The rise of an ele­phant

Destiny Man - - POWERHOUSE -

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.”

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