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Business in Africa is synonymous with mining, which forms the backbone of the economy of many countries on the continent. Not only is it considered one of the biggest catalysts for development in many African nations, but is also a source of employment and global trade exchange.

In 2017, South Africa’s Chamber of Mines estimated that the country’s mining sector constituted 6.8% of its economy. The mines in South Africa employed a total of 464 667 people by the third quarter of 2017, up from 457 290 at the end of 2016 – largely thanks to industrial minerals such as iron ore, chrome, coal and manganese.

So despite a challenging period – the release of the reviewed Mining Charter, industry unrest, monopoly and unethical business practices – South Africa’s mining industry is persevering, ‘helped by a gradual, improvement in the world economy’.

Mining-related companies and suppliers have also had to adapt to these conditions. One company that is flourishing and making a difference in the mining industry is Invincible Valves, which supplies locally manufactured and imported valves and accessories for a range of sectors, including the mining, petrochemical, power generation, water, sewerage and general industries.

Under the leadership of MD Pam du Plessis, the firm is seeking to grow through diversification – enhancing its existing products and introducing its own range of valves, Inval, which she describes as ‘a quality product with a price acceptable to the market in this day and age’.

Du Plessis, as a female entrepreneur in a predominantly male industry, is proud of the strides the company has made. Her contribution to the industry has helped her earn numerous recognitions, including the prestigious 2017 Enterprising Women of the Year and Moving Mountains 2017 awards. She was also recently named as one of the 30 most daring CEOs in business by Insight Success magazine.

AN INNOVATIVE VALVE COMPANY
Established in 1982 and located in Germiston, on the East Rand, Invincible Valves has almost four decades of experience in distributing, manufacturing, reconditioning and rubber-lining valves. Its own registered brand, Inval, features a comprehensive range of valves, including a broad spectrum of low pressure valves. 

Invincible Valves distributes its own range of valves as well as products on behalf of some of the biggest manufacturers in South Africa.

Built on the foundations of commitment, honesty and loyalty, the company is known for its exceptional customer service. It provides a ‘one stop shop’ to customers, supplying any additional requirements necessary for the valves’ application. The company offers many ancillary services such as rubber-lining of pipes, fittings and valves as well as reconditioning of valves.

As an approved BBBEE Level 4 supplier to all major industries within South Africa, Invicible Valves boasts expertise and experience across a broad spectrum of industries and applications, with a wide range of valve products at its disposal.

THE DRIVING FORCE
Du Plessis credits her success to her father, whom she regards as her role model. ‘He is the person who introduced me to the world of business at a very young age and has supported me in every moment of my life,’ she says. 

Having benefited from the support of family, Du Plessis in turn has been motivated to uplift her employees by upskilling them, and attributes the company’s success to the fact that it provides staff with the required training for their respective areas.

Her goal is to empower as many people as she can and has played an active role in establishing a fully equipped education and training centre on the company’s premises in Gauteng, South Africa, which was built in response to the absence of an efficient training facility of this nature in South Africa.

The recently opened centre offers courses delivered through the South African Valve and Actuator Manufacturers Association. In addition, ABET and basic business and life skills training courses are offered to staff, interns and the local community within which the company operates. Du Plessis says: ‘A number of these are offered to young students from local technical high schools, along with all staff members within our organisation.’

33 Shaft Road, Knights, Germiston, 1406
Tel: +27 (0)11 822 1777 / +27 (0)11 026 7413
Fax: +27 (0)11 822 3666
[email protected]
www.invalve.co.za

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2017 was a very good year for Parmi Natesan. She was recently selected as one of Destiny magazine’s Power of 40 Awards 2017 nominees. The awards celebrate powerful, successful young achievers under the age of 40 on the African continent who are bringing innovative ideas that impact the lives of people in Africa. Last year, Natesan also received the Rising Star Alumni Award from Nelson Mandela University.

Besides the affirmation of a job well done that an award brings, Natesan acknowledges that her family are her strongest supporters, and this motivates her further.

‘My two children, aged 11 and 9, are so proud every time they see me in the newspaper or getting an award. I think it’s great for children to see that hard work pays off. I hope it motivates them to be the best they can be. I am grateful to my husband, Suren, for supporting me in my career.

‘It’s not always easy. Sometimes you feel pulled in two directions. But with organisation, a good support structure and, fortunately, flexibility in my working hours, it is possible to have it all.’

Professionally, Natesan’s main focus is on promoting corporate governance and upholding the credibility of directorship as a profession. While the Institute of Directors in Southern Africa (IoDSA) is well known for its role in the King Reports, possibly less apparent is the professional body’s efforts to increase the number of competent directors, which it does through its chartered director and certified director designations.

‘Board composition probably has the greatest single impact on the future success of an organisation. It is worth getting right,’ says Natesan.

