“Griffith, who announced a 90% increase in half-year headline earnings to R6.5 billion and a six-months’ operating profit of R11.2 billion, told Mining Weekly Online that there had been a progression in the private sector’s discussion with the state-owned Transnet rail enterprise on the prospect of railing more than 60 million tons of iron-ore a year to south Africa’s Saldanha export port.

“He said that Transnet was no longer acting unilaterally on the line’s expansions. ‘We now have the iron-ore and manganese industry working together with Transnet on the next expansion beyond 60 million tons, on capital cost and how it can be done more efficiently, which is quite a significant difference to the approach that was taken before. We now also have project management from outside of South Africa trying to bring new thinking into the port and the rail systems. We now have people dedicated to focusing on this,’ he said.

“The private-sector companies KIO, Assmang and Samancor were now represented on a steering committee together with top Transnet management. Senior project personnel from all three companies were represented. ‘We have a concept study that we should see in the next month that will indicate whether the external views are any different to the internal views. Whether or not the private sector will be able to be involved in some sort of participation in the eventual outcome of the expanded capacity will be, time will tell. This represents a significant difference to the development of future rail capacity. The pricing and kind of partnerships that will eventuate has still to be determined. ‘But what we are interested in now is ensuring that the next tranche of expansion coincides with the expansion of the iron-ore and manganese mines,’ he said.

“Mining Weekly Online understands that the consulting engineering company Aurecon has been introduced to shed fresh light on how the Sishen-Saldanha corridor could be expanded efficiently. Transnet is currently completing the execution of the expansion to 47mta, and is in the construction phase of expansion from 47mta to 60.

“Increasing the capacity beyond 60mta, for which plans have still to be drawn up, is scheduled to take place by 2013. KIO’s project pipeline could add 29% to its current production capacity by 2019. In 2007 KIO promised that it could double exports five years down the line, which remains on track as the Sishen jig plant ramps up to its design capacity this year and the Kolomela project comes on stream in 2012.

“By 2013, with domestic sales of six million tons, KIO is targeting 47mta for the export market. Post 2013, KIO will be looking to its potential projects in Limpopo province and Northern Cape, which are in different phases of study.
Current projects under development and the potential projects could bring KIO to a production capacity of 70mta by 2019.

“KIO is confident that the projects the company has to offer will provide the company with the resources to continue production growth to 70mta.

“KIO’s record operational profit of R11.2 billion in the six months to 30 June was R3 billion higher than the previous best in 2008.

“KIO CFO Vincent Uren said that rail and port tariffs were under five-yearly review with Transnet, with a financial model determining the rate. ‘We are in discussions and hopefully we can be more explicit when the negotiations are over,’ Uren said.

“Production from the Sishen iron-ore mine increased another 17% to 21.1 million tons in the six months to June 30 and costs were kept below inflation at below 4%, with an interim dividend of R13.50 a share declared.

“KIO’s Kolomela – formerly Sishen South – project, now 63% complete, is on budget and scheduled to deliver its first production in 2012 and full production in 2013, when there is expected to be a global iron-ore production shortfall. ‘We have sufficient ore available and if Transnet exceeds our expectations, then we should be able to see another really good rail performance, and then a good export performance in the second half. But our caution is not to expect the same volume in the second half as in the first,’ Griffith said.

“Of Sishen’s 10% higher production of 21.1 million tons, 19.9 million tons were railed by Transnet. The volumes railed to the port increased by 8% year-on-year to 18.2 million tons.
Notwithstanding the increase in production, the overall performance was negatively impacted by the industrial action at Transnet and also by a derailment in April, which resulted in 1.2 million tons of lost rail volumes.

“KIO increased stock at the Sishen mine because the growth in production outstripped the rail performance. Of the 18.2 million tons railed to the coast on the Sishen-Saldanha export line, 0.6 million tons went to the Saldanha Steel plant, leaving 17.6 million tons for export. But export sales increased by a further 10% to 18.8 million tons and 19.1 million tons that was actually shipped, which means that stock decreased by 1.5million tons.

“Of the 19.1 million tons shipped, 18.8 million tons were sold, which meant a small increase in KIO’s stockpile in China.
Sales from Thabazimbi mine to AMSA – with which KIO has struck an interim price accord – were flat at 0.9 million tons for the half year. KIO has agreed to sell Sishen iron-ore to AMSA at $70/t for inland steel production and $50/t for coastal Saldanha Steel production for the next 12 months, to 31 July 2011. KIO will also not demand that AMSA pays for the iron-ore in advance.

