Latest Media Releases
2006
Spoornet Making Great Progress in Rolling out its Capital Program
Spoornet's projected R31, 5 billion capital expenditure over the next 5 years is aimed at ensuring appropriate investment in the bulk freight market, particularly at boosting its strategy of expansionism. Spoornet aims to expand its market share to up to 25% in five years. The company aims to move a volume of 226 million tons by 2008/9 - up from 180 million tons in 2005/6.
Spoornet's capital program is in line with Transnet's strategy to reduce transportation costs, reduce transit times and increase capacity to move freight with the overarching objective of lowering the cost of doing business and improving the international competitiveness of the South African economy.
The capital program has the following attributes:
- Future investment will be considerable - with R7.2 billion budgeted for 2006/7.
- The capital program is geared at sustaining and expanding Spoornet's assets to create additional, effective, efficient and sustainable rail capacity.
- The program centres around eliminating the maintenance backlog, upgrading and refurbishing existing assets and replacing aging assets by the acquisition of new assets.
- The capital program incorporates new, proven and appropriate technology.
- The biggest investment portion goes to the core export lines and the critical corridors.
- The R31, 5 billion will be apportioned among the entities as follows:
- General Freight Business R 10, 8 billion
- Coal Line R 8 billion and
- Ore Line R 2,7 billion
- A sizeable amount (R8 billion) will be expended on capitalised maintenance.
- The major portion (R25.9 billion) will be spent on sustaining the business, while 15% (R4, 4 billion) will be spent on expanding the business.
- The major contributors to 2006/7 cash flows are locomotives (34%) wagons (32%) and infrastructure (20%).
Adequate tractive effort is vital for Spoornet's sustainability. Hence, Spoornet plans to acquire 374 new locomotives at a total estimated cost of R8.5 billion over the next 5 years. During the same period Spoornet will upgrade 514 locomotives at an estimated total cost of R3.7 billion.
Although a large number of locomotives will be added to the fleet, an even larger number of locomotives that reached the end of its economic life will be retired. The plan is to eventually have a smaller, but more capable fleet. Thus, doing more with less.
The agreement signed between Transnet and MITSUI & COMPANY AFRICAN RAIL SOLUTIONS PTY LTD (MARS), early this year, provides for the supply of 110 new electric AC/DC locomotives for the Coal line at a total cost of R3.5 billion over 5 years.
From its humble beginnings of having delivered just 4 million tonnes in 1976, Spoornet has steadily increased capacity to over 70 million tonnes for the year ending 2005. Spoornet is now gearing up to meet a demand of 92 million tonnes for 2010/2011.
The replacement of these locomotives is absolutely essential to sustain the volumes being transported on the Coal line and to enable us to ramp up capacity to meet the market demand of 76 million tonnes for the 2006/2007 financial year.
The locomotives will, for example, be able to haul heavier loads with the same power, effectively translating to 300 wagon trains as opposed to the current 200. Reliability and availability of locomotives will also increase by as much as 20%. The first locomotive will be ready for testing within 18 months and within 24 months the first batch of 6 locomotives will be deployed on the Coal line.
The new locomotives will be equipped with the latest technological innovations, which will be driven by Toshiba's GPRS systems. These innovations will include black box technology; touch screens and ergonomics through which trip and technical data will be monitored and automatically downloaded via wayside readers as the locomotives enter home depots.
The wagon fleet size seems adequate to handle market demand. However, some mismatches between customer preferred wagon types and Spoornet available wagon types are foreseen. This implies that some wagon groups will experience shortages, whilst others could show surpluses. Therefore a program for building, re-building and modifying wagons, will accompany planned efficiency improvements. The General Freight wagon-building plan for the next three years is 1471 wagons for 2006/7, 1 979 for 2007/8 and 2 260 for 2008/9.
Investment in infrastructure network comprises the track, electrical, signalling and communication subsystems. Investment in these subsystems are integrated and harmonised to ensure total system efficiency and optimal operations. Investment in subsystems is not only integrated and harmonised within Spoornet to ensure an effective value chain, but also with the systems of upstream and downstream players to ensure a seamless logistics chain.
High levels of investment in appropriate assets is key to Spoornet's striving to become a world-class rail freight company, expanding its market share, lowering the cost of doing business and improving the competitiveness of the South African economy.
Major projects and benefits
| Project | Entity | Benefits |
|---|---|---|
| Fleet renewal & modernisation (02/03 - 07/08) | General Freight | Improved wagon availability, payload, expected life and reliability |
| Capacity Expansion Ore Line (29mt to 41mt) | Ore Line | Increased capacity and revenue |
| Eskom Majuba Power station Long Term coal supply | Coal Line | Increase capacity, profitability |
| Upgrade 200 additional Class 18E 1 Locomotives | General Freight |
|
| Coal Line: Sustain Capital 78mt | Coal Line | Sustain wagon availability and increase expected life |
| Coal Line Capacity sustain to 86mt | Coal Line | Sustain wagon availability and increase expected life |
| Coal Line: Building of 400 CCR 11 Jumbo coal wagons | Coal Line | Increased capacity of wagons as per expansion |
| Asset Tracking System | 110.500 | Improve efficiency and safeguarding of assets |
| Ore Line: In cab Signalling | Ore Line | Improve efficiency and safety. |
| 110 New dual voltage Locomotives for the Coal Line | Coal Line | Improve efficiency on the Coal line and cascade locomotives to General Freight |
| Ore Line: Upgrade 9E Locomotives | Ore Line | Improve efficiency and capacity |
| Ore Line: Sustain 05/06 to 09/10 | Ore Line | Improve efficiency and capacity |
For further enquiries, contact:
Molatwane Likhethe
Spoornet's Spokesperson
083 300 9586.
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