JOHANNESBURG (miningweekly.com) – The South African coal arm of mining giant BHP Billiton said on Friday that it had done more for black empowered coal exporters than any other single shareholder of the Richards Bay Coal Terminal (RBCT).

BHP Billiton Energy Coal South Africa asset president Manie Dreyer was responding to comments made by Transnet CEO Brian Molefe that the mining giant had refused to give up a further one-million tons of yearly port capacity at RBCT for the benefit of “the small guys”.

Molefe described the meeting with BHP Billiton as “disastrous” and one “where we nearly came to blows”.

“That has prompted us to think of using part of the Richards Bay port for the small guys.

“We fight for the small guys. That is the real issue at the bottom of this entire coal hullabaloo," Molefe explained to Mining Weekly Online.

Dreyer on Friday responded in a media release, saying that BHP Billiton was both “surprised and disappointed” by the way the Transnet CEO had chosen to portray the company.

Dreyer said that Transnet’s recent request for BHP Billiton to relinquish a further one-million tons of port capacity at RBCT had arisen at a time when BHP Billiton was short of port capacity and unable even to develop some of its own remaining prospecting rights because of the unavailability of sufficient port capacity.

He pointed out that Transnet’s rail capacity did not match RBCT’s current port capacity of 91-million tons a year, which meant that existing RBCT shareholders, including numerous black economic-empowerment (BEE) shareholders, were unable to access to their own nameplate capacity at the port.

The unfounded assertions created the impression that BHP Billiton was not committed to the spirit and intent of BEE and that the company had done nothing to demonstrate its support for BEE in South Africa, which was far from the truth. 

In reality, BHP Billiton’s numerous empowerment transactions since 2001 had resulted in eight-million tons a year of the company’s original port capacity of 26-million tons a year being transferred to black-owned mining companies.

In partnership with the Department of Mineral Resources and the other RBCT shareholders, BHP Billiton had also contributed an additional one-million tons a year in 2004 to the Quattro initiative, which resulted in four-million tons a year of port capacity being created for small BEE junior miners.

The company had also sold a further one-million tons a year to Exxaro, the BEE miner created through an empowerment transaction spearheaded by Anglo American and BHP Billiton more than ten years ago.

In all, over the past 12 years, BHP Billiton has been responsible for a total of ten-million tons a year of BEE port capacity at RBCT, which was more than any other single RBCT shareholder.

Moreover, in 2005, BHP Billiton elected to pass up its rightful share of RBCT’s 15-million-ton-a-year Phase V expansion to allow BEE miners to take up the additional capacity.

All these collectively demonstrated BHP Billiton’s commitment to transformation of South Africa’s mining industry.

BHP Billiton was currently only a 21% shareholder at RBCT compared with almost 40% ten years ago because of all the gestures it had made to open up port allocation to BEE companies.

In raising the need for small coal miners to be accommodated to a greater extent at the coal terminal, Molefe told journalists he was not challenging RBCT’s right to decide not to share.

“It’s fine, it’s what they’re entitled to do in terms of the contract…but we're just pleading with them for the small guys, and they are saying ‘no’, which they are perfectly entitled to do,” Molefe reiterated.

Earlier he had responded to Mining Weekly Online that the problem with Richards Bay was actually a general problem with concessions.

“What happened there is that a few players in the market got the concession at Richards Bay and now they are refusing to allow the small guys to take their coal through the port.

“That is the problem that confronts us as a nation. Their defence is that they have already allowed enough by allocating about four-million tons in terms of the Quattro scheme and the black economic-empowerment deals they have done through equity.

“All we know is that there are a lot of small guys there that come to us and say can you please go and fight for us as the small guys to get additional allocations through Richards Bay,” Molefe told Mining Weekly Online.

While it would be counter productive to build another coal terminal so close to RBCT, Molefe said the fact of the matter was that the biggest coal terminal in the southern hemisphere was the preserve of the private sector for the sole pursuit of its own self interest.

“That is the problem if the truth be told. So it is true that we are considering using part of our land and port capacity at Richards Bay to allocate to the small guys. However, we remain willing to talk and negotiate about RBCT,” Molefe added.

The issue of BHP Billiton giving over another one-million-ton allocation had arisen during negotiations for the signing of a ten-year agreement.

“Our ability to fund operations will depend on the industry’s willingness to sign long-term contracts with us. We’ve been negotiating the BHP Billiton contract for the last three years and BHP has in fact been benefiting from the fact that there have not been tariff increases during that period because we’ve been having month-on-month contracts.

“Now, it's very difficult for us to go and borrow ten-year paper to come and do infrastructure here with month-on-month contracts and that was the reason why we were negotiating,” Molefe explained in response to questions.