Roy Cokayne
GRINDROD, the listed integrated logistics service supplier, has hinted at the possibility of separately listing its shipping business.
Alan Olivier, the chief executive of Grindrod, said last week that Grindrod had always been a ship owning company, but there was clearly no reason for the freight service business and shipping business to be housed in the same group.
“So there could well be a reason, at some stage, to carve it up into separate groups, and separately listing shipping could be an option,” he said.
However, Olivier stressed that if Grindrod remained invested in shipping, it would never own a shipping business in which it did not have a controlling stake.
A key focus of Grindrod in recent years has been on growing its strategic infrastructure assets to provide a fuller end-to-end solution to its customers.
This has resulted in it making major investments in the Port of Maputo and actively working on the proposed $500 million (R6 billion) North West Rail project, which will be the first major new rail infrastructure project in sub-Saharan Africa.
Grindrod has concluded a draft development agreement with the Zambian government for this project, which will feed into another proposed project, the north-south corridor project involving a 3 000km rail corridor with the potential to transport 4 million tons a year at full ramp-up.
The group has three further major projects in South Africa and two in Mozambique.
Olivier said the first phase expansion of its Richards Bay terminal involved increasing its annual capacity from 3.2 million to 4.5 million tons.
Grindrod had reached an agreement with the owners of the adjoining land to its facility and would be entering into a joint venture with them, providing Grindrod with the potential to grow this facility over time to a capacity of 20 million tons a year.
However, Olivier said the big challenge for Grindrod was getting an agreement from Transnet that it would not build a competing facility. Transnet had recently announced that it would be supporting some growth at the existing Richards Bay coal terminal, as well as at Grindrod’s facility.
Olivier said Grindrod hoped to have increased the annual capacity of its terminal up to 4.5 million tons and would then start to move to the next phase, which would probably be up to about 8 million tons, and thereafter to 20 million tons.
Grindrod has a 49.9 percent shareholding in the terminal and the total estimated capital expenditure on the project is R125m.
Delays
Olivier said the 230 000 cubic metre first phase of the liquid bulk terminal storage facility at Coega would not be operational by next year as it had planned because of delays with the tariff approval from the National Energy Regulator of South Africa.
Grindrod hopes to have the facility operational by the first quarter of 2018.
The estimated cost of the entire project is R2.9bn.
Grindrod is also involved in the planned construction of a crude oil terminal in Saldanha at a total estimated cost of R3.1bn. The company has a 15.25 percent share in the project.
Olivier said Nersa approval was also required for this project and the plan was for this terminal to be operational by the end of 2018.
Grindrod’s two remaining major projects involve the dredging of the Maputo port and the expansion of the Maputo Matola terminal.
Grindrod last week reported a 9 percent drop in headline earnings a share to 107.5c in the year to December from 118.7c.
On the JSE, Grindrod shares declined by 2.56 percent to close at R18.24 on Friday.