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South Africa commits to coal export capacity rise

31 Jan 2013, 3.47 pm GMT

South Africa commits to coal export capacity rise

Cape Town, 31 January (Argus) — South African state-owned rail operator Transnet and the privately owned Richards Bay Coal Terminal (RBCT) are aiming to boost export capacity to capitalise on future Asian coal demand and increased production from local black-owned junior mining firms.

Transnet is aiming to increase its coal railing capacity to 81mn t/yr in its financial year ending March 2015, up from 77mn t in 2013-14 and 73mn t in 2012-13, the firm said today.

Transnet is currently railing around 68mn-69mn t/yr. Coal mining firms in the country have frequently blamed Transnet for failing to keep pace with export demand and for missing out on almost a decade of rising demand for South African coal from India and China.

“We will definitely see more interest coming from India and China, the key buyers of South African coal, and growth in coal production, which has been stagnant in the past five years,” Transnet general manager Divyesh Kalan said. “The infrastructure must be improved to unlock the country's potential.”

RBCT has capacity of 91mn t/yr but its exports are limited to the amount that Transnet can rail to the terminal. RBCT has longer-term plans to increase capacity at the terminal to 110mn t/yr, mainly to allow black-owned mining firms greater access to export markets.

RBCT's latest phase 6 expansion plan would increase capacity to 110mn t/yr. The company's board will give further details in October, RBCT chief executive Nosipho Siwisa-Damasane said. RBCT exported 68.3mn t in 2012, up from 65.5mn t the previous year.

Transnet expects South African coal production to grow by an average of 4pc/yr to 331mn t in 2017, which means the rail capacity has to be increased.

Transnet's performance dropped significantly in May and June as a result of an annual shutdown of the line and in October because of significant electrical faults.

Despite plans by Transnet and RBCT to expand export capacity the South African government is concerned that state-owned power firm Eskom will find it increasingly difficult to secure its future coal requirements, especially as Indian power generators need the same quality of coal used by Eskom.

The Pretoria government is considering a possible levy on coal exports in an attempt to ensure that Eskom is guaranteed coal in the future. Eskom burns around 125mn t/yr.

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