Africa invests for the future

Lower prices and falling demand for key commodities, such as coal, iron ore, copper and bauxite, have affected export traffic volumes and slowed investment in Africa in the past two years.

The economic slowdown in China has been the main reason for the slide in dry bulk shipping activity since 2014, and exports out of Africa have struggled as a consequence. The situation has been compounded by the fact that the past decade had seen China buy a greater proportion of its coal, iron ore, copper and other mineral ores (including manganese and bauxite) from the continent. 

It has led to several mining, transport and port projects being delayed and/or cancelled. In the case of the port of Ngqura in South Africa, for instance, the development of a specialist terminal for handling manganese chrome has been scaled back, and plans to build a dedicated rail line for the cargo postponed for the time being. 

Chinese buyer

In West Africa, the giant Rio Tinto mining entity has sold its entire stake in Guinea’s Simandou project to China’s Chinalco group. Simandou is home to some of the largest reserves of untapped high-grade iron ore in the world, but to bring production on stream involves massive investment in mining, rail, port and associated infrastructure. 

In general, though, the response by many port authorities and bulk stevedores to the downturn has been to take a cautious but pragmatic approach to future investment and expansion plans, as the general feeling in the industry is that a recoverywill eventually take place.

Nonetheless, competition is likely to become more intense, and the latest downturn has led to ports and terminals in the region reviewing their existing operations, in an attempt to cut costs, improve operating efficiencies and raise productivity levels in the future. This should make them “leaner and fitter” for the recovery.

In South Africa, whose economy relies heavily on the export of coal, iron ore and a wide range of mineral ores to Asia, the state-controlled Transnet SOC is embracing concepts such as Big Data and the Internet of Things to improve performance levels.

Game-changer

Speaking at the Intermodal Africa 2016 conference held in Mombasa earlier this year, Richard Vallihu, CEO of Transnet National Ports Authority (TNPA), said: “I think in Africa digitalisation is going to be a game-changer for our industry.”

In his presentation, he cited what TNPA was doing to position South Africa’s largest port as a so-called “Smart Port”. He said: “Using 18 touch points, information will be shared across the supply chain and with local communities who previously had been shut out and this allows improved coordination on both land and water sides.”

Vallihu also stressed the significance of using drones to improve and cut the time needed to perform tasks such as surveying, sampling and message sending. 

TNPA recently completed a three month “proof of concept” exercise using a range of wireless equipment and systems, and this revealed how drones could be used successfully in port surveillance, infrastructure/ equipment inspection and monitoring the condition of the sea bed, and without interrupting operations.

Ristha Joga, information, management and services manager at TNPA, port of Durban, said: “A Smart People’s Port will result in an efficient data-rich and information-rich ecosystem connecting port assets, port employees, terminal
operators and the port community, including road and rail. It helps us achieve a more focused, customercentric technology that will reduce the latency of information sharing, and result in a better information  decision-making process.”

In the group’s terminal operations arm, Transnet Port Terminals (TPT) is installing new software at several ports. TPT believes its ports have to add value and make an increased contribution to dry bulk supply chains, and that the use of web, wireless and e-systems can all help the process.

Information is key

At TPT’s dry bulk terminal in Richards Bay, the company has just installed CommTrac. This is a software package that, according to the company, “collates and processes information from other systems and, where possible, automates manual processes”. It also helps the facility’s customers perform their functions more efficiently. 

“Our mission is to be a  focused freight-handling logistics company that delivers integrated, efficient, safe, reliable and cost-effective services, in order to promote economic growth in South Africa,” explained Deirdre Ackermann, general manager of TPT’s information and communication technology division. “Our introduction of the new CommTrac software is an important step in achieving this.” 

The executive stressed that CommTrac will provide TPT with real-time and accurate reporting, including detailed progress reports on cargo loading and discharge activities, any delays and variances concerning those operations,
and on inventory and tonnage positions.

