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Transnet wants GE to set up permanent train-assembly plants in SA

Transnet SOC Limited, South Africa’s state owned ports and rail operator, wants companies including General Electric Company to set up permanent train-assembly plants in the nation to create jobs and a new industry.

GE has started putting together 233 locomotives in the country after Johannesburg based Transnet in March awarded it, Bombardier Inc and 2 Chinese companies a ZAR 50 billion contract to supply 1,064 diesel and electric trains over 4 years.

Mr Siyabonga Gama, CEO of Transnet Freight Rail, said in an interview at Bloomberg’s Johannesburg office that “We want to keep these factories working. We want to make sure that there are at least 50, maybe to 150 locomotives on an annual basis that will be built here so that we sustain the productivity.”

TFR, as Transnet’s biggest unit is known, is spending about 2 thirds of the company’s ZAR 312 billion expansion budget over the 7 years through March 2019 on a new fleet, upgrading and building new lines after decades of underinvestment in the rail infrastructure of Africa’s biggest coal and iron ore producer. TFR is boosting capacity to haul those commodities as well as steelmaking ingredient manganese.

GE and CSR Corporation, China’s biggest trainmaker and a partner of Bombardier, are assembling locomotives in Pretoria, the capital, with CSR responsible for 359 units. Bombardier and China CNR Corporation’s facilities will be in the eastern port city of Durban, with each working on 240 and 232 trains respectively.

Mr Gama said that “We are looking at locomotive parks. The key thing for us is we are trying to establish an industrial base for locomotives in the same manner as we have a key industrial base for the automotive industry in this country. This must not be a one-off.”

Mr Gama was referring to government-subsidized programs that started in 1995 and have seen automakers including Toyota Motor Corporation, Daimler AG’s Mercedes Benz and Volkswagen AG operate plants in South Africa to benefit from rebates. That helped create an export industry and provide jobs in a country where more than one in four people is unemployed.

Ms Sandy Roth, a spokeswoman, said that “Bombardier’s transport unit is reviewing options.” GE South Africa didn’t immediately respond to e-mailed questions.

Mr Gama said that the new locomotives are replacing a current fleet of about 2,400 that have an average age of 32 to 34 years. The renewal program will cut the number of models on TFR’s tracks to four from 29 now, making maintenance easier as the newer trains are self-diagnostic.

He said that “We were facing an untenable situation since probably about 1998. We are only trying to resolve it holistically now. We are moving away from the Stone Age to the Industrial Age. We have been doing a lot of patchwork on rogue locomotives, putting technicians with train drivers on journeys to repair the aging machines.”

He also said that sanctions against South Africa under white-segregationist apartheid rule that ended in 1994 forced TFR predecessor Spoornet to make customized replacement parts and dismantle engines for equipment to keep other locomotives going.

He added that “About 48 new trains will enter service monthly from June 2016. We are quite confident we have enough time to deliver. We are 14 to 15 months away.”

Source – Bloomberg

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