TRANSNET TO INVEST MORE IN RAIL

Logistics group Transnet plans to raise annual rail capacity for manganese ore exports to 7 million tons within five years from around 4 million tons this year, it said yesterday.

Transnet CEO Chris Wells said more capacity would be allocated to manganese exports from Hotazel in the Northern Cape to Port Elizabeth on the general freight rail, which is mainly dedicated to the metal used in alloys, including stainless steel.

Transnet also said the expansion of its coal export line would be completed much later than planned and that most of its projects could be delayed by rising costs.

Transnet is expanding the annual capacity on the iron ore railway lines to 60m tons from 47m tons and previously said it would raise the capacity of the coal lines to 81m from 72m by June next year.

“We are looking at putting in place a capacity of, say, 7 million tons plus (for manganese) in the medium term, both through Port Elizabeth and Durban, until we implement a new facility for manganese exports … I would say in the next five years,” Wells told Reuters in an interview.

Transnet’s freight arm, Transnet Freight Rail (TFR), has faced wide criticism for neglecting rail infrastructure, but the company points to recent investments that are five times what was put into the sector every year previously.

Wells said the cost of a new oil pipeline planned to be constructed between the port of Durban and Joburg, due in 2011, had also risen on the back of higher prices for steel and delays in getting some regulatory approvals for the construction.

Transnet has said its R80 billion investment programme was on track and the company had raised 90 percent, or R13bn, of the funding required for this year.

Wells said major expansion projects were on course but the timeline for some schemes could change due to cost variations.

“It’s typical of long-term contracts: you don’t know all the variables, but reasons would be the change of commodity prices like steel and also delays in getting various approvals, including regulatory approvals,” Wells said of the pipeline project.

“All key projects that have been announced are continuing.” Among major projects is an upgrade of rail transport to the country’s major Richards Bay coal export terminal.

“On coal, we have a big project in place to improve, together with our customers, the efficiency of the process and the intention is to get that line to around 81 million tons capacity in four to five years,” Wells said.

Transnet said in a statement its provisional revenue for the year to November had risen 5.5 percent to R23.6bn, despite a decline in overall global economic activity, and that it had R8bn in cash to finance projects.

(www.thestar.co.za; 20091205)

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