Accreditation causes high barriers to entry

The superalloys industry is characterised by high barriers to entry. The customers of this market require the products to be of an exceptionally high standard and quality is essential. As a result potential suppliers have to go through a process of accreditation before the customer accepts them as a supplier. Typically the customer has to be comfortable that the potential supplier meets costing and quality standards before they enter into any agreements and this is followed by samples of the product being sent which meet specifications requested by the customer. There can be numerous iterations of samples being sent back and forth and only once the customer is satisfied with the sample will it enter into off-take agreements.

This process is expensive and time consuming taking anything from 3 to 12 months per customer and given the capital cost of the plant, requirement to source appropriate skills and this accreditation process has led to Avalloy being the first new superalloys provider in 15 years.

Key competitive advantages of Avalloy are:

• Low cost supplier – especially important in the current economic climate
• First new superalloy plant in 15 years
• Model of beneficiation in South Africa