Transnet assesses manganese options

[] — TRANSNET is looking closely at switching manganese ore exports from the Northern Cape to the port of Saldanha Bay, instead of using Port Elizabeth or the new port of Coega.

Transnet acting CEO Chris Wells told Miningmx on Wednesday this could result in a doubling of manganese export capacity to 12 million tonnes (mt) per year from the present level of around 6mt/year.

Port Elizabeth can handle about 5mt/year; up to 1mt can also be exported through Durban, but at higher cost.

That is good news for the existing manganese producers as well as the juniors starting new mines in the Northern Cape.

The Kalahari basin contains about 80% of the world’s known manganese resource, but logistical problems in transporting ore to export harbours have been a major constraint in production expansion.

Wells said the new proposal had resulted from a rethink on the economics of the expansion of the Sishen-Saldanha iron ore line, as well as the opposition of the Port Elizabeth municipality to the existing manganese facility.

He said: “Port Elizabeth wants to build a waterfront development in the harbour, and they object to having a manganese stockpile in close proximity.

“It makes a lot of sense to rail manganese exports through Saldanha Bay. This was suggested some time ago, but ruled out because the iron ore exporters were keen to expand capacity on the Sishen-Saldanha line to about 95mt/year and they wanted all that capacity for themselves.

“That has changed. We have agreed the expansion to handle 60mt/year of iron ore, but there has been a rethink on the economics of further expansion to the 95mt/year capacity.

“After assessing the capital cost of getting to 95mt/year, it’s clear that a prohibitive tariff would have to be charged. The result is that iron ore exporters are still keen to expand their capacity above 60mt/year, but not to 95mt/year.’

Transnet is now considering a proposal to push capacity to just under 90mt/year, of which about 75mt would be allocated to the iron ore exporters and 12mt to the manganese exporters.

Wells said: “In terms of logistics and efficiency, it makes a lot of sense to use the Sishen-Saldanha line to haul just two bulk commodities – iron ore and manganese ore – to a port which is dedicated to their export.

“The other option is still the east coast option, with the Port Elizabeth facility being relocated to Coega. That would still leave us with constraints on manganese export capacity, and we would still have put material out through Durban which would not be ideal.

Wells said: “I would hope to have the decision during our current financial year to end-March.’

He added that if it were decided to export manganese through Saldanha Bay, it would take until 2015/16 before the first tonnages were shipped.

Transnet is also looking at setting up public private partnerships (PPPs) to help fund the cost of new infrastructure. Various manganese and coal mining companies have expressed interest in participating.

However, there has been some criticism of Transnet’s approach.

According to a mining industry executive, “just handing over funds to Transnet does not constitute a proper PPP if it is not running its operations well and refuses to allow the private sector to get involved in the management of the assets’.

Wells replied Transnet was aware of this criticism, but strongly defended its management of the Sishen-Saldanha line.

He said: “On any measure you care to apply, we are running the Sishen-Saldanha line as a world class operation.

“The same cannot be said of our container terminal operations, where I know the private sector would like to get involved.

“Our container terminals are not operating to world class standards but we know what needs to be done to fix them. We will be focusing over the next 12 months on improving productivity levels, and are looking for a 30% improvement from where we are right now.

“But if we still cannot get it right we clearly do not deserve to run those terminals and we will have to do something different, such as looking at whether a private sector partner should come in on the operating side.’