Transnet and Lejadja in R10bn agreement on coal transportation

By Dineo Faku Time of article published Nov 22, 2019

Share this article:

JOHANNESBURG - Transnet and Ledjadja Coal, a sub- sidiary of Australian- and JSE-listed Resource Generation (Resgen), yesterday penned a ten-year R10 billion transportation agreement to move coal from Lephalale in Limpopo to the Richards Bay Terminal Grindrod in KwaZulu-Natal. 

Transnet said the take or pay agree- ment involves the transportation of 3.6 million tons of coal annually from Ledjadja’s Boikarabelo Mine in the Waterberg (district) to Richards Bay for export, mainly to India. Boikarabelo is expected to load its first coal to the port from June 2022. 

Transnet’s chief customer officer Mike Fanucchi said that the signing of the contract was a significant mile- stone, as it gave Ledjadja a sense of security on its business plan. 

“It gives the Ledjadja team the confidence to go to its shareholders and investors to say we have reached this significant milestone. We have a deal in place, and are now going to be able to deliver our first ton of coal in 2022. “It is an exciting milestone for us, because Ledjadja is an emerging busi- ness. It took them seven years to create a business for the Lephalale area,” said Fanucchi. 

Fanucchi said that the contract also enabled Transnet to fulfil its mandate of lowering the cost of doing business in South Africa. 

“This contract will stimulate the appetite of coal miners in and across the Botswana border,” he said. In 2017, Transnet entered into a similar ten-year coal export transpor- tation contract with Exxaro Resources from the Waterberg (district) to Rich- ards Bay Coal Terminal. The deal allowed Exxaro to trans- port a total of 7.8 million tons of export coal. 

Transnet has completed the 1.8km long passing loop at Matlabas and has commenced the second phase of the expansion, including the construction of a 2.8km loop at Thabazimbi, and the building of the new 5km loops at Bleskop and Norite. Resgen, which describes itself as a new generation emerging coal pro- ducer, owns 74 percent of the Boikara- belo mine. 

The difference is owned by Fairy Wing Trading, a black empower- ment company. Resgen chief executive Papi Molot- sane said that the project was expected to help rejuvenate the Lephalale econ- omy, through the creation of 3 000 jobs during construction and 700 full- time jobs once it is operational. 

Molotsane said the project was pos- sibly the most advanced in the Water- berg (district) and was fully funded. He said that the group had already spent R2bn on developing infrastruc- ture and had received R4.2bn credit approval from a syndicate of three lenders. Molotsane said that talks to estab- lish a 44km R750 million rail line between the mouth of the mine and Transnet’s main rail line were at an advanced stage. 

“Discussions around the railing are still ongoing and we will make an announcement to the market in due course,” said Molotsane. Molotsane also said that the sign- ing of the agreement, was one of the conditions precedent set by lenders and would facilitate the group reach- ing “financial close”. “Once we commence on construc- tion and we get contractors to come on board, we then will be opening up the Waterberg (district), and this is in support of the National Development Plan to unlock the (country’s) north- ern mineral belt, using Lephalale as a catalyst,” Molotsane said.


Share this article: