Grindrod looks to invest in Maputo port September 10, 2008
By SAMANTHA ENSLIN-PAYNE
Durban - Grindrod, the shipping and logistics group that recently
reported a 94 percent increase in earnings to R1.1 billion in the six
months to June, was investigating making a substantial investment in
the Maputo port to bring it on par with Durban, South Africa's busiest
port.
Alan Olivier, the chief executive of Grindrod, said yesterday that the
Maputo port could be developed into a facility that could handle 40
million to 50 million tons a year.
"This would be a substantial investment that may necessitate raising
additional capital," Olivier said. He declined to specify the amount
needed for such a development, which could take at least 10 years.
The Maputo port was expected to handle about 8 million tons of cargo
this year, up from 6 million tons last year. Before the civil war it
handled about 15 million tons a year.
In the year to March the Durban port handled 42.5 million tons of cargo
and 2.5 million twenty foot containers or their equivalent.
Alistair Lea, a portfolio manager at Coronation Fund Managers, said:
"Without knowing the numbers, ports generally are a great investment.
"For Grindrod it will be a great source of annuity income and diversification."
Grindrod is building up its landside businesses, which include the
trading of commodities, such as grain and minerals; and freight
services, which include logistics and terminals.
Lea said: "Grindrod has tried to diversify away from shipping, but this
has been in bits and pieces. Such a big bang approach [in developing
the Maputo port] should be … good for Grindrod shareholders."
The port master plan for Maputo would be ready in the first quarter of
next year. From there Grindrod and its partner, Dubai Ports World
(DPW), would decide when and how to implement it, Olivier said.
Grindrod and DPW each own 48.5 percent of Portus Indico. The balance of
3 percent is held by a Mozambican shareholder. The Maputo port is run
by Portus Indico, which has a 51 percent interest in the Maputo Port
Development Company. The Mozambican government and rail operator CFM
hold 49 percent.
Grindrod has already invested in doubling capacity at Maputo's Matola
coal terminal to 4 million tons, as well as in a new car terminal.
The ferrochrome terminal was operating at full capacity, but volumes at
the car terminal - of which phase one of a three-phase development had
been completed - had been slow to pick up because of motor
manufacturers' contractual commitments with terminals at South African
ports, Olivier said. Volumes at the car terminal were expected to pick
up from the fourth quarter.
The group has also developed liquid bulk terminals and is increasing the coal terminal's capacity to 6 million tons.
Grindrod has started to invest part of the budget, estimated at 0
million (R1.18 billion), for the expansion project in the port. This
includes buying a stake in the port concession, investment already
undertaken and planned projects.
"But if you take the coal terminal from 6 million tons to 16 million
tons, and expand bulk liquids [and] the car terminal, and possibly
dredge and build additional wharfs, then a substantial investment will
be required that may require the raising of additional capital,"
Olivier said.
Grindrod's shares were down 6.26 percent to R20.80 yesterday. The
general industrial transportation sector was down 0.73 percent.