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CoAL snubs the Richards Bay Coal Terminal Posted: Mon, 25 Aug 2008 [miningmx.com] -- JUNIOR miner Coal of Africa (CoAL) and shipping group Grindrod have struck a deal to export CoAL’s forecast production through Richards Bay and Maputo which is likely to put noses out of joint at the Richards Bay Coal Terminal (RBCT). Reason is CoAL is proposing to export 900,000t/year of coal by 2010 through Grindrod’s “dry bulk” export terminal at Richards Bay instead of through the RBCT. That coal will be railed as part of the “general freight” allocation on the Witbank to Richards Bay line and fall outside the agreement between the RBCT and Transnet Freight Rail (TFR) over export coal volumes railed to the terminal. The RBCT and TFR have been locked in tough negotiations for the past two years over future volumes of coal to be railed to the terminal and the tariffs to be charged. There has been no formal contract between the two sides on rail tariffs since the last interim agreement expired at the end of April. The RBCT will have the capacity to export 91Mt/year from June next year when it completes its Phase Five expansion of the terminal at a cost of R1.1bn. But Transnet CEO Maria Ramos and CFO Chris Wells are adamant the organisation’s capital budget over the next five years will only allow the capacity allocated to the RBCT’s requirements on the Richards Bay line to rise to 78Mt/year. One RBCT exporter commented, “Sending 900,000t of coal annually down the line as general freight is going to have an impact on the entire system. My understanding is that Grindrod is also trying to sign up other customers to go this route.” The exporter questioned whether TFR would be able to deliver on agreements to rail this coal given its inability to move the required volumes of coal to Richards Bay as well as the minor coal export terminals in Durban and Maputo. “Coal exporters cannot get trains to deliver to Durban and are being forced to haul coal there by road to meet contracted shipments. This latest development with CoAL begs a whole lot of questions.” CoAL MD Simon Farrell commented, “ we are going this route because it avoids a lot of the problems that the juniors are encountering trying to export through the RBCT.” Farrell added, “we are not far from a comprehensive agreement with TFR and other parties which will secure a long-term solution for our plans to export 10Mt/year of coal out of the country by 2012 at the latest.” That coal will consist of metallurgical coal from CoAL’s proposed two mines in Limpopo Province as well as thermal coal from its proposed Mooiplaats mine near Ermelo in Mpumalanga. Where CoAL seems to have made a breakthrough with TFR is that it has agreed to a “take or pay” policy covering 75% of the coal it plans to ship through Richards Bay and Maputo. That means CoAL is obligated to pay for 75% of the contracted tonnage per year whether or not the allocation is utilised. This is a key sticking point in the negotiations between TFR and the major RBCT exporters. Click Here to subscribe to our daily newsletter
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