In a surprise turn of events, Kenya’s High Court on Friday ordered a stop to any further development of the Lamu mega port north of Mombasa.
The court order places a halt to the project to allow local landowners to launch a lawsuit over compensation of their land.
The idea of developing a deep-water port in the vicinity of the town and small port of Lamu has been around for more than 40 years but was more recently resurrected in a wider project of providing logistical links with Kenya’s neighbouring countries.
Known as LAPSSET (Lamu Port South Sudan, Ethiopia Transport), the plans call for the mega port to be developed while simultaneously providing road, rail and oil pipeline connections with South Sudan, Ethiopia and even Uganda.
The concept took hold after the discovery of oil in South Sudan and has been further bolstered by successful oil and gas explorations in northern Kenya.
The case before the High Court will be heard on 8 December.
(BMC have been keenly watching the development of the East African Development Strategy in which BMC made recommendations on, amongst others, the development of additional port capacity in the region)

Acting in defiance of the Kenyan government, the City of Mombasa plans to go forward with a levy or container tax in order to fund road improvements.
The city’s attitude is that it is cargo traffic to and from the port, including mainly containers, that is causing the city’s roads to deteriorate.
The plan has not met with approval from other stakeholders. The Kenya Ports Authority (KPA), which is the port operator and landlord, opposes the tax that will introduce payments to clear imports and exports of US$20 per tonne.
In addition, each ship will have to pay $60 for an inspection, $60 per square metre for compulsory spraying against disease and $40 per container for verification.
The tax is opposed by the national government on the grounds that it will dramatically increase the cost of doing business through the port of Mombasa, and would have the effect of driving shipping lines and cargo owners to use Dar es Salaam as an alternative port.
Government has pointed out that Tanzania is going ahead with building a mega port at Bagamoyo, not far from Dar es Salaam.
City governor Ali Hassan dismisses these claims, saying that no-one will divert their cargo to Dar Es Salaam or Bagamoyo for the sake of $40. He said efficiency was what influenced people in where they shipped their cargo.
KPA chairman Danson Mungatana was sceptical of the proposal, saying he was waiting to see how the city intended implementing the tax. “The port is a national asset, and therefore any legislation by any other body, that contravenes a constitutional provision, becomes null and void.”

Statoil and co-venturer Exxon Mobil announced that the Giligiliani-1 exploration well has resulted in a new natural gas discovery offshore Tanzania. The discovery of an additional 1.2 trillion cubic feet (tcf*) of natural gas in place in the Giligiliani-1 well brings the total of in-place volumes up to approximately 21 tcf in block 2.The Giligiliani-1 discovery is located along the western side of block 2 at a 2,500-metre water depth. The new gas discovery was made in Upper Cretaceous sandstones. “This discovery has proven the gas play extends into the western part of block 2, which opens additional prospects. Our success rate in Tanzania has been high and opening up a new area will be key to continuing our successful multi-well programme,” said Nick Maden, senior vice president for Statoil’s exploration activities in the Western Hemisphere. The rig Discoverer Americas will now drill the Kungamanga prospect located in the central part of block 2. The Giligiliani-1 discovery is the venture’s seventh discovery in block 2. It is preceded by the five high-impact gas discoveries Zafarani-1, Lavani-1, Tangawizi-1, Mronge-1 and Piri-1, and a discovery in Lavani-2.Statoil operates the licence on block 2 on behalf of Tanzania Petroleum Development Corporation (TPDC) and has a 65% working interest. ExxonMobil Exploration and Production Tanzania Limited holds the remaining 35%. Statoil has been in Tanzania since 2007, when it was awarded the operatorship for block 2. Source : Statoil

BY GCAPTAIN (ON AUGUST 29, 2014

Classification society ClassNK and Nakashima Propeller Co. this week announced the world’s first installation of a carbon fiber reinforced plastic (CFRP) propeller on the main propulsion system of a merchant vessel.

