In For The Long Haul

Texchange managing director Rupert Cruise is a patient man. Convinced that his linear motor technology will allow mining companies to dig deeper for gold than ever before, he's confident that it will eventually be adopted by one of the world's top mining houses. But he also accepts this may not happen for another 20 years.

Cruise first saw the potential of linear motors for deep-level mining transportation back in 1994, while doing his masters in electrical engineering at the University of Witwatersrand (Wits) in South Africa. At the time, mining companies were seeking a safer, faster and more economically viable means to access deep-lying gold than conventional hoisting systems, and in linear motors Cruise believed he'd found the answer.

'But we realised we were unlike other companies looking for early stage finance because we already had cash in the bank.

Mining hoists traditionally use ropes and a surface-mounted drive mechanism, which means the hoisting rope has to support the full load of the mining cage as well as the force needed to accelerate it. For heavy loads and deep shafts, this requires a particularly long and heavy rope - and in mines over 3,000m deep, it will eventually break.

In 1985, one of South Africa's large mining companies came up with the idea of replacing the hoist's rope with linear motor technology. But its development plans were shelved because of the astronomical cost. So Cruise planned a lower cost 'hybrid' hoist, using conventional technology to a certain depth, then deploying the linear motor to support the load during peak stresses. Longer term, he hoped mining companies would ultimately invest in the development of a totally ropeless hoist.

For the next seven years, Cruise developed his technology while working as a lecturer at the university. With a team of researchers and the support of South Africa's Deepmine Research Programme, he developed several linear motor prototypes and filed his first patent. But then the commodities market crashed, and in 2000, Cruise lost his backing. He took a break, studied for an MBA at Oxford University's Said Business School, and moved to London to carry out consulting work.

It was during this period that he set up Texchange, initially to build a Wide Area Network for a yacht club. In 2004, however, he got a call out of the blue from the Oldenburg Group, an engineering supplier to the mining and defence industries. The caller had read Cruise's research (he's had more than 50 papers published) and came across the Texchange website. 'Oldenburg asked me to give a presentation at their headquarters in Michigan in the US and, based on that, to quote for developing our technology for a defence project on which they were competing against another company,' says Cruise. 'On the basis of that presentation, Oldenburg then kicked their former partner - a large defence manufacturer - off the team and brought on Texchange.'

Cruise was able to round up his former engineering and business students at both Wits and Oxford for development and testing work. Through that work, Texchange's profit climbed from zero in 2003 to more than £200,000 in 2005. 'On a military project like this, there is a detailed spec with key deliverables - small payments at the start and end, and a bigger amount in the middle,' says Cruise. 'The project was split over two tax years and Oldenburg treated us well. They have a very long payment cycle but their programme manager, realising we were a small company, allowed us to invoice them two months before deliverables were due. It meant, of course, we had to deliver on time every month.'

Fully funded for phase one of the defence project, the consortium ultimately lost out to a rival technical submission when the project moved into phase two. 'But for a young company we didn't do too badly,' says Cruise. 'We were able to move our linear motor technology forward and spend money on building a prototype.'

Investment options and g2i

Because Texchange's work is project-based, the company doesn't have a lot of up-front costs and is currently self-funded - the start-up funding simply consisted of the £1,000 Cruise put into the company to set up the website. He did consider external investment when the Oldenburg project came to an end and completed an investor readiness course through the g2i programme.

'Our business is not mass market - there are only a handful of potential customers and we just need one project to generate a very profitable business,' he adds. 'If we'd gone into phase two on the Oldenburg job, we would have had a guaranteed income to 2013 with one customer.'

However, he sees significant value in remaining part of the g2i network. 'I may not have benefited in monetary terms from g2i, but I have in so many other ways. The networking has been particularly valuable and I'd do the whole process over again.

'I try to attend all the g2i functions because there's so much to gain from interacting with other entrepreneurs. The businesses in my cohort were all very different and we learnt a lot from each other.'

He adds that he's learned several lessons, not least the need to focus. 'At one point, I was considering going into high-speed transportation - the other big market for linear synchronous motors - but was advised by a director at E-Synergy [a g2i consortium member] to focus on what I knew best.

'And you need patience, too. One of the most important lessons during the g2i experience came from Doug Richard at a round table discussion. He said most small companies fail not because they run out of money but because they run out of time. I had been very eager to try and rush things through. But for a big company, the easiest way to deal with that is to turn around and say no. So, with Anglo American, a large mining company I'd been courting since 1994, I decided to be more gentle - for example, setting up a meeting every two years. As soon as I changed tactic, I was in the door.'

Back to the future

Today, Texchange is focusing once again on mining and re-establishing links with global companies to continue developing its deep mining transport technology. With gold prices soaring over the last few years, Cruise is now seeing increased interest from around the world in his technology. His continued investment in Texchange has also enabled him to file for a number of new patents. They include technology for linear motors that don't require position sensors to determine the position of the lift cages in the mine shaft - that means multiple cages can run simultaneously in the same shaft, which increases mine productivity.

Cruise emphasises the importance of maintaining good relationships with key business contacts. 'The mining industry is very small and people tend to stay in it and have long memories. For example, my contact at Anglo American was a fairly senior engineer but he's now in charge of the company's entire technical division and pulls all the strings. I've contacted him regularly and met him every couple of years.' '

Running a small business has many highs and lows,' he concludes. 'But when you hit the lows, don't give up. It took me 10 years from first having my idea in 1994 to see any financial reward. 'This was my baby that was going to bring me riches, and it's taken a long time for that to come to fruition.'

Rupert Cruise was talking to Alison Hjul of Webster Buchanan Research

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