South African commodity lines at heart of Transnet investment plans

Mining Weekly reported that Transnet commodity corridors in South Africa were likely to be the main beneficiaries of the State owned transport utility's expanded 5 year capital investment program.

Mr Chris Wells acting CEO of Transnet said that the new plan, which would be unveiled in February, would probably involve a 10% increase in the budget of the current rolling plan which stands at ZAR 80.5 billion.

The group had 2 main commodity lines: the coal line, linking the coalfields of Mpumalanga province with the export terminal at Richards Bay and the iron ore line from Sishen to Saldanha.

Mr Wells indicated that the main focus would be on the procurement and upgrading of locomotives and wagons for the commodity lines, but stressed that these projects still had to receive board approval. The group had invested ZAR 62 billion over the last 4 and half years in the upgrading and modernizing of existing facilities, as well as in expanding infrastructure capacity.

Its projects were also fully funded up until the end of the current financial year, and the group currently has ZAR 8 billion in cash on hand, which had been raised "opportunistically", so as to ensure that there was sufficient and timely funding for the projects. It was also confident of being able to fund the expanded project pipeline, without recourse to its shareholder, the South African government.

Transnet was in consultation with manganese exporters on the development of a new export channel which could either flow through the deep water harbor at Saldanha Bay, on South Africa's West Coast or through the new port at Ngqura in the Eastern Cape. Several possible private sector participation models were being considered, with BHP Billiton, African Rainbow Minerals and Assore having already indicated a preference for converting the Sishen line into a dual commodity channel.

The Sishen Saldanha heavy haul line had emerged as Transnet Freight Rail's top performing corridor with exports tons increasing by 32.7% to 21.1 million tonnes in the 6 months to September 30th 2009. The manganese miners would like to have access to this channel so as to boost exports from the Kalahari manganese field to some 12 million tonnes per year from the current position of around 5 million tonnes yearly, most of which is currently moved through the depth and land constrained harbor at Port Elizabeth.

The iron ore channel was in the process of being ramped up from 47 million tonnes to 60 million tonnes and a combined 90 million tonne channel with 78 million tonnes for iron ore and 12 million tonnes for manganese could be pursued. There were also various plans to raise the capacity of the coal rail corridor through to Richards Bay.

(Sourced from Mining Weekly)

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