Transnet in $230m locomotives order

5 April 2011

South African state logistics company Transnet has signed an agreement with Venus Railway Solutions, a partnership between Japan’s Mitsui & Co and local empowerment investors, for the supply of an additional 32 new locomotives worth US$230-million (About R1.55-billion).

The type 15E locomotives will be used on Transnet Freight Rail’s iron ore line which runs between the mines in Sishen in the Northern Cape and the port at Saldanha in the Western Cape, as part of Transnet’s efforts to transport 61-million tons per annum on the ore line.

Production of the 32 locomotives will commence in December 2011, with the first unit to be ready for delivery by May 2012 and the last to roll off the factory floor by August 2013.

“This is a very exciting transaction for us,” Transnet CEO Brian Molefe said in a statement this month. “In addition to the obvious benefits of our locomotive fleet renewal programme, we are particularly excited and thrilled at being able to leverage on the localisation of our capital investment programme to protect, develop and create local employment opportunities and transfer technology into South Africa.”

The electrical portion of these locomotives will be supplied by Toshiba Corporation, and the mechanical portion, such as bogies and bodies, will be supplied by Union Carriage and Wagon Company (UCW), a rolling stock manufacturer situated on Gauteng’s East Rand.

To date, Transnet Freight Rail has admitted 28 15E locomotives and 40 19E locomotives built by Mitsui into service.

Local manufacturing, skills development

The manufacturing arrangement is as a result of the Competitive Supplier Development Programme (CSDP), an initiative to encourage localisation of manufacturing, skills development and sustainable employment.

The CSDP obligations of the contract are in excess of 40% of the total value of the contract, and the agreement will ensure the continuity of over 730 existing jobs.

In addition to the local manufacture of the locomotives, the CSDP aspects of the agreement with Mitsui include investigating the possibility of South African suppliers joining Mitsui’s global supply chain, stringent skills transfer and development targets.

These include training of engineers, students, apprentices and operating a welding school to produce nearly 700 welders. The majority of beneficiaries of these programmes will be historically disadvantaged individuals.

Comprehensive fleet renewal

Transnet is to spend over R110-billion on its investment programme over the next five years, which includes a comprehensive fleet renewal programme that is aimed at improving efficiency, productivity, reliability and safety of the company’s locomotive fleet.

In 2009, Transnet concluded an agreement to buy 100 locomotives from General Electric to be used primarily on Transnet Freight Rail’s general freight business.

In terms of the GE transaction, 90 of those locomotives will be produced at Transnet Rail Engineering’s facilities in Pretoria, resulting in significant localisation benefits for the South African supply chain.

“As we progressively implement Transnet’s fleet renewal strategy to augment our fleet throughout the business, we expect service levels to our customers, including safety, to improve significantly,” said Molefe.

SAinfo reporter

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