South Africa will shortly purchase two salvage ships worth R800 million and is mulling plans to rebuild its merchant navy.
That emerged from a presentation by SA Maritime Safety Authority (Samsa) CEO Tsietsi Mokhele at last week`s 3rd Sea Power for Africa Symposium in Cape Town.
“”We`ve just completed the feasibility study and with the Department of Transport we will be buying two salvage vessels,” Mokhele said in a presentation on his agency`s activities.
Mokhele said indications are the vessels will cost between R360- and R400 million each at the current exchange rate.
“We are looking at buying two, one for the east coast, one for the west coast so we can respond to all incidents off our coast.”
He did not further elaborate on the requirement. At present, salvage work is largely in private hands, with Dutch-owned Smit Amandla Marine being a prominent name in the business.
A 300 ship fleet
The Samsa chief also lamented that the number of SA-registered merchant ships has fallen to just one – the SA Oranje – and it is on the verge of decommissioning.
He says at its heyday, in the early 1990s, the SA merchant marine had about 120 ships on register: about 60 Safmarine vessels and a similar number of Unicorn-line vessels. While successors to both still operate in SA waters, their ships now carry flags of convenience.
Mokhele says the problem with this is that SA – and Africa – can never become maritime powers “so long as on the commercial side we don`t own commercial vessels.”
Speaking to defenceWeb on the side of the conference, he said Samsa initiated a programme called “Project 300” last October to argue for a 300 ship merchant fleet as a baseline figure.
This would be done, in part, by rewriting legislation to draw ships back onto the SA register. But it would also involve reviving the shipbuilding industry and constructing ships.
“Project 300” consultations have included ship owners such as Grindrod, who are currently expanding their fleet to about 60; ship operators and the departments of Transport and Trade & Industry. “Together with DTI and DoT we have initiated a maritime cluster forum combining a number of departments and agencies to find a way forward to best position this country as a maritime centre in the global economy,” Makhele adds.
“To this extent a maritime transport policy has been completed. A memorandum was completed two weeks ago (in late February) that goes to Parliament … we are hoping the minister before he leaves office will sign off the maritime transport policy … and the Maritime Security Act and that between the two instruments we should be in a position to see how to rearrange our institutions and our capabilities in making sure we can project SA as a seapower and thereby contribute to the projection of Africa as a new centre on the merchant side.”
Speaking of the initial October meeting, Mokhele said his agency has since then “done additional work. We want another round table before June” to determine if 300 is a suitable base number.
“Three hundred is not an overambitious target. Safmarine by 1990 had 60 ships. Grindrod is ramping up to between 54 and 64.”
He says the fleet should include medium-sized fuel and chemical tankers as well as multipurpose cargo ships, “capable of carrying bulk cargo one way and containers the other”.
Business could be secured by introducing a cabotage policy similar to that in the European Union which restricts the carrying of cargo between EU ports to EU-flagged ships.
Legislative changes to encourage ships to carry the SA flag include migrating from taxing profits to taxing tonnage: “Paying a nominal tax will be a big incentive for ship owners,” he says.
Amendments to the Ship Registration Act will also be necessary and are expected in the last quarter of the calendar year.
Building ships will create a sustainable maritime building industry, he continues. But it will need some government underwriting. “It needs a guarantee, like 2010 [the Soccer World Cup] If government does not commit … it means you can`t build the needed infrastructure, you can`t make the investments.”
He is hopeful the state-owned Industrial Development Corporation and the Development Bank of Southern Africa would play a lead role in this endeavour. “The IDC held shares in Safmarine. They used government money to set up Safmarine so this is not the first time this is done.”
“We`re also speaking to the DBSA about creating specific instruments for ship financing. It`s a new sector; we have no instruments to measure opportunity, this or that. I know DBSA is very interested in investing in the shipping business.”
“Something is wrong”
The Samsa head adds that of the 240 000 seafarers visiting SA ports every year just 2000 are from SA. “There`s something wrong with that figure. The biggest constraint for is not academic institutions, they`d love to train more, but after training you have to have sea time.
“We are finding it more and more difficult to finds berths. We can`t put them anywhere and have to send them back home. Unless the state becomes involved or we attract ships to our register, we can`t place seafarers.
“The good thing about flagging is you can make agreements on where they repair, pick up supplies and who they use aboard, they give you minimum guarantees. This is international practice, but unless you have your own merchant marine you cannot dictate this. You are at the mercy of others.”
“Three hundred ships make economic sense… says Mokhele; it would address skills development and unemployment, create a sustainable maritime industry and keep African money in Africa.
SA Navy chief Vice Admiral Johannes Mudimu and his Flag Officer Fleet, Rear Admiral Robert “Rusty” Higgs both supported the proposal.