Transnet considers setting up rival coal terminal in Richards Bay

Durban 21-01-2014 Richard's Bay Coal Terminal. This is where the the 200 carrage trains are off loaded. Picture by: Sibonelo Ngcobo

Durban 21-01-2014 Richard's Bay Coal Terminal. This is where the the 200 carrage trains are off loaded. Picture by: Sibonelo Ngcobo

Published Feb 12, 2014

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Bloomberg

Ports and rail operator Transnet says it is battling mining companies for influence over access to their coal export facility as their dominance shuts out small black-owned producers.

Transnet is considering the construction of its own export facility near the privately owned Richards Bay coal terminal, the biggest stand-alone coal facility in the world, to create extra capacity for black-owned exporters.

Instead, the biggest shareholders in terminal operator RBCT, which include Glencore Xstrata and BHP Billiton, want to expand the terminal, which would maintain their control of the trade.

Transnet, which transports coal to the facility from mines in Mpumalanga and the Waterberg in Limpopo, says control by RBCT shareholders limits access for small producers.

The shareholders “want to make sure that they maintain control of the facility”, Transnet chief executive Brian Molefe said last week. “If we build our own terminal, we would get control.”

Initial shipping capacity would be between 10 million and 15 million tons a year.

Coal is the largest of South Africa’s mining industries, with sales of R96 billion in 2012, according to the Chamber of Mines, compared with R77bn for gold.

About 186 million tons of coal were sold domestically that year, mostly to Eskom, while 76 million tons were exported through Richards Bay and other ports. Almost all of South Africa’s export coal is moved to ports by Transnet’s trains.

Last year the Richards Bay coal terminal shipped a record 70.2 million tons and was targeting exports of more than 73 million tons this year, RBCT chief executive Nosipho Siwisa-Damasane said on January 22.

Capacity

That compares with a design capacity of 91 million tons, according to RBCT’s website.

While RBCT has blamed Transnet’s rail services for its below-capacity operations, Molefe said the mines did not always produce enough coal and the facility struggled to cope when the train frequency was increased.

“This capacity is mythical,” Molefe said. “Nobody can say with absolute certainty that they have 91 million tons of capacity. They allocated only 4 million tons for about 21 small miners, who are saying that’s not enough.”

The Transnet chief executive clashed with BHP Billiton last year when the mining company declined to give up an additional 1 million tons of capacity to black-owned companies, according to Molefe. BHP Billiton said it did not block access and that its own expansion in South Africa was held back by a lack of port capacity.

Glencore Xstrata is the biggest shareholder in 38-year-old RBCT with a stake of about 32 percent, according to the company. BHP Billiton had a 21 percent stake, spokeswoman Lulu Letlape said on Monday.

Spokesmen for Glencore and BHP Billiton declined to comment, saying it was a matter for RBCT. The terminal’s management did not respond to seven phone calls, three text messages and three e-mails seeking comment.

Other shareholders in RBCT include Anglo American, Total and Sasol.

While Transnet was in talks with RBCT on the expansion of the existing facility, it had reservations, Molefe said.

Within 18 months, Transnet could ferry as much as 90 million tons of coal a year to Richards Bay as it added more trains, including the 200-carriage Shongololo, Molefe said.

It was also expanding a dedicated line to transport manganese and was building a railway through Swaziland.

The terminal might not be able to handle the extra volumes from the coal line, Molefe said. “I have seen situations at RBCT that were chaos” with 68 million tons, he said.

The terminal loaded 658 ships last year, against 645 vessels a year earlier. The number of trains ferrying coal to the facility increased 1.2 percent to 8 874 during the same period.

Transnet also has power supply limits. Eskom supplies the power to run Transnet’s trains. “If we increase our capacity on the coal line, Eskom may not cope,” Molefe said.

While Transnet had raised doubt over Eskom’s ability to supply sufficient power, the utility did not have to expand beyond its existing plans, Eskom said on Monday.

Power additions

Eskom said it was installing an 88 kilovolt power line to strengthen the network on the coal line to Richards Bay and would have additional power from the Medupi and Kusile power stations.

“Transnet has applied to upgrade the supply on the coal line in 2017, after the additional generation capacity from Medupi and Kusile is commissioned,” it said. “Eskom will therefore be in a position to make the additional demand” of about 100 megawatts available to Transnet.

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