Independent process industry consultant Santosh Gunpath is cautiously optimistic about the future of the South African mining pumps industry.

“There is no definitive direction for this sector, with companies following a wait-and-see approach while keeping costs to a minimum.”

This strategy is aimed at surviving the three main challenges faced by, but not unique to, the mining sector or the pumps industry. There is a lack of investment in the South African mining industry, owing to “dubious” governmental regulation and, more recently, the country’s credit downgrade to junk status by ratings agencies Fitch and Standard & Poor’s.

Secondly, Gunpath highlights the high cost of the country’s electricity and the lack of suitable energy alternatives with the capacity to support the mining pumps industry’s requirements, and thirdly, water – a vital component of minerals processing – remains a scarce, finite commodity.

He commiserates that, while these challenges can potentially be mitigated, the implementation of such measures has been too slow to provide much benefit. The country’s engineering and manufacturing sectors are in a consolidation phase, with the focus on decreasing expenses while increasing profitability, rather than increasing production. He notes that this poses a further risk to the mining industry and those that feed into it, such as the pumps industry.

While the stability, progress and growth of the mining pumps industry lies predominantly in maintaining its existing installed base, potential does exist for growth in other areas, Gunpath says.

He tells Mining Weekly that the mining pumps industry is, however, solid and always will be, owing to ongoing demand for spares, which is the lifeblood of pumps suppliers and manufacturers.

Pumps are high-wear process equipment, with pump casings and impellors “notoriously sensitive to changes in fluid characteristics”, he says. Therefore, spares are regarded as critical and replacement cycles are short, compared with other minerals processing equipment.

This need for regular replacement of components ensures a robust and profitable turnover for original-equipment manufacturers (OEMs), outlines Gunpath. “Once installed, a pump, like other process equipment, must be maintained to ensure optimal performance. As a result, workflow from the installed base of industrial pumps remains robust and steady.”

Growth Potential

While Gunpath says the South African mining sector will definitely grow, the sector is unpredictable and the timing of this growth is an unknown.

While he expects the mining and manufacturing sectors will regress in South Africa and grow in Africa; South Africa’s overall economy is still expected to grow by 2% to 3% yearly.

Gunpath attributes this to the decline in stockpiles of basic materials, which will lead to increased investment in capital projects, driven by global demand in these materials. “Housing, transporting, feeding and educating an increasing global population requires infrastructure that is fuelled by basic material production.”

However, South Africa has become a consumer rather than a producer, and Gunpath foresees the strengthening of this trend in the coming years as the country continues to import most consumer goods, threatening the capacity for growth in the engineering and resources sectors.

He posits that, to mitigate this, local companies need to capitalise on global demand by focusing more on exports, in a bid to become a manufacturing hub. Moreover, the mining sector’s regressions can be managed by shifting focus to dynamic and efficient manufacturing, and increasing investment in research and development. For example, OEMs in the South African pumps industry can use the country as a centre of excellence, rather than preferring offshore options in Australia, the US and the UK, among other countries, as has been the case over the past 15 years, he says.

If this strategy is followed, South Africa will benefit enormously in terms of job creation by OEMs and generate support for the academic sector, Gunpath postulates.

“South Africa still has excellent education standards, at secondary and tertiary level, but is incorrectly stigmatised when globally benchmarked. “While [this strategy] may not necessarily give the mining sector a significant boost, it will support the existing installed base in the resources sector, which remains a vital contributor to South Africa’s gross domestic product,” Gunpath enthuses.