Transnet eyes manufacturing opportunities

Transnet Engineering, a division of state owned enterprise Transet, is being repositioned to become global player in the rail equipment manufacturing space.

This was expressed yesterday by the minister of public enterprises Malusi Gigaba during the presentation of Transnet financials for the year ended March. “Our vision is to see Transnet Engineering transform from an assembler into a global manufacturer,” said Gigaba.

This ups the pressure for Transnet to utilise its R307bn infrastructure development programme to stimulate localization in the manufacturing of the high tech equipment it will be purchasing over the next seven years. Transnet Engineering also features as a key player in the R120bn revamp programme being undertaken by the Passenger Rail Agency of South Africa (PRASA). The key government objective in both PRASA and Transnet procurement is to build an export focused manufacturing base. PRASA has appointed French engineering giant Alstom to roll out new passenger rail coaches in a R51bn contract. The agency announced this week a plan to develop a greenfield manufacturing facility in South Africa where a significant portion of the Alstom manufacturing will take place.

Announcing its results Transnet said its infrastructure development programme was on track despite difficult economic conditions.

Transnet revised is capital investment programme to R307.5 billion from R300 billion in the previous year. Transnet CEO Brian Molefe said this confirms the company’s commitment to  its counter-cyclical investment strategy to create capacity ahead of demand. This will enable economic growth in line with government policy.

Revenue increased by 9.4 to %R50.2 billion. SOE highlighted Transnet Freight Rail’s road-to-rail programme which it said continues to drive containers and automotive traffic off the country’s roads. Earnings (Ebitda) went up 11,5% to R21.1 billion. Transnet noted that “Importantly, Freight Rail’s Containers and Automotive segment recorded a 21.6% growth to 10.7 million tonnes (mt). This takes Transnet’s rail volumes for the period to an unprecedented 207.7 mt”.

Transnet also reported that its iron ore and manganese rail volumes increased by 7,3% to 64,3 mt due to rising demand for manganese and improved efficiencies in the iron ore channel. “However, coal volumes disappointed with a 1,9% growth due to the prevailing market conditions in the sector in spite of a 22% increase in demand from Eskom and higher levels of operational efficiency”.

We have identified certain opportunities for further efficiency improvements including introducing our 200 wagon trains on the coal line to run directly from the mine to the port, instead of going through Ermelo. Our projections are that the project, which is currently being tested, will cut cycle times from the current 65 hours to about 41 hours and add about 5 mt to our volumes.

During the year under review Transnet signed a contract with Chinese manufacturer China South Railways for the supply of 95 electric locomotives. The SOE said it was currently adjudicating bids for the acquisition of 1 064 diesel (465) and electric locomotives (599) for Freight Rail’s General Freight Business.

Other infrastructure rejuvenation highlights include:

Ø  Iron ore line expansion to 60 mt  – The old sampling building at the Port of Saldanha has been demolished, the rail triangle has been completed to enable the more efficient handling of trains and the installation of electrical equipment to reduce electrical consumption at the Port.

Ø  Coal line expansion to 81 mt – Engineering designs for the expansion to 81mt are being undertaken. The project is expected to be completed by the last quarter of 2018.

Ø  Acquisition of Wagons for MDS (2013 only) – Transnet completed building 2 235 of the 2 346 wagons approved for the year. These include automotive wagons, flatbed wagons to rail containers and CR type wagons for transporting mineral and mining products.

Ø  Acquisition of 7 tandem-lift ship-to-shore cranes for Pier 2  – All seven tandem-lift ship-to-shore cranes were assembled and are operational.

Ø  New Multi-Product Pipeline – The 24-inch trunk-line from Durban to Jameson Park was operationalised in January 2012 and transported over 2,7 billion litres of diesel for the year.

Ø  Acquisition of the old Durban International Airport site   was concluded at a total cost of R1,85 billion. Transnet plans to develop a dig-out port to address container, liquid bulk and automotive demand.

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