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Transnet Seeks $9.3 Billion From Investors to Fund Rail Growth

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Aug. 7 (Bloomberg) -- Transnet SOC Ltd., South Africa’s state-owned port and rail operator, wants private funders to invest about 100 billion rand ($9.3 billion) in transportation projects to help address bottlenecks, the head of the company’s freight rail unit said.

Transnet is already investing about 312.2 billion rand over seven years to increase capacity, with about two-thirds to be spent on rail. The Johannesburg-based company moves coal for producers including Glencore Plc to the Richards Bay Coal Terminal, the world’s biggest such facility, and transports goods for manufacturers such as Nissan Motor Co.

“The private sector sits on a pile of cash,” Transnet Freight Rail Chief Executive Officer Siyabonga Gama told reporters in Cape Town yesterday. “We’d like to leverage private capital. We have a shortfall of some 100 billion rand in the logistics system.”

While Transnet intends to retain ownership of the rail network, investors could help fund parts of a heavy-haul link to coal mines in the northern Waterberg region and a new port in the eastern city of Durban, Gama said. Private companies could also install and operate rapid train-loading systems or use some of Transnet’s branch lines to run tourism or haulage businesses.

South Africa invested less than 500 million rand a year in new rail infrastructure prior to 2005, causing many companies to switch to road to move their goods -- a situation Transnet aims to turn around with its investment program. The state company transports about 230 million metric tons of the 590 million metric tons of goods that are “rail-friendly,” according to Gama.

New Locomotives

Transnet is spending about 50 billion rand on renewing its locomotive fleet. It awarded the contract for supply of 1,064 electric and diesel trains to General Electric Co., China North Rail, China South Rail and Bombardier Transportation.

The company has 29 different models of locomotive in its fleet of 2,400, and wants to reduce that number to four, Gama said. All locomotives that are aged 30 years and older will be replaced in the next four years.

Transnet’s 861-kilometer (538-mile) heavy-duty line that links mines in the Northern Cape Province with the western Port of Saldanha Bay will be shut for 10 days for annual maintenance from Aug. 12, the company said in a statement today. The line is used to haul 58 million tons of iron ore and 2 million tons of manganese a year.

To contact the reporters on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net; Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net John Bowker, Karl Maier

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