FerroGlobe Resources Group — Operating Model & Supply Chain
The operating model, the trading and procurement engine, the industrial-logistics and supply-chain network, and the operational metrics underpinning the platform.
Section 8 · Business Plan
Operating Model & Supply Chain
The operating model, the trading and procurement engine, the industrial-logistics and supply-chain network, and the operational metrics underpinning the platform.
8.1 Trading Engine Architecture
FGRG’s trading engine is built around a back-to-back transaction
model: each cargo is purchased only after a corresponding sale contract
or robust price-hedge is in place, thereby minimising open-position
market risk. The trading desk is structured around three product books
(long products, flat products, raw materials) and three regional books
(Sub-Saharan Africa, Middle East/North Africa, Asia procurement). Every
trade passes through a four-step gate: (i) credit and counterparty
review; (ii) pricing and margin validation against the daily price file;
(iii) freight and logistics confirmation; and (iv) treasury approval for
working capital and FX hedging.
8.2 Risk Management Framework
| Risk type | Limit / control | Mitigation instrument |
|---|---|---|
| Price (commodity) | Max open position 50,000 tonnes | LME steel scrap, HRC futures, OTC swaps; back-to-back contracting |
| FX (ZAR/USD) | Daily VaR cap; 90% hedge ratio | Forward contracts (1–6 months), FX options for tail risk |
| Counterparty credit | Internal rating; concentration cap | Credit insurance (Coface, Atradius), letters of credit, SBLCs |
| Freight | Floor / ceiling rates | Time-charter mix; freight-forward agreements; pool participation |
| Liquidity | Min cash buffer 60 days opex | Committed undrawn revolving credit facility USD 100M |
| Operational | Daily reconciliation; segregation | ERP-based controls; SOX-equivalent framework from Year 3 |
8.3 Supply Chain & Procurement
FGRG’s supply chain is engineered around three principles:
diversification, contractual depth, and logistics integration.
Diversification means no single supplier accounts for more than 20% of
trade volume by Year 3, no single country of origin exceeds 40%, and no
single shipping route exceeds 30% of volumes. Contractual depth means at
least 60% of forecast Year-N volume is covered by signed framework
agreements at the start of Year-N planning. Logistics integration means
FGRG manages the full inland-and-ocean leg through partnered providers
(Years 1–4) and increasingly through owned and chartered assets (Years
5–7).
8.4 Logistics & Distribution
FGRG operates a hub-and-spoke logistics model. Three primary hubs —
Maputo (Mozambique), Dar es Salaam (Tanzania), Walvis Bay (Namibia) —
provide bulk-discharge and storage for inbound cargoes. Inland
distribution combines rail (Transnet, TAZARA, Beitbridge corridors) and
road, with last-mile to final customer typically by road. Three regional
service centres (Year 4 onwards) provide cut-to-length, slit, and
galvanised products to value-added customers. A central planning and
dispatch desk in Johannesburg coordinates inventory positioning across
the network.
8.5 Information Systems & Digital Backbone
Operational excellence requires a tier-1 digital backbone. FGRG will
deploy SAP S/4HANA as the core ERP from Year 1, supplemented by a
specialist commodity trading and risk management (CTRM) system (such as
Eka or Allegro) for the trading desk, Coupa for procurement, and
Salesforce for customer relationship management. Power BI and Tableau
provide management reporting. From Year 3, predictive analytics and
AI-based price-forecasting tools will be deployed to enhance trading and
inventory decisions.
8.6 Quality, Health, Safety & Environment
FGRG adopts international best-practice operating standards from
inception: ISO 9001 (quality), ISO 14001 (environmental management), ISO
45001 (occupational health and safety), and ISO 27001 (information
security). The Company commits to zero-harm safety performance, with a
target of zero lost-time injuries and zero fatalities. All processing
assets — owned or acquired — must achieve full ISO certification within
12 months of acquisition or commissioning.
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of FerroGlobe Resources Group (Pty) Ltd.