Feral Jundi

Monday, February 3, 2014

Industry Talk: Prince Targets Aviation And Logistics In Africa

So is this Blackwater part 2?
“It’s similar,” Prince replied. “But we’re not here to serve government or defence projects, we’re not there to build their police force, nothing like that. We’re there to move an NGO, an advanced seismic crew or a drilling crew from a mining company, or if an oil operation needs their camp supported and built.”

The story of Erik Prince starting Frontier Resource Group and focusing on Africa is not new and I have blogged about that when it first came out. But what was missing were the details, or at least more than what was available at the time I posted that stuff. Thanks to the Civilian Warriors book and all the interviews, Prince has been able to talk a little more about this new venture.

So in the articles below, there are some great little details to pluck out and talk about. The first one that I thought was interesting, was the ‘a ha’ moment for Prince as to what area of business he wanted to get into in Africa.

Prince, who has flown since he was 16, said he realised the potential of operating a safe and reliable air service a year ago when the aircraft which was flying him back from a mine site in Burkina Faso nearly crashed.
“A scary moment but also one of clarity,” he said.

I mentioned in my review of his book that he is an entrepreneur and businessman, and he constantly looks at the world through this lens. His ‘a ha’ moment for the creation of Blackwater came from the realization that he needed to be home with his family, and the SEALs and other groups needed a consolidated, all in one training facility. So he identified a market weakness that he could exploit, and also saw the advantage for his personal well being.

He is also a pilot and has had a love for aircraft since he was younger. In his book, he was very proud of all the aviation ventures that BW got into, so this move towards aviation and logistics in Africa makes sense.

The other tidbit is the quote up top and what was directly asked in regards to security work. He was asked by the WSJ on whether this new venture would include armed security work or not? Here is the quote.

Such high costs also reflect the dangers of piracy and civil conflict, but Mr. Prince plays down his firm’s plans in the security realm. “We are not there to provide military training. We are not there to provide security per se. Most of that security”—say, if an oil pipeline or mining camp needs protection—”would be done by whatever local services are there,” including police and private firms. “We don’t envision setting up a whole bunch of local guard services around the continent.”
So the former Blackwater chief won’t employ guys with guns? Well, he says, “that would be the exception, certainly not the rule.”

I should remind the reader that Prince could easily contract the services of other security firms to help in security.  That would mean using Academi or any of the offshoots of his older company. But like he mentioned in the quote, using local police or security firms is more than likely the path, which is already what most Chinese investors and companies are doing.

Although the problem with this arrangement is if those local forces are dependable? Can they deliver services on time and under budget, or is it even a good service? Can they provide high level PSD services for the engineers and workers for those companies? That is where PMSC’s like Blackwater would come in. Also, someone needs to manage those local forces, or look out for the best interest of the client.

I am quickly reminded of the In Amenas gas plant attack in Algeria and how depending upon incompetent local security forces (provided by the government) was a contributing reason why the attack was so successful. You must have a competent security company watching over the local security force that companies are either forced to use, or use because of cost and choice. I look at it from a concentric rings of security view point, and your outer layer should be your least dependable force and your final ring of security should be your most dependable. Ideally all rings are dependable in a perfect world, but that just does not happen in the real world. Another way to put it, is you need security you can ‘trust’.

But back to the articles below, I think this quote speaks pretty loudly as to why dependable and highly capable services are in such high demand in Africa.

“If you’re drilling in some remote area and your rig goes down and you need a new part for your rig; that’s 10s if not 100s of thousands of dollars a day. How do you get that thing quickly and with no excuses?”

Time is money as they say, and guys like Prince can absolutely organize an effort to get that part or human out there.

This also reminds me of another potential problem for companies. What if their equipment gets caught up in a mess like what the Arab Spring has created in the Middle East? For that, a guy like Prince could organize the effort to secure equipment and people until it can be either flown out or convoyed out of that mess.  Those types of contracts remind me of what helped put Executive Outcomes on the map.

I am talking about the Ranger Oil contract that Executive Outcomes had in Angola. Basically things became unstable there and Heritage Oil and Gas turned to EO to save some equipment caught up in the mess. At the time, they were leasing some drilling equipment that was costing over $20,000 a day, and UNITA would not allow the company to get the equipment out of there. EO was contracted to secure that equipment, which they did.

It is also important to note that the Chinese account for the largest group of people kidnapped in Africa. I have talked about this demand for protective services by the Chinese in the past, and how the South African PMSC market has been filling that niche. Lot’s of money being spent on some risky projects–hence the need for security and folks who know what they are doing.

