Jul 10, 2012
Transnet expects to haul up to 75Mt of export coal in 2013Back
Johannesburg|SECURITY|Africa|CoAL|Eskom|Resources|Security|Transnet|Africa|Botswana|South Africa|Swaziland|USD|Security|Coal Mining Customers|Energy|Energy Mineral|Freight Logistics|Logistics|Mining|Power Generation|Power-generation|Security|Brian Molefe|Power|Rail|Security
© Reuse this
CE Brian Molefe said on Tuesday that the group would have breached the 70-million-ton level in 2011/12 had it not been for the fact that a number of trains had been cancelled by miners during the period. In the event, Transnet Freight Rail (TFR) moved 8.8% more export coal in the year to March 31, 2012, resulting in volumes rising to 67.7-million tons from 62.2-million tons in the prior year.
The performance consolidated a turnaround in the Ermelo-to-Richards Bay corridor, which began during the 2010/11 period. Prior to that, the line had repeatedly reported declining volumes, which slumped to 61.8-million in the 2009/10 financial year.
TFR CE Siyabonga Gama said it had not yet seen a fall-off in demand from coal mining customers during the current financial year, which would run until March 31, 2013, despite some price weakness.
Coal prices had been recovering recently and were trading at around $90/t. However, during the early parts of 2011, the price of South Africa thermal coal was trading at above $125/t before retreating to below $90/t in June.
Gama said TFR anticipated that it would rail 7.7-million tons during July, well above the tempo required for the corridor to meet it volumes target for the year as a whole. But he stressed that the line’s performance was never “linear”, as it was prone to seasonal factors.
Nevertheless, Molefe said that it was not “unthinkable” for the corridor to meet its budget for the year.
Molefe was also not overly concerned by the current discussion about declaring coal a “strategic mineral” in the interest of shoring up domestic supply for Transnet’s fellow State-owned company, Eskom.
Eskom had signalled its concern about a growing competition for coal that had previously been designated as ‘Eskom-grade’. There was demand for such low-quality material particularly from Indian utilities, which had reduced Eskom’s bargaining power and had led the utility to suggest that some coal resources should be declared ‘strategic’ so that it could be dedicated to the development of the local power generation market.
The utility wanted first right of refusal on coal that would previously have been considered domestic grade and there were even some suggestions of asking government to hold back Transnet in developing additional export capacity until such guarantees had been secured.
However, South African coal miners continually warn that any move to restrict exports could have adverse consequences on domestic supply security, owing to the fact that the incentive to develop such capacity was based on their ability to earn a higher return through exports.
Molefe was sanguine, saying South Africa could not consume all the coal it mined, “particularly if you take the Waterberg [coal resources] into consideration”.
He was, thus, aiming to directly influence the current policy debate, stating that Transnet’s role was to adjust to the policy of the day. “If the volume of coal comes down, we will have to adjust our business plan”.
But Gama stressed it was not an “either or” situation when it came to the issue of export and domestic coal. He said the power stations were effectively a “trash can” for the consumption of lower-quality coal and would continue to unlock export-quality resources. “You have to move both,” he averred.
For that reason, TRF was pushing ahead with plans to provide the rail capacity required to unlock domestic and export coal resources from the Waterberg region of the Limpopo province, as well as resources that could be mined in neighbouring Botswana.
It was planning a phased introduction, with the first phase likely to facilitate the movement of 23-million tons and later phases raising overall capacity to as much as 80-million tons.
But the immediate priority was to reduce congestion at Ermelo by diverting general freight through Swaziland, studies for which were progressing.
To open up the Waterberg, Transnet will first aim to maximise the use of its existing assets by adding some new link lines, before pursuing major new line development plans.
The Waterberg developments are part of the group’s R300-billion, seven-year capital expenditure plan. But studies are still needed to determine the precise timeframes associated with the introduction of new capacity from the region.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Macro and Micro News
Key players in South Africa’s tourism industry say the country’s new immigration rules, which came into effect in May, could damage the country’s tourism sector. The regulations require that visa applications be made in person so that biometric data can be...
The performance of government and the services it and development agencies provide can significantly improve the establishment and growth of small and medium-sized enterprises (SMEs), according to SME Survey 2014. The threat of crime is the main concern of SMEs, with...
The South African Chamber of Commerce and Industry (Sacci) would engage with Home Affairs director-general Mkuseli Apleni “as a matter of urgency to apprise him of the unintended consequences” of South Africa’s new immigration regulations, CEO Neren Rau said on...
Updated 2 hours 3 minutes ago Despite various challenges related to the extraction of shale oil and gas, as countries grow accustomed to the idea, the use of shale as a form of energy will be more widely pursued, international oil and gas market analyst Michael Lynch said on Tuesday. Speaking at...
Updated 2 hours 6 minutes ago A consortium led by two Kenyan firms won a government tender to build a 1 000-MW, coal-fired power plant, company officials said on Tuesday, part of moves to satisfy rising demand for energy in East Africa's biggest economy. Kenya suffers from regular blackouts due...
Updated 2 hours 12 minutes ago The announcement of the successful bidder for the construction of Durban’s long-awaited passenger cruise terminal was imminent, Transnet National Ports Authority (TNPA) CEO Tau Morwe told delegates at the African Ports Evolution Conference in Durban on Tuesday. ...
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
This Week's Magazine
South African State-owned defence industrial group Denel has announced its fourth consecutive year of profits. The group's results for the financial year 2013/2014 were recently announced at its head office in Centurion, south of Pretoria. Revenues grew by 17%, net...
There is little opportunity for JSE-listed infrastructure company Group Five to grow shareholder value in the domestic market, says CEO Mike Upton. He says value can still be found in the private sector, in the renewable and industrial power sector, as well as in...
The National Association of Automobile Manufacturers of South Africa (Naamsa) has announced the event dates of the 2015 Johannesburg International Motor Show (JIMS). The event will take place from October 14 to October 25, 2015, at the Johannesburg Expo Centre, Nasrec.
UK engineering support services provider Babcock is set to deliver the largest order of global truck manufacturer DAF’s truck tractors in Southern Africa to bulk carrier road-based logistics company Ngululu Bulk Carriers (NBC), with 133 trucks to be delivered in...
Digital radio communications in the African local government space can open up the world, but have many challenges to overcome, notes integration and migration of legacy radio communications infrastructure with digital mobile radio company Emcom Wireless head of...