OVERVIEW
Whilst 2011 had been expected to be a slower year for bulk exports, growth the second half of the year saw accelerated performance across all sectors resulting in rise of nearly 9mt (million tonnes) to 141.5mt and a 6.6% rise over 2010 volumes which were also ahead of the global growth in bulk trade. This was largely achieved through better than expected iron ore shipments from Saldana and a second half of year improvement in coal railings which helped export flows from Richards Bay. Durban also saw growth through increasing manganese ore exports as well as a significant upswing in grain exports.
The forecast for the period 2012-2013 is extremely healthy and comes on the back of significant landside infrastructure projects that are already in progress or will start and complete
over the period 2013–2016 laying the foundation for exports to rise to in excess of 200mt by 2016. Even in the short term, both Saldana (iron ore) and Richards Bay (coal) will play a significant role in raising total bulk exports by 8–9% per annum over the coming year and 2013. This will force increased demand for both Capesize and Panamax tonnage at the same time. Main port exports and total bulk exports are tabled below.
There have been significant developments on both the political and industrial fronts in South Africa over the last few months and these are very positive. Indirectly one of the most positive outcomes is a clear path on development of gateway ports for South Africa’s key bulk exports. This can be clearly outlined as:
  • iron ore — Saldahna Bay which will see rail and port upgrades;
  • manganese ore — firmly decided as Eastern Cape (Nqgura port) with rail and port upgrades; and
  • coal — Richards Bay with rail upgrades.
More detail on this can be seen in the review of major bulks, but it is important after some uncertainty about the way iron ore and manganese ore channels would develop as well as the shortcomings of coal railing that a clearly defined strategy and action is now clear.
For the last two years, a debate has been in place on whether to nationalize the mining industry and it has been damaging the more so given the governments consistent lukewarm approach and inability to finalize the debate which led to huge uncertainty in the international arena. The positive news is that, in early February, Susan Shabangu — the minerals resources minister — finally issued the government’s position on this firstly at the mining Indaba at Cape Town. This was reinforced by President Jacob Zuma during his State of the Nation speech on 9 February and laid the nationalization debate to rest. There are conditions of course, but mostly surrounding future tax regimes for mining in order to channel more taxes through the state for re-development etc.
During President Zuma’s speech there was significant commitment to improving the rail infrastructure with a commitment to allocate a minimum ZAR 200–300 billion rand (US$27–37 billion) in allocation for various rail project developments to help roads by getting more freight onto rail. Some of these developments are outlined in the below review of the major bulks.
The important aspect of the speech, and the last two to three months, represent a significant shift and clear policy outlook to developing South Africa’s mineral wealth in a more efficient manner. The outlook is extremely positive and as many of these projects will start to complete in 2015 onwards we can expect to see massive upward shift in SA bulk exports over the next five years.
 
REVIEW OF THE MAJOR SA BULKS
Coal trade
The inability of South Africa to export coal to the full potential of Richards Bay Coal Terminal’s (RBCT) capacity of 91mtpa (million tonnes per annum) has been well documented in recent years.This also happened at a time when global trade in steam coal grew from 558mt in 2007 to 715mt in 2011. The main shortcoming in this was TFR’s (Transnet Freight Rail) inability to rail sizeable volume to the terminal for a variety of reasons. The good news is that TFR does appear to have turned the corner and coal railing rose dramatically in the second half of 2011 through increased locomotive use, jumbo wagons and improvement in driver skills. By the fourth quarter of 2011 TFR was railing an annualized equivalent of 72mtpa to RBCT. In addition upgrades to the Maputo line has seen increasing throughput via the Matola terminal in Maputo. The export of
steam coal through South Africa’s main three gateway ports is detailed in the table at the bottom of this page, showing a conservative forecast for 2012.
These figures are encouraging and TFR enhancements to the coal line to RBCT look set to achieve their aim of 81mtpa by 2014. In addition coal railings to Maputo are already running at 3mtpa and can increase to 4.5mtpa (current port capacity) but rail is currently running ahead of the supply of coal.
The exciting development in the coal sector is the recent signing of an agreement between TFR and Swazi Rail to build a 146km rail line between the two countries at a cost of US$2.2 billion, which will create an additional capacity of 15mtpa on the coal line by diverting non coal bulk over the Swazi route to Richards Bay. Work is expected to start during 2012 and the line will be commissioned by 2016 therefore suggesting a move from existing enhancements of 81mtpa in 2015 to 96mtpa by 2016 once the new line commences operation.
Looking further ahead to the future, South Africa’s main coal fields in Mpumalanga are at their maximum capacity and will move into decline in the coming years whilst the big development for the future is the Waterberg coal fields to the north west of the country on the Botswana border. Significant challenges are ahead for rail and infrastructure but the TFR initiative is already under way to raise capacity to 23mtpa by 2017 and currently this is at feasibility study phase 2. Construction of upgraded loops can be expected to start 2013/2014 and is essential for continued growth of exports in the coal sector.
As for trading volumes from Richards Bay the graph on p141 highlights the now well established switch from Europe (Atlantic) trading to Asia (Pacific Trading). During 2011, India volumes actually decreased but were adequately replaced by a massive surge in exports to China in the fourth quarter, which was previously a small destination for South African coal. China volumes reached over 11mt in 2011. It can be expected that China will continue to take increased volumes of coal and presents the market for growth for the increased volume through RBCT; however, China sales can often be governed by price arbitrage so are volatile. The volumes to India look solid into the future and more so with India demand of imports showing continued strong growth for 2012/2013 due to increasing shortage of domestic supply against massive power station builds.
Overall therefore, a very positive outlook for coal exists. After recent years of negative sentiment, the corner appears to have been turned and looks very exciting for the coming years.
 
Iron ore trade
The ongoing success story in South African bulk exports over recent years continues to be the exceptional growth of iron ore exports through the port of Saldanha from exports of 25mtpa in 2005 to over 53mpta in 2011. Also, since growth accelerated in 2008, there has been a marked swing towards Pacific basin supply with all export growth heading to China and, to a lesser  extent, Japan; this is a natural progression for many supplier countries. South Africa can compete well in tonne miles and price per tonne, with Brazil for the large China market enjoying an approximate US$6 per tonne advantage for a 160K Capesize vs.Tubarao to Qingdao. We have detailed below volumes by main destination forecasting through to 2013 where Saldahna exports can potentially reach 65mt.
Once again the next challenge facing the iron ore industry is the next level of upgrade to facilities in a high demand market. The Sishen-Saldahna line is delivering just over 50mtpa of iron ore through Saldahna and will have the ability to rise to 60mtpa during 2012/2013 since completion of the Phase 1C upgrade. At feasibility study stage is the ability to deliver over 80mtpa; this will require further investment by TFR using increased trains on the line and would entail an additional 9–10 passing places on the 800km track to facilitate the higher velocity of throughput. With the new locomotives being purchased by Transnet, this will
add more capacity to the line to deliver this growth path. This upgrade is assured as part of the large infrastructure build being rolled out by state-owned Transnet over the next five years.
From a production perspective in the Northern Cape, Kumba and Assmang have plans to add 39mtpa of production and largely via beneficiation technology to convert ore types into valuable saleable product. This assures volume delivery through the planned upgrade of the Sishen- Saldahna line. A further development could also take place in the North Eastern province of Limpopo via the Phoenix project (3.4mtpa) and Zandriveirspoort (5–8mpta) adding 8–11mtpa of production.
Whilst initially concerns existed over ability to deliver this product to port, the coal line developments mentioned earlier would free up sufficient non coal line capacity to also deliver ore to Richards Bay in the future.
To illustrate the changing mix of iron ore deliveries, the map below from Kumba — the largest iron ore producer in South Africa — graphically illustrates the switch to Pacific Basin trading from their 2011 annual report.
 
