Coal producers push for efficient transport passage

[Steve Appleton]

From Business Day 25 August 2011. http://www.businessday.co.za/Articles/C ... ?id=150972

Plenty of port and rail hurdles.

Transnet plans to expand rail capacity for exports but questions coal companies' ability to increase production, writes Agnieszka Flak.

Coal producers in SA eager to export more coal to meet rising demand from India and China, but limited by infrastructure bottlenecks in rail and ports.
Published: 2011/08/18 07:39:13 AM

COAL producers in SA have been eager to export more coal to meet rising demand from India and China but have been limited by infrastructure bottlenecks.

Below is a breakdown of port and rail infrastructure hurdles and some of the expansion plans in southern Africa.

- State-owned logistics group Transnet operates SA’s entire rail network. The company transported 62.2 million tonnes of coal to the export terminal at Richards Bay in its last financial year, far short of an expanded capacity of 91 million tonnes at the port. The group has said it plans to raise capacity on the coal export line to 81 million tonnes by 2015, and it is studying the possibility of freeing up some 14 million tonnes of capacity on the coal line in two to three years by moving non-coal cargo to a new line via Swaziland.

- Coal producers have said they would be willing to pitch in to accelerate Transnet’s expansion and have been discussing possible deals for years. But Transnet CEO Brian Molefe in June dampened expectations that anything would happen soon, saying many such private-public deals had turned out to be "disasters". Mr Molefe said possible deals could include a partnership in which a private player would build and operate a line, or Transnet would give privately owned locomotives and wagons access to its rail lines or lease them. Transnet has repeatedly questioned companies’ ability to produce the amounts they have said they would like to export .

- Transnet is discussing the option of building a new line linking the Richards Bay terminal with the Waterberg coalfield, touted to become SA’s next major coal region, although the line is unlikely to materialise soon.

- Transkalahari Rail line. Construction of a railway line connecting Botswana’s Mmamabula coal field with the Namibian port of Walvis Bay, pegged at $10bn, is expected to start in late 2012 and take some five years. Industry said the line, to be built in a private-public partnership, should have capacity of around 50 million tonnes to be economically viable and robust. Namibia’s government has said that the rail line may be extended to the Zambian border to facilitate exports of Zambian minerals via Walvis Bay, including copper.

- Richards Bay Coal Terminal is the world’s single largest export coal terminal, with an expanded capacity of 91 million tonnes. It has said it could increase capacity to beyond 110 million tonnes once volumes on the rail lines have been improved.

- South Dunes Coal Terminal has an allocation of 6 million tonnes, half of which belongs to state-owned power utility Eskom. Eskom said in November it was seeking proposals from coal producers for the use of its 3 million tonne stake.

- Logistics group Grindrod said in June that an expansion of available coal capacity at its dry bulk terminal in Richards Bay to 3.2 million tonnes from 1.5 million tonnes should be completed within months. It said it would like to increase the terminal’s capacity by 10 million tonnes or more.

- Durban Bulk Connections. The company operates a 3.5 million tonne export terminal from Durban. Around a million of that capacity is dedicated to coal. The company had plans to increase that capacity to 5 million tons and to build a new 3 million tonne coal export operation at Richards Bay but has so far failed to secure permits to do so.

MOZAMBIQUE:

- Grindrod said it had recently expanded capacity at the Matola Terminal in Maputo, Mozambique, to between 6 million and 7 million tonnes, out of which 5 million tonnes will be for coal and 2 million tonnes for magnetite. The company is now finalising the feasibility study to potentially add 20 million tonnes to the terminal’s capacity by late 2014.

- Beira. Current coal infrastructure is limited to a capacity of 6 million tonnes on both the railway line and the Beira terminal. Riversdale’s allowance at Beira amounts to a third of that, with the remainder allocated to Brazil’s Vale, which is developing its large Moatize coal project. Studies are being conducted into expansion of the rail line and construction of a new terminal at Beira, which would have capacity of 18 million tonnes.

- Chinde Coal producers are also looking at building a 20 million tonne coal terminal at Chinde, north of Beira. The port’s construction is planned to coincide with the start-up of production at Riversdale’s larger Zambeze project, expected to begin producing from 2015.

- Nacala Mozambique’s Nacala Development Corridor plans to invest $200 million to upgrade its port at Nacala and raise capacity to 16 million tonnes of cargo in 2030 from 1.5 million tonnes. Brazil’s Vale has said it may use Nacala as an alternative to the Beira port.

NAMIBIA

- Walvis Bay. The Walvis Bay Corridor Group, a public-private partnership, plans to spend N$2 billion ($265 million) by 2014 to extend its container terminals to be able to handle larger volumes of commodities processed through the port. Other investments will entail infrastructure upgrades along the three trade corridors linking to South Africa, Angola and the copper belt in Zambia and the DRC.