To get this right, the IoDSA has developed the Director Competency Framework, which contains the functional, personal and social competencies necessary for directors.

Encouragingly, transformation is happening at board level. Nearly one-third (32.3%) of directorships in Johannesburg Stock Exchange (JSE) and AltX-listed businesses are now black. This is the finding of 2017 JSE research conducted by the South African Institute of Chartered Accountants. However, there is still some work to be done in terms of gender diversity stats at board level.

Directors are required to provide an example of ethical and effective leadership. Leaders by their very nature carry the people that report to them along with them. And the ethos of an organisation is set by the people at the top.

Natesan’s conversation is peppered with phrases such as ‘directors’ duties’. When it comes down to the nuts and bolts of what this means exactly, she is happy to oblige with an explanation.

‘Directors have a fiduciary duty, or duty of trust to perform their functions in good faith, in the best interest of the company, with a duty of care, skills and diligence. In South Africa, directors’ duties are primarily contained in the common law.

‘Some of these duties have been codified in the Companies Act and they are also covered in the King Reports and Codes, of which the latest is King IV.’

Natesan hastens to add that directors’ duties should not prevent them from taking the bold decisions that are often necessary to drive growth and increase profits.

‘Business is ultimately about taking risk in order to gain reward. Equally, it is accepted that directors may take decisions that turn out to be wrong or result in loss,’ she says.

In these instances, ‘directors have a defence, which is commonly known as the business judgement rule, to be able to demonstrate that they took reasonable steps to become informed, and took a decision that they believed was in the best interests of the company at the time’.

The outcomes-based approach of King IV, which was released in November 2016, represents a significant improvement in corporate governance in South Africa.

‘If the principles of King IV are achieved, the benefits are an ethical culture, good performance, effective control and legitimacy,’ says Natesan. ‘This moves organisations away from a detailed tick-box compliance approach towards more mindful application – promoting corporate governance as integral to running an organisation and delivering positive outcomes.’

Natesan applauds government’s undertaking to issue a board appointment framework for state-owned enterprises as part of an inclusive growth action plan.

‘Effective corporate governance improves organisational performance over the long term and contributes to reversing the perception of corruption in the country,’ she says.

ACCOUNTABILITY THROUGH INTEGRATED REPORTING
Another crucial factor in ensuring good corporate governance and full transparency is integrated reporting. ‘Integrated reporting ensures that companies are not only meeting their set profit margins but are also actively involved in meeting their social responsibility, for example CSR projects,’ says Caylin Jade Walker, a second-year accounting science student at the University of Johannesburg, and third runner-up in the 2017 KPMG/University of Johannesburg Integrated Reporting Project awards.

The project, which is a collaboration between KPMG and the department of accountancy at the University of Johannesburg, required accountancy students to analyse a JSE-listed company’s report in accordance with the International Integrated Reporting Framework.

‘SAICA’s slogan is “develop, influence, lead”,’ says Walker, and that’s exactly what she learnt through the initiative.

‘This project has developed my integrating thinking and creative presentation skills. It has influenced me to not only focus on understanding the technical aspects of my degree but rather focus on how the skills and knowledge obtained can help make a better South Africa – a country in which companies are transparent and provide a holistic view point to their stakeholders.

‘Finally, this project has ultimately demonstrated that we students are not just the future external or internal auditors, financial directors and CEOs but rather leaders of change.’

17 Fricker Road, Illovo, Sandton,
Johannesburg, Gauteng, 2196
Tel: 0861 072 422
www.saica.co.za

There is a need for more lawyers that are able to represent the growing energy sector, be that in environmental practice or regulatory compliance and downstream project agreements, says Barrisford Petersen, BBP Law founder and MD. ‘This is a landscape that is going to be in constant flux, given the constant development of new technologies in the energy sector, which makes this aspect of the law very compelling.’

As devoted as he may have been over the past few years, in presenting a strong argument for oil and gas to have its own legislation and, therefore, be removed from the Mineral and Petroleum Resources Development Act (MPRDA) of South Africa, – Petersen has decided to diversify the BBP Law practice and include the whole energy sector in the provision of legal services.

‘The writing was on the wall even as far back as 20 years ago,’ he says. ‘The oil and gas industry has been through innumerable difficulties, and as long as it remains regulated in its current manner under the MPRDA, we will not be considered by multinationals as a viable investment destination for exploration, let alone production.

‘With proposals and amendments on the table for the past four years, we are no further from the starting point.’

Such frustration has provided new opportunities for BBP Law, and Petersen is excited by the addition of energy to its portfolio of specialised legal services. With energy matters reflected more today, given worldwide calls for reductions in carbon emissions and growing power demands, South Africa’s environmental acts appear to be more concise and appropriate, providing the legal profession with improved clarification and clearer interpretation than the MPRDA.