Manganese ore trade
South African exports of manganese ore grew again in 2011, and look set to grow
further in coming years. Manganese ore is another commodity where South Africa enjoys well above average global resource (in excess of 75% of known global reserves), yet does not fully exploit its comparative advantage due to shortcomings on the mine to port local landside operation.
The graph on the right highlights the continuing upward trend of exports and destination markets.
The current main export gateway is Port Elizabeth Bulk Terminal. However, this is already at maximum capacity (5mtpa) and, during 2011, one of the main contributions to Durban’s increased bulk exports was an increase in bulk loading of manganese ore which reached 1.8mt (this is compared with only 800,000 tonnes in 2008). The reasons for this are the capacity shortfall through Port Elizabeth and available rail capacity from the mines in the Northern Cape which only serve the Port Elizabeth corridor. This is an expensive overflow operation and needs to be addressed urgently. In the short term, there is also a considerable upswing in manganese ore being packed in containers through a slightly cheaper option of using the road to Bloemfontein and then rail via the large new container port of Nqgura (Coega). This has gathered some momentum in 2012; however, containers are realistically only able to handle maybe 800–900,000 tonnes per annum.
The positive news therefore is that part of the ZAR 300 billion roll out of infrastructure build will involve Transnet Freight Rail (TFR) upgrading the Hotazel – Port Elizabeth rail line to a heavy haul line with larger trains and this would realize increased capacity to approximately 16mtpa once complete. At the same time,Transnet ports’ commitment to vacate Port Elizabeth terminal remains in place and, in tandem with the rail upgrade, will relocate the manganese terminal to the new deep water Port of Nqgura by 2016/2017. Nqgura provides minimum 14 metre draught and would allow increased vessel size from the current Handymax/Supramax size to increased use of Panamax vessels which will help price competitiveness of moving ore to market. As reported before, there is further logic to the Coega IDZ/Nqgura gateway given that a manganese alloy plant is opening shortly in Coega and also steel manufacturing. Both of these need manganese ore as an input and can add beneficiation to exports as well.
The only short term negative is the gap in lower cost export capability will continue for at least another two to three years given the time it will take to bring rail and port capacity on line and therefore in the short term whilst bulk exports will increase through various gateways much of the growth in export will accrue to workaround operations such as container operators.
 
CHROME ORE TRADE AND BENEFICIATION
One of the most interesting trade developments in recent years has been China’s thirst for chrome ore. Chrome ore is the first stage prior to smelting to a much higher value ferrochrome product. China has no local resource whilst South Africa has approximately 65% of the global resource of chrome ore. South African-installed ferrochrome capability (furnaces) are the most efficient in the world at 4.8mt per annum, but are under utilized due to electricity shortages. Ferrochrome production is also worth 3.5 times more employment than chrome ore production. For South Africa, with high unemployment, the case for renewed and increased beneficiation in this sector is strong, especially given the vastly increased contribution to GDP.
 
