Sep 2022 Interview with André Snyman, Managing Director, Walvis Bay Salt Holdings
Prisma Reports (PR): The Namibian government’s Growth at Home plan to boost industry has local manufacturing to transform the country’s natural resources at its core. As managing director of the leading sea-salt producer Walvis Bay Salt Holdings, what are the main challenges for Namibia’s manufacturing sector?
André Snyman (AS): For manufacturers, opening new plants and purchasing equipment in any country is expensive and, therefore, in order to repay your investment, volume is needed. Namibia’s first challenge is that its local market is quite small and, as a result, companies must find ways to export to other markets. The leading exporter of salt in sub-Saharan Africa, Walvis Bay Salt produces in excess of 1 million tons of solar-evaporated sea salt a year, 80% of which is exported. In order to be successful with our exports, we must add value as far as we can.
The other real challenge for manufacturers is having sufficient and stable electricity. Theoretically, we can produce various chemicals from salt. For example, all our drinking water in Namibia must be treated with chlorine and, at the moment, our salt goes to South Africa to have the chlorine extracted. This chlorine is then transported back to Namibia and is used to treat our water. We’ve been unable to set up a plant here for this process as the energy costs have outweighed the benefits.
Importing skills is sometimes also an issue because Namibia doesn’t always have all the required skills for highly technological processes. As a country, we need a strategy to bring in that expertise so that skills transfer can happen.
PR: Established in 1964, how does Walvis Bay Salt stand out in the market?
AS: Walvis Bay Salt has about 150 permanent staff — due to the nature of our business, we’re not the biggest employer. We add as much value as possible and export to countries that include Nigeria, Cameroon, South Africa and the U.S. We’re also working on potential future exports to Brazil.
Our production process is driven by natural solar evaporation — you can’t have a salt field in a rainy environment — and Namibia’s coastal area is known for its windy and sunny conditions with little rainfall. The evaporation rate in the area of our salt fields is about 1,600 millimeters per year and the dry, windy weather is ideal.
Our main cost drivers are people and energy, which includes fuel and electricity. Together with Namport — which oversees the Port of Walvis Bay where we are the largest customer by volume — we try to keep our export costs as low as possible, although port costs are another a major cost driver. Salt is a low-cost-price commodity. In the end, what’s important to our customers is the landed price of the product and that includes the price of the salt and logistics. Often, the combined cost of the logistics, freight and transport exceeds that of the salt.
When we harvest our salt from the field, it’s still in a crude form and must be processed, which involves washing and processing. In washing salt, you have to make sure that minimal product is lost to dissolution. Our processes ensure that the amount of salt being lost to dissolution is kept low and we’ve developed technology to increase our efficiencies to international standards in order to keep this loss as low as possible.
PR: In 2020, Walvis Bay Salt inaugurated a new $5.6-million-wash plant that has a maximum capacity of 1,200,000 tons a year. The move was designed to increase the company’s processing capacity as well as its product quality, both in terms of bulk and bagged salt. How is this new facility helping you meet the requirements of global clients?
AS: As the washing efficiencies are higher with our new wash plant, we have fewer processing losses and, hence, more product to sell. Our customers want salt with moisture levels of not over 2.5% and the new plant produces salt that is very dry and caters to that industry need. The new investment has also brought benefits with regards to maintenance flexibility.
PR: How price competitive and distinct are your products, and what sort of innovations have you been working on recently?
AS: Price competitiveness depends on the importing country: we’re more competitive for markets that are in our region. Our pricing model is based on the concept of import parity — when we export to distant countries like the U.S., it’s more difficult to compete due to the high freight prices.
We produce various grades of salt, including chemical grade, general purpose and salt for cattle, and we adjust the particle size and size of packaging based on the type of salt. One of the new areas we’re working on is the production of salt-lick blocks enriched with minerals and vitamins. While, for the deicing market, we can customize the salt color to brand it for clients. In that market, the margins are initially low, but it’s a new area we’re exploring. At the end of the day, however, it’s all about the effectiveness of logistics. After COVID-19 hit, freight prices skyrocketed, which impacted our competitiveness, but we believe freight prices will come down over time and we’ll become more competitive internationally.
PR: Are Walvis Bay Salt’s operations environmentally sustainable?
AS: We don’t add any additives to our products, plus all our effluents come naturally from the sea and are returned after. Our processes don’t compromise the local environment and its ecosystems either — in fact, since we started harvesting salt here, bird life has flourished. We currently transport our salt in a truck on a 13-kilometer route to the port, but we’re thinking about investing in a pipeline for it to be transported to the port through a saturated-brine medium in a loop system. This green initiative would remove trucks on the roads and, with fuel prices increasing, it’s a project that has great potential and benefits.
PR: Is Walvis Bay Salt looking for international investment partners at the moment?
AS: Recent projects at Walvis Bay Salt were funded through investment from our holding company based in South Africa. Currently, we’re looking for logistics partners with innovative solutions, which is a huge part of our industry. We’re also looking for technology partners with a focus on value addition — an ideal partner for us must have technical knowledge and access to different markets. To address the country’s unemployment rate of 40%, more industries need to start up and that will mainly come from foreign investments. We need international companies and institutions that want to invest in Namibia: the country is stable, although we need to constantly assess how attractive it is as an investment destination, compared to others.
An ideal opportunity for a new investor would be setting up a plant for chlorine production to produce drinking water. As I mentioned, all our chlorine is imported at the moment and, with this plant, we could also supply Angola with chlorine. As we’re located at the coast, we could also look at producing wind or wave energy at Walvis Bay, and logistics is another opportunity, with our plans to remove trucks from the road and transport salt through a pipeline. Even if we use trucks, they should run on hydrogen instead of diesel in the future and that fuel source could also be addressed. Indeed, there are many opportunities and the skills within Namibia are not always the best to capitalize on them.
PR: Which achievements are you most proud of and what are your future ambitions as managing director of Walvis Bay Salt?
AS: I’m proud that we’ve expanded our salt field, which was our biggest project and grew our annual volumes by 20%. Our wash plant investment was also very successful if you look at our returns. With our refinery for table salt, we remodeled a business that was making a loss but is now profitable. But our biggest achievement is that we improved the efficiencies of the business from where it was, to where it is now through continuous implementation of lean principles and doing things better.
Somebody once said, “It’s good to go bigger, but doing it better is best. In short, costs must go down and we’ve managed to either keep our costs constant or lowered them.
In terms of what we want to achieve going forward, we need to get two big projects up and running at the port. Our export salt is loaded on a conveyor system and, at the end of our lease, that system is going to be removed by Namport because it’s old. Therefore, we need to invest in a new and mobile structure. We also need to improve our logistics and warehousing.
Another interesting project is looking at new ways to produce salt. Currently, our process starts with seawater, but we’re working on a brine expansion through which we can withdraw brine from the subsurface instead of from seawater. That would allow us to expand our field though the extraction of underground brine. Our normal evaporation process that turns seawater into salt takes 24 months, but with the brine, this would be shortened to 12 months, which will add value and increase our efficiencies.
PR: What would be your closing message to potential investors in Namibia?
AS: Namibia is a stable country with huge opportunities. I’m sure that anyone who’s interested in investing in Namibia would get the right returns and support from the government. There are challenges, but our government is willing to listen, and to address the bottlenecks and transport efficiencies. Finally, given its economies of scale, Walvis Bay Salt will continue to grow.