Transnet sets new records

Transnet Freight Rail (TFR) reported on Thursday that it achieved a new weekly throughput record, of 919 000 t of iron-ore, which was transported last week from the mines of the Northern Cape mines to the deep-water West Coast harbour of Saldanha Bay.

The figure was nearly 19 500 t better than the previous Sishen-Saldanha corridor record of 899 592 t, which was achieved a week earlier.

For its 2009/10 financial year, TFR was planning to rail 46,4-million tons along the corridor, implying weekly volumes of more than 892 000 t. This mean that it was closing in on the 47-million ton volume milestone set as part of a R8,7-billion expansion of the link.

Indeed, CEO Siyabonga Gama said on Thursday that the State-owned railways utility was now targeting one-million tons a week - an ambition that was closely linked to the development of new loops, known as 7a and 7b, which should be completed this year.

In the year to March 31, 2009, TFR railed some 37-million tons down the corridor, making it one of the few areas of volume growth for 2008/9 - coal volumes slumped to less than 62-million from 63,5-million tons in 2007/8 and general freight volumes slumping to 77-million tons in 2008/9 from more than 83-million tons.

It was still targeting 65,6-million tons for the coal line, but had railed only 17,5-million tons between March 26 and July 12.

The most recent improvements on the iron-ore line were reportedly aided by the corridor's investment in radio distributed-power trains, with the thousandth such train having operated last week.

But Gama also stressed that the performance had been achieve on the back of improved communication with customers and "meticulous planning". Capacity had also been increased to allow more volumes to be transported from Assmang's Khumani mine.

The R8,7-billion two-phase expansion of the corridor was also advancing, with the first phase, aimed at raising volumes to 41-million tons a year, nearing completion.

The ‘Phase 1B' investment, which was designed to increase yearly throughput to 47-million tons.

This expansion included the acquisition of 44 locomotives, with the first batch of new 19 E locomotives to be operational in February 2010. But the current improvements have been achieved in the absence of the new rolling stock.

Further, Transnet had approved a R4,3-billion third phase to raise throughput to 60-million tons, with TFR confirming that work was already under way on the project.

However, there was still concern that the State rail utility remained a serious constraint to South Africa's iron-ore growth, despite the recent slowdown in demand and pullback in prices. There was emerging consensus, that iron-ore volumes and prices were set to recover, with iron-ore spot prices having recently moved above price levels set during recent negotiations between miners and steelmakers.

A public-private partnership had been mooted to align rail capacity to the growth aspirations of miners such as Kumba Iron Ore (KIO) and Assmang, as well as to increase efficiencies and contain costs.

At this stage, though, Transnet had simply agreed to make available up to 12-million tons of additional cumulative capacity in the period from 2009 to 2011. In return, the miners had signed take-or-pay agreements for this additional volume.

JSE-listed KIO planned to raise production by 10% during the year, despite the lower prices, and had near-term prospects that could raise its output to close to 50-million tons, most of which would be for export. The Sishen mine produced 34-million tons in 2008.

Meanwhile, Assmang had plans to raise capacity at its Khumani mine to 16-million tons a year.

Assmang, too, had signed a contract with Transnet for its next four-million tons of export iron-ore, which was due to kick in from July 1, 2012.

Gas pipeline for the West Coast, South Africa

Gigajoule Africa has submitted a license application to the National Energy Regulator of South Africa for the supply, transmission, distribution and trading of gas in the Cape West Coast region.

Two supply options are being considered: the sourcing of marine compressed natural gas (CNG) from the Kudu gas field in Namibia, where the field joint venture partners are currently evaluating a development scheme for transporting the gas by marine CNG vessel to an offshore delivery point along the West Coast.

The second supply option is to obtain LNG from international LNG portfolio suppliers and delivering it to an offshore delivery point along the West Coast.

Gigajoule recently signed a Memorandum of Understanding with operator of the Kudu field, Tullow Kudu, in order to work together to establish the technical and commercial viability for the supply of CNG from the field.

Gigajoule Africa managing director Johan de Vos said that it is envisaged the project will be developed in phases. The first phase will involve the construction of an offshore submerged terminal, an onshore gas treatment plant, and 225 km of transmission and distribution pipelines to feed the gas to the Cape West Coast markets.

The second phase includes the construction of a pipeline to the north and east to supply customers in the Saldanha Bay and inland region.

The Kudu gas field has 1P gas reserves of 1 Tcf, which is expected to deliver CNG to the West Coast region and Namibian market for at least a decade. Gigajoule has said that gas supply could commence as early as 2014.