R40bn coal line
not be included in the R310bn Market Demand Strategy (MDS) first unveiled by President Jacob Zuma in his 2012 State of the Nation Address.
Transnet’s MDS casts a relatively wide net in that it also sets down plans for the expansion of ports and new port equipment, as well as investment in infrastructure for South Africa’s iron ore and manganese industries.
It also put aside funds for the coal freight expansion of an existing railway line from Thabazimbi in the Limpopo province to Richards Bay. At the moment, the railway has a 4m tons a year (mtpa) capacity, but the plan is to expand it to 23mtpa by 2018.
Isn’t that enough given the relative paucity of new coal production coming on stream, especially as the coal price at between $70 and $75 per ton – nearly half its levels of three years ago – is hardly encouraging of new investment.
Gama says that expansion is actually a re-fit of a general freight line that he wants to revert again to general freight. The R30bn-R40bn sum is actually for a brand new line dedicated wholly to coal.
Public-private partnerships are not easy marriages to form – a point Gama acknowledges. “There is always the problem that people have the cash, but when we meet them, and the issue of payback time is discussed, they never come back,” he said.
Typically, State-owned enterprises work on much longer investment returns than the private sector. The State also supports policy – in this case the growth of the black-owned junior coal mining sector – whereas private ventures want to know if the worthy cause will actually make money.
Still the private sector has been encouraging of Transnet’s reaching out. The Chamber of Mines said that it had established “. . . a working group to look into how the private sector could participate in the investment programme”.
“We have started some rudimentary discussions with Business Leadership SA and some [members] have expressed interest in it,” said Gama. “We would like to pilot something.”