Archive for Africa

One expert sees possible Iron Ore Price drop into $30s range — This Year

From Bloomberg, Jul 8, 2015, 7:00 pm

The iron ore rout isn’t done yet… …”the raw material will extend declines into the $30s a metric ton this year”, according to Andy Xie, an independent economist…

To read the entire article, go to

Steel demand in China is shrinking while iron ore supplies are still rising, says Xie, a former Asia-Pacific chief economist at Morgan Stanley. “China’s steel production is actually declining, that’s the reality,” Xie said…

“All the high-cost guys have to shut down for this market to stop falling. It’s not going to stabilize because Chinese demand is coming back, that’s not going to happen in the foreseeable future.” —————

This is another bad sign for mine and rail projects on the books to be built to add more ore and met coal supply that won’t be needed for quite a while.

Are you doing your due diligence strategic plan reviews?

BRICS Hail $100 Billion Reserves Pool! Realistic? Or a fools assumption?

The BRICS group of nations represent more than a fifth of the global economy.

The news sources issued by their public relations people are tonight talking up closer financial ties.

They are off to a summit in Russia on the subject.

A grand concept? But who will write the checks?

Most of the BRICS actually qualify for World Bank aid for a reason.

Is the new BRICS institution going to “borrow from Peter to pay Paul, so to speak.

Of Brazil, India, Russia, China, and South Africa, only China may have sufficient “reserves” in these troubled times to send money to the others.

Funding trillions of dollars in global rail and port and highway projects from this group “seems to be a streatch”

What do you think?

To read the entire Bloomberg article, go to

China domestic steel peaking? Might it result in cancelled rail projects? Or steel dumping?

From Bloomberg, Jul 7, 2015

China’s demand for steel has peaked, if the Japanese experience of the 1970s is anything to go by. That could spur more trade conflicts as the nation ships its excess production overseas.

To read the entire article, go to

A few key observations:

The current decline in Chinese steel output may signal that the growth period for the commodity has ended in a country where the pace of economic expansion is slowing.

Risaburo Nezu, a senior research adviser at RIETI, a think-tank linked to Japan’s trade ministry, expects a prolonged slump, with an absence of growth in demand likely for the next 10 or 20 years.

“Once a country attains a certain stage of economic development, demand for steel stops growing,” Nezu said last week in an interview. “China is left with excess capacity that’s said to be 300 million tons to 400 million tons, equivalent to three to four times Japanese output.

If true, there are economic consequences from Brazil to Mongolia and South Africa to Japan. This will impact rail and mine and port greenfield projects around the world. Are planners prepared?

The situation in China “could trigger more cases of trade measures among steel suppliers” to protect earnings, said Yoku Ihara, president of Growth & Value Stock Research.

Bloomberg reports that “Steel demand in China will shrink this year and next in the first annual contractions since 1995 according to the World Steel Association in April.

Crude steel output will shrink as much as 2 percent this year, the first contraction since at least 1990, according to the China Iron & Steel Association.”

“Globally, supply of steel will exceed demand by 657 million tons in 2016 compared to an estimated gap of 645.8 million tons in 2015, according to an estimate compiled by the OECD.

This threatens a glut of drawing board plans for global mines, ports, and rail projects. Most based on very high China growth of the 2003-2012 period.  Now an obsolete assumption.

South Africa’s R600 million train blunder reported by fee press

Suggests poor technical due diligence.

IS ANYONE PAYING ATTENTION as Chinese Stocks drop these past 3 weeks?

July 2, 2015

Everyone seems fixated about Greece’s future in the euro zone.

Pat the same time, overlooking the economic consequences of a stock market slump on the other side of the world.  CHINESE equities have dropped more than 20% — yet it is causing barely a ripple in global markets!

To read the entire article, go to

China has seen a a 3-week plunge in Chinese equities. Some calculate a massive $2.4 Trillion loss in China market value.  That is calculated as the equivalent of about 10 times Greece’s gross domestic product last year.

