EMERGING mining services company Scanalyse is following the lead of established players like Ausdrill, Lycopodium and Forge by expanding to Africa.
The company’s products use laser technology to scan mining equipment such as mills and crushers to assess wear and tear.
The technology was developed by Curtin University researchers in 2000 and was commercialised in 2006 in collaboration with the university’s research and development office and the Cooperative Research Centre for Spatial Information.
During its first six years in business, Scanalyse has won numerous innovation awards and expanded across Australia, as well as into North and South America.
It is now actively pursuing clients in Africa following a research trip facilitated by the federal government’s Auslndustry program.
Chief executive Peter Clarke told WA Business News the trip enabled the company to speak with potential clients and he was confident contracts would be signed as a result.
“There’s enough interest from the various sites to request proposals from us ... we certainly do expect to generate some activity from this trip,” Mr Clarke said.
Scanalyse already has a contract to service Perseus Mining’s Edikan gold mine in Ghana, which was signed a year ago, but Mr Clarke said that was before Scanalyse was looking to expand into Africa.
“We were interested in going into Africa and were researching Africa but we weren’t actively chasing customers,” he said.
“What we offer is a service - we need to make sure we can service those customers effectively and we weren’t confident we could service African clients until we had a base over there.
“But, of course, if people come knocking on your door we don’t knock them back.” But Mr Clarke said the time was right now for targeted African expansion.
“For us as a company, we’ve expanded internationally into both South America and North America and we did that deliberately because we perceived them as pretty well known to Australian mining companies and relatively low risk to get into,” he said.
“The next untapped region for us is Africa in terms of developing mining markets and, as we all know, there is an awful lot of mining activity going on in Africa.”
The company’s annual revenue has been growing at an average of 40 per cent year on year, boosted by more than a third of revenue coming from international contracts.
With the expansion into Africa, and efforts to grow the company’s presence in Europe, Mr Clarke said he expected about half of overall revenue to come from overseas markets in 12 months’ time.
“... And in the next two, three or five years I’d be looking for 75 to 85 per cent coming from overseas,” he said.
If successful, Scanalyse will be following in the footsteps of Ausdrill, which has been active in Africa since 1991 when it took on a drill and blast contract in Ghana.
In the past financial year, 32 per cent of the company’s work was based in Africa -a percentage chief operating officer Alex McCulloch expects will increase quickly.
“That will change over the next few years; Africa will be the big growth story for us and Australia will be less bullish,” Mr McCulloch said. “Year on year, we are growing our business in Africa by about 40 per cent.”
He said Ausdrill’s survival in 2001 depended on the promise of an African contract, which prevented the company from falling over.
“We were virtually broke and had the banks all over us ... we were basically going down for the third time. But we had one potential contract in Africa,” Mr McCulloch said.
“The banks said ‘alright, we’ll give you another 10 minutes, we won’t tip you over just yet’, it kept us alive.”
Lycopodium realised the benefits early on from expanding into Africa. The diversified engineering and project management consultancy’s revenue from African projects more than doubled in the past financial year.
In the 2011 financial year, revenue from African-based projects amounted to $11.8 million. That had grown to just under $30 million by the end of the 2012 financial year.
The company has been operating in Africa since 1994 - a move which managing director Peter De Leo said was ahead of the game.
“That’s before it became a little bit more fashionable and we’ve been there for a long time now,” Mr De Leo said.
“Clearly, Africa is a very important part of the world for us ... we’ve completed over 24 projects ... Burkina Faso in particular is becoming a much more active place.”
Fellow engineering, construction and project management consultancy Forge Group has also reaped rewards from diversification into Africa - it is currently fulfilling contracts in Burkina Faso, Mali, Ghana and Sierra Leone.
Forge bucked the trend of recent profit downgrades by other mining service providers, forecasting a profit improvement for the 2013 financial year of between 28 and 43 per cent to between $90 million and $100 million.
Deloitte partner Jacques Van Rhyn said Australian companies had a legacy of operating in Africa, with more showing interest.
“There’s a lot of talk going on about the growth of Africa but the question that we have to ask is why is Africa the number one destination?” Mr Van Rhyn said. “I believe we have something to take to Africa; we have a lot of people in mining and running big mining projects so there’s a massive opportunity for those companies to go into Africa.”
But Mr Van Rhyn warned businesses needed to be careful to assess the risks, such as security and infrastructure difficulties, as well as respecting the countries they were operating in.
“Having grown up in Africa, the view in Africa of the rest of the world is not positive; there’s a view that foreigners come in, take the value and then leave,” he said.
“We need to interact with the community and we have to understand what affects them.”