The CFRP propeller, which was manufactured by Nakashima Propeller, was installed in May on the Taiko Maru, a domestic 499 GT chemical tanker owned by Sowa Kaiun YK at the Marugame-based Koa industry Co. in Japan. The propeller was manufactured with support from ClassNK, which granted approval for the design and manufacturing process, as well as provided research and funding support as part of the ClassNK Joint R&D for Industry Program.

Research and development on the use CFRP propellers was supported by the Nippon Foundation and the Japan Ship Machinery & Equipment Association (JSMEA) from 2007 to 2011, followed by a joint research project carried out in 2012 by Nakashima Propeller Co., Ltd, the University of Tokyo School of Engineering, Japan’s National Maritime Research Institute (NMRI), NYK Line, MTI Co., Ltd., Imabari Shipbuilding Co., Ltd, and ClassNK as part of ClassNK’s Joint R&D for Industry program.

The research found that CFRP exhibits the same, if not superior strength to the aluminum-bronze composite materials used in conventional propellers. Due to its ultra-light weight however, propeller shafts can be manufactured with smaller diameters, contributing to a significant reduction in weight and fuel costs.

The sturdy yet thin blades of the CFRP have been designed with an increased diameter similar to the wings of a Boeing 787 aircraft, ClassNK said in a statement. This should allow CFRP propellers to achieve even greater efficiency when employed for maritime use and the potential for further performance improvements continues to be explored via testing model tank testing.

The Taiko Maru had already previously installed CFRP propellers in its side thrusters in September 2012. Based on the successful performance, Sowa Kaiun YK made the decision to extend use of the CFRP propeller technology to its main propulsion system, making the vessel the first in the world to use a CFRP for its main propulsion system.

During sea trials the CFRP required 9% less horsepower to operate compared to conventional aluminum-bronze propellers, and expansion of their use on merchant vessels is expected to contribute to better fuel economy and greater efficiency in operations, according to ClassNk and Nakashima.

As part of the testing, ClassNK carried out rigorous fatigue testing and material testing to assess the basic mechanical properties of the propeller, as well as conducted static load testing on full-scale propeller blades to determine the adaptability of the propeller for marine-use prior to approving the CFRP propeller for use as part of the merchant vessel’s main propulsion system,

ClassNK also carefully evaluated the manufacturing process and quality control systems for the 2.12m diameter CFRP, and expert ClassNK surveyors further assessed mechanical properties and results of stress analysis tests for each component during the vessel’s construction, as well as verified the installation of the system during construction.

From the Southern Times Africa:
In 2009, Brazil’s Vale had sparked a mini coal rush with its acquisition of a concession in the arid, hot province of Tete, in Mozambique’s inland eastern spur; by 2011, Anglo-Australian Rio Tinto wanted a piece of the action. And they were prepared to pay for it, handing over US$3.7 billion to Riversdale Mining Ltd for their concession in the area. It was a lot of money for an untested deposit, but Rio Tinto was confident. They knew there was plenty of coal, and it was the exactly the kind of coal (coking coal) that Chinese industry wanted.

There was only one slight hitch …
… “The coal business is all about logistics – getting the stuff to the ports, getting it onto the ships,” said mining analyst, David Mackay. And logistics in Mozambique are a problem. Without a railway line connecting Tete Province to Beira, the country’s main port, how was anyone going to get the coal out of the country? Never mind, said Rio Tinto, we will just barge it down the Zambezi River instead. Problem solved.

Three years later, however, things have changed. The good times, they are not rolling any more. On a macro level, demand for coal is slowing as the financial crisis bites, with even China recording sluggish growth. The price of coal, meanwhile, has tumbled – it is now worth a third of what it was in 2011.

On a micro level, Mozambique’s coal deposits just are not what they were cracked up to be. For one thing, the quality of the coal was not as high as everyone had first thought. For another, the government denied Rio Tinto permission to send coal-laden barges down the Zambezi, on environmental grounds, so transporting it became a hideously expensive nightmare. It did not help either when old civil war tensions erupted into violence last year.

Suddenly, the company’s asset was worth a fraction of what they had bought it for. If you will excuse the metaphor, it is a bit like a child opening his stocking on Christmas morning, expecting an armful of presents – but instead finding only a lump of coal. And not great quality coal, at that.

