ELB Engineering

Diversifying the engineering company to prosper through the mining downturn

About This Project

The ELB Group traces its origins back to the early days of the 20th century and the enthusiasm and foresight of its founder, Edward L Bateman, who established the company in 1919. The company enjoyed steady growth and in 1951 The ELB Group was listed on the Johannesburg Stock Exchange (JSE:ELR). The engineering arm of the company is predominantly focused on materials handling, gravity separation for minerals beneficiation, and Industrial projects and has played a fundamental role in some of South Africa’s most influential resource projects.


“ELB Engineering Services has the capability of offering the mining and minerals, industrial and power sectors total turnkey project solutions,” says ELB Group CEO Dr Stephen Meijers.


“We provide total turnkey solutions using world class technology partners on an exclusive basis. By getting the best-in-breed in the world, with the best R&D going into the technologies, we provide world class solutions to our clients.”


One of ELB’s key differentiators in the market is the way it applies the total turnkey solution approach to the projects it works on. The company provides solutions for every stage of the construction and implementation cycle of a project. It provides services for the design on structural, civil and electrical stages, ELB can do ‘anything a project requires’ says Meijers.


ELB designs the product, has it fabricated and delivered on site. Then its construction subsidiary provides a full suite of construction services including mechanical, structural, electrical implementation and manages it all the way to commissioning.


“It is a very unique offering. I would say there is not another South African competitor which has that full offering. That is one of our main differentiators,” notes Meijers.


One of the key benefits of a single firm providing the total solution is that it dramatically reduces the clients’ exposure to risk as there are far fewer interfaces on an already-complex project. The secondary benefit is that ELB develops specific project knowledge that results in efficiencies as it moves through the project stages – instead of a new company having to come in and learn the unique challenges on any project.


“Everything from the technical risk to the execution risk, the relationship and financial risk is all controlled under one roof. There are efficiencies because we take responsibility for the overall price of the project and there are not ‘profits put on profits’,” explains Meijers.


“From a schedule point of view, from a financial point of view and from an interface point of view our model is definitely a differentiator. It takes all the pressure off the client. They can have a smaller management team and we get to liaise directly with the owners.”


Major projects


ELB Engineering Services has a vast portfolio of completed projects. The company has experience on a truly broad range of projects, providing innovative technical solutions to facilitate cross-industry production, processing and engineering.


One of the major projects ELB is currently working on is the coal and ash handling package for Medupi power station. The Medupi power station is an Eskom facility which ELB has been contracted on since February 2010. The engineering firm’s role on the project entailed the design, supply, erection and commissioning of the terrace coal and ash handling facility comprising 54 conveyors of various lengths.


“It is one of the largest coal-fired power stations in the world. We have been on the project for seven years and we have another two and half to go. It is a really significant project for us, at the time it was the biggest materials handling project in South Africa.”


Another of ELB’s flagship projects recently completed was the Impumelelo overland conveyor for Sasol Mining. ELB constructed one of the world’s longest single flight overland conveyors, standing at 26.9 km in length. The conveyor was part of the overall contract to commission the Impumelelo Mine Materials Handling System, which comprised seven conveyors with a total length of around 30 km.


“It is a great project and it broke all records in terms of length and the ability to start material conveyance,” says Meijers.


ELB has just been contracted by Vedanta Zinc for Black Mountain Mining Company to supply the full processing plant, infrastructure, all power connections to the grid and the supply of water from 40km away for the new Gamsberg zinc mine.


The mining downturn


The collapse of commodity prices in the last couple of years has forced industry-wide re-evaluations. ELB was no different, although it has shown real agility to refocus its expertise and experience towards the fast-moving consumer goods (FMCG) industry. Meijers and his team identified that the FMCG sector could provide to be the perfect solution to the dangers of volatile resource prices.


“Because of the downturn in commodity prices and the demand basically disappearing we had to diversify. We looked at where we could apply our engineering and project management skills and FMCG suited us best.


“We saw a niche market where we could tie-up with international food and beverage process suppliers and with our local capability of detailed engineering, electrical installation and our construction we knew we could provide turnkey solutions for that sector and we have been highly successful in the last two years in that space.”


ELB has been awarded some major projects by the big players in the FMCG business. It completed the Nestle Egron 5 Estcourt Project in KwaZulu-Natal.


Alongside the diversification into FMCG, Meijers has also led ELB into two other external markets. The first growth area was the ‘stay in business’ sector. This involved working with mining companies which were employing new technologies in order to improve efficiencies, essentially cutting costs enough to placate the price downturn.


The second external market for diversification moved away from mining and minerals and into the small package plant power sector. Meijers says this is an area that he wants to get more involved with, “We focus on biomass boilers generating power up to 25MW and we hope to land our first project in the next two months. We also moved into the 2-10MW gas turbine market.


Meijers adds that it was the residual expertise that existed in the company that enabled it to smoothly transition between sectors and still retain the quality of solution that it provided to the mining sector.


Throughout the mining downturn ELB Engineering Services maintained a solid revenue stream by diversification into different industries and Meijers says he is beginning to see green shoots in the resources sector.


“It is definitely not like it was a year ago. The zinc price has been increasing but I think you will see some other commodities: iron ore, coal and platinum, start to move in the coming months.


“I think it could be largely driven by a demand pull where supply has reduced in terms of capacity, as soon as we see that we will see new projects, but I still predict another 18 months of hard times.”


Meijers is targeting continued growth in ELB’s power and FMCG divisions while at the same time expanding the business into Africa as a continent. In terms of his ambitions in the mining sector Meijers wants to win contracts for another one or two large projects in the next 24 months to balance the business across the three sectors.


“We know where the projects are and it is critical that by 2018 we have an even stronger balance sheet than we do now. We need to make sure that when the next downswing comes the balance sheet can carry us through again.


“I think the most important thing around business survival today is the strength of the balance sheet to get you through the tough times.”


ELB Engineering


+27 (0) 11 772 1400

mining, services, South Africa