South Africa's State-owned transport utility Transnet is engaged in "serious talks" with Northern Cape iron-ore and manganese miners on the creation of capacity beyond 60-million tons a year, Kumba Iron Ore CEO Chris Griffith said on Thursday.
Griffith told Engineering News Online during a mine visit that consulting engineering company Aurecon had been introduced to shed fresh light on how the Sishen-Saldanha corridor could be expanded beyond that yearly capacity.
"We have had a number of engagements to see how the industry could work with Transnet to change what happens on the iron-ore export line beyond 60-million tons," he said.
Transnet is currently completing the execution of the expansion to 47-million tons a year, and is in the construction phase of the expansion from 47-million tons to 60-million tons.
Increasing the capacity beyond 60-million tons, for which plans have still to be drawn up, is scheduled to take place by 2013.
"It's very important that we start the engagement now for the building of capacity beyond 60-million tons, notwithstanding the fact that Transnet still has to build the capacity from 47-million tons to the 60-million ton level," Griffith told Engineering News Online during a mine visit.
Three major private-sector participants - Kumba, Assmang, Samancor - have been engaged with Transnet. Assmang is both an iron-ore and manganese miner and Samancor is a manganese miner.
Initially, a competition lawyer attended the meetings so that the industry was not seen as colluding and later the Competition Tribunal gave the process the all clear.
It was decided that new consultants be introduced in order to ensure that past thinking be excluded and a fresh approach adopted.
Transnet has made it clear that its balance sheet can withstand expansion of the iron-ore line up to 60-million tons, but that beyond that level, private sector participation will be necessary.
Consultants involved will be required to ensure that any future expansion is done at an appropriate capital cost. Initial estimates tabled have reportedly been deemed to be prohibitively expensive.
Manganese is currently railed, unsatisfactorily, on the general-freight line to Port Elizabeth, in the Eastern Cape and its transport on what has hitherto been a single-commodity link from the Northern Cape to the port of Saldanha would be a first.
Transnet is studying plans for a heavy-haul manganese channel either through Saldanha, on South Africa's west coast, or through the new deep-water harbour at Ngqura, on the east coast.
Griffith said it was important that rail discussions be carried out timeously to allow mines time to ramp-up to higher levels of production.
Kumba last year exported more than 34-million tons of iron-ore from Saldanha Bay, while Assmang is currently expanding its iron-ore mining capacity through its Khumani project. Steps are also being considered to increase manganese exports beyond five-million a year to 14-million a year.
Kumba's current project pipeline alone can add 29% to its present export operations.
The current discussions still have to deal with the issue of the private sector's involvement in funding the expansion, pricing and operational matters.
"We will have discussions on how the mining industry will be participating at a later stage, but it is actually good news that we are, already at this stage of our engagement, in very serious talks about how to take this forward," Griffith added to Engineering News Online.
Transnet's status as a State-owned enterprise also meant that Cabinet approval would be required for any private participation in its business operations.
Source http://www.engineeringnews.co.za
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