Saldanha Bay possible coal export port.

JOHANNESBURG, Feb 22 (Reuters) - expects to focus its diversification strategy on coal and copper, with a new coal mine envisaged within the next three to four years, head of its coal unit said on Monday.

Mangisi Gule said the growing power demand in the country justified the investment, and said the new mine would most likely be built in the north-eastern Mpumalanga province where the necessary infrastructure was already available.

In the future, the company is also looking to grow in the northern Waterberg region, touted to become South Africa's new coal hub, and in other parts of the continent.

ARM, which is developing all of its coal projects in a joint venture with Xstrata, commissioned the Goedgevonden coal mine late last year, which is expected to produce 6.7 million tonnes of thermal coal per year by 2011.

Of this projected output, 3.2 million tonnes will be exported by 2011, and 2.5 million tonnes is scheduled to be shipped this year.

ARM has been promised its own export allocation of 3.2 million tonnes at the Richards Bay Coal Terminal (RBCT), which is expanding to export up to 91 million tonnes of the mineral from 76 million tonnes.

But bottlenecks on the rail lines to the port have dented confidence in logistics group Transnet and its ability to bring more coal to the port than the 61 million tonnes it managed to rail last year.

Gule said it was likely ARM would only get parts of its export allocation this year, and would seek to export the remaining coal via Xstrata's allowance.

'We would like to get our promised 3.2 million tonnes allocation... but given what Transnet said ... this year we think 1.7 million tonnes (of our own allocation) is more realistic,' he told Reuters after a results presentation.

Separately, Executive Director for Business Development Stompie Shiels said that Transnet had agreed to grant three manganese producers, including ARM, a total rail allocation to Port Elizabeth of 4.4 million tonnes.

He declined to say how much of that would go to ARM, but said that the company would also seek alternative routes via the ports in Durban, Richards Bay and Saldanha Bay.

ARM, which has interests in nickel, coal, iron ore, platinum, chrome and manganese, reported an 80 percent drop in headline earnings per share for the six months to the end of December, owing to lower commodity prices and a strong rand against the U.S. dollar.

(Reporting by Agnieszka Flak) (For more Africa cover visit: http://af.reuters.com -- To comment on this story email: SouthAfrica.Newsroom@reuters.com)

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