"We now cover around half of Africa, with the latest developments occurring in Morocco and Algeria. We are growing and ready to invest further in our Volvo network."
What developments has SMT implemented since we last spoke in 2015?
As a group we have delivered some significant achievements in terms of diversification since 2015: we are no longer only in Africa. Our acquisition of Volvo Construction Equipment’s dealerships has allowed us to cover Belgium, Luxembourg, the Netherlands and Great Britain. By establishing a strong footprint in this region we can mitigate the risk between Africa and Europe. We now cover around half of Africa, with the latest developments occurring in Morocco and Algeria. We are growing and ready to invest further in our Volvo network.
How important does the DRC remain as a market for SMT Africa?
It is a very strategic country for us but, because of the depressed market in 2016, the position for DRC has shifted down from number one. We have achieved better sales and market position in Algeria and Morocco, and more recently in Ghana. Nevertheless, DRC remains a key country and we firmly believe in its potential.
What was your strategy for surviving the downturn in the copper price?
One of the successful strategies we implemented was to reduce our margins by renegotiating some of our contracts with key customers to ensure we retained the maximum number of contracts. We also had the support from the Volvo Group for our access brands, such as Eicher from India and SDLG from China during this downturn. As our clients’ vision tends to be more short-term, they are more likely to invest in cheaper machines during depressed periods, so we developed our Indian and Chinese brands to fit this market shift.
Regionally speaking, where in the DRC do you see the most potential for growth outside of the well-established Katanga area?
The entire country has huge potential, particularly in the Kivus. However, in order to develop this potential, the challenges of increased stability and security will need to be addressed to ensure that investors can have a long-term vision. The infrastructure to support the implementation of new mines will also be critical, specifically in terms of energy and roads. We hope examples such as Banro and Alphamin will be followed by many new companies and investors so that Kivu can become a second Katanga.
What innovative developments can we expect to see from the Volvo brand?
Volvo has taken significant steps to enhance its product line-up. To complement its range, Volvo recently opened two new factories in Scotland and Mongolia that provide us with access to larger trucks: 45, 60, 70, and 100 ton trucks will be available from next year. We also have the EC950, a new, larger excavator, wholly developed by Volvo with a 90 ton operating weight and a 5.6 cubic meter bucket. This is a strong sign from Volvo that they intend to develop their mining sector range as this is a size only relevant in this industry. We also now have the new A60H, an articulated dump truck that is a key product in the mine sites, and it is the first of its size ever released on the world market with a 55 ton payload compared to the usual 50 ton alternative which is sold throughout Africa by all the key brands.
What sort of clients will benefit from this new range of larger trucks?
It depends on the design of the mine and on working conditions - for example, during the rainy season, you cannot operate huge machines in the Katanga region. It is a matter of finding a compromise to enhance your productivity and improve efficiency by cost per cubic meter. We firmly believe that our new products can achieve this.
Looking to the future, what does SMT Africa believe will be most critical in helping the DRC recognise its full potential?
The main driver in DRC will be cobalt when you consider the global trends driving demand and the sheer quantities available in this country. World demand should double over the next 10 years, which is great news for DRC and will of course mean more mining and mine development. Looking at other commodities, we see great potential to develop other regions of the country, such as diamonds in Kasai.