Liebherr to supply its 100th mobile harbour crane to Africa
Liebherr is celebrating a major milestone. In April 2012, its one hundredth mobile harbour crane for the African continent is going to be delivered to APM Terminals Apapa.
In 1976, just two years after entering the mobile harbour crane business, Liebherr supplied its first two LHMs to Africa. Dedicated to container handling, both mobile harbour cranes were destined for Libya. In the next two decades business was poor due to serious stability issues, quests for independence as well as low economic development in various African countries.
However, two deliveries to ports in South Africa and Namibia mark the significant turnaround in 1996. These machines represent the first LHMs suitable for bulk handling in Africa. From that point on business has been back on track. In 2001, a first remarkable peak was achieved with seven LHM deliveries to customers in Namibia and Nigeria.
The ongoing economic development in several African countries has favoured an increased demand for highly competitive and top quality products, which provide maximum flexibility. Liebherr’s innovative cargo handling solutions perfectly meet these requirements. Consequently, mobile harbour crane deliveries to Africa virtually exploded in recent years. Since 2007, even more than 70 Liebherr mobile harbour cranes have started operation in Africa. Impressive is not only the number, but also the diversity of sales regarding models and applications which covers container and bulk handling as well as general cargo operation. Despite a noticeable global trend towards bulk handling, most of the African ports still prefer container handling configuration.
In 2007, the Tunisian stevedoring and handling company STAM ordered its first LHMs and thereby became part of this success story. Due to the very positive experience with these three machines the company has invested in four additional LHMs in the past two years. “Currently, we have seven LHMs in operation in three Tunisian ports. Five LHMs are totally dedicated to container handling, the other two operate general cargo, dry bulk and containers. These cranes offer utmost performance, are robust and impress by state-of-the-art technology”, states Sami Battikh, STAM’s purchasing director.
When it comes to geographical distribution, Nigeria accounts for almost one quarter of all Liebherr mobile harbour cranes in Africa with a total of 24. Algeria follows closely with 21 LHMs in operation. Moreover,Algeria plus its neighbour countries Libya and Tunisia represent Africa’s most populated region with altogether 43 machines. However, recent development shows that the southern and western regions of the continent are catching-up, mainly driven by Nigeria and South Africa respectively.
Ports and Cargo Handling Services Limited is a subsidiary of the SIFAX group, which is operating in the maritime, aviation and oil and gas industries in Africa’s leading LHM market Nigeria. Ports and Cargo operates terminal ‘C’ of the Tin Can Island Port, Lagos. In 2008 the company acquired four Liebherr mobile harbour cranes type LHM 400, equipped with Cycoptronic® including Teach-In feature for faster and safer cargo handling. “LHM’s high safety standards and ultra-modern design simplifies operation of such a heavy-duty machine. Its unique flexibility makes it easy to work with two cranes at very close hatches at the same time,” Captain Luc Deruyver, group managing director, confirms.
Another Nigerian company trusting in Liebherr products is Inter-Bau Construction Limited. The well-known construction company ordered two Liebherr mobile harbour cranes type LHM 180 for the Onitsha River Port project in 2010. The cranes handle a wide variety of break bulk cargoes and the occasional container, an area where growth is expected. Additionally the machines can also be adapted for bulk handling if needed. “Due to superior technology advantage, reasonable pricing and excellent after sales support, Liebherr was the preferred vendor. Their high degree of professionalism impressed throughout the buying process,” says Sir Nath Okechukwu, owner and chairman of the group.
Regarding Liebherr’s competitive product range, so far LHM 400 and LHM 250 represent the most important models in Africa, each with 19 machines in operation. Considering the quite recent market launch of the LHM 550 in 2010, this type truly has potential to become the best selling mobile harbour crane in Africa with already eight machines in operation and several orders in the backlog. The global trend towards heavy- duty cranes may even increase the demand for LHM 550s, which is the second biggest mobile harbour crane in Liebherr’s portfolio. In addition to that, Liebherr wants to further expand its market presence in Africa with its newest model, type LHM 420, designed for versatile and efficient cargo handling with a maximum lifting capacity of 124 tonnes.
In 2011, only a few months after market introduction of Pactronic®, four LHM 550s equipped with Liebherr’s innovative hybrid drive system started operation in Africa. This cutting- edge technology provides several key advantages for both crane operators, Sogester in Angola and Intel Nigeria Limited. In terms of turnover capacity, this accumulator allows an increase by 30% leading to notably shorter demurrage. Additionally, Pactronic® leads to a reduction of fuel consumption as well as CO2 and exhaust emissions in the range of 30% depending on the operation.
In April 2012, Liebherr is going to deliver its one hundredth mobile harbour crane, type LHM 550, to APM Terminals Apapa. Their fleet will then comprise nine heavy-duty machines operating at terminals in Benin, Luanda and Apapa. Being one of Liebherr’s major customers in Africa, APM Terminals Apapa has played an important role in reaching this 100th delivery milestone in early 2012.


South African customer places large order for mobile harbour cranes
Liebherr-Werk Nenzing has received a large order from Transnet Port Terminals for the delivery of six state-of-the-art mobile harbour cranes. In January 2012, Liebherr-Werk Nenzing GmbH and Transnet Port Terminals in Durban, South Africa, signed a contract for the delivery of six mobile harbour cranes of the latest generation.These high-performance cranes, type LHM 550, are suitable for a wide range of applications.
The ultramodern machines are destined for the RoRo and Maydon Wharf Terminal in Durban. Currently the terminal mainly handles bulk. However, a steady increase in container- handling volume calls for an expansion of existing capacities. Thanks to these new LHM 550s the terminal is optimally prepared for future challenges regarding cargo handling and vessel delays are going to be minimized.


