The Civil Engineering Contractor April 2019 | Page 27

FEATURE: INFRASTRUCTURE
The main point of this project is
to create capacity between the
terminal buildings and the current
runway to allow for both apron and
terminal expansion. This key project
will be under way for some time,
said Gopal, at a cost of R3.8-billion.
Preliminary work began as far back
as 2008, but the bulk of the project
didn’t start until July 2017. Work on
the runway is expected to conclude
in 2021.
It will also get a new domestic
arrivals terminal to the value of R690-
million and two apron developments
at a cost of R775-million. Most of
these projects are going out to tender
in 2019. “CTIA is going to be a
construction site for the next three to
five years,” said Gopal.
www.civilsonline.co.za
The cost of poor
efficiency
An illustration of the economic impact
of costly logistics and monopoly-minded
inefficiency, is provided by South Africa’s
granite quarrying industry. Between
1999 and 2002, the industry exported
just under a million tonnes of granite
blocks a year; a volume that has since
declined to less than a third of that. The
cost of logistics is the single biggest cost
in exporting granite, explains Finstone
SA chief operating officer, Ian Ashmole.
“Of the price we sell for in Europe,
logistics accounts for about half of that
selling price, leaving us to recover the
rest of our operating costs from the
other half. So clearly, logistics costs are
very sensitive in our business. One of
the challenges is that when I started in
this business, 99% of our exports went
to the port by rail. Today, like the rest of
the industry, most of it is going by road.”
Finstone has gone from paying
USD80/m 3 20 years ago to well
over USD160/m 3 today to get its
product onto a vessel for export — a
doubling which does not consider
the massive weakening of the rand,
which means the local rand cost
has spiralled upwards. “It is today
on average 20% cheaper and more
reliable to move bulk materials by
road; yet, rail ought to be significantly
cheaper. The problem is that Transnet
[being a monopoly] just announces
above inflation increases of up to
10% each year, and not just on the
rail service. What they are charging
for the port service is similarly out
of line. Our Richards Bay port costs
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