The rise of an elephant
A business that started with a modification at a private residence in Venda has morphed into a R3,5 billion construction and infrastructure conglomerate. Ndavhe Mareda, Chairman of the Makole Group, shares his business journey and the new ground Makole’s breaking as it diversifies its portfolio
Where did your entrepreneurial journey begin?
I’m an accountant by profession and, like most people in the field, I started in corporate with companies like Sasol and Mercedes-Benz, as well as a stint with SARS. I reached the point where I needed a change and had always found the construction industry fascinating. But the entrepreneurial bug bit when I was growing up in Venda. My father’s always been in business, albeit on a very small scale, but it kept the family going and put us through school. During school holidays, I used to help him distribute vegetables to various markets in our area.
Tell us about the remarkable rise of Makole.
The business started in construction as Makole Property Development and Makole Infrastructure. I launched it in 2002 with a renovation job for a client who wanted to convert his garage into a bedroom with a bathroom and patio. From there, we became a specialist contractor in the construction of residential homes and got involved in major developments of residential estates such as Meyersdal Crest, Blue Valley Golf Estate and many others. We’ve done just about every type of construction and property development project you can think of, so we’re tried and tested.
You’ve since expanded the business beyond the construction industry. Tell us about the new ventures Makole’s exploring.
We decided to move into a different space because I saw the need to diversify our business. We were mindful of exposing ourselves too much in a market that could become saturated and is vulnerable to the effects of an economic downturn, so I started Black Royalty Minerals, which houses our mining exploration ventures. It’s an end-to-end business, meaning we take a project from greenfields. We do the exploration and progress to the mining right phase, and then to the actual mining operations. The Chilwavhusiku Colliery in Bronkhorstspruit is our maiden mining operation, but we also have interests in coalfields in Mpumalanga and the Waterberg, as well as other operations in KwaZulu-Natal. In addition, we’re already at an advanced stage with work on an iron ore and manganese exploration. We’re also pursuing rare earth minerals and some of those projects will soon be getting off the ground.
Starting a mining operation must have been challenging, given your lack of experience in the sector. How did you do it?
Mining is a highly regulated industry and we wanted to ensure that we were fully compliant, so we entered into strategic partnerships with companies that had operational experience. We opted to go with Stefanutti Stocks Mining Services, which has a substantial track record in this space. We’re also in partnership with Eskom, which is the dominant local energy supplier. South 32 is one of our main clients to whom we’ll be supplying product. We’re also seeking export market opportunities that will give us a global footprint.
With the recently-announced R56 billion agreement government’s entered into with Independent Power Producers [IPP], are you concerned about the threat renewable energy could pose in the future?
There’s a local market and an export market for coal.
If you’re focused on energy or steam coal, you’re more likely to be stuck with Eskom, since it pretty much enjoys a monopoly in terms of power generation. Notwithstanding the investment in IPP, Eskom will continue consuming coal for quite some time. In the Kusile and Medupi power stations, it has two major beasts to feed. In our estimation, Mpumalanga’s reserves will be the first to be depleted and
Eskom’s already battling to keep up with its supply requirements. The biggest reserves are in the Waterberg and Exxaro is currently the only supplier operating there. That presents great opportunities for us. It’s also an imperative for Eskom to diversify and move away from a single-supplier scenario. That’s just the domestic market. There’s no doubt that the Paris Agreement and similar accords on emissions control will be game-changers. However, for developing nations like ourselves, green energy will come, but on a medium- to long-term basis. So those export markets will still provide opportunities for us.
What does the future hold for your construction and infrastructure business, which is the goose that lays the golden eggs for Makole?
We’re fortunate in that we’ve retained clients who continue to be very supportive. We’ve succeeded in building a diverse client base, from individuals who just want to build homes to major infrastructural projects on behalf of local, provincial and national government. It’s the lifeblood of the Makole Group and, in fact, it’s on the strength of that balance sheet that we were able to source funding for Black Royalty Minerals. So we have to look after that business.
What are the most important lessons you’ve learnt in business and what advice would you offer young entrepreneurs?
Never stop trying. That’s the biggest thing I learnt from my father. Even when things got tough, he kept soldiering on. To this day, despite his age, he’s still working hard running his small taxi business. Young people need to adopt the mantra: “The world is your oyster.” It’s filled with opportunities which are open to them. Their only limitation is in their minds. There’s still plenty more I want to achieve, but considering where I’ve come from, I’m a good example of what can be achieved if you seize the opportunities out there.
“WE’VE DONE JUST ABOUT EVERY TYPE OF CONSTRUCTION AND PROPERTY DEVELOPMENT PROJECT YOU CAN THINK OF, SO WE’RE TRIED AND TESTED.”