This was not the only …
… ludicrously ill-conceived deal that Rio Tinto got itself involved in. In fact, this is small fry compared to the US$38.1 billion it paid for Canadian aluminium maker, Alcan. Last year, this was re-valued by the company at US$10 billion less – an admission which forced the resignation of CEO Tom Albanese.

Nonetheless, the US$3.7 billion paid to Riversdale is still a lot of money, and Rio Tinto has finally acknowledged that there is no chance of recouping even part of the investment.

On Tuesday, the company sold its Mozambican coal assets to India’s International Coal Ventures Private Limited, for the bargain basement price of US$50 million – effectively valuing the assets at less than 2 percent of what they paid originally. Ouch. Pending regulatory approval, it is a humiliating and outrageously costly exit.

It is also a setback for coal mining in Mozambique, although it is certainly not the end. Coal remains an important part of the government’s plan to kick-start development in the country, even if its contribution will be slower and less lucrative than originally thought. “A degree of sanity, erring on the side of conservatism, is returning to the market,” said Mackay.

He says that in general mining struggles with the Goldilocks Syndrome – it always seems to be boom or bust, things are never just right. But maybe Rio’s humiliating exit will be just the corrective that the industry needs in Mozambique.

“The coal is still there, but it’s not worth as much as people thought. But it’s still there, it will still be developed, and there still will be investment,” concluded Mackay. – The Southern Times Africa.

The Kenyan government says that it intends looking for a private company to operate berths 20 and 21 in Mombasa once the construction is completed in February 2016.

Transport cabinet secretary Michael Kamau said that it was required that the company being awarded the contract would have experience from operating berths or terminals with a capacity of at least 400,000 TEU. He acknowledged that this factor would probably rule out a local Kenyan company winning the tender but said that having the necessary expertise and experience was essential.

Nevertheless, the government expected the winning company to have a 51 percent stake in the company with the balance of 49 percent being owned by Kenyan interests.

The two-berth Sh23 billion will have a planned capacity of at least 550,000 TEU.

International bidding will be invited in a little over one month’s time, he said, while emphasising that there are no plans to privatise the entire port.

“All people who are working up to berth 19 will continue working as usual because this is additional capacity. So it is more people coming in, it is more employment, it is faster movement of cargo and of course fulfilling the conditionality of the loan,” he said.

Container traffic has increased by 11.5 percent over the past six months, reaching 463,807 TEU for the half year, compared with 415,958 TEU for the same period of 2013. The port has also been able to reduce its dwell time from an average of 5.8 days in 2013 to 3.5 days this year.

Overall volumes have increased by 8 percent to 11.9 million tons for the half-year, compared with 10.5mt for the same period in 2013.

The roll-out of Special Economic Zones (SEZs) is on track, says Trade and Industry Minister Rob Davies.
“Within the next 100 days, we will be passing all the regulations necessary to establish a SEZ board so that we can go ahead and establish Special Economic Zones (SEZs). We have already fast tracked a couple of them,” Davies said last week.
The minister was addressing the media following the department’s Budget Vote on Tuesday.
Earlier this year, President Jacob Zuma approved the Special Economic Zones Bill.
The bill, which supports a broader-based industrialisation growth path, also aims to support balanced regional industrial growth and the development of more competitive and productive regional economies.
“Simultaneously with processing the legislation, we embarked on a process, together with the provinces, of conducting feasibility studies on potential SEZs, some IDZs [Industrial Development Zones] and the other forms provided in the Act,” said Minister Davies in the Budget Vote.