Ackermann added: “We believe this new software will contribute towards costsavings through efficiencies, optimised processes, and enhanced customer satisfaction within our Richards Bay dry bulk terminal. We are empowering our staff with technology that coordinates and integrates planning and operational activities, and issues reports at all levels.” 

These investments are part of TPT’s parent group’s Market Demand Strategy (MDS), which was launched in 2012. It entails expenditure of ZAR337B over a seven-year period to modernise and expand  the country’s ports and, where it makes sense, to use new technology to improve the company’s cargo processing activities.

Dredging

Deeper water is also becoming more critical as shipowners/operators phase in bigger ships to exploit economy of scale opportunities and reduce the costs of moving cargo. Several dredging programmes are underway at ports in Africa, with one of the most significant involving Maputo.

Dredgers operated by Luxembourg-based Jan de Nul have been working in the Mozambique port since May 2016, and are about 60% of the way through a project that will deepen Maputo’s main access channel from 11m to 14.2m at high tide. The cost is estimated at US$115M. 

The work will mean that ships of up to 80,000 dwt will be able to call at the port, with management believing this will make Maputo a more competitive gateway in both the regional and international shipping markets. 

Osório Lucas, CEO of Maputo Port Development Co (MPDC), elaborated: “Dredging the port access channel is a strategic decision that will not only help to achieve our target of handling 40 Mt of cargo a year by the end of our concession, but will have long-term benefits for the Mozambican economy.”

He added: “We believe it will attract more cargo, create more jobs, encourage the growth of smaller businesses associated with the port, and highlight the need for more infrastructure development, as well as increase our  contribution to the economy of the country.” 

MPDC is jointly owned by Mozambican Railway Company (Caminhos de Ferro de Moçambique) and Portus Indico, a group whose shareholders include Grindrod, DP World and Mozambique Gestores. 

The dredging is key to MPDC’s strategic development plan for the port, which is based on extending the range and increasing the volume of cargo handled at the port. In addition to expanding the facility handling ferrochrome, a new grain terminal is being developed, and berths 6, 7 and 8 fully rehabilitated. 

The port group has also purchased new equipment, with two heavier-duty (lifting capacity of 144t) mobile harbour cranes, fitted with automatic tipplers, phased into operations in the past 18 months or so. These have allowed bulk carriers to be turned around more quickly, with the cranes regularly processing more than 360 tph. 

But it is not only about modernising and expanding the port’s cargo handling capabilities. Increasingly, in dry bulk shipping, it is the cost of the total supply chain (mine to factory) that is important, and that is why MPDC is also focused on improving the competitiveness of the 600 km-long Maputo Transport Corridor. 

MPDC is working with Kudumba Investments Lda on a number of initiatives, including reducing tariffs on key cargoes, and speeding up clearance procedures. “Our goal is to reduce the final cost of the Maputo corridor to the end-user,” said Lucas. “We must work with all operators and stakeholders of this corridor and, while Kudumba has been a key partner to date, we hope more operators will join us in the near future to manage and to develop the corridor of Maputo and the region.” 

Elsewhere, a new port development is planned at Ponta Techobanine, which is also located in southern Mozambique. The port will be connected to Zimbabwe and Botswana through the construction of a 1,700 km rail line, which is being partially funded by the three governments, each of which is contributing US$200M to the multi-billion dollar project that is designed to facilitate trade and encourage investment in each nation’s mining, manufacturing and logistics sectors. 

The port component of the scheme is being fronted by China Harbour Engineering Company and Bella Vista Holdings.

Beira upgrade

Meanwhile, the country’s Beira Corridor, which links the port of Beira through a network of highways and rail lines to large parts of Zambia, Malawi, Zimbabwe and the DRC, is also being upgraded. Coal is an important commodity that uses the rail connection, with Beira handling approximately 5 Mtpa  of this product, principally from the Moatize coal basin in Tete province.

Hive of activity

Farther north in East Africa, significant modernisation programmes, including the construction of entirely new cargo handling complexes, are planned, with governments and private interests active. In particular, Mombasa and Dar-es-Salaam want to improve their competitiveness in the transit trade with landlocked African nations, including the DRC, Zambia, Uganda, Rwanda and Burundi. 

