Photo: Leon Nicholas, Independent Media
Photo: Leon Nicholas, Independent Media

Transnet fights for black coal miners

By Time of article published Feb 11, 2014

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Johannesburg - Transnet, South Africa’s ports and rail operator, said it’s battling mining companies for influence over coal export port access as their dominance shuts out small black-owned producers.

The state-owned company, which is based in Johannesburg, is considering the construction of its own export facility on South Africa’s east coast near the privately-owned Richards Bay Coal Terminal, the biggest standalone coal facility in the world, to create extra capacity for black-owned exporters.

RBCT’s biggest shareholders, who include Glencore Xstrata and BHP Billiton, instead want to expand the terminal, which would maintain their control of the trade.

Transnet, which transports coal to the facility from mines in Mpumalanga province and the Waterberg region in northern South Africa, says the control by the shareholders of RBCT limits access for small, black-owned producers.

South Africa is pushing companies to increase black participation in the economy to make up for apartheid and is also trying to encourage the development of new coal mines to ensure supplies.

The shareholders “want to make sure that they maintain control of the facility,” Transnet chief executive Brian Molefe, 47, said in an interview at Bloomberg News’ Johannesburg office last week.

“If we build our own terminal, we would get control. Initially, it would be 10 to 15 million tons” of shipping capacity a year.

Coal is the largest of South Africa’s mining industries with sales of 96 billion rand ($8.6 billion) in 2012, according to the Chamber of Mines, an industry body, compared with 77 billion rand for gold.

About 186 million metric tons of coal were sold domestically that year, mostly to state-owned utility Eskom, while 76 million tons were exported through RBCT and other ports.

Almost all of South Africa’s export coal is moved to ports by Transnet’s trains.

Record Shipping

RBCT shipped a record 70.2 million tons in 2013 and is targeting exports of more than 73 million tons in 2014, chief executive Nosipho Siwisa-Damasane said January 22.

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

While RBCT has blamed Transnet’s rail services for it operating below capacity Molefe says the mines don’t 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.”

Block Access

The Transnet CEO clashed with BHP last year when the Melbourne, Australia-based mining company declined to give up an additional 1 million tons of capacity to black-owned companies, according to Molefe.

BHP said in October it doesn’t block access and that its own expansion in South Africa is held back by a lack of port capacity.

Glencore Xstrata, based in Baar, Switzerland, is the biggest shareholder in 38 year-old RBCT with a stake of about 32 percent, according to the company.

BHP has a 21 percent stake, spokeswoman Lulu Letlape said by e-mail yesterday.

Spokesmen for Glencore and BHP declined to comment, saying it was a matter for RBCT.

The terminal’s management didn’t immediately 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 is in talks with RBCT on the expansion of the existing facility it has reservations, Molefe said.

Unreliable Power

Transnet could ferry as much as 90 million tons of coal to RBCT per year within 18 months, according to its chief executive, as it adds more trains including the 200-wagon Shongololo, named after a type of millipede.

RBCT may not be able to handle the extra volumes, according to Molefe.

“I have seen situations at RBCT that were chaos” with 68 million tons, he said.

RBCT loaded 658 ships in 2013, compared with 645 vessels a year earlier.

The number of trains ferrying the fuel to the facility increased 1.2 percent to 8,874 during the same period.

Exports to Asia accounted for 75 percent of total volumes shipped, data from the facility shows.

Transnet also faces the challenge of limited power supply from state-owned Eskom.

The utility generates about 95 percent of South Africa’s electricity and supplies the power that Transnet needs to run its trains.

“If we increase our capacity on the coal line Eskom may not cope,” Molefe said.

Additional Capacity

While Transnet has raised doubt over Eskom’s ability to supply sufficient power, the utility doesn’t have to expand beyond its existing plans, the Johannesburg-based company said in an e-mailed response to questions yesterday.

Eskom is in the process of installing a 88 KiloVolt power line in order to strengthen the network on the coal line between mines and RBCT and will have additional power from two new power plants known as Medupi and Kusile, it said.

“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. - Bloomberg News

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