Roy Cokayne
GRINDROD has concluded a draft development agreement with the Zambian government for the proposed $500 million (R6 billion) NorthWest Rail project, the first major new rail infrastructure project in sub-Saharan Africa.
Alan Olivier, the chief executive of the listed integrated logistics service supplier, said yesterday that the company would be sitting down with the Zambian government in the next couple of weeks to thrash out a concession for the project.
The first phase of the project involves building a siding at Chingola and 340km of rail linking Chingola and Kalumbila, with the potential to connect the line through to Angola.
Olivier said Grindrod would, hopefully in the medium term, have a development agreement for a concession to operate and construct this line.
He did not expect this project to go out to tender.
Capital strategy
“Hopefully we will just get an agreement and conclude that development agreement and move ahead with the planning and development of the rail link.
“It’s a significant investment but we are not going to be putting all that capital in ourselves. We will be looking for capital partners and those discussions are already taking place,” he said.
Olivier said the copper producers and smelters in northern Zambia and southern Democratic Republic of Congo (DRC) were very excited about the project.
“We have had a lot of discussions with them and made a lot of progress in terms of the volumes they are looking to commit to rail haulage,” he said.
Olivier said the project fed into the north-south corridor project, comprising a 3 000km rail corridor with the potential to transport 4 million tons a year at full ramp-up, and was a competitive solution to convert road traffic to rail.
He said the primary driver of the north-south corridor was not only copper, but included industrial and agricultural growth in Zambia and Zimbabwe.
Olivier said the corridor masterplan study was being jointly undertaken by Transnet and Grindrod, supported by all parastatal rail operators.
He stressed that Grindrod needed Zambian rail, Zimbabwe, Transnet and the other stakeholders to be party to the project. “It’s a very significant part of our strategy and its going to require a concerted effort to deliver on it.”
Olivier said these projects and other undertakings – including the expansion of the Richards Bay terminal, the development of a liquid bulk terminal storage facility in Coega, the development of a crude oil terminal in Saldanha and the development of the port of Maputo and the Maputo Matola terminal – were focused on Grindrod growing its business and strategic infrastructure assets to enable the group to provide a fuller end-to-end solution for its customers.
Depressed commodity prices, a delayed recovery in dry bulk shipping markets, the winding down of the Atlas agricultural trading business and industrial action negatively affected Grindrod’s financial performance in the year to December.
Revenue increased by 2 percent to R32.7bn from R32.1bn.
Net profit declined by almost 15 percent to R1.07bn from R1.26bn.
Headline earnings a share dropped 9 percent to 107.5c from 118.7c. A final dividend a share of 20c was declared, increasing the dividend for the full year to 33.6c compared with 37.1c in the previous year.
Shares fell 3.94 percent yesterday to close at R18.30.