JOHANNESBURG (miningweekly.com) - State freight logistics group Transnet, in consultation with manganese exporters, expects to decide within the "next four to five months" whether to develop a new export channel through the deepwater harbour at Saldanha Bay, on South Africa's West Coast, or to proceed with an alternative model involving ports on the country's eastern seaboard.
Acting CEO Chris Wells tells Mining Weekly Online that the group is also interrogating several possible private-sector participation (PSP) models for the two alternatives, both of which would involve "significant investment".
He refuses to be drawn, however, on the amount of capital that could be involved, or on the nature of the partnerships being investigated, saying only that the PSP model is integral the plan and is being canvassed with the miners as the studies progress.
For their part, the miners involved (BHP Billiton, African Rainbow Minerals and Assore) have indicated previously that they would prefer to "go west", and convert the high-performance Sishen-Saldanha line into a dual commodity channel for iron-ore and manganese.
That said, they have supported Transnet's investigations into both a western corridor, as well as an eastern corridor involving the harbours of Port Elizabeth, Ngqura and Durban. Still, the miners feel that greater efficiencies would be possible on a channel that is dedicated to bulk commodities, rather than one that will also have to cater for general freight.
Currently, the Sishen-Saldanha heavy-haul line is dedicated to iron-ore exports, and has emerged as Transnet Freight Rail's (TFR's) top performing corridor during 2009.
In the six months to September 30, export tons increased by 32,7% to 21,1-million tons in line with contractual commitments TFR has with Anglo American's Kumba Iron Ore and Assmang, the joint venture between African Rainbow Mineral and Assore.
The manganese miners would like to have access to this channel so as to boost exports from the Kalahari manganese field to some 12-million tons a year, from the current position of around five-million tons yearly, most of which is currently moved through the depth- and land-constrained harbour at Port Elizabeth.
The Port Elizabeth channel has a theoretical capacity of six-million tons yearly, but it is unlikely that this nameplate will ever be achieved, owing to a number of constraints, especially relating to stockpiles.
"The big issue is that there is demand from the industry for a 12-million ton business, which is a massive ramp-up," Well explains.
Under the current configuration, the yearly peak is expected to be about seven-million tons, with Port Elizabeth probably only able to handle 4,5-million tons and with Durban in a position to handle up to 2,5-million tons.
So, to reach the 12-million target, there are only two alternatives: to develop a terminal at the new deepwater harbour at Ngqura and continue using Durban for the overflow; or transform the bulk terminal at Saldahna into a dual commodity facility for iron-ore and manganese.
The iron-ore channel was in the process of being ramped up from 47-million tons to 60-million tons, but significant levels of capital will be required to go beyond that level.
"To move to 80-million tons, which the iron-ore industry wants, will require massive investment into new infrastructure and rolling stock," Wells outlines, adding that any move towards the 100-million ton level once mooted, "looks prohibitively expensive".
However, a combined 90-million ton channel, with 78-million tons for iron-ore and 12-million tons for manganese, "looks full of potential"- this is reportedly because there would be a greater sharing of risk, especially at the port, than would be the case if only one commodity was involved.
"Either way, the investment would be significant, and while we could probably cater for it on our balance sheet, we would probably look at some kind of PSP with the miners," Wells concludes.