Monday, 13 February 2012
Mozambique capital Maputo is hotting up as a magnet for companies aspiring to be significant South African coal exporters, following a Vitol joint venture deal, industry sources said this week.
The port has been used on a small scale for coal exports which shippers were unable to move from the main export hub, Richards Bay Coal Terminal (RBCT), but is now the centre of major expansion plans for South African coal.
Two exporters have in the last few months started using the main Maputo harbour, which has no loading equipment, for the first time and gleaming new fencing has been set up around stockpiles there, a recent visitor to the port said. A handful of mining majors own RBCT, by far the cheapest, most efficient port, but new entrants have mostly failed to gain a foothold there.
"If you want to be producing South African coal for export, don't ever think you are going to get into Richards Bay - Maputo is really the only option," an executive involved in South African projects said.
Would-be entrants already see Glencore well established. At Maputo it accounts for a third of the 3 million tonnes a year of exports and is also using the main harbour which has no loading equipment.
This deadlock has been frustrating for rival, large trading firms wanting to catch up with Glencore's roughly 20 year head start in building an integrated global coal business including investments in mines and ports and myriad offtake agreements.
"Glencore were in Matola (Maputo's inland coal terminal) from the start, to see how significant or useful an export point it was, with the ability to back out at any time," said an industry source recently returned from Maputo."Vitol seems to want to move into the Glencore space (by investing in ports and production)," a veteran South African industry source said.
"This is a great deal for Vitol, it gives them an export outlet for thermal, coking and sized coal and from the Waterberg too, eventually," another industry source said.If Glencore completes its purchase of Optimum Coal Holdings with its empowerment partner, entrepreneur Cyril Ramaphosa, it will be the country's fourth-largest exporter after Anglo American, and own a big chunk of highly-desirable Richards Bay export capacity.Although currently high, Maputo's costs will fall when the port is expanded substantially and rail investment allows more coal to be railed rather than trucked.
"RBCT offers huge savings - $2-3 a tonne to shareholders, $5 for Quattro junior miners but that's a fraction of the $15-20 charged by Richards Bay Dry Bulk Terminal or $9-10 at Maputo," said the recently returned official. Vitol has a coal offtake agreement with producer Coal Of Africa and is expected to make export space for COA as it ramps up production.
But there will be no shortage of takers for Maputo's capacity, even after the planned expansion, because the 50,000 tonne ships loaded at Matola are ideal for the growing Indian market, an industry source said.
"There are two users of the main harbour, Glencore for sized coal and Jupiter Trading, while Glencore is using the inland Matola terminal for thermal coal," he said.Coal from the main harbour stockpiles is loaded into builders' skips which are tipped into waiting vessels, he said.
This method is costly and slow but the high price of sized coal used for domestic fuel gives a fat profit margin, he said."With their (Glencore's) optimum capacity they can use RBCT primarily for thermal exports and the smaller, higher cost ports for high value products, they don't need Maputo," he added.
TRANSNET SAVES THE DAY
More such strategic investment opportunities are likely to emerge in the next year or so primarily because South Africa's state-owned Transnet Freight Rail has gone from zero to hero in six months to consistently move more coal than miners ever thought possible.
After years of complaining about TFR's poor performance, miners are having to start considering boosting output.
Until June last year, TFR's poor past performance had for several years capped exports at around 65 million tonnes a year despite a capacity of over 80 million and plans to rise to over 90 million tonnes.
"Now the shoe's on the other foot and they're (TFR) getting it right. If they can sustain it, producers will eventually bring on more mining capacity," a producer source said.
"It's a 2-3 year process to make a decision and another 4-5 years to put it into place but it's just so difficult to decide to invest when there are so many uncertainties," he added.RBCT shareholders' export entitlement equates to the stakes they own in the terminal - a 20 percent stake would give 20 percent of whatever total tonnage can be exported and that in turn depends on what TFR can move. While TFR was struggling, RBCT shareholders' ability to export was constrained and they held tightly to their export capacity rather than be tempted to sell or lease it.
But if TFR keeps up its current pace and before miners invest in new mines, RBCT shareholders with more export capacity than production may revisit leasing."It's quite possible that it reverts to the situation several years ago when some RBCT shareholders leased what they couldn't fill with their own output or buy from smaller miners Free On Rail but there's hardly anything available like that now," a transport and logistics source said.