As long as we are talking about money, it is also interesting to pluck some of the quotes that discuss why Africa is so interesting to Prince. China is investing billions into development and resource extraction there.

Mr. Prince won’t share any revenue projections, but his prospectus notes that “China is Africa’s largest trading partner,” with annual flows of $125 billion. Most estimates put that figure closer to $200 billion, a meteoric increase from $10 billion in 2000 and $1 billion in 1980. The U.S., which was Africa’s top trade partner until 2009, registered $100 billion in annual African exchange at last count. China-Africa trade could reach $385 billion by 2015, according to Standard Chartered Bank.

Not only that, but the US is also delving more and more into Africa with it’s military ventures. So Prince is basically gunning to be the logistics and transportation ‘go to guy’ for Africa. If US strategy includes getting more involved with Africa, it will need companies in place that can provide a need wherever it presents itself.

Although he does have some competition, because there are numerous larger companies  that have already been working that angle in Africa. PMSC’s in Somalia and their support of AMISOM are one example. There is still room though, and investors are looking for folks that they trust can do the job. That is a key point here, because Prince has shown capability in the past by making things happen, and putting his money where his mouth is. He spent over 100 million on new products and services when he owned BW, and much of it never reached fruition. But some did, and really paid off for him. I imagine he will do the same with this company. This quote shows why investors would be drawn to him and what has provoked Prince to get into this market in the first place.

“As I was moving around Asia trying to raise money for this private equity fund, a lot of the big investors said, ‘It’s great that you want to be a fund manager, but what we really need you to do is to build a business like you had before. Not a defence services business, but one that can help us operate in the challenging areas and take away a lot of the uncertainty’.”

Pretty cool and I imagine he will apply the same mindset to this business as he did with BW. Research the region, find services that are lacking or non-existent but are needed, or see a coming need for a product or service, and create that service or product to meed those needs. That is how he built BW, and that is probably how he will build this company.

As to what kinds of aircraft he will purchase and bring to the market, who knows?  If you look at the aircraft that AAR has (former Presidential Airways and BW business unit), you can get an idea as to the kind of aircraft Prince might introduce into the game. Here is a quick run down from wikipedia as to what they have used.

Presidential operates CASA C-212 and CASA CN-235 turboprops. Recent contracts have added de Havilland Canada DHC-8 Dash 8 turboprop aircraft to the fleet. The company also operates turbine powered helicopters including Bell 214ST, Bell 412, MD Helicopters MD-530, Eurocopter/Aerospatiale SA 330J “Puma”, and Sikorsky S-61 rotorcraft.

The key for Prince is to invest in aircraft that can carry a lot, has robust fuel capacity, is durable, and can land on the really crappy air strips throughout Africa. The parts need to be cheap as well. I am sure he will find something that fits the bill. Either way, we will keep on eye on this. –Matt

Edit 04/02/2014: It looks like DVN (or it’s new name Frontier Services Group Limited) has acquired another percentage of an airline that operates out of Wilson Airport. Here is a clip from the news story about it.

News broke yesterday in Nairobi that DVN had apparently acquired a 49 percent stake in Phoenix Aviation which is based at Wilson Airport in Nairobi and engages in aircraft charters and aircraft maintenance, among other aviation services. First it was Kijipwa Aviation, based in Kilifi, a relatively small aviation company, in which DVN acquired a 49 percent stake in late February, then announcing that they were to bring on line as many as two dozen additional aircraft to boost the operational capacity of the firm. However, the acquisition of a similar share in Phoenix may change those plans as suggestions have been floated already among the aviation fraternity at Wilson Airport that the operations of the two local airlines may be consolidated or aligned under one umbrella or at least they will be working under one central command. While DVN reportedly dished out some 1.2 billion Kenya shillings to acquire the 49 percent stake in Phoenix, no confirmed value could be obtained for the acquisition of the Kijipwa shares. Both investments have been linked to the discovery of significant oil deposits in Kenya and the apparent need of international oil exploration companies to contract a range of services from local Kenyan companies, including aviation.

Frontier Resource Group website here.

Frontier Services Group website here.

