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)

Optimum Coal blames Transnet for low delivery

Five years of decling deliveries to Richards Bay Coal
Terminal but a turnaround last year

Friday, Feb 04 201107:04:48 AM
By Allan Seccombe

OPTIMUM Coal has laid the blame for undelivered export coal squarely on Transnet Freight Rail and doubted the utility’s claims it would shift 70-million tons of coal this year, urging it to appoint a CEO to give it much-needed leadership.

"History shows they’ve never done 70-million tons, but if they do, it will be of great (for) the industry," Optimum CEO Mike Teke said. He wanted Transnet to appoint a CEO as soon as possible.

"I’d like to be able to knock on someone’s door, someone who can make a difference. Transnet needs someone to make decisions," Mr Teke said.

Optimum has 318000 tons of export-grade coal stockpiled at its operations, waiting for it to be delivered by rail to Richards Bay Coal Terminal, where it has an 8,44-million-ton annual allocation.

"Transnet Freight Rail has fallen short of our expectations. If we had received all our trains we would not have these stockpiles," Mr Teke said. "They could have done better."

Transnet Freight Rail has set a target this year to deliver 70-million tons of coal to Richards Bay as it moves towards its target of 81-million tons, Divyesh Kalan, GM of Transnet, said at the McCloskey Coal Exports conference in Cape Town this week.

Last year Transnet Freight Rail missed its 65-million-ton commitment because of a strike that knocked 2-million tons off that target and a derailment that cost it 1-million tons. "We’ve had five years of consistent decline in deliveries to Richards Bay Coal Terminal, but we had our first year of turnaround last year," Mr Kalan said.

Transnet Freight Rail is working closely with its coal customers to match coal production to rail capacity. It has installed about 40% of the jumbo wagons it wants running on the coal line and has taken delivery of 40 of the 110 new locomotives it is dedicating to the coal haul line.

Meanwhile, Optimum yesterday reported a profit in the six months to end-December increasing to R275m from R16m a year earlier. It may have to raise debt in the financial year ending June to complete a R700m capital expansion programme to develop new mines.(sourced:Businessday)

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South Africa Wants State to Play Role in Coal Mining

February 02, 2011, 7:40 AM EST
By Mike Cohen

Bloomberg-South Africa’s government wants a state-owned mining company to have coal interests to help ensure power utility Eskom Holdings Ltd. can secure supplies of the fuel, Mineral Resources Minister Susan Shabangu said.
“Coal is a strategic asset,” Shabangu told the McCloskey South African Coal Exports Conference in Cape Town today. “We need to grow our economy, we need energy in general. It becomes important for the state to play a role there. We are looking at 18 months” to clarify the role the mining company would play.

Eskom, which generates 95 percent of power in Africa’s largest economy, has called on the government to develop a coal export policy that will guarantee it sufficient, affordable supplies as exports become more lucrative for producers. BHP Billiton Ltd., Xstrata Plc and Anglo American Plc are among the biggest coal producers in South Africa, which generates about 93 percent of its electricity from the fuel.
“It is not the government’s intention to enter the minefield of specifying all the processes and it is our fervent hope that the industry will recognize the particular challenge and work with us,” Shabangu said. “We reserve the right to take corrective measures should the situation demand it. A balance has to be found between pursuing the principles of free market while taking into account the needs of the country.”
Eskom burned 123 million metric tons of coal in its last fiscal year. Recent floods in Australia have bolstered demand for South African coal, and pushed up international coal prices.

‘Australian Misfortunes’
“Some will see an opportunity of making more money on the back of the Australian misfortunes,” Shabangu said. “That opportunity may very well be a serious threat to our supplies for electricity generation. We will be monitoring the situation closely because we will not allow a situation” that will harm the economy.
Shabangu welcomed a Jan. 31 call by BHP Billiton’s South African energy coal unit for bids to buy prospecting rights over its undeveloped reserves, saying it would help bring new investors into the industry.
South Africa is the world’s seventh biggest coal producer and the fifth biggest exporter of the fuel, government data shows. In 2009, the country produced 249 million tons of thermal coal, 74 percent of which was consumed locally, and had about 30 billion tons of reserves.
--Editors: John Deane, Alastair Reed