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  • SUCCESSFULLY HARNESSING SYNERGIES THROUGH NETWORKING, A CASE STUDY

    Establishment of a local capability to producemonoclinic fused zirconia for export

    ECCO Symposium #4 June 14 and 15, 2012

    Foskor Zirconia

  • Foskor Zirconia

    ECCO Symposium #4 Pilatus Aircraft Ltd

    June 15, 2012 2

    CONTENTS

    Industrial Participation in South Africa

    Focus on NIP Program

    Pilatus Aircraft Overview

    Pilatus Aircraft in South Africa

    Foskor Zirconia Overview

    Fused Zirconia NIPP Project

    Project / Product Overview

    Project Current Status

    Benefits to Foskor Zirconia

    Benefits to Limpopo Province and SA Economy

    Closing Remarks

  • INDUSTRIAL PARTICIPATION IN SOUTH AFRICA

    Foskor Zirconia

  • Foskor Zirconia

    ECCO Symposium #4 Pilatus Aircraft Ltd

    June 15, 2012 4

    INDUSTRIAL PARTICIPATION IN SOUTH AFRICA

    NIPP is the National Policy and applies to all procurements made by Government,

    including Defence.

    Managed by the dti

    Imported Content > 10 M USD

    National objectives

    Mainly civilian (non-defence) Industry

    30% obligation

    7 years discharge

    5% penalty

    DIP is linked to the National Policy and is an additional obligation that applies only to

    Defence Procurements.

    Managed by Armscor

    Imported content > 2 M USD

    Defence strategic objectives

    Defence-related Industry

    50% obligation

    7 years discharge

    5% penalty

  • Foskor Zirconia

    FOCUS ON NIP PROGRAM 1/2

    ECCO Symposium #4 Pilatus Aircraft Ltd

    June 15, 2012 5

    NIPP Role

    The National Industrial Participation Programme(NIPP) was launched in 1997.

    It is a programme of the Department of Trade and Industry (the dti) and uses government procurement to leverage investment, exports and technology development. The NIPP is administered by the dti through its Industrial Participation Secretariat (IPS).

    NIPP Objectives

    Ensure sustainable economic growth;

    Facilitate access to new markets, and establish new trading partners;

    Encourage Foreign Direct Investment (FDI) into South Africa;

    Increase exports of South African value-added goods and services;

    Encourage research and development (R&D) collaboration in South Africa;

    Contribute to job creation in South Africa;

    Develop human resources in the country;

    Ensure technology transfers to South Africa;

    Support the economic development of historically disadvantaged communities.

    NIPP Mission

    Leverage economic benefits and support the development of South African industry by effectively utilizing the instrument of government procurement.

    This mission is guided by the National Industrial Participation (NIP) Policy.

  • Foskor Zirconia

    FOCUS ON NIP PROGRAM 2/2

    ECCO Symposium #4 Pilatus Aircraft Ltd

    June 15, 2012 6

    THRESHOLD(IMPORTED CONTENT)

    Imported content > 10 M USD (single contract, multiple contracts over a two-year period, renewable option clause or acquisition by State-Owned Enterprises)

    NIP QUOTA 30% of Imported Content

    FULFILMENT PERIOD Usually 7 years

    PENALTIES 5% of NIP Obligation (Performance Guarantee)

    MULTIPLIERSNormally, one dollar equals one credit.Exceptions: Investment and Technology Transfer; Black Economic Empowerment (B-BBEE)

    BANKINGAllowed (credits valid for 4 years).Only 50% of any new NIP Obligation can be fulfilled using banked credits.

    B-BBEE REQUIREMENTS B-BBEE involvement 20% of NIP Obligation

    CRITERIA

    Additionality: All NIP projects must reflect new or incremental business. Sustainability: All NIP projects should be economically and operationally sustainable, even after

    the discharge period. Causality: There must be a clearly identifiable link between the NIP Obligation, the obligor and

    the NIP project.

    NIP ELIGIBLE ACTIVITIES

    Investments (Joint Ventures, Licensed Production, Technology Transfer) Sub-Contracting Works; R&D Collaboration; Export Promotion; Supply Partnerships with South African industry; Delivery of Specialized Technical Training.

    ADDITIONAL REMARKS NIPP is applied to procurements in both defence and civilian arenas NIP is a precondition but not a factor in the adjudication

  • PILATUS AIRCRAFT OVERVIEW

    Foskor Zirconia

  • Foskor Zirconia

    ECCO Symposium #4 Pilatus Aircraft Limited

    June 15, 2012 8

    PILATUS AIRCRAFT LTD OVERVIEW 1/2

    Established in 1939, Pilatus Aircraft Ltd is now the worlds leading manufacturer of single-engine turboprop aircraft and the only Swiss company to develop, build and sell aircraft and training systems on every continent.

    Headquartered in Stans, in the heart of Switzerland, Pilatus is also licensed to perform maintenance and conversion work on various aircraft types.

