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New Richards Bay terminal ‘unlikely’ Posted: Mon, 22 Dec 2008 [miningmx.com] -- COAL industry sources are sceptical over reports of a proposed new 10 million tonnes(mt)/year coal export terminal to be built at Richards Bay, and view its construction as extremely unlikely. An authoritative source believed the move was an attempt to put pressure on the Richards Bay Coal Terminal (RBCT) to allocate more export quotas to black economic empowerment (BEE) junior coal miners. Reuters reported on December 19 that an unidentified consortium was planning to build the new terminal adjacent to the RBCT. The coal mining industry source told Miningmx that Sipho Dube, chairman of Endulwini Resources, appeared to be the leader of the consortium promoting the new terminal concept. Dube is also a director of the South African Mining Development Association (Samda), which represents junior SA mining companies. Dube could not be reached for comment. Endulwini has the right to export 250,000t/year of coal through the RBCT in terms of the “Quattro” scheme, which allocates 4mt/year of export quotas to junior BEE coal producers. The issue of who gets what export allocation through the RBCT becomes critical in 2009 with the completion of the Phase 5 expansion, which will boost the terminal’s annual throughput capacity to 91mt. But Transnet Freight Rail (TFR) cannot supply at a rate sufficient to meet the RBCT’s present capacity of 76mt/year. TFR management claims its capacity is about 74mt/year, but even that is hotly disputed by the coal exporters. TFR’s five-year capital budget only provides for its coal haulage capacity on the Richards Bay line to be increased to 78mt/year. Expansion of the line to handle volumes above that is still being negotiated with the coal exporters, and those discussions have been ongoing for the past two years. As a result there is a considerable degree of coal sector scepticism over the claim made in the Reuters article by the terminal’s promoters that TFR “had guaranteed to provide trains to match the new terminal’s capacity”. The coal industry source told Miningmx “it is highly unlikely that any bank or other financial institution is going to put up the money to build a new terminal when there’s an existing, state-of-the-art facility which is going to be seriously under-utilised for years”. The Reuters story quoted sources claiming the new terminal was aimed at providing access to junior miners unable to export through the RBCT because they were denied access to the Phase Five expansion. It also reported these sources as claiming that, “unless the RBCT is nationalised and opened to all the country’s producers and not just shareholders, a new terminal would be the only way of providing export access to all”. The issue raised of the juniors who did not gain access to the RBCT in terms of Phase Five is a very real one. The Phase Five programme was heavily oversubscribed. Eight coal companies offering to export 9mt/year were successful. But an additional 10 coal companies offering to export a further 10mt/year in total were not awarded Phase 5 quotes. That was despite meeting all the RBCT’s stringent qualification requirements. Some coal producers and traders are now looking to export using the Dry Bulk Terminal (DBT) in Richards Bay harbour, to which they can gain access via shipping group Grindrod’s linked Kusasa dry bulk handling site. These include Coal of Africa, Petmin, Noble and Glencore. The plan is for up to 4mt/year of coal to be exported through this facility. That coal would be handled by TFR on the Richards Bay line as part of its general freight business and would be separate from the capacity on the line dedicated to the RBCT. According to the authoritative coal industry source, using the Grindrod facility is going to be a lot more expensive than going through the RBCT. He said: “When the fob (free on board) coal price through Richards Bay was $150/t, then it was a no-brainer to use the Grindrod facility if you were shut out of the RBCT. “It does not look such an attractive alternative with fob prices down to the current levels in the mid-$70s a ton.”
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