How much longer must Chinese stocks continue dropping at this steep pace before the economic shock fears shift away from Greece?

Which economic indicator means more to emerging nation resources and transport infrastructure plans?  Hands down, it would probably be the China drop.

Will Chinese equities recover? Will China’s government step in with a recovery program?

If a bubble burst, how will the global economies react to a China crisis versus all of the attention on Greece?

What is your opinion? Jim

Botswana – South Africa heavy-haul rail project almost ready | reports IRJ

This railway news report is focused on the expected physical construction of new railway. That is the SUPPLY side story.

The rest of the technical story will be found in the depth of the awaited economic feasibility study.

Is the shifting global market DEMAND going forward going to require the added transport supply? Reports from Independant market analysts like Goldman Sachs suggest a much lower market demand for coal.

Can this new Botswana project compete in a slowing growth market and still pay off the railway future debt?

On the supply side, the report says: The new railway line would ultimately be part of a new 560km heavy-haul railway linking Botswana and South Africa’s Waterberg coalfield with Lothair, near Ermelo, where it would meet the planned 146km Swazilink line. This would create a new route via Swaziland for coal traffic and general freight to both Richard’s Bay and Maputo in Mozambique.

The expected market demand is for about 100 million annual coal tons?

Is that a realistic market forecast based on current economic due diligence? Let’s see what the promised feasibility report says when it is released.

Delayed Swazi Rail project — discussion held in Africa

Part of the rest of story not covered in the speeches.

Requires a bit more due diligence to attract private investor real interest.

The basic news report found here:     From a 19/06/2015 report by Nomthandazo Nkambule

SO far, Swaziland has injected only E100 to E150 million in the multibillion proposed rail link spearheaded by Swaziland Railway and Transnet Freight Rail (TFR).

Speaking in an interview after the opening session of the first Southern African Railways Association (SARA) 2015 board meeting, Swaziland Railway CEO Stephenson Ngubane said this amount, amongst other things included environmental impact assessment.

The proposed line that would start from Lothair in South Africa and run to Sidvokodvo. Ngubane said the project has seen a pre-feasibility and a feasibility study so far. No solid funding yet. They are still looking for calculated project financials that might demonstrate ability to pay expenses and capital debt from projected freight revenues.

The Minister of Public Works and Transport Lindiwe Dlamini also spoke. Dlamini concludes that “Railways are the engines of economic growth, they enabled industrialisation in the past and they are even more relevant today.”

However, there is a logical mistake in that assumption. The mistake is that most industrialization railways were built to compete against horse and wagon and waterways. Swazi railways competes against trucks. That is a huge difference! Competition matters.

To beat the truck, the proposed new railway will have to employee big train technology. Will it?

Review of South Africa’s electricity fall from prominence to the current 2015 shortage of power

Interesting history from African investigative reporters

Transnet Rail depends upon a lot of electricity to power its South African trains. Maybe a good tactic in the old days. But faced with massive power shortages, maybe not a good Plan A anymore.  Plan B would use more diesel-electric high efficiency low pollution locomotives.  Will it come to that?


Founded in 1923, the South African monopoly utility was known as the Electricity Supply Commission before changing its name to Eskom in 1987. It built its first hydropower station in 1925 and commissioned its first two coal-fired plants two years later.

Dozens more facilities followed over the next six decades, turning Eskom into the world’s fourth-largest power utility.

Expansion peaked in the 1970s and early 1980s when about 20,000 megawatts of power, or almost half of Eskom’s current 2015 capacity, was installed.

Here is a summary of the history of its rise and then fall found in:      Primary writer is

Eskom’s expansion was curtailed in 1985, as sanctions were instituted against the apartheid regime, foreign loans dried up and the economy stagnated, along with electricity demand.

By the time the new National Congress took the government reigns in 1994, the utility’s reserve margin, or the amount by which generating capacity exceeds peak demand, was more than double the international norm of 15 percent. That looked good. Very good.


