Transnet Port Terminals is preparing for the next boom by creating additional capacity at Richards Bay, even though cargo volumes have declined. It is continuing with its R800 million refurbishment programme.
Solly Letsoalo, the chief operating officer at Transnet Port Terminals, said yesterday that the utility was confident there would be a recovery within two years and its medium-term forecast showed that current volumes would almost double within five years.
The port has the capacity to handle 13 million tons a year. This is expected to increase to 21 million tons by 2014. Forecasts indicate it will need to handle 35 million tons by 2020.
Letsoalo said the port needed refurbishment because its equipment was old and some sections would have to be closed if they were not upgraded.
Refurbishment would cost 30 percent less than buying new machinery. The company had come up with the strategy as it looked for ways to stay within its R80.3 billion expansion programme over five years.
The port operator plans to spend R9.6bn over the five years creating capacity. Letsoalo said some programmes had been postponed to the next financial year because volumes had declined and the company had to remain within its budget.
To cope with Richards Bay's expected growth, 18 small-batch commodities were being moved from the dry bulk terminal to the multipurpose terminal.
"In theory, that would create an additional 50 percent capacity, so it is expansion without high investment," said Letsoalo.
"We are saving billions by creating additional capacity at the very same terminal instead of building a new one. When we get to 35 million tons, we will need to invest about R4bn on new stacking equipment, reclaiming equipment, conveyors, storage slabs and ship loaders."
Volumes and revenue were down by at least 30 percent at the Richards Bay terminals because the economic downturn had hit demand for commodities like ferrochrome, ferromanganese, pig iron, steel and woodchips. Revenue was R648m at the two terminals last year.
Magnetite and anthracite are expected to drive growth.
Letsoalo said the company was reducing contract workers and overtime as volumes fell.