 

 

Beyond Blackwater: Prince looks to resources in Africa
Photo
Sun, Feb 2 2014
By Stephen Eisenhammer
After running one of the world’s biggest and most controversial private military groups, Blackwater founder Erik Prince is starting a new venture providing logistics for oil and mining companies in remote and dangerous parts of Africa.
China is increasingly looking to Africa to meet its ever growing demand for natural resources. Trade between the two reached an estimated $200 billion (121 billion pounds) this year. With 85 percent of Chinese imports from the continent being oil or minerals, Prince sees an opportunity.
He wants to use his experience of getting people and equipment in and out of remote places, where there is little or no infrastructure, to help companies looking to exploit abundant natural resources in places like Sudan or Somalia.
The 44-year-old former U.S. Navy Seal became chairman of Frontier Services Group (FSG) this month, a Hong Kong-listed company of which China’s state-backed investment fund Citic owns 15 percent. Prince himself has share options in the firm that would convert to a 9 percent stake.

(more…)

Tuesday, July 23, 2013

Publications: Contractor Support Of USCENTCOM AOR, 3rd Quarter FY 2013

This is the latest DASD program support report. Here are the highlights from the report.

Afghanistan
In 3rd quarter FY13 there were approximately 101.8K DoD contractors in Afghanistan. The overall contractor footprint in Afghanistan decreased by 5.5% from 2nd quarter FY13.
The contractor to military ratio in Afghanistan is 1.43 to 1 (based on 71.5K military as of June 7, 2013).
There will be substantial contractor reductions over this fiscal year, as a result of base closures, the return to expeditionary standards, and transition of security to the APPF.
Local Nationals (LN) currently make up 36.7% of the DoD contracted workforce in Afghanistan. The use of LNs remains important to COIN strategy.

The big one in Afghanistan is that there are more contractors than military folks there. It’s a contractor’s war now and local nationals make up a huge portion of that work force.

Iraq
In 3rd quarter FY13, the total number of contractors supporting the U.S. Government in Iraq (DoD + DOS) was approximately 10.3K. There will be substantial contractor reductions in 2013 reflecting consolidation of sites, completion of ongoing activity, and increased utilization of host country service and labor.
The DoS and DoD continue to refine the requirements for contract support. Some contractor personnel employed under DoD contracts are supporting State Department and other civilian activities under the Chief of Mission, Iraq. These DoD contractors are provided on a reimbursable basis.

In Iraq, the name of the game is DoD and DoS working with one another and using each other’s resources in order to accomplish the mission. Which makes sense because the former military resource everyone depended upon is gone, so now it’s all about supporting one another with the limited resources that are there.

The other thing to factor into the contractor equation is all the turmoil going on throughout these regions. For Iraq, Syria is being closely watched and monitored. The current presence in Iraq is vital for that mission and contractors will be very much in need to secure that effort and supply the beans/bullets/bandages.

Not to mention that as Al Qaeda gets stronger in Syria, they will be taking that capability back into Iraq to clean house. The raids they are doing in Syria and becoming more complex and bold and they are using that knowledge and applying it in Iraq. As a result, Iraq is definitely seeing a pick up in violence and complex attacks. A great example is the recent prison assault at Abu Ghraib in which 500 Al Qaeda prisoners escaped as a result. But check out how they did it.

Monday’s attacks came exactly a year after the leader of al Qaeda’s Iraqi branch, Abu Bakr al-Baghdadi, launched a “Breaking the Walls” campaign that made freeing its imprisoned members a top priority, the group said in a statement.Sunni Islamist militants have in recent months been regaining momentum in their insurgency against Iraq’s Shi’ite-led government, which came to power after the U.S. invasion to oust Saddam Hussein.The group said it had deployed suicide attackers, rockets, and 12 car bombs, killing 120 Iraqi guards and SWAT forces in the attacks in Taji, north of Baghdad, and Abu Ghraib, the prison made notorious a decade ago by photographs showing abuse of prisoners by U.S. soldiers.Interior ministry and medical sources said 29 police and soldiers were killed, and 36 wounded.

 12 car bombs? That is quite the assault! (the Taliban were able to release 400 prisoners in the Sarposa prison escape.)DoS is concerned about the surge in violence as well. Here is a quote.

The attacks on the prisons at Abu Ghraib and Taji were carefully synchronized operations in which members of the Qaeda affiliate used mortars to pin down Iraqi forces, employed suicide bombers to punch holes in their defenses and then sent an assault force to free the inmates, Western experts said.

We are concerned about the increased tempo and sophistication of Al Qaeda operations in Iraq,” said a senior State Department official, who requested anonymity because he did not want to be seen as commenting on Iraq’s internal affairs.

