ATC150814: Report of the Portfolio Committee on Public Enterprises on the oversight visit to Port of Saldanha Bay, dated 5 August 2015

Public Enterprises

Report of the Portfolio Committee on Public Enterprises on the oversight visit to Port of Saldanha Bay, dated 5 August 2015

 

1.         INTRODUCTION

 

The Portfolio Committee on Public Enterprises undertook an oversight visit to the Port of Saldanha Bay on 6 February 2015. The purpose of the visit is to familiarise the Committee with the operations of the port and progress that has been made with regard to infrastructural developments at the port. The Committee met with the leadership of Transnet led by the Chairperson of the board, Ms L Mabaso. The Transnet delegation included: Mr. K. Phihlela, Acting Group Chief Executive, Mr. T. Morwe, Chief Executive for TNPA, Mr. V. Dube, General Manager: Western Cape Terminals, Mr. M. Buthelezi, Chief Operating Officer: TFR and Mr. R. Vallihu, Chief Executive for Transnet Engineering, Ms. N. Sishi, Group Executive HR and Ms. S. Lund, General Manager Sustainability. 

 

This report provides an overview of the visit, observations and recommendations emanating therein.  

 

2.         COMPOSITION OF THE DELEGATION

 

The multiparty delegation consisted of the following Members:

 

Portfolio Committee on Public Enterprises:

• Ms D Letsatsi-Duba (Chairperson)
• Dr Z Luyenge (ANC)
• Ms DZ Rantho  (ANC)
• Ms G Nobanda (ANC)
• Mr K Morapela (EFF)
• Mr N Kwankwa (UDM)
• Mr E Marais (DA)

 

Committee Support Staff:

• Mr Disang Mocumi - Committee Secretary
• Ms Lee Bramwell - Researcher
• Mr Rodney Mnisi - Content Advisor
• Ms Yandiswa Cele - Committee Assistant

 

3.         PRESENTATION ON THE PORT OF SALDANHA

  

The Committee received a presentation on the operations of the port and the plans for the capacity expansions which were already underway. These were some of the key highlights of the presentation:

 

1.      Transnet will be establishing an oil and gas marine repair engineering and logistic   

     services complex, servicing the needs of the up and mid-stream exploration and   

production sector of the oil and gas sector.

1.      The port is making facilities available to facilitate the growth of the Industrial

     Development Zone (IDZ), in support of capturing the oil rig market. This will  

     support GDP growth and create employment.

1.    The Port of Saldanha is not weather dependent due to the formation of the bay,

it is sheltered from bad sea conditions.

1.    The IDZ will support the Port business, it will be a custom controlled area

   adjacent to the Port of Saldanha.

1.    The Port of Saldanha has an iron ore berth, break-bulk and liquid bulk facilities.   

   The new planned infrastructure will include the Off-Shore Supply Base, the Rig

   Repair facilities, the vessel repair/new build and LPG facility.

1.    The Saldanha Terminal is SA’s largest natural anchorage and port with the  

   deepest water. The terminal added Manganese exports to its service offerings.

The terminal has requested to handle 60 million tonnes (mt) of iron ore through the port, and were therefore issued a provisional Air Emissions License by the West Coast Municipality on 08 January 2014. The terminal currently has an Air Emissions License to handle 40 mt. The rail way line from Sishen to Saldanha would like to increase capacity to 62 mt per annum, and has already increased capacity from 18 million tonnes per annum (mtpa) to 28 mtpa.

1.     Train length increased from 216 wagons to 342 wagons during 2007.
2.     Transnet needs cooperation of the municipalities along the Sishen – Saldanha   

 route as a train track can divide a community from a school or water source, and   

 this can lead to safety issues as the community seeks to cross the train tracks.     

 Transnet needs the cooperation of municipalities to ensure that did not

 happen.

1.     The Port is spending R8 million on a multi-purpose sport centre in conjunction     with Saldanha municipality.

 

1.     A Memorandum of understanding between the School of Engineering in             

    Saldanha and the West Coast College for sourcing apprenticeship and    

    learnership students.

1.     Transnet has techno girls programme for local community schools which is aimed

    at workplace exposure.

