TRANSNET, the state-owned freight and ports company, will go to the international debt market before the end of March 2013 to raise capital for its R300bn capital expenditure programme, CEO Brian Molefe said on Thursday.

A minimum "benchmark" issue of $500m would need to be issued to ensure the liquidity and tradability of the bonds, Mr Molefe said, adding that the upper limit of the issue would be $1,5bn.

He declined to say when the issue would be made, but added that Transnet was watching the debt markets and would make its decision "opportunistically" to secure the cheapest rates.

The rail and ports company is to invest R300bn in expanding its capacity under a seven-year programme dubbed the Market Demand Strategy (MDS).

The investment schedule will triple the size of Transnet and raise revenue 152% to R128bn through increased general freight and bulk commodity volumes.

More than two-thirds of the MDS budget will be spent on rail and rail-related infrastructure as part of the state's efforts to catch up on infrastructure backlogs that have limited South Africa's ability to export commodities such as coal and iron ore at a time when prices have soared on demand from China and India.

Mr Molefe also said on Thursday that Transnet would manufacture its own trains and locomotives.

"Transnet will be equipped with the knowledge and skills to be an equipment manufacturer," he said. "We will build our own locomotives and trains."

The company had ordered 143 locomotives from General Electric's local subsidiary, of which the first 10 were manufactured in the US. "During the manufacture, we sent our people to learn and study how the locomotives are put together," Mr Molefe said.

A local manufacturing plant has been set up and Transnet has begun ordering parts for local assembly. Some parts are already manufactured locally, such as wheels.

With Sapa

smithn@bdfm.co.za