Plans by Transnet’s National Ports Authority to apply for a tariff hike in the next financial year would further erode the competitiveness of South Africa’s exports, the local unit of London-listed miner, Xstrata, said on Friday. “South Africa is already struggling with falling market share in beneficiated products and this proposed increase in tariff would make things worse if approved,” Xstrata spokesman Chris Tsatsawane said. The ports authority manages seven commercial ports in South Africa and intends applying for an average tariff increase of 14.2% for the 2013-14 financial year as part of efforts to raise funding for the upgrade of the country’s ports. Mr Tsatsawane said the proposed increases were inflationary, would stunt economic growth and erode SA’s export competitiveness. South Africa’s consumer inflation was 5% in August, according to Statistics SA. The country’s cost competitiveness in mineral resources and manufacturing exports has been eroding over the past few years, partly as a result of rising labour and electricity costs as well as a stronger rand. Eskom, which provides more than 90% of South Africa’s electricity, is set to submit a five-year tariff application that is expected to be above the country’s inflation rate. The rand has gained more than 15% against the dollar over the past 10 years.
Transnet’s port expansion project will cost about R46.9bn and forms part of the company’s plans to spend about R300bn on upgrading and expanding the country’s transport infrastructure over the next seven years.
In delivering the country’s much-needed infrastructure, the government has adopted the user-pay principle. Transnet wants to boost coal exports from 68-million tons a year to 97.5-million tons and increase iron-ore exports from 53-million tons to 82.5-million tons. Transnet CEO Brian Molefe was not immediately available for comment. Xstrata, the Swiss-based miner, operates ferrochrome mining operations through a joint venture with JSE-listed Merafe Resources in North West. Source: http://www.bdlive.co.za
