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Grindrod to invest in Maputo port, RBay coal and Africa rail projects

Grindrod to invest in Maputo port, RBay coal and Africa rail projects

Photo by Duane Daws

25th February 2015

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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Freight services and shipping group Grindrod would upgrade capacity at its Richards Bay coal and magnetite terminal from 3.2-million tons a year, to 4.5-million tons a year, said Grindrod CEO Alan Olivier on Wednesday.

Speaking at the company’s annual results presentation in Johannesburg, he said the R125-million project could be completed by the end of the year. Grindrod had a 49.9% share in the project.

Olivier said Grindrod had been looking “for some time” to grow the terminal. A joint venture (JV) agreement with the owners of the land adjoining the terminal, could now, finally, see the facility grow, with a second-phase expansion to 8-million tons a year also a possibility, as well as further growth to 20-million tons a year.

These further expansions would, however, require “much more material investment”, warned Olivier, as well as secured coal volumes.

He noted that rail-freight parastatal Transnet supported construction of the expanded terminal.

A second capital expenditure (capex) programme on Grindrod’s horizon was the Ngqura liquid-bulk-terminal storage project.

Grindrod had a 30.5% shareholding in the R2.9-billion project to build the 230 000 m3 storage facility, said Olivier.

Land was available to expand the facility to 720 000 m3, if required.

The facility would be used for the storage of all petroleum products, with the exception of crude oil and liquefied natural gas.

Should construction start this year, the first phase could be completed by 2018, said Olivier.

The project had been experiencing delays owing to the fact that the tariff model of the National Energy Regulator of South Africa (Nersa) “did not work” for projects requiring new capital outlay, said Olivier.

He said there were new tariff regulations in the works for May this year, which should allow for the construction of this facility.

Another project in the pipeline for Grindrod was the Oiltanking Grindrod Calulo Holdings (OTGC) JV with the Royal Bafokeng Group’s Mining, Oil and Gas Services (MOGS) business, to establish the OTGC Saldanha crude oil terminal.

The R3.1-billion project should be completed by mid-2018.

Grindrod had a 15.25% share.

The project would consist of twelve 1.1-million-barrel crude oil tanks, as well as the development of crude oil blending capability.

This project would also benefit from the same tariff regime change required from Nersa for the Ngqura project.

DREDGING MAPUTO PORT
Grindrod, a shareholder in the Maputo port, was also set to help finance an estimated $100-million project to dredge the port to allow access for fully laden Panamax vessels with a draft of 14.2 m.

The project should be completed by the middle of next year.

The Mozambican government was assisting in waiving its concession fee for seven years to pay for its part of the dredging costs, said Olivier.

He said the aim of the project was to “make Maputo more competitive from a pricing point of view”.

He said the port was starting to reach its capacity, while price pressure in commodity markets also required the port to become more efficient.

Olivier believed this was possible through loading and offloading ships faster, and by allowing bigger ships into the port.

Maputo port volumes were up 14% in 2014 compared with 2013, to 19.5-million tons.

Grindrod also had its eye on an estimated $500-million project to build a 340 km railway line from Chingola, in Zambia’s copper belt, to Kalumbila, with a possibility to eventually extend the line to the Angolan border.

This north–west corridor project could potentially move 1.2-million tons of copper concentrate a year.

Olivier said Grindrod would not supply all of the project’s required capital, noting that the company was already talking to partners to fund and develop the line.

Grindrod had secured a draft development agreement on the project, and would soon sit down with the Zambian government to finalise a concession agreement, he added.

Grindrod also had its eye on further developing the so-called north–south rail corridor, where it operated on a concession agreement, carrying around 800 000 t of goods a year.

The corridor ran from northern Zambia, through Zambia and Zimbabwe, to Maputo, Durban and Richards Bay.

This corridor could potentially carry around 4-million tons of copper, mining supplies and agricultural products, said Olivier, especially when considering current road freight volumes.

Transnet and Grindrod were developing a corridor masterplan for the project.

It was the intention for the north–west corridor to link up with the north–south corridor at Chingola, noted Olivier.

He said the north–south corridor was “very efficient”, with trains taking six days to reach Durban from northern Zambia.

Grindrod also had an opportunity to secure more rail business in Mozambique.

The group had been asked to handle all the shunting work at the Maputo port on a six-month trial basis, while four derailments in southern Mozambique in 14 days – disrupting goods flow to the port – was potentially creating an opportunity for future rail concessions in South Africa’s northern neighbour.

THE NUMBERS
Grindrod saw revenue for the year ended December 2014 grow by 2% compared with 2013, to R32.7-billion, with headline earnings up 4% to R729.4-million.

Freight Services contributed R494-million to headline earnings, and Shipping R175-million.

The Freight Services business was hit by decreased locomotive sales as a number of African mining projects had been delayed.

Olivier hinted on Wednesday that a separate listing of Grindrod’s Shipping business might, at some stage, come into play.

Edited by Creamer Media Reporter

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