Andrew Waller's End-of-Year update
2020 was a very tough year for our people and our divisions. But with determination, we pushed through and ended the year with meaningful achievements.
Grindrod’s strategy, endorsed by the board, focuses on unlocking trade corridors and providing customers with supply chain solutions enabling the export of Africa’s resources to the world.
Business in Africa can be tough. It takes experience, strong leadership, tenacity, and a great deal of skill to succeed in challenging environments.
We are proof that vision and genuine willingness to collaborate with customers and governments can transform untapped potential into productive logistical hubs – unleashing value across the continent.
Examples of this collaboration and developing fit-for-purpose infrastructure for our customers are our investments in Northern Mozambique.
We invested in an Intermodal facility in Nacala and trucks to transport graphite from a mine in Balama to Nacala for onward export to global markets. While the mine in Balama is in care and maintenance until graphite markets improve, the Nacala facility has provided the perfect base to operate on the Malawi corridor, where we’ve seen an increase in volumes.
Our strategic presence in Northern Mozambique has provided us with the ideal springboard to be one of the early logistics providers for the Rovuma LNG project in the Cabo Delgado region. The LNG industry presents an enormous growth opportunity for Grindrod. The Rovuma LNG project will produce, liquefy, and market natural gas from three reservoirs of the Mamba complex. The project includes the construction of two natural gas liquefaction trains, with a total LNG nameplate capacity of 15.2 million tonnes annually.
In addition to our base in Nacala, Grindrod established operations in Pemba and acquired the rights to a strategically located plot of land in Palma, adjacent to the project. The construction of our logistics facility has commenced. It will support containerised and break-bulk cargo destined for the region. Our trucks and six chartered ships operate between all the ports delivering material to the Rovuma LNG project.
Grindrod invested in the Port of Maputo many years ago, so operating in Mozambique is not new to our experienced team. Bottlenecks at the border have eased, with approximately 450 to 500 trucks going through the border daily. Cargo transported by rail versus road has improved from pre-COVID times of 15% to post-COVID times of 25% through the increased allocation of train sets. The increase in rail is encouraging as it diversifies cargo delivery to our terminals in Maputo and Matola. Further good news for our terminals is that the magnetite and chrome markets are returning to normal with strong pricing, particularly for iron ore.
We’ve deployed train sets on the Dar Es Salaam corridor – 3 locomotives and 54 wagons. During the COVID-19 lockdown, products moved East and West and not through South African as our borders were closed. Demand for rail has increased post the lockdown. Most of our commercial rail activities are now being conducted through merged operations with African Rolling Stock Solutions.
Transnet has made significant strides in creating efficiency in their networks. We welcome this, not only for Grindrod but for the economies across southern Africa. These efficiencies have impacted Richards Bay, the North/South corridor, and the Maputo corridor particularly.
The Grindrod Intermodal team has have worked hard to increase our container facility footprint and diversify into bulk cargo. By partnering with key customers and establishing an efficient and reliable service, Grindrod facilitates the export of minerals through our Maydon Wharf Terminal in Durban.
Container volumes coming into and out of South Africa slowed down this year but fruit exports during the citrus season and grape season provided a boost. Our seafreight container business has worked hard in the second half of the year to bring efficiency into container logistics within southern Africa.
The ships agency, marine services, and clearing and forwarding businesses have improved with signs of a good recovery across the businesses.
Phase 1 of the 270 000sqm AutoPort situated just off the N3 between Pinetown and Pietermaritzburg will be completed in December 2020. With 2500 undercover bays for the storage of imported cars and cars awaiting export, this green facility will also be used as a staging area for Durban Port. The staging service will support the Automotive Logistics (car carrier) business, which was very heavily impacted by the 32% reduction in new car sales in 2020.
Demand for fuel also dropped this year, which impacted the utilisation of the road tankers in Fuelogic. The ongoing COVID regulations on the border between Botswana and South Africa have further significantly affected the business. Management has worked very hard to drive efficiencies in the business and restructured it to minimise costs.
Grindrod Bank maintained a conservative approach in managing its book. The team will continue to enhance and build the platform banking services, grow in the retail space, and broaden their footprint in the SME markets.
Our business is about operating supply chains, leveraging our strategically located Terminals, Port operations, Rail, and Logistics assets. Our divisions must work together and collaborate with customers to ensure we provide bespoke solutions.
To the Grindrod team, our customers, suppliers, investors, business partners, and other stakeholders, I wish you and your loved ones a wonderful, safe festive season. May 2021 be filled with opportunities and adventure.