Grindrod Raising Coal-Terminal Capacity, Sees Africa Opening

Grindrod Ltd. (GND), Africa’s largest shipping company, plans to raise capacity at a coal terminal in Mozambique to as much as 7.5 million metric tons a year by the middle of 2013, Chief Executive Officer Alan Olivier said.

The capacity at the terminal in Maputo, the Mozambique capital, is 6 million tons now, Olivier said by phone from Johannesburg today. Grindrod started expansion of the terminal last year and its eventual goal is to add more than 20 million tons of coal and magnetite capacity at a cost of $800 million.

Exxaro Resources Ltd. (EXX) and Coal of Africa Ltd. (CZA) are among South African companies that have used Maputo because Richards Bay Coal Terminal in their own country lacks rail capacity. Coal deposits in Mozambique, mined by companies including Rio Tinto Plc (RIO), are closer to the nation’s Beira port. Governments from Nigeria to South Africa are raising funds to expand and improve roads and railways to help boost their economies.

“More opportunities lie north of South Africa,” Olivier said. “Our target is on developing critical infrastructure based on where resources are.”

Grindrod in July spent 388.5 million rand ($44 million) buying 46.4 percent of New Limpopo Bridge Projects Ltd., which is involved in the Beitbridge Bulawayo Railway (Pvt) Ltd. The company has a line connecting Beitbridge, the Zimbabwean town on the border with South Africa, with Bulawayo, Zimbabwe’s second- biggest city.

Profit Increase

Grindrod’s earnings per share excluding one-time items climbed 22 percent to 1.22 rand in the year through December, boosted by improvements in the freight and financial services units, the Johannesburg-based company said in a statement. Its final dividend rose 28 percent to 15.4 cents a share.

The company reported a 169.7 million-rand loss in its shipping unit, where it had to write down the value of some vessels because of weak markets.

The Baltic Dry Index (BDIY), a measure of commodity shipping costs, reached its lowest annual average in 26 years in 2012 amid an oversupply of vessels and slowing demand. Earnings for ships that carry dry-bulk commodities are set to start recovering in 2014 as fleet growth slows to keep pace with demand for the first time in four years, Citigroup Global Markets Inc. said in a Feb. 12 report.

The big driver this year “will be what happen in the shipping market,” Olivier said.

Drybulk shipping markets are likely to remain under pressure this year, which will continue to affect earnings in the shipping unit, the company said in the statement.

Grindrod advanced for a fourth day, adding 2.2 percent to 17.37 rand by the close in Johannesburg, the biggest gain since Feb. and extending its climb this year to 9.6 percent. That compares with a 0.1 percent increase in the 165-member FTSE/JSE Africa All Share Index. (JALSH)

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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