Restructuring and diversification at Lesedi Nuclear Services over 14-years culminates in the globally-significant market position.
INTRODUCTION
Lesedi Nuclear Services has undergone various restructurings and diversifications over the course of its 14-year history; all of which have culminated in the globally-significant market position it currently finds itself in as the Company looks ahead to an even more exciting future.
Far from relying on pipedreams and potentially risky strategic developments, all of Lesedi’s growth – especially over the past decade – has been achieved as a consequence of carefully thought through, organic progression, with this journey now leaving the South African-based business on the precipice of a concerted drive into the wider sub-Saharan region and towards a diversified broader market.
Formed in 2001 as an evolution from Intens Engineering and the predecessor’s construction of Koeberg Nuclear Power Station, AREVA, global leader in the nuclear industry, adopted Lesedi Nuclear Services as a way to enhance its localisation strategy.
Fast-forward 14 years, and Lesedi is a market stalwart across not only nuclear projects and maintenance services, but also industrial, renewable, oil & gas and waste to energy, leveraging a turnkey service offering unrivalled elsewhere in the sector. And very soon, this expertise will be evident on an international scale on the continent.
“We have expanded our project horizons to include several sub-Saharan countries,” the Company’s Business Development Manager, Shane Pereira explains. “Over the past 12-18 months we’ve been active with waste to energy and biomass projects in Ghana and Mauritius as well as in Rwanda, Namibia, Botswana and Mozambique.
“We will partner with local companies when doing business in those particular countries, while, over the next few years, we also hope and expect to increase our turnover from US$50 million to around US$75 million through a similar diversification in the various forms of power generation.”
SECTOR WIDENING
Another, potentially longer-term goal would be to take equity in projects, but Lesedi has a rich history in optimising its natural growth one step at a time; its current shareholding structure is setup strongly to facilitate such success.
Five years after inception, in 2006, the first significant restructuring took place as AREVA increased its majority share to 51 percent; a move which paved the way for the construction of 14 150MW open cycle gas turbines for Eskom as it entered an environment outside of nuclear for the first time.
The commissioning of an entire balance of plant contract for Eskom further compounded the sector widening, and set the tone for three years of prominence in that nationally-pivotal energy sector.
Pereira notes: “The contract with Siemens was for the mechanical erection of the turbines, and the balance of plant for Eskom involved scopes including fire protection, fuel and loading, treatment of the fuels, forwarding systems, compressed air, electrical power distribution systems, control and instrumentation, and the supply of all operating and maintenance procedures.
“Then, in 2009, we were awarded the contract for the balance of plant for the Medupi Coal Fired Power Station for Eskom which included the detailed design, procurement, installation and commissioning of all the low pressure services for the plant. The contract value was in excess of US$100 million and Medupi is the largest dry-cooled power station under construction in the world and therefore a significant milestone project for Lesedi.”
Applying those same levels of expertise, the significance of attaining the contract for the balance of plant for the 4,800MW plant stemmed equally from the fact that Lesedi was the only bidder; emphasising the Company’s stature as the only able turnkey provider for a project of that magnitude.
HIGHLY SOPHISTICATED ENGINEERING
This unique and niche set of resources derives from a careful fostering of the Company’s workforce throughout its diversification and was given a new dimension in 2012 with a restructuring put in place to best hone the skill-sets, sub-contracting partnerships and project management capabilities engrained in the organisation.
With AREVA diluting its shareholding to 39 percent, the introduction of the J&J Group as the Company’s primary black empowerment shareholder, and international construction heavyweight, Group Five to the Company’s ownership has since aided Lesedi’s diversification even further.
“Over the years, we have developed a highly sophisticated engineering division as well as commercial contracting competencies in order to carry out the kinds of projects we have done,” Pereira says. “We have utilised only local skills for the projects we have worked on, and the diversification we have enjoyed, has enabled us to grow our engineering and project management capacities significantly.”
The end result is an EPC entity with overlapping skill-sets across numerous industrial domains, which not only makes Lesedi an attractive contracting proposition across nuclear, oil & gas and various energy sectors, but also a highly flexible business in terms of applying said attributes to future opportunities that may arise.
“Since 2012 we have diversified a little bit further and have bid on a biomass project in South Africa,” Pereira states as an example. “We’re now well positioned to develop our own projects with the intention of executing them across various forms of power generation in the future.”
This differentiating market advantage out in the field is further complemented by an ongoing internal acknowledgement of how to be as lean, efficient and streamlined as possible, despite the ever-increasing size of the business.
Demanding, continuous training programmes for experienced and graduate employees alike addresses the manual aspect of such an approach, while the introduction of Industrial Financial Systems in 2009 as an enterprise resource planning (ERP) platform has had a similarly defining effect on refining administrative and project procedures from the Company’s central South African hub.
DIVERSIFYING RISK
Ultimately, what Lesedi has achieved, on an unparalleled scale, is affirm itself as the EPC contractor of choice in a widespread array of sectors in the region.
Pereira enthuses: “We position ourselves as an EPC company but our value added is certainly focussed on the ‘EP’ aspect of EPC. We have strong engineering skills, strong project management skills and strong integration skills ensuring appropriate technologies are selected in the execution of our projects.
“Typically with the construction element though, we will either partner with a construction company or sub-contract the construction scope to a construction specialist, where Lesedi will manage the construction. It just so happens that by the definition of construction, a lot of market players have large balance sheets but that doesn’t mean they have the EP capabilities, which is really where the risk resides.”
It is also where Lesedi comes into its own in diversifying said risk, striking a balance between offering clients its own extensive turnkey offering, alongside the promise of introducing a host of construction-specific business partners to the overall bid proposition.
Being the only bidders back in 2006 for the balance of plant on Eskom’s open cycle gas turbine project, as well as for the internationally-renowned Medupi balance of plant EPC contract, epitomises Lesedi’s unique positioning in the market, while equally prominent successes in areas of health and safety – recently celebrating three million lost time injury-free man hours – ensures that the excitement surrounding the Company’s future expansion is certainly not misplaced.
Pereira concludes: “Areas like health and safety are given massive emphasis within our organisation, throughout Lesedi, our partners and our sub-contractors.
“It fits within the wider ethos of priding ourselves on quality and doing the job correctly. “Quality is the name of the game: We have trusted relationships, competent sub-contractors, and a highly skilled workforce which ultimately confirms to clients in these projects that we are the people who will do the job correctly first time.”
