164 | theceomagazine.com
Under Rowan’s stewardship since 2016, South
African anthracite and bituminous coalmine Buffalo
Coal has been working hard to come back from
a financial nightmare, with around R200 million
still owed to specialist banker and asset management
firm Investec. With operations in Kwa-Zulu Natal,
the company’s Magdalena and Aviemore mines
supply thermal coal, anthracite and calcine to
both domestic and export markets.
Rowan has been charged with the task of
putting the company back on solid ground. “When
I joined Buffalo, there were a lot of things that
weren’t in place. We had significant debt issues,
we were dealing with a claim against mining
rights at Aviemore coalmine, we were in
the red with the Department of
Mineral Resources, and we faced
difficulties with the communities
surrounding the mines.
I worked hard and fast
to resolve these issues and
spent a lot of time in the
community to improve the
relationship,” explains Rowan.
“In terms of safety, our
injury frequency rate was far too
high until I introduced visible felt
leadership. We focused on lead
indicators and appointed an ex-BHP Billiton
Vice-President of Health and Safety to transform
our safety procedures.”
While these issues were resolved fairly quickly,
Rowan says it was thanks to strong coal prices that
the company’s margin was boosted during this time.
“This uptick allowed us to sell off some old stock
and form a stronger relationship with Investec and
rebuild our credibility.”
In addition to financial setbacks, Buffalo is also
faced with technical concerns created by Kwa-Zulu
Natal’s challenging geology. “We are always trying
to optimise our operations by improving our mine
planning and focusing on technical excellence.
We are looking at reserve statements for our two
operations, which will give us an improved yield
and less contamination, and we have an in-seam
horizontal drill to help us predict the faults and
dykes,” says Rowan. “At the new North adit of our
Aviemore mine, we’ve doubled our undergroundsections going forward. This will lift production and
reduce the fixed cost, having a big impact on our
overall NPV value. We have also identified spare
capacity in our two wash plants. We’re now focused
on buying coal to reduce the fixed cost and increase
our margin.”
Buffalo prides itself on a diversified marketing
strategy. “We supply coal inland and to the export
market by rail and road. We sell the coal in South
African Rand on a freight-on-road basis, which
de-risks us from rail and port risks, demurrage costs,
and fluctuating exchange rates. We sell
through traders like Glencore, which
gives Buffalo a diversified port
strategy that differentiates us from
competitors,” Rowan says. “We’re
at an advantage because we are
one of the few anthracite mines
left in South Africa, and the
demand for anthracite and coal
looks promising. I’m a big coal
bull and I believe the coal market
will be in an up-cycle for the next
couple of years.”
According to Rowan, the outlook for
Buffalo is positive, following a rebound in the
price of thermal coal and a robust demand for
anthracite. “I’ll be focusing on our health and safety,
environment, and community procedures. We still
have a way to go, but we’ve already seen great
improvements in our performance,” he remarks.
“On the financial side of things, we are creating
a bankable feasibility study for the Aviemore mine
to extend its life from three to 15 years,” explains
Rowan. “Over the next two years, we’ll begin to
repay Investec while continuing to add value to
our major shareholder, Resource Capital Fund.
We’re also looking to buy opportunities from
neighbouring mines to keep our wash plants full
and improve our margins.
“There’s been a lot of challenges at Buffalo –
never a dull moment – but we’re definitely moving
in the right direction. As the saying goes, you have
to soar with the eagles instead of hanging out with
the chickens.”“I like to play
in the space where
companies are in
distress and turn
them around.”
INVEST | Interview