Transnet moves ahead with plans to develop R2.5bn Gauteng port

Ports and logistics parastatal Transnet is moving ahead with plans to develop a new ‘inland port’ in Gauteng and on Wednesday announced the winning bidder that will develop and operate the R2.5 billion Tambo Springs Intermodal Terminal in Ekurhuleni.

Transnet’s chief business development officer Gert de Beer says the deal represents a major public-private partnership (PPP) that will see Southern Palace Joint Venture Consortium holding a 20-year concession for the new inland terminal, which will complement the container facilities at City Deep.

A wholly black-owned and managed diversified industrial holding company, Southern Palace is the lead concessionaire in the consortium. Its partners in the project include Italian state rail and infrastructure company Ferrovie dello Stato Italiane as technical partner and supply chain, and advisory group Makoya as logistics and marketing partner.

“The new terminal in Springs will have an initial capacity to handle around 225 000 TEU [20-foot-equivalent unit] containers in its first phase and ultimately grow to handle some 550 000 TEUs,” De Beer told Moneyweb. “City Deep, located near the Johannesburg CBD, has a capacity of 400 000 TEUs and has already reached almost 80%.”

‘Fully-fledged’ and modern facility

He says the new Springs terminal will boost efficiencies as a fully-fledged modern intermodal facility, directly connected to the Natal Corridor (Natcor) rail link between Durban and Johannesburg.

He says the PPP project will improve the rail freight system in the country and boost economic growth, and admits that Transnet has experienced challenges on the general freight rail side, “which has been in systemic decline over the years”.

He points out that the decline of general freight rail has contributed to the growth in the number of trucks on national roads, especially the N3 between Durban and Johannesburg. “We need to get general freight working again on rail. With time-sensitive cargo, rail can play a critical role as part of the intermodal mix. Even Amazon is now using rail, linked to passenger trains in the US.”

The Springs terminal is expected to break ground by November and is anticipated to open in 2022.

It will be located on a 67-hectare (ha) site within the broader Tambo Springs Logistics Gateway development, which is being master-planned by the Tambo Springs Development Company on 607ha of land near the N3. Transnet has already purchased 35ha of land within the new development node, with another 32ha being negotiated.

“The City of Ekurhuleni will provide major bulk services for the development,” says de Beer, adding that the terminal will be developed as part of a next-generation logistics gateway combining direct terminal handling facilities as well as back-of-terminal property development and related value-add logistics services and activities.

Leveraging off existing infrastructure

“The existing Natcor dual directional freight rail line runs directly to the site of the [new terminal],” he adds. “Transnet will therefore not incur significant additional costs for new rail infrastructure to connect to the new terminal, but rather, leverage off the existing infrastructure.”

De Beer adds that once the terminal is developed, it is expected to spur surrounding industrial and commercial property development to the tune of around R20 billion from the private sector.

Lucas Tseki, deputy chair of Southern Palace, told Moneyweb that Southern Palace has brought in international rail and container terminal specialist Italferr, which is part of the Ferrovie dello Stato Italiane group. The joint-venture consortium is also supported by Concor and engineering firm AECOM.

Bigger vision

“It is noteworthy that Concor, formerly Murray & Roberts Construction, is part of the Southern Palace Group of companies,” says Tseki. “When we acquired the business a few years back, we had a bigger vision of becoming a leading provider of infrastructure solutions and logistics services in South Africa and across the African continent. Winning the bid for the development of Tambo Springs inland port is a major milestone.”

Tseki says Southern Palace has raised around R7 billion to date through its various businesses, so the terminal will be largely “self-funded”.

Last year Southern Palace sold its 5.4% stake in JSE-listed Growthpoint Properties for an undisclosed amount. Tseki declined to comment on whether some of those funds would be used to finance the new terminal. However, he did say “it represented a timely return for the group, considering the poor performance of the listed property sector”.

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