Name and Location
Coal-line export-channel expansion programme, South Africa.

Client
Transnet Freight Rail (TFR).

Project Description
TFR is in the process of expanding its coal export channel, which links the coalfields of Mpumalanga and the Waterberg, in Limpopo, to markets in Europe and Asia by increasing initial capacity on the corridor to 81-million tons a year and thereafter to 97.5-million tons a year. Tenders for a prefeasibility study to increase the capacity to 97.5-million tons a year will be issued in the near future to confirm the expansionary and sustaining investments.

The programme combines investments in new infrastructure and rolling stock, most notably a comprehensive dual-voltage locomotive acquisition programme.

The infrastructure construction programme for the expansion to 81-million tons a year has started. Major work packages include various sustaining investments and the upgrade of four yards at Blackhill, Saaiwater, Ermelo and Vryheid, 11 substations, five new substations and two locomotive workshops upgrades, with a new locomotive turntable.

The work packages will be executed through a combination of internal resources and external design and supply contracts.

TFR has also brought forward the engineering and design work on the Overvaal second tunnel, owing to the operational challenges and risk associated with the single-line tunnel between Ermelo and Richards Bay.

The tender documents for the feasibility studies are expected to go to market before the end of the 2014 financial year.

Value
Together with sustaining capital, the capital investment to increase capacity to 81-million tons a year is estimated at R31.6-billion over the next ten years.

Duration
The 81-million-ton-a-year coal line is expected to be completed in 2014/15 and the expansion to 97.5-million tons a year will span ten years, with various capacity tranches being delivered during this period.

Latest developments
TFR will introduce a new 200-wagon rail service along its coal export corridor, raising the operation's yearly capacity to above 81-million tons.

Dubbed ‘Project Shongololo’, the service will operate directly between the privately owned Richards Bay Coal Terminal (RBCT), in KwaZulu-Natal, and the coal mines of Mpumalanga, bypassing the Ermelo yard leg to reduce train-handling time. Previously, 100 empty wagons have been dispatched from Ermelo to the mines for loading before being returned to the yard for consolidation into 200-wagon trains.

TFR CEO Siyabonga Gama says the new approach, which is part of its scheduled-railway philosophy, will reduce cycle times for locomotives from an average of 58 to 41 hours and from 63 to 48 hours for wagons. In addition, it will relieve capacity across its coal logistics system.

TFR estimates that it is poised to deliver more than two-million tons of coal a week for domestic and export customers, raising its annualised coal-transport capacity to 96-million tons.

Shongololo project manager Pragasen Pillay says the service will increase weekly railed export coal capacity by 30%, from the current 1.4-million tons, to a potential capacity of 1.85-million tons.

The service will free up slots that can be used to address other domestic demands such as coal for Eskom’s Majuba power station. Coal from the Waterberg region will also benefit from this unlocked potential.

In addition, the debottlenecking of Ermelo will allow TFR to run longer general freight trains, which will have positive spin-offs for other minerals sectors such as chrome.

Project Shongololo introduces a new efficient use of technologies, including the concurrent use of wire-distributed power and ac/dc traction.

However, TFR has stressed that any ramp-up to 81-million tons in the near term will depend on the availability of coal and the timeous completion of the Eskom backbone supporting the coal line

During the 2013 financial year, the group transported 69.2-million tons of coal along the export channel, a lower-than-expected increase from the 67.7-million railed in 2012. Softer coal prices have reportedly dampened demand, while TFR has also experienced operational problems at the Overvaal tunnel.

Under the bigger Transnet group’s R300-billion-plus market demand strategy, the plan is to increase the corridor’s capacity to 97.5-million tons a year by 2020 – well above the RBCT's nominal nameplate capacity of 91-million tons.

Transnet is, thus, also investigating the prospect of building a new open-access coal terminal, which could be developed in phases alongside the miner-owned RBCT.

It is currently uncertain how the export ramp-up proposal will integrate with State-owned power utility Eskom’s call for coal to be designated a strategic resource to reduce the security-of-supply threat faced by its coal-fired power station fleet from 2018. The South African government is still finalising its policy in this regard, which could affect the nature of coal mining investment and the future of exports.

Key Contracts and Suppliers
Coal export channel expansion to 81-million tons (internal resource strategy).
Overvaal tunnel doubling – call for feasibility tenders in 2014/15.
Coal export channel expansion to 97.5-million tons – call for prefeasibility tenders in 2014/15.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Transnet Freight Rail corporate affairs, Mike Asefovitz, tel +27 11 544 9585 or email Mike.Asefovitz@transnet.net.