The emerging politics of state energy focused then on connecting the more than 40 percent of households and tens of thousands of schools and clinics in black areas to the electricity grid. The broadening of access to power coupled with resurgent growth as the economy opened up and began to consume Eskom’s excess capacity.

Alarm Bells Ignored?

“In the 1980s and early 1990s, Eskom had a huge degree of autonomy,” says Anton Eberhard, a professor at the University of Cape Town’s Graduate School of Business,. “That gradually got eroded. There was a time when the government stopped Eskom from building new power stations.”

The first alarm bells were sounded publicly in 1998, when the Department of Minerals and Energy released a policy paper warning that the country could run short of energy by 2007 and a decision on expansion would be needed by the end of t1999.. It advocated allowing private investment in the industry.

“With no imminent crisis in sight, the government took no immediate action” writes the BizNews author..

In 2001, the utility was named company of the year at the Financial Times Global Energy Awards in New York. All of its 78 production units were considered to be in good working condition.

Low Prices – low investment and maintenance

Potential investors in the power industry were deterred by some of the world’s lowest electricity prices and the bankruptcy of Enron Corp. in the U.S. In 2003 South Africa placed its privatization plans on hold.

“Eskom looked like a stable company” providing cheap electricity as the timeline headed towards 2004.

In late 2004, the government awakened to the looming energy crunch as economic growth and power demand surged, and Eskom announced it would spend 50 billion rand ($4.1 billion) on expansion over five years. In 2005, the five-year investment budget was more than doubled to 102.8 billion rand.

Nationwide Blackouts

The first power cuts struck the Western Cape province in late 2005, when a generator at the nation’s sole nuclear plant near Cape Town was damaged by a loose bolt. The coastal city and Johannesburg experienced further blackouts in 2006.

In May 2007, Eskom approved its biggest five-year investment program yet — the construction of the Medupi and Kusile coal-fired plants and 11 other generation projects, worth 203.6 billion rand. The targeted completion date was December 2015. S

South Africa’s then president apologized to the nation for poor planning say news reports. And by October 2007, countrywide rolling blackouts began.

The crisis intensified and a national electricity emergency was declared in January 2008 as the grid neared collapse, shutting most mines and factories for five days.

“We underestimated the scale of demand,” Alec Erwin, who served as South Africa’s public enterprises minister from 2004 to 2008, said in a May 22 interview at his Cape Town home. “Our planning was two or three years behind.”

Maintenance Deficit as the government prepared for the 2010 soccer World Cup

Blackouts were suspended in February 2008 as Eskom brought more of its idled plants’ units back into service and delayed maintenance to comply with a government instruction to ensure power supply wasn’t disrupted in the run-up to the staging of the 2010 soccer World Cup.

Eskom’s CEO resigned in 2009.

2014 and the OUTAGE RETURNS

The outage reprieve lasted until last year, when a lack of upkeep took its toll on Eskom’s plants.

In 2015, just 49 of its 121 generating units were in good working order, 32 were in poor condition and the balance were somewhere in between. Kendal, Eskom’s biggest facility at 4,166 megawatts, has six units.

Regular breakdowns ensued. Load-shedding, as scheduled blackouts are known in South Africa, has taken place on average every third day this year.

Rating Cuts

Moody’s Investors Service cut its rating for Eskom to non- investment grade, or junk, on Nov. 7 last year.

Standard & Poor’s followed suit in March 2015.

With the Medupi and Kusile plants running four years behind schedule, Eskom has limited scope to boost output and the new CEO Molefe is focusing on optimizing output from existing plants.

The government, admits that it expects power shortages to persist for two to three years.

The state monopoly currently supplies about 95 percent of South Africa’s power.

On a few days this fall, power available for its customers was well below the 60% market demand.  Industries that depend upon power to employ workers and generate GDP growth are suffering.  Once a leading BRIC high GDP annual growth nation, South Africa’s GDP this year may grow by less than a 2% to 2.5% range according to some sources.

Will the trains still receive power on a priority basis as a fellow state monopoly?  Should they?

