[miningmx.com] — THE Richards Bay Coal Terminal (RBCT) could be able to export at its full capacity of 91 million tonnes (mt) of coal annually within six years, if Transnet delivers on the strategy outlined on Wednesday by CEO Brian Molefe.
Presenting Transnet’s interim results for the six months to end-September in Sandton, Molefe said Transnet Freight Rail (TFR) would be able to deliver 95mt/year of coal if the proposed new link to Richards Bay through Swaziland was developed as planned.
Once in place TFR would divert general freight business for Richards Bay through Swaziland and dedicate the existing line between Witbank and Richards Bay to handling coal.
Molefe added the Swaziland link had to be in place before Transnet could bring on line the proposed upgrade of the railway linking Lephalale in the Waterberg to Witbank.
The reason for this was that “otherwise there will be traffic chaos in Ermelo’ which is the main rail marshalling yard for the Richards Bay line.
The upgraded Waterberg line would have the capacity to haul between 20mt and 25mt of coal annually, and is viewed by economists as a crucial requirement for the future growth of the SA economy. The reason is that coal from the Waterberg will be needed to keep Eskom’s power stations in Mpumalanga going after their local coal supply sources are exhausted.
Waterberg coal will also be needed to maintain RBCT exports at the 91mt/year level.
Expansion of the Waterberg line has been the subject of discussions and studies for years.
Ian Hall, chairman of the South African Coal Road Map Steering Committee, said in a presentation to the South African National Energy Association last week that “there now seems to be some momentum’ behind plans to expand the line from the Waterberg to Witbank.
Molefe added that TFR’s capital programme to expand capacity on the existing Richards Bay line to 81mt/year within five years was being carried out as planned.
He got in a few “digs’ at the RBCT during his presentation, pointing out coal stockpiles at the terminal had risen to nearly 5mt because TFR was railing coal to the terminal faster than the RBCT could ship it out. That was the result of three months of good performances from TFR during which it has consistently railed coal at a rate of around 1.5mt per week or about 6mt/month.
The situation stands in sharp contrast to TFR’s erratic and poor performances over the past three years during which former RBCT CEO Raymond Chirwa repeatedly laid the blame for poor coal export volumes squarely at TFR’s door.
“I think perhaps we caught the RBCT by surprise,” said Molefe. “I am sure they will put the ball back in our court – probably in a vicious way – when the coal exporters ramp up their production capacity.”
According to coal industry sources the reason that RBCT exports have been running below TFR railages over the last few months is uncertainty over whether TFR can keep up the new level of railages.
Some coal exporters have held back on production, because of concerns over the costs that would be incurred on shipping contracts not met if the coal was not railed on time.
“It takes time to ramp up production to meet expanded sales commitments,” one said.
That situation goes to the heart of what Molefe stressed had traditionally been Transnet’s operating “Achilles heel” – lack of reliability.
Molefe and TFR COO Mlamuli Buthelezi both stressed their belief that TFR could maintain the newly-established railage levels of 1.5mt/week .
“I am sure they can continue with that performance,” said Molefe. “There is nothing at the moment to suggest that they cannot. It is the result of qualitative improvements in the way we do business.”
Buthelezi said the improvement was sustainable because it was based on sound maintenance scheduling combined with the introduction of new locomotives as well as new and larger wagons onto the line.
The RBCT exported 63.4mt in the year to end-December 2011 which matched levels achieved in 1999 when the terminal only had the capacity to shift 72mt/year. The official target for 2011 was given as 70mt in January but, by end-June, TFR had railed only 28.9mt (58mt annualised) of coal to the RBCT which had exported only 27.5mt (55mt annualised).
The turnaround in TFR’s performance since July raises the possibility of RBCT exports reaching between 65mt and 66mt this year, and going as high as 72mt in 2012 assuming TFR can keep up its new levels of delivery.