Following recent appointments to the legal panels of the Department of Public Enterprises, Saldanha Bay Municipality, PetroSA, Engen, SA Forestries Company Limited and the Independent Electoral Commission, there is now a need for BBP Law – with its team of bright, young lawyers and the support of more seasoned attorneys – to focus its presence and activities on the instructions of these panel appointments, so that they can grow in experience.

With diversification into energy, the practice has employed a number of newly qualified lawyers who, together with Petersen’s son, Brent (who was recently admitted as an attorney), are well set to service this sector and BBP Law’s expanded legal services.

‘Our senior attorneys are mentoring and developing the juniors, and I see them advancing our diversified portfolio of legal services.’

While oil and gas remain his passion, right now Petersen is content to focus on ensuring a good, diversified legal practice, ‘one that works in resources’ and has a reputation for advancing the views of his clients within the parameters of regulation.

If this means he needs to pick up his sword and challenge the country’s energy policies as he does with oil and gas, he will do so, ‘as often as it takes to ensure we have legal frameworks that our investors and clients – both local and international, can work within’, he says.

Petersen adds that there is lots to be excited about in terms of how power could be generated in South Africa in the future, even currently. ‘There are very stimulating opportunities, not least of which is the importation of liquefied natural gas [LNG].’

LNG projects have the capacity to underpin exploration and production of indigenous gas, which could alleviate South Africa’s dependence on coal. The proposed LNG-to-power programmes will have at least two industrial ports producing some 3 000 MW that would be sold to the national grid supplier Eskom, which will alleviate, if not solve extensively, the energy demand-versus-supply failures that it has been experiencing over the past decade.

‘LNG development has been offered to independent power producers and, should trajectories prove true, by 2040 LNG-to-power expansion will lead us into shale gas and deepwater offshore field creation,’ according to Petersen.

Shale gas, however, comes with its own set of problems. ‘While there have been uncertain legislative delays in the commitment to shale gas exploration, we need to keep pushing this. Largely the challenges relate to environmental impacts, and highlight the concerns of action groups – like the Karoo Action Group – that oppose shale-gas mining through fracking, in particular the consequences of which are cited as harmful public health issues.’

Petersen says that, fundamentally, the base building blocks to solving these problems lie in legislation and how to mitigate environmental risks at grass-roots level.

‘If there was lots more investment in shale gas right now, the landscape would be very different because legislators would be under pressure to push for amendments,’ he says, adding that it’s similar to the oil and gas predicament. ‘If regulations are enabling, investment would be flooding in. In some ways, shale gas is like the icing and the cherry on a cake, but without the cake itself.’

Further compounding the dilemma is that the cheapest form of energy delivery in the country currently is coal, but as Petersen points out, the majority of countries that advocate for the non-use of the commodity are those that have environmental challenges, and ironically may have already over-utilised the resource.

‘I believe that given we already use coal effectively to generate energy, and should we begin to manage it more effectively, we can continue to use this abundant resource, and realise cost-effectiveness. But the country is a signatory on mitigating carbon emissions, and rightly so. Therefore I’m not sure how we can solve this problem.’

Which brings us right back to gas. ‘The best form of domestic energy in terms of environmental impact is gas. It is obviously always better to source your commodity locally than to bring it in, but this takes us into the regulatory framework debacle, which I have been fighting for decades and will continue to do. It’s a catch-22 – we just keep going around and around.’

Petersen believes the solution lies with having independent oil producers partnering with the state through a hybrid of production- sharing contracts. The incentives, he says, will allow more royalty income and tax relief. He provides a simple formula, and one that he has presented to the relevant authorities many times.

‘Exploration can be encouraged by permitting a greater and/or accelerated cost recovery, and the oil barrel split can be negotiated between the oil company and the government. What is then being given away is a proportional share of the barrel and not a national heritage. The state will always own its resources.’

This formula mimics that of many African countries that have separated oil and gas from their mining legislation, so it’s not that South Africa doesn’t have case studies it can refer to. It’s a fact too, according to Petersen, that many multinationals seem to prefer operating in other African states where there is a good fit in the fiscal regime for their exploration activities.

‘South Africa is really losing out. Not only have we gone too far down the oil and gas rabbit hole in terms of legislation, but we have also been impacted as a consequence of the global oil price.’

Subsidies would help. As it is, the government has been indirectly subsidising the production of renewable energy, such as wind and solar farms but, while this has been successful, Petersen points out that on a cost per KW, it is still cheaper to focus on gas, particularly domestic gas.

BEE and beneficiation will also be advanced through an enabling legislative environment, let alone employment opportunities and skills development. This is an aspect BBP Law is devoted to, given its Level 1 BEE status.

Tel: +27 (0)21 913 1384
Fax: +27 (0)86 691 4998
[email protected]
www.bbplaw.co.za

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