1.     In terms of rural development, there is a 12-month learnership programme to

    empower the local communities which includes the West Coast areas.

1.     Through the Transnet Academy, capacity building focuses on the development of    

    skills to support the Market Demand Strategy (MDS) by delivering the required

    skills.

1.     In 2013/14, energy costs were 18 per cent of total operating costs, 74 per cent of

    total Transnet electricity is used by Transnet Freight Rail traction.

1.     The number one risk at the port is the security of electricity supply.
2.     In 2013, Transnet adopted an Energy Security and Carbon Mitigation Strategy to

    reduce energy supply risks; energy costs; and emissions from energy use.

1.     The three focus areas include energy management, energy efficiency and

    alternative energy investigations.

1.     Transnet is working with the Council for Scientific and Industrial Research to

    reuse some of the energy emitted by the locomotives when braking.

 

4.         OBSERVATIONS

 

The Committee made the following observations:   

4.1        A concern was raised regarding the high attrition rate and the need to retain skilled employees.

4.2        The Committee emphasised the need for the immediate community to benefit from the economic opportunities, especially local businesses.

4.3        The Committee expressed appreciation for the comprehensive corporate social investment programme, but expressed the need for more inclusion of rural communities.

4.4        The Committee noted that Saldanha is a water scarce area, and urged Transnet to ensure that there are mechanisms in place to preserve water.

4.5        The Committee requested that Transnet should forward timeframes and the breakdown of the budget for the Saldanha expansion programme.

4.6        The Committee applauded Transnet for having a good working relationship with the Municipality of Saldanha Bay.

4.7        The Committee requested Transnet to submit their Energy Security and Carbon Mitigation Strategy to the Committee.

4.8        A concern was raised regarding the number of fatalities at the port, and urged Transnet to strengthen measures to reduce accidents and improve safety.

4.9        A concern was raised regarding the low representation of women and people with disability at the port.

4.10      A concern was raised regarding the imbalanced ratio of raw material exports over the exportation of processed goods. Transnet should elaborate on its strategy to support beneficiation.

 

5.         Responses

 

In response, Transnet provided the following responses to the observations of the Committee:

5.1        The major challenges on the Sishen line was a shortage of accommodation, most workers lived in Kimberley and commuted to Sishen on a dangerous road full of trucks. Due to the increase in manganese in this area, housing is scarce and the municipal processes for the approval and allocation of land for housing is very slow.

5.2        An amount of R1 billion has been set aside for research and development. Transnet is collaborating with the Council for Scientific and Industrial Research (CSIR) to develop innovative solutions to some of their problems. Transnet has approximately 150 students working on energy efficient solutions, who will register intellectual property.

5.3        Transnet acknowledged that water was important in their business. They were rolling out a water audit to determine how much water was being used by the business, in order to preserve water usage. Transnet was still in the early stages of developing water management systems and was very keen to work with business partners regarding environmental issues.

5.4        Transnet encouraged manufacturing and beneficiation through its pricing strategy. The strategy that is approved by the Regulator is the user-pay strategy. The strategy they would like to pursue is that customers should pay more for exporting raw materials and pay less for exporting beneficiated products (eg. cars, fridges, steel, etc.). Transnet requires the support of government for this strategy to work or it will be counter-productive.

5.5        Transnet is targeting January 2018 for the commissioning of the oil and gas operations as per Operation Phakisa targets.  This has accelerated the plan for Saldanha, as Transnet only had it planned for 2021 but Operation Phakisa has brought it forward.

 

 

 

6.         RECOMMENDATIONS

 

The Committee recommended that the Minister of Public Enterprises should:

6.1    ensure a reduction of energy consumption by placing solar panels on the roofs of the corporate buildings at the port.

6.2    ensure that Transnet updates the local community on its plans, opportunities and

         progress on developments on the port on a quarterly basis.

6.3    ensure that Transnet educates local businesses on energy efficiencies and form

         partnerships regarding this matter.     

6.4    ensure that the Department of Public Enterprises communicates and markets the 

         good work done by state-owned companies in terms of their Corporate Social

         Investment projects.

6.5    ensure that Transnet assesses the impact of its CSI programmes to ensure

         sustainability.

 

 

 

Report to be considered.