The port of Maputo, in Mozambique, would see an estimated investment of around $800-million over the next five years, said Grindrod Freight Services CE Dave Rennie on Thursday.
JSE-listed shipping and freight services specialist Grindrod would be responsible for roughly 40% of this figure as the company grew its capacity at the thriving harbour node, he added.
“There is a huge shortage of infrastructure to support the commodity markets,” added Grindrod CEO Alan Olivier. “There is huge opportunity for us in this market.”
He noted that the Maputo Port Development Company, in which Grindrod had a 25% share, had received an extention to its port concession to 2033, with the option for another ten-year extension thereafter.
This extension provided a timeline for the implementation of a port master plan and for sub-concessionaires to undertake additional investment.
The immediate expansion plans included the dredging of the port from its current 9,4 m draft to 11 m, to accommodate the larger Panamax vessels, which would improve the port’s competitiveness in terms of bulk and container traffic.
This dredging operation would start as soon as next week, and would be completed early next year, said Olivier.
He added that the extension of Grindrod’s Maputo coal terminal sub-concession to 2043 had also been concluded, together with an agreement to expand this terminal from its current planned capacity of six-million tons of coal a year – on schedule for completion at the end of the year – to between 16-million and 25-million tons a year in 2013.
Olivier said the new concession agreement secured some additional land for Grindrod, which would now allow it to “substantially expand its coal operations”.
Grindrod had also completed agreements with CFM, the Mozambique State-owned rail and port company, and Dubai Port World for the joint development and operation of an intermodal container depot adjacent to the Maputo port, with phase one of the project due for completion by June 2011.
“Container volumes have grown very quickly at Maputo’s current container depot, and this would need to be expanded too.”
Grindrod had sold 30% of its car terminal at Maputo to Höegh Autoliners, one of the world’s largest shipping companies in the world, in the last 12 months.
One factor inhibiting growth at Maputo to date had been a lack of rail wagon availability. However, said Olivier, availability was expected to increase as more wagons had now been committed by transport parastatal Transnet.
Oliver said Grindrod had always believed that the port of Maputo could grow from handling the current nine-million to ten-million tons of cargo a year, to close to 50-million tons over the next 15 to 20 years.
“Our ports and terminals are very strategic assets,” he added.
“But, when you invest in infrastructure, you don’t see the results immediately, as you do in shipping. You only see it two to three years down the line. For Maputo, this means 2013.”
Grindrod’s Freight Services division, which included the Maputo operations, contributed R103-million to Grindrod’s attributable income of R435-million for the first six months of the financial year, ended June 30. This was up from the R89-million recorded in the first half of the previous financial year.
Shipping – despite shrinking as the limp economy took its toll – remained Grindrod’s biggest source of attributable income, at R250-million for the six-month period ended June 30, down from R337-million in the comparable period. Trading contributed R71-million for the six months ended June 30, and Financial Services R21,2-million.
Grindrod recorded revenue of R14,9-billion for the first half of the current financial year, up 20% from the first half of the previous financial year.
However, trading profit declined by 14% to R686-million, with operating profit before interest and taxation down 19% to R528-million.
Oliver noted that the strong rand had impacted on the company’s results, as did the strike at Transnet during the period under review, and the high volatility in the shipping, commodity and financial markets.
However, he said that China, India and Brazil were continuing to drive global economic growth, and that the company expected sound earnings for the 2010 financial year.