Integrated shipping and logistics group Grindrod and black-owned investment firm Brimstone Investment Corporation have successfully concluded a black economic-empowerment (BEE) transaction, which has resulted in a Brimstone-led consortium acquiring an 8.4% interest in Grindrod for R1.6-billion.
Brimstone holds a 59% share in the consortium, while Calulo Investments holds 20%, Solethu Investments13%, Safika Holdings 5% and the Adopt-A-School Foundation 3%. Calulo, Adopt-A-School and Solethu previously held shares in Grindrod subsidiaries and had since restructured their shareholding through the consortium at listed company level.
Grindrod CEO Alan Olivier said on Wednesday that the investment, together with the R2.4-billion raised through the issue of 96-million new shares in an accelerated bookbuild earlier this year, would fund planned capitalinfrastructure projects.
“We’ve been in business with Calulo and Solethu for some time and value their contribution to our business. We are very pleased to have Brimstone as the leading shareholder in this consortium and look forward to their valuable input,” he commented.
Brimstone CEO Mustaq Brey added that the group continuously sought investment opportunities that would create long-term value for its shareholders.
“The BEE transaction allows us to establish infrastructure as a new focus area and is something we’ve been investigating for some time. With its diversified suite of well-placed quality assets, Grindrod represents a long-term investment in African infrastructure development, which is an attractive and growing asset class.
“Grindrod shares are currently tightly held and it’s difficult to acquire a substantial shareholding in the company. This deal enables us to acquire a meaningful stake on a leveraged basis and we look forward to contributing to the company’s ongoing success,” he said.
Edited by: Chanel de Bruyn

Crowley Maritime Corp. subsidiary TITAN Salvage and project partner Micoperi confirmed that the Costa Concordia – the Concordia-class cruise ship that wrecked off Giglio Island, Italy in January 2012 – is safely moored at the Port of Genoa Voltri, Italy, marking the completion of the largest maritime salvage jobs in history.
Towing the disabled ship from the Tuscan Archipelago to the Mediterranean seaport of Genoa was a remarkably delicate task that required a convoy of more than a dozen support vessels, including two tugboats with a combined 24,000 horsepower and 275 tons of bollard pull at the bow for the hull, and two additional auxiliary tugs positioned aft. TITAN Salvage’s Nick Sloane, senior salvage master, and Rich Habib, salvage director, were onboard the Costa to provide around-the-clock, hands-on monitoring of the vessel’s list, ballasting, and speed, among other vitals.
“Our team’s goal was to accomplish the project with safety, ingenuity and detail,” said Chris Peterson, TITAN Salvage vice president. “We truly believe that we have done just that. Over the past two years, every aspect of this project was handled with the utmost professionalism and an inordinate amount of calculation and planning.” TITAN Salvage will continue working in Italy over the next few months demobilizing equipment and personnel. As for the Costa, a Genoa consortium will soon begin dismantling the 114,000-ton vessel, stripping the ship for scrap metal.

The Ports Regulator of South Africa has issued a multi-year tariff methodology to govern the National Ports Authority’s (NPA’s) tariff setting process in an attempt to create more regulatory certainty.
The regulator said the tariff methodology, while retaining the fundamental elements of previous determinations, would be applicable to the 2015/16, 2016/17 and 2017/18 tariff years, as opposed to only one year, improving the level of transparency and consistency in the tariff setting process.
While a single methodology would be used for the entire period, the multi-year tariff application would have different calculations for each tariff year in the period, consisting of forecasts and calculations of each of the components of the required revenue approach, it explained.
“The guidelines within the regulatory manual for the tariff years 2015/16 to 2017/18 will assist the NPA in submitting an application that will reduce regulatory uncertainty by narrowing the difference between what is requested by the NPA and subsequently granted by the regulator,” the regulator said.
It added that it would, after assessing the NPA application and taking into account all public comments, publish a record of decision with a fixed tariff for the 2015/16 tariff year and indicative tariffs for the 2016/17 and 2017/18 tariff years.
“The regulator is of the view that this will create greater certainty from a planning and investment perspective, both for the NPA, as well as for portusers over the next three years.”
The regulator would, however, allow for the yearly review and adjustment of tariffs within the three-year period, as opposed to fixing the prices for the period, as this would protect users from possible large step changes in the tariff.
“In addition, unlike other regulated industries, like electricity or oil and gas pipelines, there are large variations in the users and usage of port infrastructure and services, and an annual review allows adjustments in prices to be more efficiently and appropriately allocated/distributed to users than an adjustment after three years,” the regulator explained.
Edited by: Chanel de Bruyn