    KEY FIGURES 2010 2011

    Sales (CHF million) 688 781

    Aircraft sold 93 87

    EBIT (CHF million) 88 108

    Investments in R&D (CHF million) 49 67

    EBIT before R&D (CHF million) 137 175

    Employees 1.395 1.441

    ECCO Symposium #4 Pilatus Aircraft Ltd

  • Foskor Zirconia

    ECCO Symposium #4 Pilatus Aircraft Ltd

    June 15, 2012 9

    PILATUS AIRCRAFT LTD OVERVIEW 2/2

    Business and Utility Aircraft

    Training Aircraft incl. Ground Based Training System & Integrated Support Service

    PC-12 NG PC-6

    PC-21 PC-9 M PC-7 MkII

  • Foskor Zirconia

    ECCO Symposium #4 Pilatus Aircraft Ltd

    June 15, 2012 10

    PILATUS GROUP OVERVIEW

    Development

    Production

    Worldwide sales

    Maintenance

    Service for Pilatus aircraft

    Sales

    Completions

    Service for PC-12 aircraft in America

    Sales

    Marketing

    Service for PC-12 aircraft

    Maintenance

    Modernization

    Overhauls for Pilatus aircraft and others

  • PILATUS AIRCRAFT IN SOUTH AFRICA

    Foskor Zirconia

  • Foskor Zirconia

    ECCO Symposium #4 Pilatus Aircraft Ltd

    June 15, 2012 12

    PILATUS AIRCRAFT IN SOUTH AFRICA 1/2

    Pilatus supplied about 60 Pilatus PC-7MkII trainer aircraft to the South African Air Force between 1993 and 1996.

    In 2008, Pilatus Aircraft was awarded the contract (in excess of 10 M USD) to replace the avionic systems on 35 South African Air Force Pilatus PC-7MkII Aircraft. The contract also included incorporating two new flight training devices, ground based training systems and spares.

    Upgrades of the first aircraft were carried out at the Pilatus facility in Switzerland during 2009. Aerosud Aerospace Systems with assistance from Pilatus field service engineers is undertaking the modernization of the remaining PC-7MkII fleet at Langebaanweg Air Force Base in South Africa.

    The upgrades are expected to be completed by the mid 2013.

  • Foskor Zirconia

    ECCO Symposium #4 Pilatus Aircraft Ltd

    June 15, 2012 13

    The associated NIP Agreement was concluded in 2008.

    As a direct result of the Pilatus NIP obligation, Pilatus identified the Foskor Fused Zirconia project as a NIPP Project.

    Pilatus is providing financial assistance to Foskor Zirconia for the project.

    In addition, Pilatus shall also provide assistance to Foskor Zirconiawith the promotion of exports of the Fused Zirconia product through its network in Europe and India into these regions.

    PILATUS AIRCRAFT IN SOUTH AFRICA 2/2

  • FOSKOR ZIRCONIA OVERVIEW

    Foskor Zirconia

  • Foskor Zirconia

    FOSKOR ZIRCONIA (PTY) LTD OVERVIEW

    Foskor Zirconia (Pty) Ltd is a manufacturing Company and producing Fused Zirconia in its factory located in the town of Phalaborwa, Limpopo province, South Africa.

    The Company has three share holders:

    Perfect Positions Investment CC, a Broad Based Black EconomyEmpowerment (BBBEE) company, owns 19 %

    Foskor (Pty) Ltd, a Company ownedby Industrial Development Corporation (IDC) of South Africa, owns 30%

    Carborundum Universal Ltd (CUMI), an International Company, owns 51%

    ECCO Symposium #4 Pilatus Aircraft Ltd

    June 15, 2012 15

    Existing Plant South Africa

  • Foskor Zirconia

    WHAT IS ZIRCONIA AND FUMED SILICA?

    Zirconia Definition

    Fused Zirconia (ZrO2) is produced by dissociating the FumedSilica (SiO2) from the Zircon sand (ZrSiO4) by means of an electro-fusion process, at temperature exceeding 2800C.

    (ZrSiO4 SiO2 = ZrO2)

    Fumed Silica (By product)

    The Fumed Silica is the dissociated silica that is fumed off, through a bag house, during the Zirconia production process.

    ECCO Symposium #4 Pilatus Aircraft Ltd

    June 15, 2012 16

  • FUSED ZIRCONIA NIPP PROJECT

    Foskor Zirconia

  • Foskor Zirconia

    PROJECT SCOPE

    Setting up of 5000 kVA Tilt type Electric Arc Furnace system. New Production Technology.

    Construction of Building & other infrastructure facilities forproducing fused Zirconia bubbles in the new facility.

    The total investment of the Project is Rand 80 miln (US $ 10.67 miln).

    The Project is planned to be implemented in 18 months time frame.

    ECCO Symposium #4 Pilatus Aircraft Ltd

    June 15, 2012 18

  • Foskor Zirconia

    PRODUCT OVERVIEW

    The new project will manufacture 6,000 tons of fused Zirconiabubbles which is totally a new product .

    ECCO Symposium #4 Pilatus Aircraft Ltd

    June 15, 2012 19

    Zirconia Bubbles

  • Foskor Zirconia

    PROJECT BRIEFING

    ECCO Symposium #4 Pilatus Aircraft Ltd

    June 15, 2012 20

    Ele