Source: Reuters
Mozambique capital Maputo is hotting up as a magnet for companies aspiring to be significant South African coal exporters, following a Vitol joint venture deal, industry sources said this week.
The port has been used on a small scale for coal exports which shippers were unable to move from the main export hub, Richards Bay Coal Terminal (RBCT), but is now the centre of major expansion plans for South African coal.
Two exporters have in the last few months started using the main Maputo harbour, which has no loading equipment, for the first time and gleaming new fencing has been set up around stockpiles there, a recent visitor to the port said. A handful of mining majors own RBCT, by far the cheapest, most efficient port, but new entrants have mostly failed to gain a foothold there.
"If you want to be producing South African coal for export, don't ever think you are going to get into Richards Bay - Maputo is really the only option," an executive involved in South African projects said.
Would-be entrants already see Glencore well established. At Maputo it accounts for a third of the 3 million tonnes a year of exports and is also using the main harbour which has no loading equipment.
This deadlock has been frustrating for rival, large trading firms wanting to catch up with Glencore's roughly 20 year head start in building an integrated global coal business including investments in mines and ports and myriad offtake agreements.
"Glencore were in Matola (Maputo's inland coal terminal) from the start, to see how significant or useful an export point it was, with the ability to back out at any time," said an industry source recently returned from Maputo."Vitol seems to want to move into the Glencore space (by investing in ports and production)," a veteran South African industry source said.
"This is a great deal for Vitol, it gives them an export outlet for thermal, coking and sized coal and from the Waterberg too, eventually," another industry source said.If Glencore completes its purchase of Optimum Coal Holdings with its empowerment partner, entrepreneur Cyril Ramaphosa, it will be the country's fourth-largest exporter after Anglo American, and own a big chunk of highly-desirable Richards Bay export capacity.Although currently high, Maputo's costs will fall when the port is expanded substantially and rail investment allows more coal to be railed rather than trucked.
"RBCT offers huge savings - $2-3 a tonne to shareholders, $5 for Quattro junior miners but that's a fraction of the $15-20 charged by Richards Bay Dry Bulk Terminal or $9-10 at Maputo," said the recently returned official. Vitol has a coal offtake agreement with producer Coal Of Africa and is expected to make export space for COA as it ramps up production.
But there will be no shortage of takers for Maputo's capacity, even after the planned expansion, because the 50,000 tonne ships loaded at Matola are ideal for the growing Indian market, an industry source said.
"There are two users of the main harbour, Glencore for sized coal and Jupiter Trading, while Glencore is using the inland Matola terminal for thermal coal," he said.Coal from the main harbour stockpiles is loaded into builders' skips which are tipped into waiting vessels, he said.
This method is costly and slow but the high price of sized coal used for domestic fuel gives a fat profit margin, he said."With their (Glencore's) optimum capacity they can use RBCT primarily for thermal exports and the smaller, higher cost ports for high value products, they don't need Maputo," he added.
TRANSNET SAVES THE DAY
More such strategic investment opportunities are likely to emerge in the next year or so primarily because South Africa's state-owned Transnet Freight Rail has gone from zero to hero in six months to consistently move more coal than miners ever thought possible.
After years of complaining about TFR's poor performance, miners are having to start considering boosting output.
Until June last year, TFR's poor past performance had for several years capped exports at around 65 million tonnes a year despite a capacity of over 80 million and plans to rise to over 90 million tonnes.
"Now the shoe's on the other foot and they're (TFR) getting it right. If they can sustain it, producers will eventually bring on more mining capacity," a producer source said.
"It's a 2-3 year process to make a decision and another 4-5 years to put it into place but it's just so difficult to decide to invest when there are so many uncertainties," he added.RBCT shareholders' export entitlement equates to the stakes they own in the terminal - a 20 percent stake would give 20 percent of whatever total tonnage can be exported and that in turn depends on what TFR can move. While TFR was struggling, RBCT shareholders' ability to export was constrained and they held tightly to their export capacity rather than be tempted to sell or lease it.
But if TFR keeps up its current pace and before miners invest in new mines, RBCT shareholders with more export capacity than production may revisit leasing."It's quite possible that it reverts to the situation several years ago when some RBCT shareholders leased what they couldn't fill with their own output or buy from smaller miners Free On Rail but there's hardly anything available like that now," a transport and logistics source said.
Source: Reuters
Posts
No comments:
Post a Comment