SIMON BROWN: I’m chatting with Andrew Waller, CEO of Grindrod. Results out recently, but we’re not going to touch on those results. Andrew, I appreciate the time. I want to dig into Maputo Harbour. You’ve capacity there, you’ve been hitting records. What product is going through Maputo? What are they shipping there?
ANDREW WALLER: Thanks, Simon. Yes, the main products running through Maputo at the moment are chrome and ferrochrome through the main port. Magnetite, which comes out of the Phalaborwa region [goes] through our Matola terminal. And then of course, all of a sudden we’ve got lots of demand for coal exports. Those are the mineral products that we are running out of that port.
SIMON BROWN: So it’s not folks who are saying I don’t want to use Durban, I use Maputo because, apart from a border post, distance is largely the same. This is commodities going through.
ANDREW WALLER: Absolutely. This is commodities going through. During the Covid time, as you know, there was a shutdown and that obviously did test us hugely because you couldn’t get product through. But it is quite a short route through to Maputo. There’s product going through Durban as well, and then of course Richards Bay is a big mineral port. So quite a lot of our customers use Richards Bay and Maputo just to try and increase the volumes, especially in a mineral cycle like this at the moment.
SIMON BROWN: Yes. Richards Bay – obviously there are minerals going through. There’s also the Richards Bay coal terminal [RBCT] that sits there. Do you pick up some slack from that? Certainly I’ve heard not that the coal terminal is the problem, but that Transnet is a challenge.
ANDREW WALLER: No, I think the RBCT [caters for] the major miners, they’re a dedicated service. They use the jumbo wagons. Those customers are focused on exporting with big stockpiles onto big Cape vessels. What we do in Richards Bay, we work for the junior miners who don’t have the same volume; so they need a few extra days to get their stockpile to the right size to load a much smaller ship than the majors are loading across the water at the RBCT terminal. So a slightly different focus from our side.
SIMON BROWN: Gotcha. Some of that I imagine would be coming sort of north in Africa as well. I’m thinking Zambia and those sort of territories as well.
ANDREW WALLER: Indeed. The product that comes out of northern Zambia and the Congo is obviously the copper. Again, during the Covid lockdowns we struggled in South Africa because of course they found other routes. They went east to Dar es Salaam and Beira. So now where the borders are open again, we try to lure them back into the country – and it’s obviously a two-way traffic. It’s the salsa ……2:47 going up and the copper coming back, and of the copper coming back quite a lot goes into [the] Durban port actually, and it goes through in containers to wherever the customers are.
SIMON BROWN: The short answer is – and I say that up front – throughput in Maputo is booming and you are expanding it.
ANDREW WALLER: Indeed. We are very proud of what the government and ourselves have achieved in Maputo. It’s a really good model that works effectively. I know we’ve had loads of conversations with Transnet and I know you want to speak a bit about them. We’ve had loads of conversations with Transnet on the particular model that’s being used in Maputo. In fact, Mauritius has also contacted us to understand how the model works. It’s simple.
As the private sector we have access to capital and we are prepared to roll up our sleeves and get involved operationally. It’s worked wonders in Maputo – a good record for the year. So yeah, we very pleased with what we’ve achieved here.
SIMON BROWN: As private capital you take some risk. We can debate the level of risk, but you go there and you’re saying, we’re putting our capital in; if this doesn’t work, it’s on your balance sheet.
ANDREW WALLER: Indeed, indeed. Where we’ve got to be careful as the private sector is that we understand that the customer has an offtake and we know the producer has a stockpile, and we look to tie them in. It’s us as shareholders of the operation, as well as the banks. The banks obviously don’t want to fund unless they see that there’s a term to everything. That’s what the concession has done. It’s given us a term and on the back of that we have been able to contract with those customers and producers for [a] longer term than just spot.
SIMON BROWN: Okay. So also contract there. Let’s touch on Transnet. Some of the coal miners are saying that they could do a lot better except for constraints on Transnet talk that they would allow private operators on the lines. Your sense that that’s going to happen, and the significance for the broader country, as well as for obviously Grindrod, which has locomotives and I think wagons as well.
ANDREW WALLER: Indeed. We saw during Covid and indeed when we suffered the fibre attack … here in Durban, we did see that Transnet not working shuts the country down. Nothing moves. We didn’t really understand the extent of that, but that was very stark for us to see. So yes, fantastically we’ve got a strong new team in Transnet – well, I guess they’re not so new any more – that is pushing in the right direction, being supported by government and the president. That’s great to see. They’ve made some great strides on the port, and what they are doing in the port I think is absolutely right.
Unfortunately we have a legacy in South Africa from the apartheid days where the private sector [was] not allowed. So we don’t have container operator terminal operators in South Africa. So they’re inviting the global guys in, which is absolutely right, [to] let the global guys help in Coega and in Durban, and that’s what I think will happen to get that throughput up, which is what we need, and to lock in – they’ve been very clever, they’ve been locking in a volume commitment as well, certainly into Coega. That’s been very clever from Portia [Derby] and her team on the container terminals.
On the rail it’s a lot more complicated. You can’t just put a locomotive on a rail line. Do the braking systems comply, do the locos work in tandem or with other locomotives? So there’s a lot more to discern, of course. If you then are crossing passenger lines, that risk, there’s a whole lot of things that that are involved. I know they’ve been working on it for months now. We’ve indeed spoken to them a number of times about how we think we could help. Remember, we’ve got 55 locomotives. Transnet has over 2 000 locomotives. So the scale is just completely different, and these are big, big operations that they’re talking about.
SIMON BROWN: You made the point. Portia Derby – [it’s] a couple of years she’s been there. It takes time to turn around an SOE [state-owned enterprise] like that. But moving in the right direction the talks are happening and certainly, [as] you mentioned, the challenges are there. Maybe the timeline is not 2022, but the timeline is agreeable to talk to the private sector and say ‘let’s work together and make it work’.
ANDREW WALLER: Yeah. I think she’s under enormous pressure because I think the president is also putting on pressure. What we don’t want to do is we don’t want this to go awry, and it could go awry really badly. We want sensible discussions that help South Africa and Transnet to succeed. If we as little Grindrod can do something, we are absolutely a hundred percent behind helping that. At the end of the day, again where Portia’s thinking is very clear, the mines are the ones that have the rail link to the port.
If you look at a country like Australia, the mine owns the railway line and the port, and it makes sense. So if she [Portia] involves the mines, which I know she’s doing, and says to the mines, ‘Look, you’ve the core responsibility for this whole line, you work out who you want to help you along this line – and let’s get on with it,’ I think that thinking of hers is very crisp. We need that kind of thinking to come through.
It doesn’t help to find small two-bit operators that are going to be given a line and how they are going to do it. It’s the big miners that have the most to lose, so they’re the ones that should participate and actually decide how this all works, I think.
SIMON BROWN: Yes. [I’m with you] on that. You’ve got 55 locomotives. Where are they right now?
ANDREW WALLER: In fact, quite a few are not actually operational. You remember we [had] a number out of Sierra Leone, and what we did is we delayed the six-year service on those locomotives because we weren’t seeing very much take up in demand for leased locomotives. So we still have eight now running in Sierra Leone. We’ve got a number working within the mines in South Africa, which means not on Transnet lines, but within the mine sites, which has freed up some locomotives for Transnet. We’ve got a number working on that corridor. We operate the Beit Bridge-Bulawayo corridor. So we’ve got a number on that railway line, the north-south railway line.
SIMON BROWN: We’ll leave that there. That’s Andrew Waller, CEO of Grindrod. Andrew, as always, I appreciate the time and insights.
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