Many leading private business companies have already turned to independent power sources because their business can no longer depend on the Eskom network. How will Transnet rail respond to the national energy crisis?


Technically wrong images often tease readers of marketing publications

BEAUTIFUL PICTURES send the wrong message as to what will be delivered.  The writers could change that and send a really powerful “this is possible message” if they focused on the engineering specifications.

Better news reporting can make a difference.  I urge them to improve on an otherwise good publication.

The April 2015 issue of CBTL-WATCH AFRICA is a very well laid out and professionally scoped marketing tool for the ocean carrier. It presents colorful to look at and generally well written subject themes for the various geographic sections of its Africa maritime business.

The authors put the best face forward in describing the announced railway modernization projects in this one April issue. The photo cover of the marketing document is beautiful.

Unfortunately, almost none of the modern railway operation pictured in that cover — or later in a page dedicated to Zambia –DRC modernized service — will occur under the current African rail plans.

A due diligence investigative report would quickly note that the image of the massive and highly efficient doublestacked container trains in the photos CANNOT OPERATE on the currently proposed rail lines in the story. In fact, from an engineering and economics technical view, NOT A SINGLE AFRICAN PROPOSED FREIGHT RAILWAY WILL BE ABLE TO OFFER DOUBLESTACK CONTAINER FREIGHT SERVICE using their current proposed engineering guidelines.


Because the tracks and infrastructure bridges of these new railways WITH DOUBLESTACK CAPABILITIES would have to support 1) 33 to 35 metric ton axle loads, 2) trains lengths of about 2,500 to 3,400 meters, and 3) vertical clearances above the top of the rail head in the 6.1 to 6.2 meter range (if a diesel electric locomotive operation) and in the range of 6.8+meters if an electrified line.

Neither the reporters on these stories or the ministers doing the technical planning are focused on these fundamental yet missing design standards.

The result is sort of like announcing a new international airport plan, but the runways and terminal ramps will not accommodate modern B-777 or A380 aircraft. In aviation, that would get you fired.

I am hoping that a future issue of this otherwise great news magazine will correct these mistakes. Please, at least do not tease the audience with a picture image that technically will not happen. Unless someone changes the engineering design.

If the authors can use this technical rail intelligence in future issues, perhaps they can influence modernization changes to the plans. Such engineering change would truly benefit their African customers. Because doublestack trains are about 35% to 45% more efficient than the current African rail plans will allow.

Commercial rail freight service NOT possible with almost all of current African rail plans

Commercial rail freight service NOT possible with almost all of current African rail plans

TRUCK KILLER RAIL TECHNOLOGY conintues to elude Eruope-Asia planners - Jim Blaze

Suez Canal — Quick plan execution will double its capacity in about one third of the expected project timeline

Leadership and focus can make a difference.  This is a good technical news story out of Egypt.  The project was originally expected to take 3 years and be ready by 2017.  Instead, it will be essentially completed in just one years time and dedicated in August this year.

The New Suez Canal (actually an expansion project) is more than 80% complete according to multiple sources. The project is intended to increase the capacity of the channel from the current 49 ships a day to 97 ships a day.  The market target of almost 100 daily ships (half in each direction) will be likely reached by year 2023

The result will be a POSSIBLE 1 DAY SHORTER journey on a 21 to 24 day containership passage between Asia & Northern Europe

Waiting time for entering the canal will be reduced to 3 hours from the current 8 to 11 hours. The actual canal transit times could drop from 18 hours to 11 hours.


The investment could increase canal revenue from the $5.3-billion generated from the payment of tolls by 16,744 vessels in the 2013/14 financial year to $13.2-billion by year 2023.

The Suez Canal route competes with railways trying to offer price competitive and time competitive blends of container transport between Asia and Europe.  The water route via Suez has ~ a 99% share. Now the Suez sailing times will improve.  The maritime route has a huge price advantage in terms of the price per container moved. versus the railway prices.Suex Canal Asia - Europe route map Sent from my iPad