HomeEnergy MineralsR15.4 billion expansion for Richards Bay coal line

R15.4 billion expansion for Richards Bay coal line

A TFR coal train
on its way from
Mpumalanga to
Richards Bay
Johannesburg, South Africa — MININGREVIEW.COM — 28 October 2010 – Transnet Freight Rail (TFR), a division of Transnet Limited “’ a solely South African government-owned public company that operates and controls the country’s overall transport infrastructure “’ has now committed to spending R15.4 billion on expanding coal export capacity on the Richards Bay railway line to 81Mtpa by 2014.

Previously, TFR had only been officially prepared to commit to spending R9 billion on taking capacity to 75Mtpa, but had indicated that it was in discussions with the coal exporters on pushing this to 81Mtpa.

Miningmx reports that the expansion is subject to signing long-term take-or-pay contracts with the coal exporters, and says these are still being negotiated, but Transnet is optimistic the contracts will happen. TFR and the coal exporters have been haggling over rail tariffs on the Richards Bay line since 2005, when the last long-term contract expired.

Wells told Miningmx here that there were previously so many imponderables that neither side felt it could sign a long-term contract, but now future moves to a capacity of 81Mtpa have basically been sorted out.

“The new draft contracts have been drawn up and are being circulated. Discussions are under way and the governance processes at the mining groups have begun. I would hope everything will be largely in place by the end of January,” Wells predicted.

He indicated that serious efforts were also being made to resolve the other major debate between the coal exporters and Transnet, which was the further expansion of the line to match the 91Mtpa ship loading capacity of the Richards Bay Coal Terminal (RBCT).

The main issue here is that the cost to Transnet of getting to 81Mtpa is relatively low, compared with the huge additional capital expenditure required to move beyond that level. Wells said Transnet and the coal exporters had now agreed to a new independent study by consultants Oliver Wyman to assess likely demand for capacity on the line above 81mt.

“The focus of the study is to look at the most efficient way to move coal from both Mpumalanga and the Waterberg to either Richards Bay or Maputo in the short, medium and long term. The study should be completed by the first quarter of next year,” he added.