http://www.businessday.co.za/articles/C ... ?id=124936
Transnet taps private sector for expansion.
TRANSNET said yesterday it is in discussion with industrial and mining groups to help fund a major expansion of its bulk commodity rail capacity, which could not be paid for by its existing five-year, R93bn capital expenditure programme.
JULIUS BAUMANN
Published: 2010/10/27 06:32:17 AM
LOGISTICS group Transnet said yesterday it is in discussion with industrial and mining groups to help fund a major expansion of its bulk commodity rail capacity, which could not be paid for by its existing five-year, R93bn capital expenditure programme.
Acting CEO Chris Wells said the investment includes adding substantial capacity to its iron ore, coal and manganese lines and would run into “tens of billions of randâ€. Transnet is investigating upgrading and expanding its lines in Mpumalanga and Limpopo to carry heavy-axle loads, as well as widening some corridors to dual lines. The investments are over and above capacity increases targeted in its expansion plans.
If successfully completed, the ventures would be a significant step forward for Transnet’s private-public partnerships and could boost economic growth and job creation.
“We need to tap the opportunities offered by the country’s mineral resources and these are beyond the capacity of Transnet’s own balance sheet. We need to partner with the private sector to unlock these opportunities,†Mr Wells said yesterday at the release of Transnet’s results for the six months to end-September.
The group posted a 17% rise in headline earnings to R1,57bn.
Transnet’s discussions include plans to increase capacity on its coal line 10%-15% to “well above 90-million tons†a year, with the development of additional capacity in Limpopo, Mpumalanga and along the Maputo Corridor. Transnet is already committed to raising capacity from 71-million tons to 81-million tons by 2014.
Transnet is also targeting capacity of 12-million to 14-million tons on a new manganese line either to Coega or Saldanha to replace eventually the 5,5-million tons at its Port Elizabeth facility.
Transnet has committed to shutting down the Port Elizabeth facility by 2016 and the group expects to make an announcement on a new manganese facility in the next few months, Mr Wells said. Along with this will be an investment in a new manganese rail line.
“Apart from the environmental concerns around the Port Elizabeth facility, there is really little scope to increase capacity beyond 5,5-million tons a year. As it is, we are transporting 1,5-million tons through Durban at huge expense to industry and even along this route there is little capacity beyond that level,†he said.
An increase in iron-ore capacity beyond 61-million tons targeted by 2012 is being investigated.
The logistics group has already appointed consultants to help Transnet identify where there is demand for added capacity beyond 2014 and draw up a schedule of when and where that demand would come on stream.
“This involves developing a time line of new mine openings and their requirements for the local and export market, as well as identifying any new prospecting licences that have been granted,†Mr Wells said.
In the first six months of the year, Transnet spent R10,2bn on capital projects, including R5,5bn on additional capacity and R4,7bn upgrading facilities. It continued to take delivery of new locomotives, create new capacity on the coal- and iron-ore lines and increase capacity in the Cape Town Container Terminal. Construction of the multiproduct pipeline, due for completion in December next year, continued.
Mr Wells said Transnet expects to spend a similar amount in the second half of the year, taking total investment in the year to more than R20bn. It has already spent R73bn on new infrastructure in the past five years.
Transnet plans to borrow a further R35bn over the next three years to fund its capex requirements, having already raised R7,6bn in the first half of this year. The group expects to borrow a further R9,6bn in the second six months of the year.