The world’s lowest-cost diesel-electric locomotive was not made in China, but in Pretoria, at RRL Grindrod Locomotives’ newly upgraded 30 000 m² plant.

The company’s locomotive pricing was “more competitive than any other original-equipment manufacturer (OEM) in the world”, said RRL Grindrod Locomotives CEO Robert Spoon on Thursday. “This is the lowest-cost diesel loco in the world, and we plan for it to stay that way.”

RRL Grindrod Locomotives is 51%-owned by Grindrod, the JSE-listed pit-to-port logistics and shipping group.

A Phase 1 expansion project at the RRL Grindrod Locomotives plant, opened on Thursday by Trade and Industry Minister Dr Rob Davies, grew capacity at the plant from 24 locomotives a year in 2012, to 100 locomotives a year.

The company should benefit from a grant by the Department of Trade and Industry’s (DTI’s) Manufacturing Competitiveness Enhancement Programme for the development of Phase 1.

“We have made a R40-million application to the programme,” said Spoon.

Phase 2 should see capacity remain the same, but local content on the company’s mainline locomotive increased from 65% to 80% by the end of 2014.

“At 80% local content we can think of ourselves as an OEM, and not an assembler,” said Grindrod Freight Services Ports and Rail CEO Dave Rennie.

“We have good intellectual property and good management.”

Locomotives could be built for any gauge railway line.

RRL Grindrod Locomotives’ main markets were largely located outside South Africa, with around 90% of business in Africa, said Grindrod Rail divisional CE James Holley.

Around 30% of overall business flowed from the government sector, he added, and 70% from the private sector.

Clients include the mining industry, large industrial groups and transport utilities.

One of the projects Grindrod recently secured was the opportunity to work with Northwest Rail Company to build, operate and maintain a new 590 km Cape-gauge railway service from Chingola, in the heart of the old Zambian Copperbelt, to the Angolan border.

RRL Grindrod Locomotives employed around 450 people, and had eight large parts suppliers.

The facility produced 110 t, mainline diesel-electric 3 000 hp locomotives, aimed at the heavy-haul, long-distance market, as well as a smaller shunting locomotive.

The shunting locomotive, with numbers six, seven and eight currently on the assembly line, found its market mainly in South Africa.

Around 80 mainline locomotives had been produced to date.

If, however, RRL Grindrod Locomotives produced the lowest-cost diesel-electric locomotive in the world, why not supply local utilities, such as Transnet, which recently signed contracts for the acquisition of 1 064 locomotives, including 465 diesel locomotives?

Rennie said the company could not deliver this number of diesel locomotives over the expected four-year period, as it did not have the capacity to do so. Supplying Transnet would have also starved the company’s African customers, as all of its capacity would have been tied up in a single contract.

“We tool up for the large Transnet tender, and four years later, what happens then?” he added.

Apart from building locomotives, RRL Grindrod Locomotives also maintained, refurbished and leased locomotives. Grindrod Rail, in turn, provided rail operation services, signalling and control systems, and also specialised in railway track construction.

While Africa was RRL Grindrod Locomotives’ largest and most important market, the company was also looking towards the Middle East, while the first South American locomotive order of four units was already being built.

Apart from cost, Spoon believed the company’s other competitive advantage was its focus on on-the-ground maintenance.

Around 50% of staff were not based in South Africa, but in six rail hubs located in Africa, such as Sierra Leone and Mozambique. Other, new hubs, such as in Dar es Salaam, in Tanzania, were also on the drawing board.

Rennie said this support model saw RRL Grindrod Locomotives deliver 95% availability in some of the world’s harshest environments, such as areas where rainfall measured three metres over a period of five months.

RRL Grindrod Locomotives rail services GM Jannie Bouwer added that Chinese products had, in the past, often failed under these tough circumstances, which provided the South African company with an edge over locomotives sourced outside the continent.

SIXTH VERSION OF IPAP OUT SOON
The sixth version of the DTI’s Industrial Policy Action Plan (Ipap) should be rolled out on April 7, said Minister Davies on Thursday.

He said the focus of Ipap had included viewing infrastructure development as a major source of industrialisation, insisting on localisation, and working towards regional integration in Africa.

Davies noted that each African economy was too small to sustain industrialisation on its own, but that combined regional markets could achieve this goal. However, this required regional integration through infrastructure that connected African countries to each other, rather than infrastructure that connected African countries to other continents hungry for mineral resources.

He added that government remained insistent on becoming “tougher on fronting” in terms of black economic empowerment.

“[And] we want to see more black industrialists.”