State-owned freight logistics group Transnet is working on two major expansion projects at the Port of Richards Bay, in KwaZulu-Natal, which could together result in investments of more than R30-billion between 2015 and 2020, including the development of a possible new open-access coal terminal.

Programme director for the projects Sudesh Maharaj says a conceptual study for the coal terminal has been completed as part of a government-backed plan to open up export capacity for emerging black coal miners.

It is currently envisaged that the facility could be developed in stages, possibly by a private terminal operator, starting at 14-million tons a year and potentially rising to 32-million tons over time.

The entire project has been tentatively priced at R15-billion, with half of that likely to be for the account of Transnet National Ports Authority (TNPA), which is the landlord and infrastructure provider. The balance would need to be funded by the terminal operator.

TNPA could issue a request for expressions of interest during the course of 2013 in line with the competitive process stipulated for new terminals in South Africa’s ports legislation.

However, Transnet Port Terminals, which operates the bulk of the country’s port terminals currently, is unlikely to be precluded from bidding.

Currently, most of South Africa's coal exports are channelled through the privately owned Richards Bay Coal Terminal (RBCT), where an exporter’s entitlement is determined by the coal owner’s shareholding in the terminal.

RBCT has a theoretical yearly nameplate capacity of 91-million tons, but it operates well below that level owing to constraints on the rail channel from the Mpumalanga coalfields to the export facility.

The new terminal is being proposed as an open-access facility. But Maharaj has acknowledged that Transnet’s studies have proceeded on the basis of a mandate received from leadership of the State-owned company rather than any analysis of whether there is commercial demand for the terminal.

Much detailed engineering and design work is also still required and could proceed as from April should the project pass a so-called “gateway review”, which is scheduled for late March.

In addition, it is likely that the TNPA will need to purchase additional land, as the current preferred site is on a site currently owned by Foskor. However, Transnet is also closely monitoring developments at BHP Billiton’s struggling Bayside aluminium smelter, as the site occupied by the smelter could be preferable to the Foskor land should it become available.

The terminal, together with Transnet's general freight port expansion plan, forms part of a portfolio of strategic projects being overseen by the Presidential Infrastructure Coordinating Commission.

Known as the Eastern Catchment Integrated Corridor Strategy, the portfolio includes various other initiatives, such a plan to open up the Waterberg coal resources, in Limpopo, and another proposal to liberate capacity on the existing Ermelo-Richards Bay coal corridor by diverting general freight currently moving on the line through Swaziland.

GENERAL FREIGHT

Initial studies have also been completed for a major expansion of the port's general freight capacity, which has already been earmarked for development under the group's R300-billion, seven-year market demand strategy.

The initiative, which is also provisionally expected to cost R15-billion, is designed to begin the process of raising the port’s capacity to handle bulk and break bulk commodities from 23-million tons to 59-million tons by 2040.

Various port infrastructure projects, as well as terminal expansions and reconfigurations are currently envisaged. In addition, Transnet is hoping to introduce new near-port rail infrastructure, including new loops and tipplers.

The aim is to position Richards Bay as a premier bulk commodity gateway for resources such as chrome, ferrochrome, fertilisers, magnetite, coal and discard coal, forest products and liquid bulk.

But the capital programme, on which a final investment decision could be made by mid-year, could also raise the port's container capacity to 100 000 twenty-foot equivalent units a year in an effort to make the harbour attractive to industrial investors.

Maharaj reports that Transnet has already initiated a stakeholder engagement process and a full environmental-impact assessment will be undertaken as the project enters the feasibility-study stage.

Should the initiates receive board sanction and receive the necessary environmental approvals, construction could begin by mid-2015.