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Mozambique Coal Conference 2013 Infrastructure Development Support for Mozambique Coal
Published July 2013 © Transnet Engineering (TE) a division of Transnet SOC
PAGE 1
Contents
TE - Who are we?
The Mozambique coal mining expansion
Opportunities for strategic partnership
Conclusion
1
2
3
4
PAGE 2
South Africa has embraced the challenge
“Regional and continental infrastructure development is
of fundamental importance to the realisation of Africa's
economic growth and development imperatives.” […] As
regional leaders, we carry a particular responsibility to
serve as champions in driving industrial and
infrastructure development both at the regional and
continental levels.”
President Jacob Zuma - on Infrastructure Development
“Our foreign policy prioritises the building of
relationships in the African continent, the focus of which
is to promote development, contribute to the resolution
of conflicts and to build an environment in which socio-
economic development can take place”.
Minister of Public Enterprise: Malusi Gigaba – Reiterates SA’s Foreign Policy on 28 June 2013
PAGE 3
Transnet Structure
TE summary and overlay within Transnet
1 SOC – State Owned Company
SOURCE: Team analysis
TE - WHO ARE WE?
National Ports Authority
Freight Rail
Port Terminals
Pipelines
Transnet SOC1
Engineering
Rolling Stock Manufacturing: ▪ Manufacture ▪ Assembly ▪ Rebuilds ▪ Refurbishments ▪ Upgrades &
Conversions ▪ Maintenance &
Service
National Ports Authority: ▪ Responsible for
the safe, efficient and effective management of South African Ports
Port Terminals Operator: ▪ Monitoring and
executing port terminal operations within South African Ports
SA Rail Line & Freight Operator: Rail Operator
responsible for rail freight logistic solutions
Serve the mining, manufacturing and industrial sectors
Pipeline Operator: ▪ Transportation
of petroleum products via a pipeline network within South Africa
PAGE 4
Continuous technology advancements and improvements
Running Maintenance
Refurbishing & Conversions
Locos, wagons, coaches, components
Heavy Maintenance
Upgrades Locos, wagons, coaches,
components
New Builds Locos, wagons
Leasing
1859 – Landing of the first railway locomotive in South Africa at Cape Town Running maintenance was first established
TE brings over 150 years of experience in the rail engineering sector and has built substantial expertise...
TE’s evolution and transformation of the SA transport industry1
1950s – Koedoespoort plant established to refurbish steam locos 1970s – Started refurbishing electric locos
1999 – Expanded capability to upgrade locos starting with 6E1 to 17E 2007 – Upgrading of diesel locomotives
2008 – Entered the new build market
TE - WHO ARE WE?
PAGE 5
TE began its journey in 1860, and is currently a leading Rail Engineering & Manufacturing firm
TE journey to date
TE - WHO ARE WE?
REVENUE
R15bn
DEPOTS
132
EMPLOYEES
~13,0001
ASSET VALUE
R8.4bn
FACTORIES
6
OFFERINGS
9 PRODUCTS
TE Today
Coaches Wagons Locomotive
Foundry Auxiliary Rotating machines
Ports Rolling stock Equipment
Wheels
1850 2009 1916 1892 1990 1994
First railway in South Africa established – Natal Railway Company
South African Railways and Harbours was born under the Union of SA
Transwerk branded as a separate entity within Transnet
Links between various Railway Companies started to develop
SA infra-structure management became a company entity, and Transnet was born
Transnet rebranding and structuring completed – Transwerk became TE
First locomotive arrived in SA – beginning of TE
Arrival of the first train at Johannesburg from Cape Town via Bloemfontein
TE produces
the worlds
most advanced
health train
(Phelopepa 1)
TE partners with
leading
international
OEM’s to create
world class
products for Africa
Official opening of the first public railway in South Africa, from Point to Durban
Today Transnet Engineering is the backbone of South Africa’s railway industry with
nine product-focused businesses, 132 depots, six factories and ~13,000 employees
countrywide. The organization is dedicated to in-service maintenance, repair,
upgrade, conversion and manufacture of freight wagons, mainline and suburban
coaches, diesel and electric locomotives as well as wheels, rotating machines,
rolling stock equipment, castings and auxiliary equipment and services
PAGE 6
Contents
TE - Who are we?
The Mozambique coal mining expansion
Opportunities for strategic partnerships
Conclusion
1
2
3
4
PAGE
Coal Production (mtpa) Mozambique Share of Mining Sector Value by Segment %
7 SOURCE: BMI
Mozambican Coal Mining Growth
Company Mine
Estimated Production
(mtpa) Year
Vale Moatize 22 2014
Rio Tinto Benga 20 2015
Beacon Hill Resources
Minas Moatize 4 2012
Nippon Steel Corp
Revuboe 5 2015
ENRC Estima 20 2016
PAGE
Mozambican Transport Coal Corridor Projects
•The Sena railway line is Mozambique's only existing route for coal exports, linking the Moatize region with the port of Beira. The railway can carry 3.5mtpa, which is insufficient. Delays in upgrading the project have seriously dented the country's ability to ramp up coal exports and this was exacerbated by flooding in February 2013 which cut off part of the line temporarily.
Beira Corridor
•Vale is investing significantly in a railway line to link the Moatize basin with the port of Nacala via Malawi. The project includes construction of a 900km railway line and upgrades to the deepwater port of Nacala.
Nacala Corridor
•Kazakh mining company ENRC has also announced plans to build a railway and coal export terminal at the port of Nacala. Construction is due to start in 2014 and be completed in 2016. The project, which would run adjacent to Vale's Nacala corridor, is envisaged to carry 40mtpa in the initial phases.
ENRC Project (Tete-Nacala)
•The recent project to be proposed is a railway line and port project that would carry coal 525km from the Moatize basin to Macuse in the central coastal Zambezia province. The tender was released in early 2013. The winning bidder is due to be announced shortly. It is hoped that the railway will carry 20mtpa. It is unclear which port it would use as its end destination, as Macuse lies between Beira and Nacala. There are some indications that a new port will be built to service this rail line.
Moatize-Macuse
•China has announced it is in negotiations for US$1.5bn in financing for the construction of a deepwater terminal at Nacala. The project would be able to handle 20mtpa.
China Nacala Port Project
8
Growth in Coal Mining
SOURCE: BMI
PAGE
Mozambican Coal Mining Growth
The Tete province has the largest under-developed coal basin in the world. Coal production exports from Tete are expected to reach 40Mtpa by 2017 and 100Mtpa in the longer run. There are several new rail lines and ports under development and upgrade. These are desperately needed to alleviate the transport bottleneck as the freight volumes increase. It is an absolute imperative to support the this coal sector rail infrastructure with safe, reliable and efficient rolling stock and rail related products for sustainable, effective and efficient operations. 9
Growth in Coal Mining
SOURCE: Team analysis
PAGE 10
Contents
TE - Who are we?
The Mozambique coal mining expansion
Opportunities for strategic partnerships
Conclusion
1
2
3
4
PAGE
Key Stakeholders
11
100 MTPA
of COAL
PAGE
Benefits of Partnership
Transfer of rail engineering skill from its relatively mature engineering and operational skills pool to key stakeholders including the people of Mozambique
Jointly established state of the art maintenance facilities with modernized machinery and equipment to support the current and future rolling stock demand.
The supply of products and services by Mozambicans in Mozambique
Reduction in the cost of doing business in Mozambique, as localized support will not incur cost due to delayed maintenance support and services
Financial benefit from DFI as well as synergies created during the acquisition and during the life cycle support phases of the rail logistic chain.
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PAGE 13
South Africa’s Heavy Haul Coal Operation
PAGE 14
Key Consideration for Rolling Stock
1067mm
Current Future?
18 tonnes/axle
50 tonnes
30 years
Track gauge
Axle weight
Payload
Standard Air
Brakes
Operating life
Brake System
Brake Rigging
Maximum operating speeds
1435mm
22-36 tonnes/axle
68-120 tonnes
40 years
ECP
Conventional Bogie Mounted
Brakes
80 km/h 100 km/h
Fleet Management
Rolling stock Regulations
Adhoc
Source: Team analysis, tender documents
OPPORTUNITIES FOR STRATEGIC PARTNERSHIP
895mm
Current Future?
34”
32-35
Wagon
Non-steering
Coupler Height
Wheel Sizes
Train lengths
Steel
Bogie Type
Body Material
Wheel Profiles
Maintenance
> 895mm
36”
>35-200 wagons
Steering
SS/Aluminium
Conventional New
Time/Use
Based Condition
based
Strategic Sourcing
Standardization
Company
Approach
Fleet Plan
Railway Regulations
Industry
Approach
Customised Industry Norms
and Standards Emergent Mature
PAGE
Standardisation Higher standardisation leads to larger demand and lower LCCs
Source: Team Analysis
Capital Cost
Lifecycle Cost Industrialisation Risk
Transformation
Standardisation
Standardisation
Sta
nd
ard
isatio
n S
tan
dard
isati
on
15
The initial cost of Rolling Stock
The cost to the company
in lost revenue due to the
non-availability, delay or
cancellation of trains
The ability to compete in
competitive supply chain for
locomotives/ wagon
services
The capability and capacity of
the domestic
locomotive/wagon
manufacturing & service
industry.
The total cost of the locomotive
over its lifecycle including
energy, maintenance and
operating costs
PAGE
Strategic Sourcing initiatives hold many potential benefits for the region
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3
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5
Stimulate regional integration
Build local capacity and capability
Accelerate economic development
Security of supply
Reduction of supply, production
and maintenance costs
PAGE
Partner to Achieve
17
Lower cost
Ease of working with us
Local supply capability
Reliable Products
Production Capacity
Maintenance & Support
Green conscious
Ease to integrate
Wide network
Training support
Innovation Skills & Capability
Flexible
Product Differentiation
Quality
Modern Production Facilities
PAGE
Comprehensive suite of Rolling Stock support
18
New product development and design
Product and component
manufacturing
Life cycle maintenance (Heavy and
light)
Cost effective rebuild and
refurbishment programmes
Financial solutions and
purchase plans
Training wrt Maintenance, new product & Lean Six Sigma
TE can customize
complete packages to
meet operational
requirements from
manufacturing and
maintenance to other
supporting functions ...
SOURCE: Team analysis
Obsolete product,
component & technology upgrades
Field service team support
Maintenance and fleet planning
PAGE 19
Transnet’s Support to Mozambique's Coal Infrastructure Development
Group • Supporting Government’s role in the development of the Region and the
Continent • Financial support thro DFI as the opportunity may arise Rail (TE) • Supplier Development • Transfer Knowledge and Skills • Conduct Engineering Development for Mozambique Solutions • Supply of wagons and locomotives • Supply of rail maintenance services
A Solid History
With origins dating back more than a century to the mechanical engineering
department of the former South African Railways and Harbours, this
engineering organization has actively supported railways in the expansion of
the country’s economy.
Our institutional capability will help avoid expensive lessons. African Soul – Global Perspective
Transnet Engineering has committed itself to significant investments in
research and development to service the specific requirements of Africa.
This has led to an ever-expanding range of rolling stock solutions and
products.
We pride ourselves on developing African products by Africans for Africa and
our proximity to Mozambique makes us an attractive partner.
Conclusion
THANK YOU