GRINDROD is looking to benefit more from increased usage of ports in Maputo by South African exporters and importers due to constraints being experienced by Transnet, prompting the logistics company to bump up its interest in a company that owns a dry bulk terminal in Mozambique by 35% to 100% for a consideration of $77 million (R1.35 billion).
The 35% has been snapped up from Grindrod’s partner in the asset, Vitol, which is based in Mauritius. Grindrod will pay $55m upfront and the remainder in quarterly instalments of $1.375m.
Logistical constraints are hobbling South African exporters, including bulk miners and other export producers. Some miners have had to cut production after stockpiles of ore and finished products worsened.
Grindrod was hoping to benefit more from this, said Anthony Clark, an analyst with Smalltalkdaily Research yesterday. This followed the acquisition of the remaining 35% it did not already own of Terminal de Carvão da Matola Limitada (TCM) which owns a dry bulk terminal in Maputo.
“More product is going to the Maputo ports and the ports have seen increasing volume of throughput. The implementation of third-party rail access and the open rail border benefits between South Africa and Mozambique will be a boon for the ports,” said Clark.
Owning 100% in TCM was a “ positive long-term benefit” although investors in the company were somewhat indifferent after its share price fell 2.25% to R14.75 in midday trade on the JSE yesterday.
“The market may just be looking at the investment cost given Grindrod has hefty capex ahead for the rail expansion and a chunk of available funding has now gone into Matola,” he added.
The Maputo dry bulk terminal that Grindrod will now have complete control of has an annual capacity to export in excess of 7 million tons of magnetite and coal. In the half year to June,TCM had a net asset value of $116m while profits after tax attributable to the net assets for the same period amounted to $9.2m.
Grindrod said yesterday: “TCM’s long-term sub-concession is a strategic asset enabling Grindrod to provide cost-effective and efficient integrated logistics solutions for its customers’ cargo flows. Through this asset, Grindrod will unlock its value creation across the Maputo corridor and meaningfully drive its pit-to-port solution for its customers.”
The terminal is operated under a sub-concession to the Maputo Port Development Company’s main port concession and has the capacity to receive cargo by rail and road as it has its own dedicated export berth which handles gearless panamax and baby cape vessels.
For the half year period to end June 30, headline earnings per Grindrod share slumped by 1% to 72 cents on the back of flat revenues while earnings before interest, tax, depreciation and amortisation (Ebitda) were 7% weaker at R1bn due to logistical constraints in South Africa.
Volumes from the Port of Maputo volumes were however firmer by 18% on chrome demand although terminal volumes trended downwards. Volumes at Richard Bay rebounded by 20% while shipping agency clearing and forwarding saw an increase in customers which drove up earnings for the category.
BUSINESS REPORT