The use of mortars is interesting and we saw this weapon used in the Benghazi attack. An effective mortar team can do a lot of damage very quickly if they are able to get in close and have the targeting data.

I wanted to bring these examples up in this post because it is relevant to contractor usage. With increased danger comes more dependence on solid security and defenses. If we want a presence in Iraq to monitor Syria or Iran or the internal developments in Iraq, then security contractors and support will be needed to continue that mission. Or we could pull out altogether….or send troops back in, and I don’t think neither of these options are of national interest.

For Afghanistan, the Taliban will continue to apply the pressure as more troops pull out. They will also do all they can to test the government and show how ineffective they are by making things more chaotic and dangerous. Much like what is going on in Iraq now. Contractors will be there to fill the vacuum left by these departing troops and they will have to deal with this increased danger. (contractor deaths are up to 3357 as of June)

Contractors will continue to train, continue to finish building projects, and continue as normal. We are essential to the massive logistics game of leaving Afghanistan as well. From breaking down camps or equipment deemed too costly to ship, or supporting those who are left, contractors will keep the machine running. –Matt

 

Contractor Support Of USCENTCOM AOR, 3rd Quarter FY 2013

Friday, April 5, 2013

Industry Talk: Equipment Drawdown From Afghanistan An ‘Enormous’ Undertaking

Filed under: Afghanistan,Logistics — Tags: , , , , — Matt @ 10:13 PM

And contractors will be a very important part of that drawdown, much like they were in Iraq. The problem with Afghanistan though is how difficult it will be to actually get this stuff out of the country, just because it is a landlocked nation and the roads out of town are through some rough and dangerous country. At least Iraq had easier roads to navigate on and plenty of port access.

What is interesting with this deal is the decision making process to ship the item or leave it in Afghanistan for whomever– all because of cost. How much stuff they leave in this country is the question, and I imagine it will be quite a bit. –Matt

 

Equipment drawdown from Afghanistan an ‘enormous’ undertaking
By Hendrick Simoes
March 23, 2013
With the pace of NATO’s drawdown from Afghanistan accelerating, the international coalition is faced with the unprecedented task of removing tens of thousands of tons of equipment and vehicles from a country still very much at war.
For the U.S. military, moving 35,000 vehicles and 95,000 shipping containers full of cargo to various bases in America or overseas is easier said than done.
Maj. Gen. Kurt Stein, commander of the 1st Theater Sustainment Command, said during a visit to Kuwait last month that getting the supplies and equipment out of Afghanistan will be an “enormous” mission.
“It will be historic, it’s nothing like we have ever done in the history of our military.” The 1st TSC has a leading role in the equipment drawdown, or as they refer to it — “retrograde.”
Afghanistan is landlocked, and transit routes to the nearest seaport in Pakistan are long, politically tenuous and vulnerable to attack. The alliance’s northern supply route, snaking overland through Central Asia and Russia to Poland and the Baltics, also is difficult due to the logistics of coordinating truck and rail transport.
Stein, who also oversaw the pull-out of equipment from Iraq, said there could be no comparison between the complexity of the two operations.

(more…)

Monday, July 30, 2012

Logistics: Afghan Truckers A Forgotten Front In A War Growing Deadlier By The Day

Filed under: Afghanistan,Logistics — Tags: , , , — Matt @ 10:06 AM

Asked which road he feared most, 40-year-old driver Mohammad Qayum said the valley route to the most far-flung U.S. base in the northeast, Forward Operating Base Bostick near the Pakistan border in north Kunar, was the most dangerous.
Bostick, in a natural mountain amphitheatre visited by Reuters in June, is a frequent target for Taliban rockets aimed down at the first battalion of the U.S. 12th Infantry Regiment.
“Last year, two of my trucks were attacked going to Kunar. My nephew was inside and was burned to death,” said Lalajan, nodding agreement with his friend.

This has always left a bad taste in my mouth when it comes to the logistics of this war. These materials being shipped on land are and have always been a prime target of the enemy, and yet you never hear of any concerted effort to actively protect these shipments or to set up fairer contracts that would better protect the rights of these truckers? Why is that?

These truck drivers are risking life and limb to deliver this stuff and at the very least we should be providing some kind of constant over watch with air assets along with some ground units that can help to establish corridors.  Anything to protect these guys as they deliver these crucial supplies. (at least on the Afghanistan side)

The other angle that we are missing out on is that if the enemy wants to show themselves in attacks against these supply convoys, then these are perfect opportunities for us to eliminate the exposed enemy using air assets and strategically positioned ground units. We should be striving to make life a living hell for the Taliban out in those mountain passes, and make them pay for attacking convoys.

