Mr Siyabonga Gama CEO of Transnet as saying that South Africa’s coal exports could reach and top 91 million tonnes a year but only if mining companies strike long-term agreements with rail operator Transnet Freight Rail and reach the right tariff agreements.

One of the concerns about the expansion at Richards Bay Coal Terminal is the ability for TFR to meet the rail requirements to shift 91 million tonnes a year from the current 76 million tonnes.

Mr Gama said Transnet had to spend ZAR 40 billion over a decade to increase rail capacity to 91 million tonnes, but this process was mired in talks with the sector to secure long term production commitments. He said that “Some people are dragging their feet, which is not helpful for the industry. We’ve been in discussions for a very long time, and the doors aren’t closed yet on getting firm commitments and contracts.”

Mr Gama said “There isn’t any company that is going to make an investment of ZAR 40 billion and upwards without those firm commitments. We need those contracts to take to the banks for them to hand us that money. He said the coal sector was already struggling to meet the rail current allocation, which is around 1.46 million tonnes a week. The 91 million tonne per annum exports would need rail loading of 1.75 million tonnes a week.”

He later told Miningmx that Transnet’s problems with derailments and old rolling stock accounted for between two to three million tonnes of coal not reaching RBCT. He added that the first of the 110 locomotives Transnet has ordered will start arriving from July at a rate of six a month allowing the TFR division to move 86 million tonnes.

Mr Gama said “I believe with the right structure of tariffs the potential is greater than 91 million tonnes. He said that a key factor is TFR’s capacity growth plans is long-term agreements of 15 to 20 years with the miners, but at the moment none of the agreements is longer than a year, which is not favorable for planning expansions, he said. It costs ZAR 250 million for a 100 wagon set and TFR has 65 of these sets.

Mr Gama said “We cannot make commitments if the industry does not sign long-term agreements. He said that the industry would have to look at a possible alternative terminal to the RBCT so that junior entrants to the sector could have unfettered access to the more lucrative export markets. He added that the 91mtpa capacity will be available from July this year. He added that the trigger for looking at the expansion of RBCT would be exports reaching a sustainable 86 million tonne per annum.

Mr Gama said the seaborne thermal coal market of 700 million tonnes, which has grown around seven percent a year, will continue expanding, but at a slower rate of 2.5% to 3% because of a slow down in demand.

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