Johannesburg, South Africa — MININGREVIEW.COM — 16 January 2012 – South African state-owned freight and logistics group Transnet, SwaziRail and South Africa’s Public Enterprises Ministry have unveiled the much-vaunted 146km Lothair rail project “’ the first new rail project in South Africa since 1985 “’ which is expected to boost coal deliveries to Richards Bay to as much as 100Mtpa.

Speaking at the official opening of the project, Transnet Group CEO Brian Molefe estimated the project cost at between R16 and R17billion.

The project was first floated last year, and involves the building of 46km of new rail through Swaziland that will accommodate general freight currently railed on the so-called ‘coal link’ which connects the Mpumalanga province coal fields with Richards Bay through the heavily congested Ermelo hub.

Molefe said that moving general freight to the Lothair link, set to be completed in 2016, would take coal capacity on the Richards Bay rail to “beyond 91Mtpa and possibly to 100Mtpa.”

“This project is vitally important for a number of reasons for us,” he explained. “When complete, this new line will create additional capacity of 15Mt, which will predominantly be general freight volumes from the existing coal export line.”

“Given the configuration of coal trains – that is 200 wagons – we expect that significant capacity will be made available for export coal."

He added there would be concurrent work on a rail line out of the Waterberg coal region in the Limpopo Province which Transnet has said in the past could have a total capacity of 80Mtpa. “At the same time we hope to finish the Waterberg upgrade,” said Molefe.

Miningmx reports, however, that funding for the Lothair project has not been secured, and does not seem to have been allocated in the R110 billion, five-year capital expenditure programme set down by Transnet freight division, Transnet Freight Rail (TFR).

But Molefe was confident finance of the project would be settled relatively quickly. “The project will be cash flow positive from completion,” he said, adding that there was already existing traffic that would be repositioned, while it would create additional capacity in coal deliveries. “The banks are coming to us rather than the other way round,” he pointed out.

In terms of project details, there would also be upgrades to existing lines including the 108km line from Davel in South Africa to Lothair costing R2.2 billion; the R7.3 billion new line from Lothair to Sidvokodvo in Swaziland; and a further R4.6 billion upgrade of existing line to Richards Bay.

Another R1.8 billion would be expended upgrading a line from Swaziland to Maputo in Mozambique. South Africa would shoulder about R12 billion of the investment with SwaziRail and its government supporting the balance.

“We are determined to drive this initiative hard,” said public enterprises minister Malusi Gigaba. “That’s because it will also help unlock the Waterberg coal line,” he added.

The Waterberg holds the biggest untapped coal source in South Africa, with various junior miners involved in development projects in the region.

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