The DRC and Zambia have significant reserves of copper, and Tanzania would like to handle more of it. But it faces competition from Durban in South Africa, where the low value of the rand has made transfers more competitive, 
Walvis Bay (Namibia) and Mozambique.

In the case of Walvis Bay, the Namibian Port Authority (Namport) is in the midst of building a new container terminal that is scheduled to open in early 2018. This will allow the existing box handling facility to handle breakbulk and bulk cargoes, thus raising the port’s overall handling capacity in these sectors.

Namport is keen that Walvis Bay should evolve as a bulk cargo handling gateway for southern Africa, and is targeting iron ore, coal and copper exports and grain imports, and is developing its facilities to support such a role.

Consequently, the Tanzanian Government needs to ensure it has modern cargo handling facilities and an efficient landside corridor in place, but, above all, clarity is needed on the country’s taxation systems. Earlier this year, for instance, VAT of 18% was temporarily imposed on transit cargo, and this led to a sharp reduction in all types of cargo volumes. In an attempt to improve its position in the central African market, Tanzania Port Authority opened a regional office in Kigali, Rwanda, in July this year. 

Moreover, upgrades and modernisation works are taking place in the country’s largest port, Dar-es-Salaam. The World Bank has pledged US$740M to help with the costs of dredging the access channel to 15m, and renovating berths 5, 6 and 7. 

Relieving pressure 

On the West Coast, two new general purpose ports could be built to relieve pressure at Nigeria’s largest port complex, Lagos/Apapa. The ports are located in the city, and traffic congestion is a huge problem. It is hoped that Lekki,  which is fronted by the Singapore-headquartered Tolaram Group and Badagry, where leading international terminal operating companies APM Terminals and Terminal Investment Ltd are shareholders, will be partially operational by 2020. 

While the development of container terminals will be key aspects of the design, both ports feature dry and liquid bulk processing facilities. In the case of Lekki, a 300m dry bulk cargo berth will be constructed and installed, with equipment capable of handling Panamax ships of up to 75,000 dwt. It is envisaged that the facility will be designed to handle 4 Mtpa of cargo, with grain, raw sugar and fertilisers expected to be the main commodities processed. 

On the inside face of the main breakwater, a berth for handling liquid bulk will be developed, but its actual configuration will depend on the mix between crude oil exports and refined petroleum products, as the port plan involves 
construction of a free industrial zone and refinery complex.

At Badagry, a general purpose berth with an initial length of 325m is planned, but this could be extended to 775m in subsequent expansion phases, according to demand. 

In southern Nigeria, the World Bank is providing US$73.5M for the development of a new cargo handling complex in Port Harcourt. The new terminal, which will cost an estimated US$150M to build, will mainly handle urea exports from the locally based Indorama Eleme-operated fertiliser plant. 

Elsewhere in West Africa, the Port of Antwerp is investing in the Cote d’Ivoire port of San Pedro. The aim of the cooperation is to develop San Pedro as a logistics centre for the region’s burgeoning agriculture sector. The so-called
San Pedro Logistique project is a key element of the new five-year Memorandum of Understanding recently signed by the two port authorities and the Port of Antwerp’s International arm.

Training role

In addition to supplying the necessary technical expertise for the development, the agreement also specifies that APEC, the training centre for the port of Antwerp, will hold two training seminars per year for San Pedro port personnel.

 
The construction of San Pedro’s new logistics platform will start in 2017, and it will be led by the port management group SEA-Invest, which is active in several bulk and reefer projects in West Africa.

Currently, San Pedro handles about 4.9 Mtpa of cargo, with cocoa, cashew nuts and fertilisers among its most important commodities. 

While significant challenges remain, the improvement in commodity prices in the second half of 2016 is reason for optimism, with Africa still well-positioned to increase its export of resource commodities. The use of new technology and digital systems, though, will be crucial to its success.