South Africa Should Mull New Coal Port, McCloskey Says

Feb9, 2011
South Africa should study building a new coal-export harbor to meet surging demand from Asia or risk falling behind nations that are investing in transportation and output of the fuel, research company McCloskey Group said.

“South Africa is the natural supplier for India’s new demand,” Managing Director Gerard McCloskey said at the Mining Indaba conference in Cape Town today. Yet the nation is “humble in its aspirations” and infrastructure is underfunded, he said. Planned new rail lines in African countries may increase regional coal output, while Mozambique and Botswana are also looking to boost production, he said. While South Africa last year expanded capacity at Richards Bay Coal Terminal to an annual 91 million metric tons, state-run rail operator Transnet Ltd., which delivers most of the fuel to the facility, is only able to carry about 65 million tons.

The country last year shipped 62.86 million tons from the terminal, owned by producers including BHP Billiton Ltd. and Xstrata Plc. The terminal handles more than 90 percent of South Africa’s coal exports, while Asia overtook Europe as the country’s main overseas market for the product during the past two years. “The European market is fading but the Asian market is really booming,” McCloskey said. “One in three ships that goes out of Richards Bay now heads for India.” The government should consider appointing a coal “czar” to encourage development of the industry, he said. (source: Bloomberg)