small crucibles per month.
“We are operating reasonably well at the moment. We now make to order but we just keep some. Freda Rebecca mine (in Bindura) consumes quite a lot,” said Mr Sithole.
Expectations are high that demand for the products will grow soon in response to a rise in gold prices. While gold prices are still down at the moment, hovering around US$1120 as at Wednesday last week, it is anticipated that a fall in the prices of oil will result in many investors hedging in gold, sparking a rally in the prices of the yellow metal.
Challenges
Like most other local businesses, the company has had to contend with an illiquid market and the influx of discounted imports, particularly from South Africa.
Explained Mr Sithole: “Our biggest challenge is the cost of money, and imports mainly from South Africa. We therefore appeal to local companies to give business to local players. I think there is need for a change of mindset (that foreign products are the best).”
It is estimated that 60 percent of local imports are from South Africa.
Government has been trying to coax local companies to buy from local manufacturers through various tax measures.
Zimbabwe managed to import goods and services worth $6,3 billion last year but only managed to export $3,4 billion worth of goods.
The other challenge is that given the unique nature of its business, the relevant skilled personnel for the business are hard to come by.
The company has had to train people on its own, usually students studying towards degrees and diplomas in engineering at Kwekwe Polytechnic.
The closure of Ziscosteel, the downsizing of Zimasco and plunging metal prices are the other challenges giving the firm some headaches. The revival of Ziscosteel will be a major fillip for the business, Lamcast believes. According to Mr Sithole, Government has to increase duty on imported products, especially for the mining sector, to cushion local manufacturers from the impact of imports.
Expansion program under threat
In its endeavour to grow, Lamcast has received $75 000 from a local bank to sponsor its expansion programme.
Work on the expansion of the production plant has since begun.
However, it is feared that water shortages in Kwekwe and Redcliff might scupper the initiative.
“Water is a problem in Kwekwe. Our expansion is dependent on the availability of water which is a core ingredient in our operations.
“When we do not have water here, at times we are forced go and fetch it from Kwekwe town, which increases our production costs,” said Mr Sithole.
Power cuts also affect their operations that run for 24 hours every day.
Export market
There is a firm belief that Lamcast’s products can be exported to countries such as Tanzania, South Africa and DRC.
It is believed that gold mining activities in Tanzania might spur the demand for crucibles and cupels.
“We have looked at the export market but our constraint is capacity. We look to export to South Africa and East Africa, particularly Tanzania.
“In terms of the DRC, we gave their Ambassador (to Zimbabwe) some samples and we hope he will come back to us,” said Mr Sithole.
Lamcast has gotten a lot of financial support from BancABC which has extended about $75 000 in the last two years.
“We are quite happy with the relationship we have with the bank but we want other banks to do the same.
“Government should also extend affordable loans to SMEs. There is always talk that funds are being extended to SMEs but we never hear where they can be obtained,” said Mr Sithole.
Lamcast is one of the SMEs toured by officials from the Office of the President and Cabinet’s public affairs and knowledge management directorate led by Ambassador Mary Mubi late last year.