“The arbitration between AMSA and Kumba, still under way, is not about price but about who should have renewed mineral rights, and talks on a long-term pricing agreement are continuing.

“On global iron-ore pricing, a degree of uncertainty remains around future pricing mechanisms for the seaborne iron-ore

“TransNamib is determined to overhaul its image as a battling state-owned enterprise and to revive the ‘glory days’ of the railways in Namibia. Senior managers of TransNamib met with high-ranking officials from the ministry of works and transport and members of the TransNamib Board to clear the air on the company’s past, current and future challenges and to persuade the public that TransNamib was committed to becoming a vital part of the country’s economic growth.

“Titus Haimbili, chief executive officer of Trans-Namib, told deputy minister chief Samuel Ankama and others during visits to several TransNamib sites that the company acknowledged the ‘legacy of challenges’ it had to overcome and was committed to address. He added that TransNamib was ‘not promising miracles’ but was ready and willing to ‘lay a sound foundation for the railways in Namibia’.

“TransNamib could become a vital part of railway infrastructure in Africa, a critical development need according to the African Development Bank. In Namibia particularly, a well-functioning railway system can be a critical asset, as the uranium-mining industry continues to grow and railway traffic volumes could double.

“Haimbili acknowledged the important role of Trans-Namib in line with the wish to develop the port of Walvis Bay into a transport hub of the SADC region. The company had to battle ‘an image of being a non-performing state-owned enterprise (SOE)’ and had been ‘haunted by a stigma of secrecy and a lack of active stakeholder involvement,’ he said.

“Haimbili introduced the company’s top management team during the site visit, and said their qualifications and crucial roles within the company’s structure should be enough to refute criticism describing them as ‘incompetent’ and ‘political appointees’. Other challenges include an aged railway network, which is approximately 100 years old. Its trains are past their sell-by date too, and the recently acquired Chinese locomotives have been heavily criticised.

“Profits since 2000 have been ‘elusive’, Haimbili said. He added that ‘this negative profit trend’ could have been influenced by the lack of updated annual financial reports and ‘unaccounted asset register and evaluations’.

“On the other end of the scale, Haimbili took stock of the company’s successes and achievements. Major achievements include the agreement with the Ohorongo Cement factory
outside Otavi. The agreement, which is projected to rake in N$60 million annually, will make TransNamib responsible for the transport of coal and cement to and from the factory.
Another project is an agreement with GPT Infraprojects Ltd to establish a factory in Tsumeb that will produce concrete railway sleepers. These sleepers will be used by TransNamib to upgrade critical railway lines across Namibia.

“Another important milestone is a reworked agreement with Beijing Zongs Railway Supplies in May 2010. Haimbili said the previous agreement with the railway supply company was flawed because of a stipulation that ‘upfront cash payment was required before any parts could be delivered’. This agreement had been revised and the delivery of parts should improve, Haimbili said.

“Haimbili also highlighted an N$80 million programme to refurbish 18 General Electric locomotives, and an SOE agreement with NamPort to share strategic business information and experience.

“TransNamib employs 1,636 people, making it one of the largest SOE employers
in Namibia.”

Construction of a sinter plant at the mine has begun and in May 2011, work is to start on a manganese smelter at Coega in the Eastern Cape. In 2009, the Rio Tinto group dropped plans to build a major aluminium smelter at Coega, citing concerns about the cost and supply of electricity. However, says IDC divisional executive (resources) Ufikile Khumalo, the Kalagadi smelter “is a very robust project”.

The complete scheme is expected to cost about R12 billion. ArcelorMittal, which has a 50% stake, has agreed to buy 50% of the output from the sinter plant and smelter, to supply its steel mills across the world.

Khumalo is quoted saying that about 700,000 tons from the sinter plant will be consumed at the smelter, the rest going for export. If all goes according to plan, the first production from the smelter – which will produce about 320,000 tons of high-carbon ferromanganese a year – should be seen in 2015.

The transport implications of the project have not been spelled out at this stage, but impact very obviously on the railway between Hotazel and the Eastern Cape, together with its recently completed connection to the new harbour at Coega.

Chief executive officer of Caminhos de ferro do Moçambique (CFM – the state railway & harbours) Adelino Mesquita said the budget for studies and construction of the port and railway is estimated at around $US7 billion. The preparatory phase, including the mobilisation of finance, should be completed by the end of 2011, and the first phase of construction should take place between 2012 and 2015.

Mozambican transport minister Paulo Zucula said proposals for a deep water port in Matutuine dates from the 1960s. The original site indicated was Dobela Point, but it has been shifted to Techobanine largely for environmental reasons.

