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RBCT, Transnet in spat Posted: Thu, 31 Jan 2008 [miningmx.com] -- THE war of words between the Richards Bay Coal Terminal (RBCT) and Transnet Freight Rail (TFR) over who is to blame for low coal exports broke out again at the McCloskey South African Coal Conference being held in Cape Town. TFR also made its most explicit demands yet for a much higher system of rail tariffs linked to commodity prices for use of the Richards Bay coal line. A presentation delivered on behalf of TFR CEO Siyabonga Gama stated that TFR was responsible for only 35% of the shortfall on coal exports last year and the members of the RBCT were responsible for the rest. The RBCT had targeted exports of 74 million tonnes during 2007 but only managed to export 66.1 million tonnes. According to TFR it currently has the capacity to rail 78 million tonnes annually to Richards Bay. TFR said it was responsible for 35% of that shortfall because of train "rescheduling" while 20% could be allocated to the mining companies "cancelling" trains and the balance of 45% resulted from "low mine demand". Asked at question time whether he accepted this analysis RBCT chairperson Kuseni Dlamini said: "It's a very interesting graph which will provide the basis for an interesting conversation with TFR during which we would hope to separate fact from fiction. We don't agree with their assessment." Dlamini added: "What we export is dependent on what we receive from TFR and last year we exported more than what was railed by running down our stockpiles." Skewed risk/reward split Gama also effectively drew a line in the sand over what TFR wants before it will agree to further expansions of capacity on the Richards Bay line beyond the 78 million tonnes/year level. Gama highlighted the "skewed risk/reward split on the expansion" because of the disproportionate amount of capital that TFR had to invest compared with the costs to the RBCT of expanding its terminal. He said that the cost to TFR of going to 91 million tonnes is estimated at some R20bn compared with the R1.1bn that the RBCT has invested in the Phase 5 expansion of the terminal. "For that we estimated TFR will get between 6% and 8% of the value created with between 85% and 90% of the value created going to the coal mining companies. We view this situation as unfair, skewed and unsustainable. "We want a fair risk/reward contribution and that means significantly higher rail tariffs and we must have prior commitments from the coal producers (on coal export volumes)," Gama said. Low quartile Gama also pointed out that, on TFR's figures, the South African coal exporters were in the lowest quartile of the industry cost curve with 2007 spot prices cif (cost insurance freight) estimated at between $34/t and $35 per tonne compared with exports from Poland at the top of the cost curve estimated at around $55/t. Click Here to subscribe to our daily newsletter
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