New South Africa-to-Swaziland Rail Link to De-Bottleneck Coal Exports from Richards Bay

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Real estate agents aver that there are three key points which contribute to the value of a property: "location, location and location." The key points to unlocking the benefits of Africa's resource wealth are "infrastructure, infrastructure and infrastructure." Recently, major new rail transport projects have been launched on an almost-weekly basis in Africa. The latest, which was announced this week, is a new rail link between South Africa and Swaziland that will carry general freight and coal. Investment needed to complete the projects is estimated at $2.1 billion, with South African transport utility Transnet and backers set to contribute about $1.5 billion. Swaziland is set to contribute $625 million.

In addition to the new, 146-kilometer single line, which will have an initial capacity of 15 million tons a year, Transnet will upgrade and strengthen connected networks in South Africa, Swaziland and Mozambique. The supporting projects will include a $275 million upgrade of the 108-kilometer Davel-Lothair line; a strengthening of the 345-kilometer Sidvokodvo (Swaziland)-to-Richards Bay line, with an investment of $575 million; and the $225 million upgrade of the 154-kilometer Phuzuoya-Maputo line. In a second phase, the capacity of the new line will be upgraded to an annual 35 million tons a year.

Construction is scheduled for completion in 2016. The project will offer a major benefit to coal exporters through the Richard's Bay terminal on South Africa's Indian Ocean coast.

Transnet Chief Executive Officer Brian Molefe said that when the line is commissioned in three years' time, "Transnet will have a significant increase of capacity on our coal line. Investments in new lines and the upgrade of the existing network will take capacity beyond 91 million tons and close to 100 million tons."

The lack of capacity and a problematic service have constrained delivery of coal for export from Richards Bay. Under current conditions the coal line has the capacity to move 72 million tons, but actual annual tonnages have varied between 62 million tons and 68 million tons. The Richards Bay terminal has a design capacity of 91 million tons. The coal-carrying capacity of the new line will be enhanced by passing the traditional Ermelo bottlenecked transit point to Richards Bay from the coalfields of Mpumalanga province.

The Swazi line also anticipates heavy coal hauls from the quickly developing Waterberg coalfields in the northern Limpopo province, which are set to replace slowly diminishing supplies from Mpumalanga.

The rail project is the largest undertaken in Southern Africa since 1976 and has the support of major coal-exporting companies. Some doubts have been expressed on mixing general freight with coal shipments as a high-capacity bulk line requires a minimum of stops, but this is weighed against the development potential of mixed freight access to the line.

The non-electrified single line will have crossing loops spaced about 40 kilometers apart. Transnet's freight arm is acquiring a new, 143-fleet of class 43-000 type General Electric C30-ACi diesel-electric locomotives that are to be delivered this week; 10 of these have been built in Pennsylvania, and 90 will be built by Transnet Rail Engineering in South Africa.

Molefe said that the final budget still had to be set following detailed engineering studies to be performed during 2012. Environmental approvals and land acquisitions will be finalized between 2012 and 2014. For related information, see January 13, 2012, article - Vale Invests $4.4 Billion in Link Malawi and Mozambique Rail Networks, and January 11, 2012, article - New Central-East African Rail Infrastructure to Boost Development and Commerce.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.