Botswana believes the new port and railway will dramatically reduce the time taken to move its imports and exports. Botswana railways chairman Taolo Sebonego explained that dependence upon South African ports and railway means that it takes up to 22 days for merchandise to arrive, be unloaded and reach its destination.

The Southern African Development Community (SADC), according to executive secretary Tomas Salomao, will give its full support “because we believe this project is important for the region”. SADC would also encourage other member states, much as South Africa (which is just 30km from Techbanine) and Swaziland, to participate in the initiative.

The Mozambican and Botswana governments believe that private finance will be forthcoming, since the port and railway can be leased out to private management. Asked by AIM, the Mozambiquan new agency, what would happen if the private sector failed to provide the money, Zucula replied “if there is no interest from private business, then there will be no problem in arranging public investment, because the project justifies this”.

The main cargo expected to use the new port is coal from Botswana. The country has an estimated 212 billion tonnes of coal reserves. Using Techobanine would free Botswana from dependence on the South African ports of Durban and Richards Bay which give priority to South African exports and experience congestion problems.

Passenger Rail Agency of South Africa (Prasa) group chief executive officer (CEO) Lucky Montana said: “With the opening of this world-class station, Nasrec now becomes one of the most accessible precincts in the country. It provides modern infrastructure and facilities that we believe will provide economic opportunities to the surrounding communities and general public.”

Prasa proved they were ready on 29 May when Metrorail transported rugby fans to Soweto’s Orlando stadium for the Super14 final. “Fans not only got to the game on time, but the feedback we’ve received indicates they also enjoyed the experience they were treated to on our newly refurbished trains, as well as the world-class facilities at the upgraded Orlando stadium,” he said.

The upgrades to the station include:
• “Super0-wide (9m)” platforms with a 3m wide, centrally located stairway;
• Three stairways, wide entrance ramps and a lift for passengers with special needs;
• Adequate lighting and CCTV cameras; ,
• Ticket sales and verification points sheltered from the weather;
• An integrated control system that allows train arrivals and departures to be monitored via the internet; and
• A standby generator and UPS in case of power failure.

Starting in March 2011, Voith Turbo is to deliver 42 rail packs with T212bre turbo transmissions, SK/KE 485 final drives, roof-mounted cooling systems, cardan shafts and Schaku couplers for the project. Each vehicle has two Voith Turbo power packs rated at 530kW.

The vehicles, all to be delivered by 2012 for use on routes around Tunis, will be manufactured in Nanjing, China, with the first prototype railcar set scheduled for testing in Tunisia in mid-2011.

The refurbished stations include:

JOANNESBURG:

• New Canada and Nasrec (R90 million);
• Ellis Park and Doornfontein (R77 million);
• Orlando (R70 million).

PRETORIA:

• Loftus and Bel Ombre (R20 million);

DURBAN:

• KwaMyandu and KwaMashu (R50 million).
• Reunion (R6 million).

CAPE TOWN:

• Athlone, Heideveld and Langa (R60 million).

PORT ELIZABETH:

• North End (R16 million).

“One of the reasons rail use has declined over the years,” Montana suggests, “maybe because people felt it was unsafe. However; a safe and effective public rail transport system was paramount to the success of the Fifa World Cup. This is why Prasa has spent over R160 million to bring back railway police. We knew we’d done our job when fans stepped off our trains with a smile, took advantage of all the wonderful facilities at our stations and enjoyed a gentle five minute stroll to their seats in the stadium”.

[ Prasa boasted its 5-minute-walk-to-all-the-stadiums claim in widely distributed publicity handouts, all specifically including Cape Town. “A gentle 5-minute stroll” to Green Point did stretch credulity somewhat: the official distance from the station is 2.6km. – editor

The objective is to produce 3 million tons annually (mta) of coal for sale to Eskom from 2013 and another 3 million tons for export, “with strong interest from India and China.” That is in phase one. Phase two will see production reaching 40mta by 2018.

Rail connections are envisaged to move the coal to Eskom power stations and to the coast, both Matola in Mozambique and Richards Bay being possibilities.

Resgen CE Paul Jury is quoted saying: “We are not trying to tackle this in any small way,” and explaining that “We’re in discussions with Transnet, taking them solutions, rather than waiting for them to find solutions”. The group is to contribute R4m to the current surveying of a rail route from eastern Botswana to the Atlantic coast in Namibia. CIC Energy is involved in this project, to export coal from its own Mmamabula mine in Botswana. However, Jury told the press, Resgen is prepared to put up “at least” R2.5 billion towards additional rail infrastructure in South Africa.