Transnet to make own equipment: Molefe

By Drum Digital
28 June 2012

Logistics company Transnet will eventually manufacture its own trains and locomotives, CEO Brian Molefe said in Johannesburg on Thursday.

"Transnet will be equipped with the knowledge and skills to be an equipment manufacturer," he said.

"We will build our own locomotives and trains."

He was speaking at a business breakfast hosted by the American Chamber of Commerce in South Africa.

Transnet had ordered 143 locomotives from General Electric's local subsidiary. The first 10 of these had been wholly manufactured in the United States.

"During the manufacture, we sent our people to learn and study how the locomotives are put together."

A manufacturing plant had been set up in South Africa, and Transnet had begun ordering parts for local assembly rather than complete locomotives. Some parts were already manufactured locally, such as wheels.

"We have put in an order for cranes for our port terminals, and we are looking to conclude a similar agreement here," he said.

Transnet would insist that maintenance, at least, be carried out in South Africa.

Responding to criticism of the country's high port charges, he said the group was looking at port charges for containers. Historically, South Africa had been a bulk exporter of raw materials, particularly minerals. As a result, bulk prices were kept low, but container prices were high.

Now that the country was industrialising, it was increasingly exporting containers of manufactured goods.

"We need to encourage container exports," Molefe said.

South Africa's port charges were perceived as high relative to other countries because it did not offer subsidies.

"The question we should be asking is, should South Africa, to be competitive, start subsidising its ports?"

There were arguments for and against subsidies. Subsidies would take resources away from priorities such as health and education, and when the government needed to cut spending, charges would go up as subsidies fell away, Molefe said.

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