[miningmx.com] — TRANSNET SOC, SwaziRail and South Africa’s public enterprises ministry on Thursday unveiled the much-vaunted 146km Lothair rail project – the first new rail project in South Africa since 1985 – which is expected to boost coal deliveries to Richards Bay to as much as 100 million tonnes/year (Mtpa).
Transnet Group CEO Brian Molefe estimated the cost between R16bn and R17bn.
The project was first floated last year and involves the building of 46km of new rail through Swaziland that will accommodate general freight currently railed on the so-called ‘coal link’ which connects the Mpumalanga province coal fields with Richards Bay through the heavily congested Ermelo hub.
Molefe said at the official opening of the project in Sandton that moving general freight to the Lothair link, set to be completed in 2016, would take coal capacity on the Richards Bay rail to “beyond 91Mtpa possibly to 100Mtpa”.
“This project is vitally important for a number of reasons for us,” said Molefe. “When complete, this new line will create additional capacity of 15 million tonnes, which will predominantly be general freight volumes from the existing coal export line.
“Given the configuration of coal trains – i.e. 200 wagons – we expect that significant capacity will be made available for export coal.”
He added there would be concurrent work on a rail line out of the Waterberg coal region in the Limpopo Province which Transnet has said in the past could have a total capacity of 80Mtpa. “At the same time we hope to finish the Waterberg upgrade,” said Molefe.
Funding for the Lothair project had not been secured, however, and does not seem to have been allocated in the R110bn, five-year capital expenditure programme set down by Transnet freight division, Transnet Freight Rail (TFR).
However, Molefe was confident finance of the project would be settled relatively quickly. “The project will be cash flow positive from completion,” he said, adding that there was already existing traffic that would be repositioned, while it would create additional capacity in coal deliveries. “The banks are coming to us rather than the other way round,” he said.
In terms of project details, there would also be upgrades to existing lines including the 108km line from Davel in South Africa to Lothair costing R2.2bn; the R7.3bn in new line from Lothair to Sidvokodvo in Swaziland and a further R4.6bn upgrade of existing line to Richards Bay. A further R1.8bn would be expended upgrading a line from Swaziland to Maputo in Mozambique.
South Africa would shoulder about R12bn of the investment with SwaziRail and its government supporting the balance.
“We are determined to drive this initiative hard,” said Malusi Gigaba, public enterprises minister. “That’s because it will also help unlock the Waterberg coal line,” he added.
The Waterberg holds the biggest untapped coal source in South Africa, with various junior miners involved in development projects in the region.
