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Apr 13, 2012

13/04/2012 (On-The-Air)

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Every Friday morning, SAfm’s AMLive’s radio anchor Xolani Gwala speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:

Gwala: Durban’s new ‘dig-out’ port will test Transnet’s new private-sector participation scheme.

Creamer: This private-sector involvement in Transnet has been mooted for a long time, but it never surfaces. You see even with this R300-billion expenditure over seven years, its great that this is happening, you’ll find that the real private-sector participation is probably going to come outside of that. The real private-sector participation will be in this new ‘dig-out’ port.

Gwala: What is this ‘dig-out’ port.

Creamer: It is quite an imaginative thing. Here is a picture of it looks like now, and I am showing Xolani the picture, and that's solid land mass. This is the plan, they are going to dig-out a new port and its on the site of the old Durban Airport. Now, you say why are they going to do this, why do they need this capacity, because its close to the Durban port.

Even as they speak they haven’t got enough container capacity. They know that no matter what they do at Durban there is not going to be enough room for the containers so they need another port.

So, they've gone on a State-to-State deal. They’ve gone to the Airports Company and said look you’ve got the old Durban Airport ground there, sell it to us for R1,8-billion and we’ll buy that, but we want to create a ‘dig-out’ port out of that. So it is an ambitious thing. I think the first shovel in the ground is probably only going to came in at about six years time.

So it is going to be a long-term project, but they say that the tenders for this is going to be invited in the next financial year, which is 2014/15. This will be where the big private sector involvement is. The probabilities are that we are going to have a port here that is built, owned and operated possibly by a private sector company, which will be a major first for a port of this size coming up.

That will be part of what Transnet calls this new private-sector participation. If you look at the R300-billion that they are spending, this dig-out port doesn’t really feature to any great extend, so the funding for this will come from a slice from the private-sector and there will be some sort of participation there.

Gwala: Describe it to for the listener, the picture, how different is it from the kind of ports that we have at the moment.

Creamer: We also have the channel that comes in, as at the Bluff in Durban, but you can see that they’ve got this breakwater, which they’ve created there and they are actually going to excavate a port. So you are going to have an area, which is now solid land mass, suddenly becoming a water-course with ports in as we see from this picture.

Gwala: South Africa’s inadequate commodity railway network is in line for a R100-billion boost.

Creamer: We talk these big numbers and we know that the government talks its big numbers. It talks R840-billion that it has got to spend, but it doesn’t spend it. But at least with Transnet and Eskom they have ability to spend. When they say they are going to spend some, they normally spend it. You can see that Transnet is a new organisation under Brian Molefe.

When he says that they are going to do more for the commodity business, that is the mining business, the export business, then we take him seriously, because we already see he surprised some of the mines. He has actually created more volumes of exports that they can cope with.

So he is definitely a new spark of energy in Transnet, which we need. This is State-owned, like the coal port is private sector operated.

The port is always moaning that we have got more capacity in Richards Bay then you are giving us coal. Brian Molefe wants to change that with part this R300-billion, but about a third of that R100-billion is going to go towards commodity boosting. So the logistics for coal-exports, manganese exports and iron-ore exports are going to come into this.

We see that about R50-billion of that R100-billion is earmarked now for coal and they are also unlocking the Waterberg. There is no rail there at the moment and they want to create that rail. It is absolutely essential that they unlock that coal, because the coal in Mpumalanga is depleting, but the power stations are still living.

So where are they going to get their coal? They need it to be railed in from the Waterberg. That rail that they want to create from the Waterberg to Richards Bay also passes the existing power stations where they can give off the domestic coal and then send off more coal for exports.

They are talking about 98-million tons a year, a 44% increase in the capacity of coal that goes through, which will be massive boost. That will mean that it will go ahead of the private-sector port, which is on 92-million tons at the moment.

Then 25-billion towards manganese, there is also other resources for the South Corridor, which includes East London and Port Elizabeth and also the Port of Coega. But, on the manganese front there has been a lot of angst.

We only export about 4-million tons a year, but we have got 80% of the world’s reserves and so they are looking to spending R25-billion there and boosting that to about 11-million tons a year over a seven year period.

Then iron-ore where they have actually been quite efficient, they are going to be more efficient and lift it up by about 57% to 83-million tons a year with a R28-billion expenditure. A lot of figures to consume, which is always difficult, but we can see that our logistics are now coming into line.

Gwala: I spoke to Brian earlier on in the week and he says that he is going to sign agreements with the private-sector to ensure that this capacity is used. That once he has put up these rails that people get on the rail and forget about our roads.

Creamer: I see they’ve even done their own due diligence to see that that coal is in the ground there and they know the sort of volume potentials, because the miners have to come to the party as well. On a use or lose basis.

Gwala: South Africa is losing engineers to other countries because of the lack of project work in this country.

Creamer: South African Institution of Civil Engineering (SAICE), they are very moderate in their criticism. They never have outbursts, when they have a media conference and they say that we are loosing engineers here, because of the lack of project work in South Africa then we have got to take them seriously because they don’t do this.

They never critisise, they normally just do their jobs with their heads down. SAICE is saying that our engineers are sitting idle, there are no projects coming through. A key element in this is government work, because the biggest employer of these engineers and the biggest generator of these projects is government.

They say, please guys give us a repeat of 2010 when we had the Soccer World Cup. We know that if we set a deadline on this we can do things. You’ve got money, you’ve got R840-billion so that's not the problem.

You’ve got resources, you’ve got engineers sitting here doing nothing, but they are going to leave the country just now because they’ve got no work. So, that is a wake-up call for the government, because they can’t put people into positions that don't understand and can not identify projects and also can not manage the spend allocated to that project.

They have got to have more efficiency. What seems to really hurt the civil engineers, like a dagger into the heart, is in fact this quote, “the governments audacity to bring in engineers together with other professions from Cuba en masse, with full and comprehensive packages to work in South Africa on South African government funded projects”.

That really sticks in their throats. I didn’t realise that, I thought that there were a lot of Cuban doctors, but I didn’t realise that there were civil engineers. I don’t think that this would isolate this if they didn’t have evidence, but we still have got to interrogate that the fact that they are saying that government is bringing in Cuban civil engineers en masse with fantastic packages.

Gwala: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly, he’ll be back with us at the same time next week.

Edited by: Creamer Media Reporter

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