Old SA’s man of steel can be model for new tycoons
The government wants to create 100 black industrialists. Ray Hartley asked Exxaro CEO Sipho Nkosi how this could be done
POLITICALLY powerful people embarked on a project to power up a South African economy that had become too dependent on resources. They turned to the scion of a politically connected family and asked him to lead an industrialisation drive.
It was 1924 and Jan Smuts had been in power since 1919. The man he and his associates had turned to was Hendrik van der Bijl, the son of a family close to Smuts and his predecessor, Louis Botha. They had made the family name in the produce and property businesses.
Van der Bijl was appointed special adviser to Smuts. He began by building a new state enterprise that would later be called Eskom.
It was an obvious starting point. There was abundant coal, and without a major improvement in electrical supply, there could be no serious extension of the industrial base.
Four years after starting Eskom, Van der Bijl started another giant state enterprise called Iscor. Its objective was to produce iron and steel products and to create jobs.
Iscor’s Pretoria plant was commissioned in 1934.
When World War 2 erupted, demand for steel rocketed and Iscor opened a new facility in Vereeniging.
A plate rolling mill that would serve military needs but also postwar commercial demand was developed.
Smuts and Van der Bijl started the Industrial Development Corporation to spur economic growth based on abundant electricity and steel.
When the war ended, a fully integrated steelworks was constructed at Vanderbijlpark, named after the ageing Van der Bijl, who had been made chancellor at the University of Pretoria. He died at the age of 59 in 1948.
I mention this forgotten history of industrialisation because Van der Bijl is the person that Sipho Nkosi, head of coal company Exxaro, mentions first when I ask him how South Africa can improve its economy.
Van der Bijl’s projects were designed to serve the interests of white South Africans, but Nkosi brushes this off. What is important is that the lessons of this massive industrial expansion are learnt and understood today.
Nkosi has read Van der Bijl’s biography. The most important lesson is that Van der Bijl “did his time in terms of his own skills and knowledge”.
Van der Bijl was an accomplished academic with years of training.
When told that South African coal was unsuitable for furnaces, he responded: “We’re engineers, man, we can solve this thing.”
“You need that kind of animal,” says Nkosi.
The apartheid-era industrialist is not the only politically incorrect role model that Nkosi draws on without batting an eyelid. He cites the contribution made by Graham Boustred, the former deputy chairman of Anglo American who was key to the rapid growth of its coal business — the predecessor to Exxaro.
In a now-famous interview with Business Day, the then 84year-old Boustred was responsible for some memorably offthe-wall quotes.
When one of the journalists conducting the interview did not understand a comment, he retorted: “Then f*** off.”
Later he explained why he wanted to move to the Isle of Man: “There are no Muslims, no blacks. It’s got a good healthcare system. It rains a lot, but so what? I’ll get underfloor heating and I’ll get a good mackintosh . . . I’m going to the Isle of Man, for Christ’s sake.”
Nkosi has the ability to put aside Boustred’s bluster and recall the man who helped build the South African coal business. “They had the vision and the perception when they saw the oil crisis of the 1970s.” The rail links to Richards Bay and the coal export terminal were con- BLACK ENERGY: Sipho Nkosi, the CEO of Exxaro, at the company’s Inyanda coal mine in eMalahleni. He says there are no short cuts to becoming an industrialist and acquiring the relevant technical know-how structed because of the rambunctious aggression of Boustred and his colleagues. The government and business saw an opportunity and directed their resources to exploiting it, a lesson that should not be cast aside in a hissy fit of political correctness.
“South Africans are a good people, a unique people. But someone has to rally them,” Nkosi says.
He believes the approach to BEE is not working. “You don’t want people who are about themselves, who are out to make money for themselves. You need people who will put the country first.”
“Policies have to change. What has made empowerment not too successful is that it is a half-baked solution.”
When companies sell stakes to empowerment players, they are in reality binding them with debt to financial institutions. “What was 20% one day is — after 10, 15 years — worth 9%.” Unsurprisingly, they cash out when they can.
Nkosi’s criticism of empowerment cannot be ignored. He belongs to an elite club of black executives who have produced the goods at major South African companies. Others include MTN’s former boss Phuthuma Nhleko and retired FNB CEO Sizwe Nxasana.
“I was always prepared to go and work inside the organisation and acquire the knowledge and the skill. You have to do the time.”
Doing the time meant getting knocked into shape by the best in the business, sometimes with a lashing of humiliation.
He recalls when he began attending executive meetings at Anglo American.
“Here was the highly educated darkie who walked in. But I was not making much of a contribution.”
Eventually, he was taken aside by executive Trevor Jones. “You are not going to attend these meetings because you know nothing,” was his blunt statement.
Nkosi was given a series of assignments to work on. They were marked in headmasterly fashion.
“I felt my ego bruised. But I took up the challenge and I thought: ‘I’m going to be a better person for this.’ ”
He was sent to mines to spend time around coal stockpiles and working at the coalface, so to speak.
Years later, he emerged as the finished product — someone who could talk about the product in detail, who understood the business from the inside out. “Can you talk about a lowvolatile coal versus a high- volatile coal? Can you see the difference from just looking at a pile of coal?”
He was sent to India, Brazil and Argentina. “I learnt to deal with the world.”
Nkosi’s confidence grew. “I attended a conference in Copenhagen. I looked around the room and couldn’t see a darker face. I said: ‘Can you turn up the lights because I’m too dark, all you will see are my teeth.’ They all laughed. I gained their support.
“You have to earn the respect of everyone. You will earn respect when they see you doing the work. People respect what you have done,” he says.
By the time opportunity knocked, when Anglo sold off some of its coal assets, Nkosi had done the time needed to venture out on his own. “When we started in 2002, we knew the mines we were buying were old.”
For five years, they scrambled to find a partner to develop the mines. Exxaro emerged from the old mines and soon began to lead the coal industry.
Now Nkosi is concerned about the slow pace with which the country’s energy challenges are being overcome.
It goes back, he says, to Van der Bijl’s strategy — enough properly priced electricity to power up the economy.
President Jacob Zuma’s much-publicised plan to create 100 black industrialists is a good idea, but there are no short cuts to the top. Building industrialists, says Nkosi, is not something you can do overnight. “You cannot walk around anointing people, saying: ‘I like you.’
“There is some special characteristic that you look for in a person. They must have the passion to do it. If you don’t have the passion for it, you’re not going to do it.
“The point I want to make about Van der Bijl is that it was not smooth sailing. He was criticised by his own people. He was criticised by the media fraternity at the time who asked: ‘Who do you think you are?’
“To become an industrialist, you need to have that staying power, that resolve to say: ‘I believe in this vision.’ ”
South Africans are a good people. But someone has to rally them I took up the challenge and I thought: ’I’m going to be a better person for this’