Digging Deep in West Africa

Resources company TOP International Holdings has successfully grown its bauxite operations in West Africa.

Singapore-based TOP International Holding’s (TOP) geographical operations are dictated by the supply and demand of the commodities it deals in. As an exporter specialising in bauxite, metals and energy trading, the company has operations spread across Asia Pacific, as well as Guinea in West Africa.

TOP owns mine concessions and handles mining operations and trading of bauxite in Guinea, West Africa, and Indonesia. In 2019, the company contributed around 20% of the African nation’s total bauxite production to China.

BiZQ speaks to Lex Lee, TOP’s Chief Strategy Officer, on how the firm leveraged its expertise and extensive network of partners to successfully penetrate the African market, as well as its plans for expansion.

Why did TOP choose to enter a frontier market like Guinea?

Singapore is a very small market, and if you want to succeed, you need to go abroad. The obvious place is Southeast Asia, but the problem with that is that it is too congested. At the end of the day, your market expansion plan really depends on your industry.

We are a resources company, so we follow the sources of supply and demand. In terms of bauxite, there are only a few places with huge reserves, and Guinea is one of them. That is why we have a presence there. It is one that is borne out of necessity.

What are some of the risks and challenges of operating in a market like Guinea?

It is important to identify and understand the business risks before entering a new market. It could be the political situation or regulatory stability, or even forex risks. You must be fully aware of these factors and check it against your own risk appetite so that you can make an informed decision.

In terms of challenges, there are simple things like opening a bank account, which can take a few months in Africa. There is nothing you can really do about this; this is just the way things are done.

Language is another challenge. In Guinea, they speak French because they are a former French colony. To overcome this, we hired people who speak English, French, and Chinese as well, because we have a team of Chinese engineers on the ground. Finding such talent is not easy.

In fact, finding the right talent and those who are willing to be stationed in a market like Guinea is difficult.

How important is it to find good partners to work with?

Not only do you need to find local partners, but you also need partners who will go into new markets with you, because it is more effective to ‘hunt in a pack’. Finding local partners is very important, as it helps to alleviate potential problems that you may face in the new markets. You will find that at every turn you will face problems and by having the right local partners, you can resolve these issues quickly and easily.

I cannot stress the importance of networking and building up your connections. While having virtual meetings help to circumvent the issue of border closures for now, a face-to-face human interaction is of utmost importance to forge the kind of reliable and trustworthy relationships that will last for years. Due to our existing networks, we were able to find partners to work with in Guinea.

What do you think is TOP’s competitive advantage?

In today’s rapidly changing world, we must constantly explore new opportunities and expand into new international markets. With a relatively flat corporate structure, we are nimble and agile – key aspects that enable us to make fast decisions and hence, swift execution of our plans.

We also have a good reputation and track record, and many people in the industry know us. We are also not afraid of hard work. As this is a niche industry with high exposure and high capex, it may suit only companies that have higher risk appetites.

We are also very efficient in our operations, taking care and effort in managing the efficiency of the operations, which lead to greater cost effectiveness.

What are your plans for expansion?

We have been adopting a vertical growth strategy for mining. We embarked on bauxite trading in 2014, ventured into contract mining after three years, and owned our mine concessions in 2018. We also developed our own river port and road infrastructure for export of the bauxite.

With our proven track record in the rapidly growing bauxite market, this strategy has put us in good stead. As such, we will be continuing with this vertical growth strategy for the next three years.

In terms of our trading portfolio, we have expanded it to include iron ore, copper cathode and sand, in addition to thermal coal. We will continue to look into various commodities to bolster our offerings.

In preparation for our next phase of growth, we have expanded our team and will be leveraging our strengths to bolster our businesses into adjacent and new areas. We are embarking on decarbonisation initiatives to reduce our carbon footprint. While this will be a long-term project in which we may only see results in the next few years, we are glad to get this started sooner than later.

Related to decarbonisation, what are some of your initiatives when it comes to sustainability?

Our whole company strategy is underpinned by sustainability principles. To accomplish these principles, we have the three-P model: People, Planet, and Performance. Our business needs to be in a position that will be sustainable for the people, for the planet, and for our own performance.

We take excellent care of our people, not just in terms of ease of working from home, but also their mental and physical wellbeing, as well as their learning and development pathways. We have various programmes to address these for our people in Singapore as well as in West Africa.

In Singapore, we partner with the People’s Association to help the underprivileged and elderly. We also give back to the communities surrounding our mining sites in Guinea, such as by providing wells and access to clean water, and solar lamp poles.

From a planet perspective, we rehabilitate the land that we mine by planting trees. Ongoing rehabilitation works currently stands at one-fifth of the land, and we have since planted more than 15,000 cashew trees on the rehabilitated land.

Finally, performance is very closely tied with our diversification strategy. We constantly look to diversify and find new business opportunities because we believe that sticking to just one business is not wise. You must have multiple businesses and revenue streams to be sustainable.

TOP International Holdings is featured as part of SBF’s Company Case Study / Video Series. The series serves to share translatable key lessons and industry best practices for local companies looking to internationalise.