Transnet to upgrade export rail

Johannesburg - South African logistics group Transnet Ltd plans to raise annual rail capacity for manganese ore exports to 7 million tonnes within five years from around 4 million tonnes this year, it said on Friday.

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 now only be completed much later than planned and

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

"We are looking at putting in place a capacity of say 7 million tonnes 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 Johannesburg, 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 R80bn investment programme was on track and the company had managed to raise 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 about 81 million tonnes capacity in four to five years," Wells said.

Transnet said in a statement that its provisional revenue for the year to November 2009 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.

- Reuters