Also by not protecting these convoys, we are creating Afghans that harbor animosity and anger towards ISAF/NATO. These folks are also in the same position as interpreters or anyone else that has stepped forward to help ISAF/NATO in the war–that they get the label of ‘infidel’ or traitor.  I think they deserve better than that. They should get our respect and thanks for their sacrifices and we should do more to meet them half way in their effort to support us.

Hell, if the military doesn’t want to do this, then contract it out. Task a company with protecting over these routes and allow them to operate lethal air assets along with sufficient ground assets. A private company could absolutely create the corridor needed, and the money saved by making this deal with Pakistan to continue ground shipments could be applied to contracting out this type of security effort. And that would include security on the Afghanistan side and Pakistan side of these routes, because the enemy is hitting them on both sides. Either way, something must be done if these supplies are that important? –Matt

Edit: 07/31/2012– Check this quote out. It seems the Taliban are pretty stoked about these shipping routes being opened. They were a prime source of income for their fighters.

“Stopping these supplies caused us real trouble,” a Taliban commander who leads about 60 insurgents in eastern Ghazni province told The Associated Press in an interview. “Earnings dropped down pretty badly. Therefore the rebellion was not as strong as we had planned.”
A second Taliban commander who controls several dozen fighters in southern Kandahar province said the money from security companies was a key source of financing for the insurgency, which uses it to pay fighters and buy weapons, ammunition and other supplies.
“We are able to make money in bundles,” the commander told the AP by telephone. “Therefore, the NATO supply is very important for us.”

 

44 NATO oil tankers attacked in Pakistan, December 2011.

 

Afghan truckers a forgotten front in a war growing deadlier by the day
Sun, Jul 29 2012
By Rob Taylor and Hamid Shalizi
In the cabins of their “jingle” trucks flamboyant with tinsel baubles and painted tiger patterns as they move NATO’s war supplies, Habibullah thinks he and other drivers are becoming a forgotten front in an Afghan war growing more vicious.
From a dusty truck park midway between Kabul and the Pakistan border, and under the constant thump of helicopters from Jalalabad airbase over the road, Habibullah moves food and military materiel across the Taliban’s eastern heartland, from Nuristan to the former al Qaeda cave stronghold of Tora Bora.
“We worry about our fate when NATO leaves, because the Taliban also call us the infidels. For them, we are not just the enemy, but also traitors,” said the soft spoken 23-year-old, who contributes seven trucks to a cooperative with five owners.
It is a thankless and increasingly deadly job, and one so mired in graft that the drivers see a fraction of the cash paid by U.S. military paymasters, with the rest skimmed by middlemen or even going into the hands of insurgents for “protection”.
Only this week, three of Habibullah’s trucks were attacked and burned by Taliban amid the rugged mountains of Nuristan, a virtual no-go zone for NATO soldiers after heavy past losses and now garrisoned by a handful of Afghan troops and police.

(more…)

Saturday, April 28, 2012

Cool Stuff: The Ultimate Public-Private Partnership–Contractors In Space!

This is just cool. Here is a NASA astronaut describing the public-private partnership between SpaceX and NASA with this upcoming logistics mission. Dragon is the name of the supply capsule, mounted on a Falcon 9 rocket, that will be sent to the International Space Station to resupply it. Dragon would be the first commercial spacecraft to perform this mission at the ISS.

Not only that, but government needs SpaceX to get this right.  We are talking about delivering the essentials of life–food, etc. and there are people in space who are depending on these deliveries. So all eyes will be on this company and their team of quality control folks, engineers, and everyone in between on getting this thing off the ground and delivering like a champ. (which this will be a really interesting case study for how private industry will do this versus how NASA used to do this–differences, similarities, cost savings, etc.)

What I really enjoyed though was the comparison of today’s public-private partnership, to yesteryear’s use of private industry to support the expansion out west.  I have discussed this partnership when it came to scouts and the Army, and Don Pettit’s example of contractors supplying forts is another one.

Not only that, but today’s contractors in the war have been immensely important to the task of supplying military outposts and supporting logistics missions all over. So yes, when I see a government Astronaut talking about contractors and commercial spaceflight, while he is in space, I rate that as pretty awesome. Check it out. –Matt

 

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