King & Sons, one of the oldest ships’ agencies in Southern Africa
King & Sons, one of Southern Africa’s most established ships’ agencies, was founded in 1881. A division of Grindrod Ships Agencies (South Africa) (Pty) Limited, it was the first ships’ agency in South Africa to receive ISO 9001:2000 accreditation for agency services in both liner and non-liner functions.
With integrated state-of-the-art technology and extremely
qualified staff, the company is proud to offer its clients a full range of support in both technical and commercial logistics. It is highly experienced in handling vessels ranging from passenger liners, bulk and break-bulk vessels, tug and tow to specialized gas carriers at all Southern African ports from Walvis Bay to Maputo.
King & Sons is one of the oldest ships’ agencies in Southern Africa, having been founded on 19 December 1881. Its origin was the agency formed by Captain Don King and Mr W S Bullard, who inaugurated the White Cross Line sailing ship schedule between London and Natal.
The Grindrod Group as it exists today is a result of more than 100 years’ service to commerce and industry in the broad transportation field. It has grown as a result of its reputation for excellent service and the acquisition of other companies engaged in complementary activities.
 
ROLE OF A SHIPS’ AGENT
To provide technical, operational and commercial logistics support to ships owners, charterers, cargo owners and receivers in the full logistics chain.
This includes:
  • landside management of cargoes, port to door and door to port logistics solutions.
  • bunkers, co-ordinate bunker stems with oil major’s/arrange barge where necessary and co-ordinate bunker operations as per vessel requirement;
  • spares, track and trace, arrange clearance of spares and delivery to vessel;
  • stores, co-ordinate vessels/owners’ requirements and delivery to vessel;
  • arrange guarantee letters, arrange/co-ordinate flights, arrange transportation/immigrations and customs formalities;
  • hotel bookings, book inward/outward crew with relevant hotels at preferential rates as and when required;
  • crew transport, arrange crew transport at owners/masters request: to doctors, dentist, notaries, hotels etc.;
  • cash to master (CTM), arrange/coordinate safe receipt and delivery of cash to masters;
  • fresh water supply, arrange/co-ordinate supply of fresh water to vessels as per owners’/masters’ requests;
  • stowaways, arrange/co-ordinate detention/removal of stowaways with relevant authorities (immigration/ customs/P&I/SAPS) arrange/co-ordinate repatriation as and when required as per South African immigration regulations;
  • vessel arrests, arrange/co-ordinate legal processes;
  • hospitalization, arrange crew
  • hospitalization as and when required, co- ordinate feedback/doctors reports and repatriations requirements;
  • vessel husbandry;
  • ship repair co-ordination;
  • dry dock arrangements;
  • SPM (single point mooring) operations;
  • ship owners’ protecting agency;
  • port agency operations;
  • container logistics;
  • container rail management; and
  • specialist depot storage for ISO tank containers, also providing repairs, preparation, washing and cleaning.
PORTS
King & Sons offers full ships’ agency services in all major ports in Southern Africa, Mozambique and Namibia.
The ports served are: Durban – South Africa; Richards Bay – South Africa; East London – South Africa; Mossel Bay – South Africa; Port Elizabeth – South Africa; Cape Town – South Africa; Saldanha Bay – South Africa; Beira – Mozambique; Nacala – Mozambique; Maputo – Mozambique; Luderitz – Namibia; and Walvis Bay – Namibia
 
MAJOR CLIENTS
King & Sons’ major clients are ship owners, vessel charterers, cargo owners and cargo receivers, cargo shippers.
 
DRY BULK BUSINESS
Dry bulk transported in vessels served by King & Sons include: Coal exports, iron ore exports, sulphur imports, magnetite, corn, ferro chrome and chrome ore, copper concentrate, manganese ore, and maize. Being Part of the greater Grindrod Group, King & Sons is able to provide a full port-to-door and door-to-port logistics solution.