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

The company’s locomotive pricing is “more competitive than any other original-equipment manufacturer’s (OEM’s) in the world”, says RRL Grindrod Locomotives CEO Robert Spoon. “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 in March 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,” says Spoon.

Phase 2 should see capacity remain the same, but local content on the company’s mainline locomotive increase 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,” says Grindrod Freight Services Ports & Rail CEO Dave Rennie.

“We have good intellectual property and good management.”

Locomotives could be built for railway lines of any gauge.

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

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

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

One of the projects Grindrod has recently secured is the opportunity to work with North-west 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 employs around 450 people, and has eight large parts suppliers.

The facility produces 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 finds its market mainly in South Africa.

Around 80 mainline locomotives have been produced to date.

If, however, RRL Grindrod Locomotives produces the lowest-cost diesel-electric loco-motive 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 says the company cannot deliver this number of diesel locomotives over the expected four-year period, as it does not have the capacity to do so.

Supplying Transnet would starve the company’s African customers, as all 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 adds.

Apart from building locomotives, RRL Grindrod Locomotives also maintains, refurbishes and leases locomotives. Grindrod Rail, in turn, provides rail operation services, signalling and control systems, and also specialises in railway track construction.

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

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

Around 50% of staff are 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, Tanzania, are also on the drawing board.

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

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