South Africa's Transnet to Boost Freight Capacity with $38 Billion Investment Program

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--As part of South Africa's plan to invest in infrastructure development, state-owned freight and logistics company Transnet (Johannesburg) will invest $38 billion over the next seven years to boost delivery capacity and debottleneck internal and export volumes.

Transnet CEO Brian Molefe said that the plan effectively tripled the rate of capital expenditure as it had invested $15 billion on maintenance and development over the past seven years.

Rail projects will receive more than $27 billion, and port and pipeline infrastructure will receive $11 billion. In the rail sector, general freight business will receive more than $20 billion, coal export $4.3 billion, iron ore $3.3 billion, containers and ports $3.2 billion, piped products $1.2 billion, bulk transport $3.8 billion and other projects $4 billion.

The coal export line volume is expected to increase from an annual 68 million tons to 98 million tons. Iron ore exports will increase from 53 million tons to 83 million tons, and general freight business will soar 113% from 80 million tons to 170 million tons. Maritime containers will grow from 43.3 million 20-foot equvalent units (TEUs) to 7.6 million TEUs. The increases are expected to make Transnet's Freight Rail (TFR) into the world's fifth-largest freight rail company, transporting more than 350 million tons, up from the current 200 million tons.

The program is expected to create 588,000 indirect, direct and economy-wide jobs. Transnet is planning for an increase in staff from 59,000 to 74,000 full-time employees.

Later this year, Transnet will issue an open tender for the purchase of 1,000 new diesel and electric locomotives with a value of about $7 billion. In addition to this, tender bidding documents for 95 new electric locomotives have already been issued. In the area of locomotive manufacturing, Transnet Rail Engineering is achieving local content levels of 52%. This average has been elevated through a follow-on agreement with General Electric (NYSE:GE) (Fairfield, Connecticut) for a further 43 diesel electric locomotives, over and above the 100 units purchased under a 2009 contract, for which a local content level of 67% was achieved.

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