State freight logistics group Transnet announced in its 2007/8 yearly report that it will implement a robust capital expenditure (capex) programme over the next five years to ensure that capacity is created ahead of demand and that productivity is improved.
The parastatal comments that its Transnet National Ports Authority (TNPA) division’s five-year capex plan amounts to R17,4-billion, while its Transnet Port Terminal (TPT) division’s five-year capex plan amounts to R10,3-billion.
The group plans to expand capacity at its ports. This includes the expansion at the Port of Durban, where the widening and deepening of the entrance channel is under way, as is the redevelopment of Pier 1 as a container handling facility, and the increase in capacity of the car terminal.
Meanwhile, at the Cape Town harbour, the container terminal will be widened and deepened. Continued development will take place at the Port of Ngqura, in Port Elizabeth, within the Coega industrial development zone.
TNPA Capital Expansions
Transnet states that capex increased by 144%, from just over R1-billion in the previous year to R2,5-billion in the 2007/8 financial year.
The company states in its annual report that the TNPA’s capital expansion programme has progressed well. Consider-able progress has been made on the Durban harbour entrance widening and deepening project.
The dredging works and the construction of the new northern breakwater at the harbour are currently in progress.
The construction of Berth 306 at the Richards Bay Coal Terminal has been commissioned and was completed by Transnet Capital Projects ahead of schedule and within budget.
The TNPA states that at the port of Ngqura, the paving at the container terminal has been completed, and the construction of the additional quays has started. The TNPA has received approval from the Transnet board to construct an additional bulk liquid berth at Richards Bay.
Approval has also been granted for tug acquisitions for Port Elizabeth, Durban and Richards Bay. The division has awarded a tender for the supply of a new 4 200-m2 trailing suction hopper dredger.
TPT Capital Expansion
TPT’s capital spending for the 2007/8 year amounted to just over R2-billion, including capital- ised borrowing costs, compared with R1,7-billion in the 2006/7 financial year.
Transnet states in the report that considerable areas of expenditure for the year included the refurbishment and expansion of the iron-ore export facility at Saldanha Bay, the construction of a new container terminal at Pier 1 at the Durban harbour and the procurement of terminal equipment, such as ship-to-shore cranes and rubber-tyre gantry cranes.
Other areas of expenditure include the construction of a new container terminal at the Port of Ngqura, the expansion of equipment capacity at the Cape Town and Durban container terminals and the refurbishment of the manganese export facility in Port Elizabeth.
During the 2007/8 year, TPT began building a fifth container terminal at the Port of Ngqura. The report states that Phase 1 of the terminal is expected to be operational by October 2009, with a yearly capacity of 700 000 twenty-foot equivalent units (TEUs).
The division is in the process of creating an additional 4 000 bays at the Durban car terminal. On completion, the terminal’s capacity will have grown from one berth and 6 500 parking bays in 2006, to three berths and 14 000 parking bays. The project also increases rail connectivity to and from the terminal.
The report states that the re-engineering project at the Durban container terminal is expected to increase the capacity of the terminal from 2,3-million TEUs a year to 2,9-million TEUs a year.
The Cape Town port expansion project is expected to double capacity from the existing 700 000 TEUs a year to 1,4-million TEUs a year.
The Richards Bay multipurpose terminal has commissioned a new mobile crane. The crane has achieved loading rates of 250 t/h instead of the usual 120 t/h. This has resulted in a 50% improvement in turnaround time for vessels on which the mobile crane was used.
The division states that its core challenge at present is to grow the business and to create capacity ahead of demand.
TPT says that the capex plan provides for the expansion of container handling facilities at the ports of Durban, Ngqura and Cape Town, as well as the expansion of the bulk handling facilities at Richards Bay and Saldanha Bay.
TPT’s approved capex for 2008/9 is R2,7-billion. This includes the development of the Ngqura container terminal, the Saldanha iron-ore terminal phase 1B expansion, and the Durban container terminal re-engineering project.
The Cape Town harbour capacity expansion, the Port Elizabeth manganese terminal Phase 3 expansion, the Richards Bay dry-bulk terminal plant refurbishment and expansion, and other projects are also included in the approved capex.
More than 60% of the TPT division’s capex for next year targets expansion in capacity. This includes the new container terminal at the Port of Ngqura, the expansion of the Durban and Cape Town container terminals and the upgrade of bulk handling facilities at Richards Bay and Saldanha Bay.
Transnet states that although the economic prospects for the year ahead remain challenging, volume growth is expected for the TNPA and the TPT divisions, as well as all other divisions of the parastatal.
The group states that the TNPA will deliver capital projects to provide port infrastructure capacity ahead of demand. It adds that port efficiency will be improved through the enhanced service levels, as well as increasingly efficient marine resource capacity at the port.
TPT states that although it faces the significant challenge of growing the business within the context of a changing commercial environment, the projected financial performance is positive, with increasing profitability margins and returns on investment.