RBCT coal terminal expansion to 100 million tonne likely

Saturday, 25 Feb 2012

Major South African coal producers that own shares in the Richards Bay Coal Terminal may invest to expand the terminal to handle up to 100 million tonnes of coal a year.

Mr Mxolisi Mgojo head of Exxaro's coal unit said that coal miners had been surprised by the improved rate at which logistics group Transnet transported their coal via rail to the port in the second half of last year.

While Transnet's volumes are still below the terminal's annual capacity of 91 million tonnes, the transport group has been quickly catching up.

Mr Mgojo said that "The pressure is back on us as RBCT shareholders to say, beyond 91 million tonnes what can we do? We need to get to at least 100 million tonnes.” He said the expansion would depend on the timing of Transnet's upgrades on the coal export line.

For years miners had blamed Transnet for failing to improve much-needed infrastructure, but the group has put money into new wagons and locomotives and plans to build a line via Swaziland, which would ease congestion on the main coal export line and raise capacity to close to 100 million tonnes.

Exxaro, South Africa's second-largest coal producer and a big supplier to power utility Eskom, exported 4.9 million tonnes of coal last year and expects to ship 5 million in 2012.

Mr Mgojo said there was more focus than ever on developing the Waterberg coal fields, seen as the next major coal hub as reserves in the Witbank area near depletion.

This is after the government highlighted the project as one of its economic priorities along with the need to secure coal supplies for South African power plants, now supplying 85% of the electricity powering Africa's biggest economy.

Exxaro also said it planned to more than double its capital expansion this year to ZAR 10.93 billion (USD 1.4 billion) as it seeks to diversify into other commodities such as iron ore.

(Sourced from Reuters)